George Soros on The Age of Fallibility (partial transcript, part 2)

[Kragen Javier Sitaker]

This is the second part of my transcript of the George Soros interview
at Google.  It runs from 1351 seconds from the start of the recording
to 2912 seconds from the start of the recording, a total of 1561
seconds, another 26 minutes of video; it ends just before Ruchira
Datta's question.  The whole video is 3719 seconds in length, so I
have another 807 seconds left; I expect I will finish the
transcription tonight.

As far as Google can tell, nobody else has gotten around to
transcribing this yet, although Google claims 21039 people have
watched it, so I guess I'd better finish.

The previous part of the transcript is at
http://lists.canonical.org/pipermail/kragen-fw/2006-October/000244.html
under the title "George Soros on The Age of Fallibility (partial
transcript)".

The video itself is at
http://video.google.com/videoplay?docid=6150320548187842685

----

SOROS: ...like maintaining peace, et cetera, uh, and you need some
leadership; somebody has to lead for the, urr, collective action.  And
that is the role of the leader.  We emerged as the sole superpower;
before that, you had two superpowers, and they were sort of some kind
of, uh, balance with each other, uh, actually it was a MAD balance:
Mutually Assured Destruction --- that was the basis of the world
order, right?  

That world order has dissolved.  We were left as the sole superpower,
and therefore it's our responsibility to lead the, uh, initiatives; to
strengthen international organizations; and strengthen international
law.  Now, the, the, um, uh, American Supremacists or Neocons say
international law doesn't really exist; it's, it's a matter of power.
And of course they are right.  But international law ought to exist,
and if you, if you say it doesn't exist, and you disregard it, you
actually destroy it.

Uh, what we ought to be doing, we ought to be strengthening it.  But
this idea of international cooperation has a terrible reputation in
the United States, which is the result of a concerted sort of
educational, uh, uh, project by the right wing.  And that has to be ss
--- radically revised, because if we want to be leaders, then we
actually have to lead, and accept that we are dealing with a world of
sovereign powers, so they won't always do what we want them to do; and
we have to build consensus and, you know, we'll never quite, um,
reach, uh, anything approaching, uh, perfection.  So the United
Nations is a very limited kind of international organizations because
it's an association of sovereign states; very difficult to forge, uh,
consensus.  There are five powers that have veto power.  So we can't
just sort of have it our way.

But nevertheless, it's, it's in that framework that we have to work.

SCHMIDT: So what I'd like to just ask one, one final question, while
we get organized for some are, uh, people ask questions from the
audience I think is always more interesting than the questions I might
ask.  

I'm still frustrated by not knowing the answer of what we should do.

SOROS: But...

SCHMIDT: Do you have, off the top of your head: What would you do in
Iraq?  What would you do in Lebanon?  What would you do about all the
treaties that we're adhering to or not adhering to?  Um, you're
obviously not supporting the current, uh, political climate and the
current president, uh, but the out --- the voters will have the
opportunity to, to discuss that, you know, at the appropriate election
time.  What would you do now if you were President and you were in
charge of foreign policy?  Or the Congress and you were unilaterally
in charge of foreign policy for a day?

SOROS: It's a, It's a very, very good question; a very difficult
question, because you are, you know, in a process that is, you're far
advanced in it, and you can't just sort of, uh, uh, make it disappear.
Uh, so you can't actually, for instance, pu --- uh, pull out...

SCHMIDT: So you can't just pull --- you can't pull everybody out of
Iraq right now, is what you're saying.

SOROS: Uh, I don't think you can do that.  We have to get out of Iraq.
But we have to get out in an orderly manner, and try not to leave
behind a, uh, a very large-scale civil war, because we are currently
in that process.

SCHMIDT: So, just to test this, imagine a situation where the civil
war terribly gets worse.  American lives are at risk.  And we face
this very difficult choice of do we keep our Americans in or do we
withdraw.

