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Fareed Zakaria GPS

Interview With Robert Gates; Japan's Aging Population; Interview with Umair Haque and Zachary Karabell; Interview with Nicholas Wright and Karim Sadjadpour

Aired January 19, 2014 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

FAREED ZAKARIA, CNN HOST: This is GPS, the Global Public Square. Welcome to all of you in the United States and around the world. I'm Fareed Zakaria.

We have a terrific show for you today starting with Robert Gates, the former Secretary of Defense under President Bush and President Obama. Despite all the uproar, when I read his new book, I found that he actually agreed with Obama on Iraq, Afghanistan, Iran, all the issues of substance so I'll ask him to explain.

Also, the U.S. economy, how much will it grow in 2014? Two percent, three percent, four? Wall Street is wondering, pundits are pontificating, but does it really matter? What does GDP describe anyway?

And negotiations with Iran are beginning again soon. What is the best strategy going forward? Two scholars tell us that neuroscience can actually help illuminate the issue.

And lots of people call BS on their politicians. Somebody in France actually went a step further.

But, first, here's my take: President Barack Obama gave a much- anticipated speech on Friday outlining reforms in the American government's surveillance activities. Before I give you my reaction to the speech, I want to give you some context.

The American government and many U.S. companies are routinely the targets of cyber-attacks from all over the world. For example, the National Nuclear Security Administration, which is an arm of the Energy Department and monitors America's nuclear power plants, was the target of 10 million cyber-attacks every day in 2012.

By contrast, the entire United Kingdom suffered 44 million cyber- attacks in the entire year of 2011.

Some of these are efforts to spy on America, enter into communication systems, telecom systems, steal secrets from the government or from private companies, look at phone records, e-mails.

Others are efforts to disrupt normal life or kill civilians. Last year, the head of the FBI testified that cyber-attacks from foreign sources, often including terrorist groups, had surpassed traditional terrorism as the single most worrisome threat to the United States.

I'm trying to remind you that this debate about American policy cannot take place in a vacuum. There are other countries out there, and groups of militants and terrorists, and they are actively using whatever cyber-tools they have to tap into phone systems, emails, bank records, power plant operation systems, nuclear facilities, and more.

In that context, President Obama has taken on a worthy task, to see if American intelligence has gotten out of control as it deals with these threats and challenges there. His speech suggests that, no, the NSA is not a rogue outfit.

But he acknowledged that two facts need to be kept in mind. First, that the United States has unique capabilities in this area and second, that after 9/11, the American government went too far in its efforts to search for and counter terrorist threats.

So he's proposed a series of reforms that strike me as a good balance between security and liberty. He's preserved the basic structure of American intelligence gathering while putting in more checks and safeguards.

One case where he may have gone too far is in limiting America's ability to spy on foreign leaders. This was probably inevitable and a political sop to foreign heads of government like Brazil's Dilma Rousseff and Germany's Angela Merkel.

It's a good idea for the United States to protect civil liberties, institute checks and balances, and have periodic reviews of the whole system. But let's also keep in mind that I haven't heard much about the Chinese President Xi Jinping's intelligence reform proposals, and I don't expect we will be hearing much from him, or President Vladimir Putin or many other foreign leaders.

Intelligence is called the world's second oldest profession for a reason. Everyone does it.

Let's get started. Robert Gates worked for eight presidents. His last job, of course, was Secretary of Defense starting under President George W. Bush in 2006 and ending under President Obama in 2011.

He has just published his memoirs simply called, "Duty", an unusual and controversial move when one of the president's he served is still in office and he criticizes that president or so many say.

We'll get to all of that, but I wanted to start off on the substance of the key decisions made on his watch, Iraq, Afghanistan, Libya, Syria, Iran.

You'll note the Secretary Gates is in a neck brace. If you're wondering if it's whiplash from his critics, it is not. He tripped and broke a vertebrae.

(BEGIN VIDEOTAPE)

ZAKARIA: Bob Gates, thank you so much for joining us.

ROBERT GATES, FORMER SECRETARY OF DEFENSE: My pleasure, Fareed.

ZAKARIA: So Fred Kaplan of Slate Magazine calls this memoir a "primal scream." Do you think it was a primal scream?

