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Fareed Zakaria GPS

On Donald Trump's Claims; The Week's Pressing Global Topics; What the GOP Can Learn From Its Counterpart Across the Pond; Nuclear Deal: View From Inside Iran; Interview with Author Gillian Tett. Aired 10-11 ET

Aired September 20, 2015 - 10:00   ET

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

[10:00:03] 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.

(BEGIN VIDEOTAPE)

ZAKARIA: Today we'll tackle the top stories affecting the world. Refugees in Europe. Russians in Syria. New threats from North Korea.

I've got a great panel to talk about it all.

And the final buzzer has sounded. Critics in Congress failed to thwart the Iran-nuclear deal. But there's one more group of hard liners who could scuffle it. The ones in Iran. Will they? We'll discuss.

Also the rise of Britain's radical left-wing leader, Jeremy Corbyn, actually tells us more about the Conservative Party than the Labour opposition. I'll explain to you why.

Then, Sony Walkman once ruled the streets.

UNIDENTIFIED MALE: The Walkman from Sony.

ZAKARIA: Sony's TVs were ubiquitous. They invented the CD, for goodness sakes. So what happened?

It's all about octopus spots. The "Financial Times'" Gillian Tett will explain.

(END VIDEOTAPE)

ZAKARIA: But first here's my take. Donald Trump's presidential bid is centered on the promise of his personal talents. He says he's the most successful person ever to run for the presidency by far. So George Washington and Dwight Eisenhower, sit down. But if there is an idea animating his candidacy is that America is being beaten badly by its economic competitors.

In his speech on foreign policy this week, Trump explained that America is being bested by countries like China, Japan and Mexico because their leaders are smarter, more cunning, sharper than our leaders. They're killing us, he often says. Now this is an odd moment to make this charge because the reality is

almost entirely the opposite. The United States is more dominant on the global economic landscape today than at any point since the hay day of Bill Clinton's presidency. America's annual growth now is almost twice that of the Eurozone and four times that of Japan. Unemployment is at 5.1 percent, the lowest in seven years.

Quote, "The United States has come out of the 2008 crisis better than all the others," says Ruchir Sharma, head of Global Macro Investing at Morgan Stanley. He continues, "Americans have reduced their debt burden more than the Europeans, while China's debt has skyrocketed to extremely dangerous levels. Since the 2008 crisis U.S. equity markets have outperformed all others. In fact, nine of the 10 most valuable companies in the world are now American. The dollar is the currency of choice," closed quotes.

When I was in Europe last week businessmen there were concerned with what they saw as a new level of American dominance in everything from technology to entertainment to finance. Consider America's big banks. They were at the epicenter of the global financial crisis. And they were badly battered by it. Then they faced lots of new regulations which critics said would cripple them.

Well, America's banks today are more dominant than ever. The "Wall Street Journal" notes that in the last five years JPMorgan Chase, Bank of America, Citigroup and Goldman Sachs, and Morgan Stanley have collectively increased in value by $254.6 billion. In the same period their European competitors, Barclays, Credit Suisse, Deutsche Bank, UBS and Royal Bank of Scotland, have added just $9.5 billion of value.

The "Wall Street Journal" also notes that in July Barclay's chairman John McFarlane was asked if America's banks were eating European lenders' lunch. He replied, "They're doing a good job of it." He added that the U.S. banks are the only ones that really claim to be global and successful.

To compare America's performance and leadership to Mexico's, Japan's and China's is particularly ill timed. Mr. Trump might be stuck in a 1980s time warp on Japan. When his "The Art of the Deal" was published in 1987, Americans were envious of Japan's supposedly brilliant leaders who were said to be outsmarting the U.S. at every turn. Since then Japan has become the poster child for economic stagnation and political paralysis.

Mexico, meanwhile, is watching its growth collapse. The country was ill-prepared for plunging oil prices that have battered government revenues and growth. And in the last few years Beijing for its part went on a borrowing binge that has driven up its total debt massively. And over the last two months it made mistakes in managing both its equity markets and currency. Mistakes that have cost $400 billion, the "Financial Times" reports.

[10:05:17] Of course America has problems that are worried like wage stagnation and low labor force participation. But the important comparison is not to some ideal fantasy of what America might be but to other countries in the real world. And the facts show, Mr. Trump, we're killing them.

For more go to CNN.com/fareed and read my "Washington Post" column this week. And let's get started.

It was a busy week on the world stage. The refugee crisis worsened in Europe. The North Koreans threatened to nuke America. The United States tried to figure out what the Russians were up to in Syria. The Pope headed to the Americas.

I will try to get to as much of it with my panel as I can today. David Frum was a speechwriter for George W. Bush. He is now senior editor of the "Atlantic." David Milband was Britain's foreign secretary from 2007 to 2010. He is now the president and CEO of the International Rescue Committee. And Danielle Pietka is the senior vice president for Foreign and Defense Policy at the American Enterprise Institute.