SOROS: I think that you...

SCHMIDT: How would you, how would you make that decision?

SOROS: No, I think we have to, uh, be determined that we've got to get
out.  Is, we can, we get out either in an orderly manner or the way we
did in Viet Nam with the, you know, the, oh helicopters picking you
off the, uh, the, the Green Zone, fr --- out of the Green Zone.  Uh,
it's much preferable to get out in an orderly manner; leave something
behind that is re --- relatively stable.

How could you get there?  And, I've given this quite a bit of thought.
And it's clear that it would have to be some kind of an arrangement
that various factions agree on the distribution of oil revenues.
That's the key because that's the main source of the Iraqi state.  And
actually you have to create conditions where you generate new revenues
--- in other words, where you can have an auction bringing in oil
companies for new concessions.  For that, you have to establish a
legal basis for, for, for the oil concessions.  And that has to be the
objective of, uh, of any kind of agreement that would, uh, leave ss
--- leave something behind.  Because that would be, uh, not a zero-sum
game of fighting over the existing revenues because you would be
generating new revenues.

Now, any kind of agreement would require international, uh, uh,
enforcement in a way, to guarantee it.  So there would have to be some
kind of an international presence.  And probably that international
presence would have to have a large American component, because others
are not willing to go in there.  But that would have to be under an
international, uh, uh, authority.  So that would mean that the United
States would have to be willing to submit its --- itself to such an
authority.  And that is the decision that would face the
Administration.  Is it willing to do that?

I think the --- the current, uh, uh, attitudes would not permit that.
That would be a, uh, hundred-and-eighty degree about-turn.  And that
is what you need.

SCHMIDT: Let's start with some questions from the audience.  We have
some microphones --- we have one right here.  Um... And, uh, again,
remember that you're live and on broadcast.

ALEX MARTELLI: Many Western European nations in recent decades have
faced and managed to defeat, essentially, very strong terrorist
movements of, with a variety of, uh, different, uh, reasons for
existing, from the Red Brigades in Italy to IRA in Britain to the
Basque terrorism in Spain.  Uh, what metaphor could best describe the
way these bloody terrorism movements have been defeated?  Maybe police
action?  Maybe a re-education?  Maybe a removal of motivation by
sharing power in Northern Ireland?  I mean --- isn't it terrible that
it seems that the United States isn't looking at this recent
experience in very similar nations to inform its metaphors and its
perceptions in dealing with the terrorism it's been facing?

SOROS: Yeah, I think you make a very good point that there have been a
number of terrorist movements, and, uh, they don't necessarily all
have the same motivation; they have different motivations, different
contexts.  And, and therefore putting them all together is a
distortion.  It's an abstraction.

UNIDENTIFIED QUESTIONER #1: Um, so I have two questions, and they're
not related to terrorism or your book.  Sort of related to your early
career as a financial trader?  Um, so my father, who is in Hong Kong,
read all your books on reflexivity, and he tried all your techniques
on stock market, and it just didn't work out for him?  (HUGE LAUGHTER)

SCHMIDT: Well, at least you're telling the truth. (LAUGHTER)

UNIDENTIFIED QUESTIONER #1: And, uh, so I'm just wondering sort of, if
you have, if you wanted to flip a coin like 100 times and you have to
get heads all the time, all you need is two to the one hundredth
coins, right?  I mean, expected.  You know.  So do you see yourself,
like your investment philosophy, as something --- like, do you have
this --- like, what's your secret sauce?  Like, uh, do you have
this...  (HUGE LAUGHTER) Do you have this principle that you've hold
on to over time that has helped you profit, or is it more of a luck
thing?  That's my first question.

My second question is regarding um, Long Term Capital Management.  So
you know how the Nobel Prize laureates have, uh, failed in that
particular incident when, uh, Russia defaulted on their sovereign
bonds.  So I was wondering whether you have any insights on
quantitatively-based trading methods actually having a future?