GATES: No, but I do think one of the reasons that I wrote the book was to describe -- I mean everyone in the country sort of knows, at a certain level, about paralysis and polarization in Washington and I wanted to make it real in terms of how you deal with that on a day- to-day basis when you're running the Defense Department and trying to fight two wars.

And to show that no matter how frustrated and how angry I got, by suppressing all of that, I actually was able to get a lot of things done in a town where very few are.

ZAKARIA: You've gotten a lot of attention for the comments you've made about President Obama with regard to Afghanistan, basically, that the president seemed like, in the middle of the war, his heart wasn't in it.

But I want to start you from -- you know, with the substance. What I was most struck by was the fact that you said that the -- the president had to make several decisions about Afghanistan from 2009 onward. He had to make big decisions like the surge. He also had to make decisions about whether or not to have a timetable and things like that.

You say you agreed with every one of the president's decisions.

GATES: That's exactly right and I supported those decisions and I continue to support the decisions, such as the strategic agreement with the Afghan government that would provide a residual force for the United States and our allies there.

So I never had any quarrel with the president's decisions and, in fact, I was very impressed with how he would set aside the opposition, largely for political reasons of the vice president and virtually all of his civilian advisors in the White House to make a decision that he knew would be politically unpopular in the Democratic Party base.

ZAKARIA: And it seemed like your fundamental kind of inclination and approach is one that would regard this as a place not to overdo the military footprint or to overdo the commitments.

I read you on, you know, Syria, on Iran, in all of those places you seemed to be much more comfortable with what I take as the president's caution about getting too involved military in these places.

GATES: Well, that's right. And, as is I think well known, I opposed the intervention in Libya and I would say in the situation room, "Can I just finish the two wars I already have before we go looking for another one?" But if Iraq and Afghanistan have taught us anything, it is that -- first of all, that our assumptions are usually wrong and the first and most important of those assumptions is that a war will be short.

And the second is we don't have enough humility about our inability to predict unforeseen consequences. And so my argument against going into Syria militarily was that it is an act of war to take down their air defenses, establish a no-fly zone or humanitarian zone.

And, yet, Russia is a close ally of Syria's, Iran is a close ally of Syria's, Lebanon hangs in the balance and my worry was we were throwing, as I put it, gasoline on a very complex fire and we had no idea what the second, third and fourth were -- consequences of our actions would be.

And unless you have a clear idea of what your military is supposed to accomplish and how long it will take, I think you need to be very very cautious about introducing military force.

ZAKARIA: And, again, on Iran, it seems like you're pretty cautious about the idea of military intervention.

GATES: Well, particularly in the Bush administration because I felt that we still had time to make the economic pressures work. And, again, we were already in two wars, our military was stretched very thing, our military was exhausted.

And so the idea of acting precipitously to go after the Iranians or to enable the Israelis to go after them where we didn't know the consequences, but could well lead to a major regional war I felt was too risky.

ZAKARIA: So let me ask you something about the book, as I read it, and your views.

I look at all those positions and it seems, on the substance, you were very simpatico with President Obama. On the substance, for what I can tell, when reading what you say about the Bush administration, you were much more unhappy.

It seems to me you were pretty skeptical about the Iraq war. You were certainly skeptical and you write that about the Freedom Agenda, the idea of spreading democracy around the world.

You seemed skeptical about the way Afghanistan was handled in those -- in the years before you got there. You know, there seemed to be -- and these are major, major issues. And, yet, it feels to me like almost culturally you're more -- you were more comfortable in the Bush White House than the Obama.

Is this a case just of a -- you know, a Kansas Republican, father is an Eisenhower Republican. You know, you might have agreed with Obama, but just that world of the White House Democratic aides and Biden and all that, it just -- it irritated you. GATES: Well, I really don't think it's that. I think, in part, it was the time I served each of those presidents. I served President Bush in the last two years of his presidency. He had had a hard run for 5 1/2 years since 9/11.

He learned a lot of lessons. He was a wiser, more mature, more seasoned president that I encountered. All the big decisions on national security had essentially been made and neither he or his vice president would ever run for office again. So there was a -- it was a much less political environment.

On the other hand, I served in the first 2 1/2 years of the Obama administration where a president was going to run for reelection, that was clear, and both his secretary of state and his vice president had potential ambitions themselves.