David, you are dealing with -- and the IRC deals with this refugee problem. Describe the extent of the problem in Europe and it surely is going to get worse now that Germany had -- you know, once you announced you're going to take in all these people, the magnet effect must be large.

DAVID MILBAND, PRESIDENT AND CEO, INTERNATIONAL RESCUE COMMITTEE: Well, last year was the world record for the number of people fleeing conflict and disaster. 20 million refugees. The European situation primarily caused by the Syria crisis involves a moment about 400,000 people who have arrived in Europe over the last seven or eight months. The majority of them from Syria.

I've been in Lesbos, the Greek island, that is receiving half of the refugees arriving in Europe. And frankly, it's an unspeakable scene because people say in Aleppo I'm already dead and I'm willing to try anything to get out.

ZAKARIA: You called this a Lady Diana moment or a Princess Diana moment. Explain what you mean.

DAVID FRUM, SENIOR EDITOR, THE ATLANTIC: After the death of Princess Diana in that terrible car crash, there was an explosion of grief in Britain. And there was a moment of kind of unanimity of thought. Everyone was supposed to behave in a certain way and say a certain thing. And anyone who spoke differently found themselves on the receiving end of this explosion of angry and fury. And that was pre- social media. What has been happening is that Germany has just accelerated.

This gigantic movement of people, not just with Syria and not from the Middle East. But from all over the world, West Africa, Pakistan, Sri Lanka, into Europe. And there is no end to it. This was an unthought decision with consequences the German themselves don't seem have anticipated.

ZAKARIA: And you really think it was a kind of spur of the moment emotional decision that the Germans felt. FRUM: It certainly looks this way because this has been going on as

you know well for many years. Europe has had a policy of keeping refugees and migrants out of Europe. Having very limited resettlement. Europe has had very bad experience with migration in the past. Migrants to Europe have much higher levels of long-term unemployment. They've had a lot of dependency on the state. Their prisons are -- disproportionately filled with the second generation from these migrations.

It's becoming an ever greater step to move from a poor country to a rich country. The skills you need are ever more remote. And European governments owe their first duty to their own citizens.

ZAKARIA: So should -- this is kind of a fascinating moment where this massive outflow of migration of refugees, call them what you will, is coinciding with a point at which every Western country is experiencing greater anti-immigrant feeling, political parties that are fueled by it and Donald Trump's number one issue is migration. How does one handle it?

DANIELLE PIETKA, SENIOR VICE PRESIDENT, AMERICAN ENTERPRISE INSTITUTE: Well, I think first of all I think the words do matter actually. I think some of these people are migrants, they're economic migrants. If you're coming from Pakistan, you're not a refugee from Syria. If you're coming from West Africa, you're not a refugee from Syria. But there are hundreds of thousands, millions of actual refugees who are fleeing circumstances that are really unimaginable.

And the horror of that is what has, in many ways, galvanized more action. Is it unthought out? You know, the challenge here is so enormous. Western Europe absolutely has to do something for these people. And I applaud Chancellor Merkel. I think she's done the right thing. I think she has the conscience of a post-war German and I think she's acting on that.

Now do they need to screen people properly? Do they need to have a EU wide policy? Absolutely. Do they need to ensure that the people who they keep aren't shoved in voiliers in Paris, and shoved into, you know, Saudi-run mosques in -- you know, in Hamburg. Absolutely. But that's where they fall down. It's not on the compassionate side.

[10:10:14] ZAKARIA: What about the concern? I've heard conservatives talk about this particularly with regard to the United States. There are probably a lot of jihadists in there. Who knows who these people are. Maybe they've come out -- you know, there are people who had weapons. Do you think that's a boogeyman? How do you --

PIETKA: No, I don't think it's a boogeyman. I think that it's a reasonable concern. There are very, very bad people on the ground in Syria, in Iraq. All around the Middle East. We know that. They need to be -- they need to be kept out. Will they be taking advantage of these refugees. For sure. But at the same time that can't be an excuse for us not to have the appropriate global response to a crisis of this kind. You know, these are -- we see babies washing up on the shore. And we say, you know, no, we can't let any of these people in because they are probably all terrorists. Screen the right ones out. ZAKARIA: You deal with this. I mean, you've seen these people. Can

you vet them? Can you be sure they're not terrorists?

MILBAND: Yes. It's harder to get to the United States as a refugee than under any other program. There's a very significant vetting. Actually the employment among refugees up to five years is higher than for the rest of the population. And I think it's very important to remember two things. One, Mrs. Merkel was responding to reality in September. August and September. There were already 350,000 refugees or economic immigrants who've arrived this year.