SOROS: Okay, well, um, the secret of my success, actually, uh, I can,
I can now tell you.  It's, um...  (HUGE LAUGHTER)

SCHMIDT: Okay, hold on!

SOROS: Since you ask me!

SCHMIDT: Thank you!

SOROS: I'm always wrong.

(SILENCE)

I'm always wrong!  And I try to correct my mistakes.  That's the
secret of my success.

Uh, the, the, as far as the... the, um, quants are concerned, uh, I
mean there are very successful models, but they, they all have a flaw
in the end.  And eventually, if you persist, uh, then the flaw becomes
apparent.  Uh, so they, Capital Management did extremely well, very
high leverage, for a very long time, and there was that thick tail
that occasionally, uh, you slip up, uh, slip on --- what is the meta
--- appropriate metaphor for a thick tail?  I don't know what happens
to it.  Uh, you step on it.  Okay. So you step on the thick tail and
you are in trouble.

UNIDENTIFIED QUESTIONER #1: Thank you.

VALENTIN SPITKOVSKY: I have a question about the, the War on Terror
and the terminology, uh, because I think, uh, on both sides of the
political debate there's pretty much agreement that it's, uh, an
idiotic, uh, phrase.  Mainly because waging a war on terror is kind of
like waging a war on planes, or tanks, or missiles.  You don't care
about the tool --- you care about what's behind the tool, what's
controlling it.

Um, it, my understanding, and a lot of people say that this was a
result of the Bush administration's trying to be politically correct,
and not to name the, the real enemy which was actually an ideology, a
militant, uh, Muslim ideology, uh, much like the Cold War was a war
against the Communist ideology.  If they replaced the words, the word
"terror" with "militant Islam", would your opinions change, whether or
not the war is appropriate?  Or would you still think that it's, that
they're try --- that they're trying to fight something fuzzy?

SOROS: Well, you see, I go --- I disagree a little bit with your
question.  Because basically, the War on Terror, uh, came about, uh,
because the Bush Administration decided to exploit the very real fear
that people felt as a result of that attack.  Now, the fear was very
real.  But instead of doing what president Roosevelt said --- uh, did,
and saying, "We have nothing to fear but fear itself," the Bush
Administration went out of its way to exaggerate that --- the threat,
so the next time it was going to be in the mush --- in the form of a
mushroom cloud!  It wasn't enough that three thousand people died and
the, and the, and the towers collapsed.  Next time it's going to be an
atomic.  So, so, it was an exploitation of fear to mobilize public
support behind a president who's, you know, uh, commander-in-chief,
and you have to salute and accept his orders instead of criticizing
him.  Criticizing him is unpatriotic.

And that undermines the very principle of an open society, which is
based on critical thinking.

(SILENCE)

UNIDENTIFIED QUESTIONER #2: Um, your old friend Jim Rogers has argued
that, um, countries of people that don't want to be together should be
allowed to fall apart; like, Yugoslavia or USSR.  Do you think that's
true with Iraq, that we should just let the Kurds secede and the
sunnies and the Shi'ites separate?  And, second, have you had a
falling-out with Jim?

SOROS: Um, what? (LAUGHTER)

UNIDENTIFIED QUESTIONER #2: Did you have a falling out with Mr. Rogers?

SOROS: Uh, well, that's, that's a private matter; I don't think it
(MORE LAUGHTER) concerns others.  Uh, but Iraq, that is a public
matter.  And I think Iraq is falling apart, because the factions are
all pulling apart.  But I think, uh, if you want to avoid a civil war
similar to what happened in Bosnia, uh, you've got to hold Iraq
together because of the oil revenues.  See, Iraq is based on oil.
It's Bosnia with oil.  So you can't, can't actually divide it, uh,
because the Sunnis then have absolutely no oil on their territory, and
they would have to fight with the, for, for oil.