So there was a focus on domestic politics in the debates in the Obama administration that I didn't encounter in the Bush administration. But I will say had I been in the Bush administration during the same first 2 1/2 years, my suspicion is it would have been very similar.

(END VIDEOTAPE)

ZAKARIA: We'll be back in just a moment with much more with Secretary Gates. Was writing the book dishonorable?

(BEGIN VIDEO CLIP)

ROBERT GATES, FORMER SECRETARY OF DEFENSE: I didn't set out to vilify anybody in this book and I don't think I did.

(END VIDEO CLIP)

ZAKARIA: And what would he say to Vice President Biden, whom he criticizes, if Biden called him?

(BEGIN VIDEO CLIP)

ROBERT GATES, FORMER SECRETARY OF DEFENSE: I'd say, well, Joe, this is the world you and I both know.

(END VIDEO CLIP)

ZAKARIA: We will be right back.

(COMMERCIAL BREAK)

ZAKARIA: I'm back with Robert Gates. Should he even have written this book at all? Listen in.

(BEGIN VIDEOTAPE)

ZAKARIA: I've got to ask you about some of the criticism. John McCain says you shouldn't have written this book now, you should have waited. Cass Sunstein, one of the president's aides, says this was a "dishonorable act."

Even the Wall Street Journal's Foreign Affairs Columnist Bret Stephens says, "Bob Gates has a reputation for keeping his mouth shut. Maybe he should have paid attention to it this time."

What do you say people who say this was incredibly indiscreet and even dishonorable to do it in the middle of a president's term while the foreign policy issues that you were involved in are actually still playing themselves out.

GATES: First of all, virtually all of the conversations that I report are on issues like Afghanistan and Iraq where the policies are already set and the decisions have been made and our course has been established.

Second, I think a close look at the book would validate that nearly all of those conversations, in fact, present the presidents, both presidents, in a positive light of being tough-minded, of pushing back, of asking hard questions, of doing exactly what the American people would hope a president would do whenever the use of military force is involved.

I didn't set out to vilify anybody in this book and I don't think I did. But I think you have to read the whole book and not just quotes that are taken out of context.

And I would just say I mean the other piece of this is there's a genre of books out there that are written about insider conversations in the White House, quoting the president from private conversations, quoting private meetings and meetings in the situation room and so on, all done from the shelter of on-background and leaked by people in the White House.

What I wanted to try and convey to -- the book is dedicated to the men and women of the armed forces. And what I wanted to -- what I wanted to say to the people in uniform and their families and the America that sent them to war is that these are tough issues.

And I wanted to show the leaders of the country wrestling with these issues and the passion that they were discussed so it isn't some dry as dust political science exercise.

But I also think that, you know, this is a town -- Washington is a town where everybody says it's paralyzed. I also wanted to show how you actually can make things work in Washington.

And then, finally, a lot of the issues we've been talking about, military action in Iran, how to deal with China, how to deal with Russia, how to deal with allies like Saudi Arabia and Israel, these are contemporary issues.

I've worked for eight presidents. I have the perspective and experience of working for eight presidents and I think I have something to offer to that debate. That debate is not going to wait until 2017.

ZAKARIA: What do you think is the lesson? You know, presidents sometimes write a letter to their successors.

If you were to set out a couple of things to worry about or to be focused on, for not just the current secretary of defense but going forward, what are the things that worry you about in the way that Eisenhower wrote about the military-industrial complex? What is it that worries you about America's defense posture and foreign policy?

GATES: Well, first of all, I would say that the one piece of advice that I would give, either to a new secretary of defense or to a president -- a new secretary of president, is that absent an immediate threat to the United States, the use of military force should be a last resort, not a first option. We need to be much more careful.

I wrote in my first book that the dirty little secret in Washington was that the biggest doves wore uniforms. And it's because they have seen the face of war, and they have been thrown into conflicts only to have political support evaporate behind them. And so being very cautious about the use of force, I think is incredibly important.

Right now, the biggest threat to our national security, as far as I'm concerned, is the paralysis in Washington and the uncertainty with respect to defense programs, uncertainty about what kinds of military capabilities we're going to need for the future, where our record in predicting where we will use military force next is perfect over the last 40 years. We've never once gotten it right.

ZAKARIA: Do you think we have to plan for China as a strategic military adversary?