And she's recognized that they were coming to Germany. And she had to -- she decided that the best way of getting a burden sharing arrangement would be for Germany to take the lead. Contrast that with the Euro crisis I think that's a very -- really the right thing to do. Secondly, David, who I have a lot of respect for, really shouldn't confuse the issue of immigration, quote-unquote, migrants with that of refugees.

Refugees have a well-founded fear of persecution. They have a right to international law. There are responsibilities on states. And the issue about immigration when it gets confused with the issue of refugee status in the end pollutes both. I think it's very, very important not to tar a generation of refugees where the (INAUDIBLE) that they're all going to end up in prison.

ZAKARIA: You think this is going to transform Europe.

FRUM: I do.

ZAKARIA: Explain why.

FRUM: I don't think you can separate. I like the use the word migrant because I think it's neutral. A migrant is someone who moves from place to place for whatever reason. Nor do I think you can neatly distinguish between refugees who flee for their lives and immigrants who flee because they see a better opportunity. Most people who move are somewhere on the spectrum of a variety of fears and who see a better life. Nor do I dismiss the desire of people for better life. That is a powerful motive.

And in moderation it is something that can strengthen Europe. In moderation. But what is happening now is not in moderation. Nor do I believe you can screen for it because the danger to Europe has come from the second generation. It is the radicalization caused by unemployment, alienation and the inability to assimilate.

ZAKARIA: We're going to stop, we are going to come back and talk about everything else going on in the world. When we come back.

(COMMERCIAL BREAK)

[10:17:33] ZAKARIA: And we are back with David Frum, David Milband and Danielle Pietka.

The Russians seemed newly active in Syria. When you were foreign minister, you've dealt with the Russians, you've dealt with the current Russian Foreign minister. Do you think that there is any solution to Syria without active Russian participation and help and how does one get that since right now they are pretty simply fully supporting the Assad regime?

MILBAND: The danger of Brits talking about Russia is that Britain thinks Russia is a declining power. Russia thinks Britain is declining power and both may well be right. So beware what follows. But I think one has to see the move of Putin into -- and the Russians into further support for Assad as a sign of Assad's weakness. There's no question that Assad is in a weaker position than he was a year ago. Maybe a stronger position than three years ago. But a weaker position than a year ago. And I think that's necessitated the Russian move.

The hard thing is whether or not the Russian would actually proceeds to pulling the rug from under Assad. And I wouldn't dismiss that because the truth is that Assad has become a problem for the Russian concern with Islamic radicalism that comes from Syria. The way in which Assad had enabled even sponsored the rise of ISIS I think is a real issue for the Russians. They've been consistent over four or five years and saying that is their concern in Syria.

And although it may not be obvious I wouldn't dismiss the idea that actually the Russians may be setting the stage for a serious discussion with the U.S. that says look, we can't pretend that we're now going to sign up to Geneva. What we've got to do is engineer a way for Assad to go and we've got to find some common ground in which to do that.

ZAKARIA: So would you advocate for this? Apparently a debate in the Obama administration about whether to take this -- take Putin up on this and talk to him.

PIETKA: I don't think there's ever any problem with talking to Putin. The question really is what we're going to do about this. I really think you're being a little bit Pollyanna about what the Russians are doing. I think the Russians geostrategic opportunity, they assess that the other side is weak. They assess that the United States is not going to do anything. And they are there to fill the vacuum. So my view is that they're there to help Assad. But, you know, this is enormously complex.

ZAKARIA: It's not that the refugees that, David, you know, that they weren't on our conscience. I would say to kind of let them all -- let them all fight. Have a great time.

PIETKA: You and I have -- you and I have had this argument before. This is Sarah Palin foreign policy in which you said I don't care about the fact that hundreds of thousands of people are dying, let them kill each other. This is their problem. That is absolutely unconscionable. Not just from an individual standpoint. It's unconscionable for the most powerful country, the richest country in the world to stand aside and watch this happen, watch hundreds of thousands of people being murdered.

[10:20:14] ZAKARIA: What would you do, David? FRUM: We need to find the kind of solution we found in Lebanon in the

1990s. A very imperfect messy thing where the different communities somehow find some way to get along --

ZAKARIA: After a 15-year bloody civil war in which they all got very exhausted.

FRUM: And we hope it will not take that long because there's been more bloodshed in just these few years than we had in Lebanon all of that time. And the Russians may have to be a sponsor which is going to be ugly but necessary.

The -- I was -- I'm normally a pretty hawkish person. I was very much opposed to any attempt to intervene in this war because I couldn't see anyone to be for. You don't intervene unless you're trying -- unless you're trying to stand upstate as well as take one down. And that has never been possible. There has to be some kind of brokered compromise. And as you say about Lebanon, let us hope it takes less time and less blood.

ZAKARIA: The key question in a sense that we have to deal with is the requirement that Assad go, which has been stated by American president, by the Europeans. Do we have to walk back from that?