SCHMIDT: What do you suggest, by theway?  You're talking about a very
difficult scenario for people who are of different religions and have
not historically, uh, cohabitated, shall we say, are forced to agree,
in the history of Iraq, Saddam Hussein, a terrible dictator, did force
them into what was essentially a secular country, run by --- the only
religion was himself.  This is a, this is a big burden on a society to
change into something different.

SOROS: No, it, it, it is, and it's a, it's actually a long shot.
It's, it's, it's, it's the l --- the less likely outcome.  The more
likely outcome is that the civil war, which is already, uh, uh,
occurring, forces people into separate, uh, uh, they have to pull
apart.  The, the, the killing occurs where the, where the lines are
not properly drawn.  So there is a breaking up of, of Iraq.  And if we
just simply pull out, then what is now a hundred, uh, uh, deaths, uh,
a day, would, would for a while become tenfold or much bigger.

UNIDENTIFIED QUESTIONER #3: Um, this question might seem a bit
premature considering all the problems that we're facing now, but in
the past, in the past you've focused on promoting an open society
outside the United States, especially in the developing world.  Uh,
today you're focused on promoting, uh, that within the United States
to an extent and dealing with, uh, issues of terrorism, etc.  What do
you think the problems that are going to be facing society will be in,
I don't know, five to ten years from now, and what do you see
yourself, uh, focusing the efforts of your foundations on in the
future?

SOROS: Well, uh, first of all, uh, while you hear about my involvement
in, in, in the United States, the foundation is still working, and I
am still deeply involved in what goes on in the rest of the world.
So, it, it, it, that hasn't changed.  And we, we are engaged in
promoting open society everywhere.  And that, I don't see that as
changing.  And I think it will continue after me.

I now think there is a role for the continued existence of the
foundation, because I think civil society has to be active in holding
governments accountable.  (CELLPHONE RADIO INTERFERENCE NOISE) And it
needs support for that.  And this support is difficult to obtain,
because philanthropists don't like to meddle in political arena.
People, you know, happy to work on health and so on, but, you know,
supporting civil society --- there aren't many.  And that I see as a
continuing role for the foundation, uh, throughout the world.

I came to this insight in South Africa, which, uh, has, you know, one
dominant party, uh, would be able to change the Constitution.  And
yet, South Africa is a functioning open society.  And that's because
it has an independent judiciary and it has an active civil society
that holds the government accountable.  So South Africa is a
flourishing open society, even though it doesn't really have a
parliamentary opposition.

So that is the role for civil society; that's what my foundation there
is engaged in; and I think it's, it's something that needs to
continue, uh, indefinitely.

UNIDENTIFIED QUESTIONER #3: Thank you.

UNIDENTIFIED QUESTIONER #4: I'm afraid I have dozens of questions for
you, um, but, but I guess my, my biggest one is, um, how do you see
the, uh, the trend to narrowcasting.

SOROS: In?

QUESTIONER: Narrowcasting.

SCHMIDT: Narrow --- narrowcasting: serving small networks of people
with specialized information.

SOROS: Obviously I don't know anything about it.

QUESTIONER: Well, no, you do.  (HUGE LAUGHTER) 

SCHMIDT: (incomprehensible)

QUESTIONER: Well, we have an administration that was (GESTURES QUOTES)
"elected" because there were enough people who believed a certain line
that it was close enough to be stolen, or close enough to win,
whichever you want to... but it was, the fact that it was even close
is amazing to me, and, and the, the idea of narrowcasting, that if you
control two sources of, of news and opinion, namely Fox News and
evangelical ministers, and, and this is the way of disseminating
opinion to half the country, um, it seems like, like, like things like
the Bush Administration will not merely be an outlier but will be ---
become the norm, and they'll be just the way things are.