GATES: Well, I think our military plans for everything. I think that China is not a military adversary at this point. I think that the way the Chinese and American leaders deal with each other in the years to come will determine whether or not that becomes the case.

But I do think that our presence in Asia is very important, just as our presence in the Middle East is very important, as a deterrent.

ZAKARIA: Can you envision a scenario where Israeli or U.S. military action against Iran ends well, has the desired effect?

GATES: Ends well jumps from the action to some period of time beyond that. I think that if there is a military action against Iran, Iran will not just absorb it or retaliate in a cursory sort of way, with a few rockets launched into Israel and maybe a few Hezbollah rockets launched into the northern part of Israel.

I think Iran will retaliate and, moreover, I would say that that would make it inevitable that Iran would become a nuclear state.

They will not come head-on to us, but they will find ways I think to inflict real damage, whether it's against oil facilities in the Gulf, whether it's potentially sinking some of our warships, whether it's terrorism in the region, potentially here at home, but I think they'll react. ZAKARIA: If Vice President Biden were to call you about this memoir, given what you said about him. You said he's been wrong about every national -- major national security issue for the last four decades. What would you say?

GATES: The interesting thing is that Biden and I actually agreed on virtually every part of Obama's national security and foreign policy except for Afghanistan.

And, in the book, I acknowledged that I should have worked harder to bridge the differences between us on Afghanistan and I fault myself for that.

ZAKARIA: So what would you say to him?

GATES: I'd say, well, Joe, this is the world you and I both know.

ZAKARIA: Bob Gates, pleasure to have you on.

GATES: Thank you.

(END VIDEOTAPE)

ZAKARIA: Lots more ahead on the show. If you're wondering why Iranians act the way they do on the world stage, I have a guest who says the answer is in the human brain and he would know. He is a neuroscientist.

But up right next, What in the World. Why Japan's declining population may actually be a good thing. You will be surprised by some data.

(COMMERCIAL BREAK)

ZAKARIA: Now for our What in the World segment. I was struck by some startling data this week, 2013 saw Japan's population fall by 244,000 people, the largest natural decline in that country's history.

It's a trend that's getting worse. By 2060, Japan projects that is population will have fallen by a third, 40 percent of Japanese will be retirees.

It sounds like a recipe for disaster. Imagine a United States where half the population is over the age of 65. Social Security would collapse. Health care costs would explode.

So I was surprised to see the headline in the latest edition of The New Scientist claiming Japan's aging population could actually be good news. How on Earth is that possible?

After all, China relaxed its one-child policy last month precisely so it could avoid the fate of Japan. And that fate, if you go by conventional wisdom, seems to be slowing growth and leading to unsustainable debt. Why? Because our entire system is based on having enough young workers to pay for pensions and government services.

Well, according to The New Scientist, perhaps we've been looking at the wrong data. Consider growth, the number we tend to focus on the most. Look at the performance of a selection of rich countries in the last decade.

According to HSBC, Japan's economy expanded by just 0.8 percent a year on average. France was faster. The United States and Britain grew at twice Japan's pace.

Now look at growth per capita, growth per person. This is a number that gets less attention. The table is inverted. The U.S. and France are near the bottom, but Japan is at the top.

This is because individual incomes are actually rising while the population is declining. It would follow that people are actually better off. Not bad for a country everyone seems to have written off.

Let's look at some other indicators. According to the demographer, Nicholas Eberstadt, Japan is the healthiest country in the world.

Now, given that the average lifespan in Japan is 83 years, the highest in the world, you'd expect health are costs to dominate and remember Japan has universal health care.

Again, you'd be wrong. Japan spends only 8 percent of its GDP on health care, half the percent the United States spends.

Now look at education, Eberstadt points out that in the very near future, for every Japanese newborn, Japan will also have a centenarian, a man or woman who is 100 years old.

0It sounds like a science fiction movie, but the low percentage of children also means fewer school students, less money spent on education. And, remember, Japan has a strong schooling system and is a world leader in research and development.

How does Tokyo manage this? Is a welfare state? Again, the answer is now. According to the OECD, a group of 34 rich nations, the average Japanese worker faced a tax burden of about 31 percent, four percentage points lower than the group's average.

The New Scientist essay lists a few other hidden benefits for Japan. A declining population means that there is more space and arable land for every Japanese citizen. Remember, Japan is a tiny country that packs in 127 million people. Fewer people could well translate into a higher quality of life as well. These are fascinating points to consider. Because many other countries may soon encounter some of Japan's problems. China could grow old before it becomes rich. Europe's rich nations have fertility rates that are too low to replenish the population. If it weren't for immigration, America's population would start leveling off as well. But remember the United States gains more than a million immigrants legally every year. Japan and Europe on the other hand have stricter immigration laws and are less welcoming to immigrants. I don't think dwindling population is actually all good at all as the article suggests. Young people mean energy, risk taking, hard work, and, of course, tax revenues. Tokyo needs to reform its benefit system, raise its retirement age and encourage immigration. But the essay does show that Japan has many hidden benefits in its demographic predicament. Maybe that's why there have been no revolts or revolutions as the country has gone through 20 years of stagnation and maybe there are lessons for other countries in that as well.

Up next, is America going to grow as fast in 2014 as everyone hopes? Does it even matter? I have two very smart guests up next on the crucial question of GDP growth.

(COMMERCIAL BREAK)

CANDY CROWLEY, CNN ANCHOR: I'm Candy Crowley in Washington with the check of the headlines. Two U.S. lawmakers are expressing serious concerns about security at the upcoming Winter Olympics in Sochi, Russia. Earlier on "State of the Union," House Intelligence Chairman Mike Rogers said Russia is not as cooperative as it should be with the United States about security at the games. Senate Intelligence Committee member Angus King says his reservations are so high about security that he would not go to the Olympics, even if he had the chance.

The mayor of Hoboken, New Jersey, is standing by her claim that Governor Chris Christie's administration threatened to withhold Superstorm Sandy relief for political reasons. Earlier on "State of the Union" Mayor Dawn Zimmer said Christie's lieutenant governor indicated that her town would not receive aid if she failed to support a development project favored by the governor. Zimmer said the lieutenant governor suggested the message came directly from Governor Christie. The mayor says she did not come forward with her story earlier, because she didn't think anyone would believe her. Governor Christie's camp is pushing back hard against Mayor Zimmer, saying it is Democratic mayors who are going after the governor for political reasons. Those are your top stories. Brian Stelter hosts a special "Reliable Sources" from the Sundance Film Festival at the top of the hour. Now, back to Fareed Zakaria, GPS.

ZAKARIA: The incoming Fed Chair Janet Yellen told "Time" magazine that she is hopeful that U.S. gross domestic product or GDP could grow three percent or more in 2014. The Chicago Fed chair envisions 2.75 percent growth. The World Bank expects 2.8 percent growth this year. We talk about GDP growth a lot on this show. But does it really matter? Is GDP growth actually necessary? What does it mean? Let's ask my next two guests. Umair Haque writes for "The Harvard Business Review" and he's the author of "Betterness: Economics for Humans." And Zachary Karabell is the author of "The Leading Indicators," which will be out in book stores on February 11th, so you can preorder it now. And he is the head of global strategy at investment. Welcome.

So, Zachary, let's first start with the growth numbers. There are lots of people who worry that the West is in for what Larry Summers calls secular stagnation, that there just isn't going to be much growth. And if you look back over the last 20 or 25 years, and you look at Japan, the U.S. and Europe, there hasn't been much growth with the brief exception of the '90s.

ZACHARY KARABELL, AUTHOR, "THE LEADING INDICATORS": And the thing about U.S. growth is, I think, there's been an uncoupling between what those numbers tell you and what the actual effects are systemically. So, to think about a factory that opens in 1970, it employs 5,000 people, it puts out a certain number of cars or a certain number of stuff and it adds to GDP growth. Today yes, there may be a slight manufacturing revival in the United States. But that same factory is going to have 500 people and it may add more to output, but it will add less to jobs. So, we've created this number that optically we think is a proxy for everything and increasingly it's a proxy for only one particular thing, which is output as defined as stuff that we have produced.

ZAKARIA: So, does that mean, you know, we all still look at GDP growth as a mark of how an economy is doing? Isn't that fair that if you look at -- just to put it in very simple terms, China grew at ten percent over the last three decades. If you look around, and China is doing pretty darn well. India did not grow quite as fast. Or Bangladesh grew even slowly. You know, you could go through that list and over time, particularly compound it, it seems like it makes a difference.