SOROS: Well, I mean, this is one of the real puzzles, uh, that I'm
addressing in the book, but I can't say that I'm, sort of, have
anything like the, um, definitive answer in the book, or, or,
altogether.  And that is, how come that you have uh, uh, independent
and pluralistic media; nevertheless, you have conditions very similar
to "1984", you know, where there was a Ministry of Truth that
controlled the information.  So how come, how c --- how could the same
kind of distortion of truth be perpetrated with pluralistic media?

And one of the, one of the answers is that people don't care about the
truth that much.  Uh, I mean, people in America care about success,
and it doesn't matter how you get there.  So this, this pursuit of
truth --- which, you know, has a long tradition, the Enlightenment and
so on --- is, at the moment, I think, in, in trouble.  So that's the
public.  In other words, you can blame the leadership, but you also
have to blame the followership.

So that's, that's part of the answer, but it's not the only one.  And,
obviously, there's the, the concentration of the media, the, uh, own
--- concentration of the ownership; but then you've got internet and
the new media which ought to some extent countermand it.  And you do
have a right-wing propaganda machine, that has, that, uh, acts by, uh,
basically, uh, re --- constant repetition of a distorted point of
view.  And I'm, I'm just currently, uh, ...

QUESTIONER: You've seen this movie before.  Would you...

SOROS: What?

QUESTIONER: You've seen this movie before.  You survived this movie,
you know, sixty years ago.

SOROS: Yes. And, you know, that's what led me to say that, uh, that
I'm reminded of the Nazi regime, and I got into a lot of trouble for,
for saying that.  But I'm currently trying to understand in what way
the, um, the, uh, propaganda, uh, uh, is similar to the, what was used
there.  And I'm just sort of beginning to identify some of the tricks
that are being, uh, used, and I'll probably, uh, write about it in the
next few weeks.  (LAUGHTER)

UNIDENTIFIED QUESTIONER #5: Hi there. I --- I really share your view
that the best way for us to spread democracy is not by invasion but by
strengthening international bodies and by supporting grassroots
movements.  Um, and I was wondering where are your thoughts the most
need for that support was right now and what kind of support was most
needed?

SOROS: Well, I think it's, uh, it's, it's, it's public support.  You
know, our politicians want to get elected, so they run focus groups
and they want --- they try to find out what you think.  And if they
find out that that's what you think, then they'll stand for that.

UNIDENTIFIED QUESTIONER #5: So if you could, if you could do something
on behalf of, say, the democracy movement in, in Burma, or to try to
help Georgia stay democratic, um, against, you know, Russian
resistance; what do those countries need?  And, like, what can be done
internationally that isn't the Bush model?

SOROS: Oh, I see; you're talking about repressive regimes, uh...

QUESTIONER: Yes.

SOROS: It, I mean, it's very difficult, because when the repression
goes beyond the tipping point, uh, there's very little you can do from
the outside, because you have no leverage.  You've got a lot more
lever --- leverage by countries that are part of the, of the global
system; you then have some, from the outside, you can bring something.
When you, when they go overboard, like Burma, or, or, or Uzbekistan,
um, then it's, it's, it becomes --- or Zimbabwe.  I mean, all you can
do, of course, is to support the people in the country.

And it's interesting that even, even in Zimbabwe, which is a country,
you know, that's been really going down the drain, there are still
people who stand up for their rights.  So, supporting them is the only
thing you can do.

QUESTIONER: If I may, um, I would also like to know how useful you
think it would be to as a way of spreading democracy internationally,
how useful do you think it would be to try to promote, uh, greater
literacy, and especially female literacy in the Arab world, as a way
of stemming radicalism?

SOROS: In the, in the Arab world?

QUESTIONER: Mm hmm.

SOROS: I think that there are people in the Arab world also.  It's
difficult, because, because, uh, currently, um, people are being,
being radicalized.  You see, there's a process going on now where
extremists are playing off each other.  Extremists on our side and
extremists on their side.

And that leads to an escalation, and it's very difficult then for
anybody to be moderate in between.  And that's the tragedy that is
currently occurring in the Arab world.