UMAIR HAQUE, AUTHOR, "BETTERMENT: ECONOMICS FOR HUMANS": Yeah. I think that, you know, GDP does have some value to it. But I also think that it may have -- it may be at the point where it's outliving its usefulness. Because as Zachary points it out, GDP just measures the volume of stuff. It doesn't look at the quality of our lives, which is presumably what we want from any - to benefit us in real terms, not just to deliver us more stuff. And the real question for us is what do we want out of an economy and how do we begin measuring it? Because when we talk about growth, I think that many people often think that growth is a God-given thing and it refers to some kind of natural phenomena in the world. But it doesn't. Growth is a manmade creation.

ZAKARIA: Exactly.

HAQUE: And when we talk about growth, we are talking about something that people made, which is this construct called GDP. And GDP is a newer creation than, for example, the automobile. The automobile was created 100 years ago. GDP was only created 75, 80 years ago.

ZAKARIA: But GDP captures the reality, which is ...

HAQUE: Sure.

ZAKARIA: You know, that countries have produced more goods in output and consume more do tend to - I mean people get richer. And in general, again, historically ...

HAQUE: Yes.

ZAKARIA: They were healthier, they lived longer ...

HAQUE: That's exactly right. And I think that for kind of an industrial economy, GDP may capture a valuable truth.

ZAKARIA: Right.

HAQUE: For an economy that is kind of moving past an industrial set of conditions, GDP may be in need of a serious ...

ZAKARIA: What would be - because you've written this book about leading indicators like GDP? So, if GDP is not capturing, to your mind, the essence of what advanced industrial economies should be looking to, what is the -- what number should we be ...

KARABELL: Right. Or, in fact, is not capturing service-oriented technology laden economy. So, it's actually quite good, I think, at measuring 1950s level industrial nation states, which is why it's probably more meaningful for China ...

ZAKARIA: Right.

KARABELL: At its moment in economic evolution. Then it is for the United States or Western Europe or Japan. Look, the temptation is always, and it's particularly an American temptation. If the number doesn't work, let's just invent another number that will work better. And there've been a lot of attempts to come up with different ways of measuring national good. There is Bhutan came up with a gross national happiness index. Sarkozy as the president of France came in the commission to come up with what do we replace it with?

ZAKARIA: Yes.

KARABELL: I think any one number in multi-tiered variegated systems of which the U.S. economy is absolutely is going to be wrong.

ZAKARIA: But you say - I mean what you remind me of, the point that you were making, Robert Kennedy once made a very famous speech where he talked about the limitations of GDP and he talked about what it could measure and what it couldn't measure.

(BEGIN VIDEO CLIP)

ROBERT F. KENNEDY: It measures neither our wit, nor our courage, neither our wisdom, nor our learning. Neither our compassion, nor our devotion to our country. It measures everything in short except that which makes life worthwhile.

(END VIDEO CLIP)

ZAKARIA: In a really stirring - a lot of way.

HAQUE: Yes. (Inaudible) And that was kind of 40 years ago. And, you know, the fascinating thing is that the world has moved on since RFK gave that speech. And so, now in countries like Canada and Australia, they've developed very sophisticated sets of indicators to look at the real prosperity of those economies, about the well-being of people within those countries, which is a little bit analogous to what Zachary is talking about. So, when we look at the Canadian and Australian state of prosperity, we don't have to look at a single number which, when it's averaged, may hide all kinds of truth. And leaves out a human reality. Right? You know the old joke about the economist. He had his feet in the fridge and his head in the oven and on average he was feeling fine. Right? The real irony of the joke for me is that it doesn't tell you anything about the economist's life. Right? Was he happy, was he married, was he successful? Was he satisfied? That's the kind of stuff we need to really delve into. And to do that, I think we're going to need to develop, you know, a range of indicators, not just about the volume of stuff, but the real quality of people's lives. Because the idea of growth isn't just about the growth of economists, right? It's about our growth.

ZAKARIA: As humans.

HAQUE: As human beings.

KARABELL: And those countries have done much better than the United States in crafting a system, when things about the long-term future of the societies, which may or may not be GDP growing ...

HAQUE: Exactly.

KARABELL: Too many governments in the world, the U.S included, China (ph) now especially have essentially tethered their referendum on whether they are doing a good job to whether they can say to a populous, we've increased this number.

HAQUE: Totally.

ZAKARIA: A pleasure to have both of you on.

This is fascinating. Up next, how to negotiate with Iran. We're not going to talk about foreign policy. We're going to talk about psychology and neuroscience. How it might explain Washington's most vexing foreign policy problems.

(COMMERCIAL BREAK)

ZAKARIA: If you wondering whether Washington's nuclear negotiations with Iran will succeed, don't look at policy or history. Look at psychology and look at the human brain. That's what my two next guests argue in the piece in "The Atlantic" magazine this week. They have some surprising and simple insights that explain how and why the Iranians act the way they do. Nicholas Wright is a neuroscientist, Karim Sadjadpour studies Iran. Both of them are with the Carnegie Endowment. Welcome. So, Karen, the first thing I've got to ask you is, you know, people are going to listen to this and say, wait a minute, the Iranians are not rational. They are, you know, crazy mullahs, whatever they want. And you have pedigree to talk about this. Because you have always been very tough on this regime. But yet you think that, you know -- you say in the article there's no orientalism of the brain, meaning that, you know, Iranians, because they are oriental or Iranian are not so different that we can't study them by looking at neuroscience.

KARIM SADJADPOUR, SENIOR ASSOCIATE, CARNEGIE ENDOWMENT: Sure. I mean I always have been skeptical of the nature of this Iranian system. And certainly, what we're trying to do here is not to replace ideology or nationalism, or geopolitics as our way to understand Iran's nuclear motivations. But to offer an additional lengths to try to understand what Iran's motivations are. And what is quite remarkable, if you listen to Iran's rhetoric of the past two decades, rejecting unfairness, this idea of rejecting global double standards has been an incredibly powerful motivation for them unto itself.

ZAKARIA: And what I find when I was in Tehran, this was said by not just the regime, but even ordinary people. And you argue that neuroscience tells us why this issue of rejecting unfairness is so important.

NICHOLAS WRIGHT, NEUROSCIENTIST: Yes, so we can say that people are prepared to pay a high cost to reject unfairness, and this is based in our biology. So, I can illustrate this with a brief example. So, imagine, Fareed, that I am given $10 and I can decide how to split that with you. This is the classic example. So, I may then decide to make a nine - one split. So, I'll keep $9 myself and you'll have $1. And if you accept that offer, then we both get that split as proposed. And if we reject it, then we both get nothing. So if you cared only about yourself, then you would say, well, I'll take the $1. Because $1 or nine dollars. But what people actually do is if you're offered less than about 25 percent, people reject that about half the time.

ZAKARIA: The famous experiment with the capuchin monkeys, I think is absolutely dramatic illustration of what you say. It's, you know, there are these two monkeys, they are each asked to give a stone to the person outside the cage and they get a cucumber in return.

WRIGHT: Yes.

ZAKARIA: And then you switch it and you start giving one of the monkeys a grape, which is, I think, in the world of monkeys more valuable. And the minute you start giving one of the monkeys a grape, the other one now refuses to accept the cucumber and actually throws the cucumber back, because it is so upset and wants the grape. The argument here, of course, is that the Iranians look at the nuclear issue and say other countries are allowed to have nuclear -- civilian nuclear programs, are allowed to enrich, why should we accept some lower standard?

SADJADPOUR: That's absolutely right. I mean Iran is negotiating with the P5 + 1, six countries who collectively have several thousand nuclear weapons. They look at countries like India and Pakistan, which never signed the NPT, which have nuclear weapons. And are upstanding members of the international community. They point to that double standard and, of course, they point to Israel and they say, you know, Israel has well over 100 nuclear weapons and we're pursuing, you know, this nuclear program. Why the double standard? So this is something, which has really been fundamental to the Iranian regime, this idea of rejecting perceived unfairness and injustice. And what we are trying to do here, is not kind of justify Iran's motivations, but just try to better understand of it ...

ZAKARIA: And then, so, you say that this issue of unfairness leads to the next point where each side think that they are justified and virtuous in the position they're taking?

WRIGHT: Yeah. So, you can have two people who both feel that what they're doing is entirely fair and these two people can be - one another. And this can lead to the type of tragedy that the German philosopher Hegel described where you have two people, both of whom feel that what they are doing is entirely right and just. That's mutually incompatible and it leads to a tragic outcome.

ZAKARIA: And then the third piece of this is the, when do you make a conciliatory gesture? When do you make a concession? One of the things I remember from graduate school in international relations -- and you probably remember this as well, Karim, that there is a lot of good data that shows when you have negotiations between nations, they tend to be of this quality, which is when the other side makes a concession, you assume he was forced into it. That circumstances compelled it. When you make a concession, it's because of the goodness of your heart.

SADJADPOUR: Yeah. I think it's useful to make an observation about the evolution of Iranian society. Three decades ago when the revolution happened, if there was kind of a unifying philosophy among the masses in Iran, it was anti-imperialism. And today I would argue that unifying philosophy among Iranians is globalization. We don't want to resist the outside world, we want to be part of the outside world. And I think Hassan Rouhani is certainly reflection of that kind of pocket (ph) of will, not for resistance, but reintegration. And so, this is, I think what's really driving Iran's desire to try to re-emerge from isolation.

ZAKARIA: As much the pressure of the sanctions, but also the promise of globalization?

SADJADPOUR: I think certainly sanctions played a role in bringing Iran to the negotiating table. But for the Iranian people, who are really, I would say, driving the regime in this direction, it's much more wanting to be part of the outside world rather than to resist it.

ZAKARIA: What conclusion do you draw as the United States and Iran head into negotiations again?

SADJADPOUR: It's very interesting. Because Henry Kissinger said a week before he went to meet with Chairman Mao for the first time, all of the China experts in America said that China will never change, Mao will never change. And for a long time, a lot of people, including myself, have been saying that the supreme leader is very rigid. And I think now we've seen over the last six, seven months some unexpected progress in the U.S./Iran negotiations and I think we have to continue to try to test this to see, you know, is it possible to reach some type of a new relationship with Iran or is it not possible? But we won't know until we test that.

ZAKARIA: Thank you both. This is fascinating.

WRIGHT: Thank you. ZAKARIA: Up next, are you fed up with the bull from your government? So was somebody in France, and he made a big stink. I'll explain in a moment. You have to watch this.

(COMMERCIAL BREAK)

ZAKARIA: The 2014 index of economic freedom was released this week. And it brings me to my question of the week. What is the only country to have recorded a loss of economic freedom every year for the last seven years? A, France, B, China, C, Greece or the United States? Stay tuned and we will tell you the correct answer. Go to cnn.com/Fareed for more of the "GPS Challenge" and lots of insight and analysis. You can also follow us on Twitter and Facebook. Remember, you can go to iTunes.com/Fareed if you ever miss a show or an episode.

This week's book of the week is "India Grows at Night," by Gurcharan Das, the former CEO of Procter & Gamble in India has become one of India's leading intellectuals and he has written a spirited, intelligent book about how to get his country moving again. This is the most interesting book on India that I have read in a while.

Now, for the last look. Here in the United States, Congress' approval ratings are near their lowest levels in history. Nearly half of those polled in the U.K. say they were angry at their nation's politicians. There were riots this week near a Spanish political party headquarters. And protesters in Ukraine continued to call for the government to go. It would seem that the whole world is tired of government. Perhaps the most expressive protest came from Paris this week, where despite the French reputation for snooty and uninterested citizens, protests there have always been big and creative. Furniture barricades during 19th century of rebellions famously depicted in "Les Miserables" comes to mind. In more recent decades, farmers protested falling grain prices with tractors blocking the streets and by burning hay on the Champs Elysees. This week's protest may be hard to forget as well. A man dumped a large pile of steaming manure outside the National Assembly, protesting the policies of President Hollande and his government.

While these protests are creative, they can actually be too creative and too effective. The government in France often surrenders. After all, who would want to be confronted every day with a pile of -- well, you know what. The correct answer is D, the United States. While 114 countries took steps to increase economic freedom last year, the U.S. has dropped out of the top ten most economically free countries. It is now at number 12. According to the report, this is largely due to the regulation of health care, finance and energy. It's worth noting that this is a report from the conservative Heritage Foundation.

Thanks to all of you for being part of my program this week. I will see you next week. Stay tuned for "Reliable Sources."