MILBAND: I think he's going to have to go but it may -- you may have to save the Russian face in achieving that goal. And if it's correct, that Assad has actually become a facilitator of ISIS, not just by attracting jihadist but also some other ways that have been quite well documented, the Russians will never sign up to an American listing but they can recognize reality. And the fact is that Syria is already a divided country. Never mind an absolutely bummed out country.

I think the Lebanon parallel is a very, very interesting one that David raises because of course what happened in Lebanon in the end a government was created in which every community had a stake. That's precisely what it's impossible to achieve in Syria at the moment.

ZAKARIA: I want to get one last thing in which is North Korea. When you were speechwriter to George W. Bush, you put North Korea in because you were looking for a third country and the axis of evil was Iran, Iraq and North Korea.

What do we now do about North Korea and its former nation?

FRUM: I don't want to frighten anybody about the speechwriting process but actually I didn't put any countries in. I had a series of TBDs, TBDs, so I just wrote the grammar because other people I didn't make the decision about which countries are going to be listed by the president. That was a little above my pay grade.

The decision to include North Korea was not just one of ticket balance their ethnic diversity. It was also because that situation looked very, very scary at this time. Since then the world has done a reasonable job of living with this constant irritant. And indeed one of the reasons they get more irritating is because the world has done too good a job of living with them. And every once in a while they have to remind the world hey, we're here and we're still really obnoxious.

PIETKA: We need to work with our allies in Asia to try and do more to contain them and we need to encourage the Chinese, not simply not to steal all of our data but also to exert a little pressure on the North Koreans and they have the leverage to do it. So that in fact they stop doing this.

ZAKARIA: We're going to have to go. This is absolutely fascinating. I wish I would bring you all back.

Next on GPS, David Cameron has discovered the secret sauce for winning elections but will America's Republicans learn from their fellow conservatives across the ocean? I'll explain when we come back.

(COMMERCIAL BREAK)

[10:27:19] ZAKARIA: Now for our "What in the World" segment. When Britain's Labour Party moved way left in the 1970s and early 1980s, somebody called one of its political platforms the longest suicide note in history. And in fact, during that period the party ended up losing four elections in a row.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Jeremy Corbyn, leader of the Labour Party.

(END VIDEO CLIP)

ZAKARIA: Well, they might be returning to that checkered past by electing a radical left-winger Jeremy Corbyn to be party leader. Corbyn is for the abolition of the monarchy, nationalization of key British industries, against Britain's nuclear deterrent and he calls Hamas and Hezbollah our friends.

Tony Blair, the only leader to have led Labour to electoral victory in the last 40 years, argued in the "Guardian" that Labour would not just lose but lose big in the next elections. Why has this happened?

Many explanations focus on the financial crisis and its aftermath. The public is angry and ready for an anti-capitalist, anti-banker response. But that's not the only piece of the story. The other crucial element is that the Tory government of David Cameron has occupied the center ground of British politics.

Just how far left has the current conservative government gone? Well, it has moderated the austerity program it had this place once its debt and deficit became more manageable. It enacted a sweeping regulation of the financial sector, it actually raised some taxes. It promised to increase spending on the National Health Service. It announced a minimum wage raise to around nine pounds an hour by 2020 for everyone over 25. That's about $14 an hour in today's U.S. dollars.

It has massively increased foreign aid. It's up 36 percent since 2011. David Cameron speaks urgently about global warming and has set annual carbon budgets. He's also an eager and enthusiastic advocate of gay marriage, pushed to legalize it while many predicted this would cause a revolt in his party and lead to his downfall in the next election.

The Tories are now to the left, substantially, of every Republican candidate who was on that debate stage Wednesday night. This is not always the case. Margaret Thatcher was to the right of Ronald Reagan on many issues. But David Cameron's reform conservativism places him much closer to the political center.

And Cameron's move is a master stroke because it forces the opposition into a corner. Either Labour becomes a "me too" party or it moves to the extreme end of the spectrum. And in fact, the problem for the more mainstream Blair-like Labour leaders has been that they were seen as Tory light. So now the Labour Party has the genuine article. An unreconstructed socialist who will keep the party ideologically pure and politically irrelevant.

Now, the extremes make noise, but look who is governing countries. Angela Merkel, Rensey, even the leftist Francois Hollande in France has backtracked on much of his leftism.

Bill Clinton's strategy is still the right one in a post-cold war, post-socialist world. The most serious place in politics remains the center ground. That's where the majority of people are, maybe some of the Republican presidential candidates should take note. Next on GPS, now that the U.S. Congress has opportunity to scuttle the nuclear deal has passed. It has one more big hurdle. The hardliners in Tehran who need to decide if they want to get into bed with what they call the Great Satan, when we come back.

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[10:35:07]

ZAKARIA: Despite all of the controversy, despite all of the grand standing, on Thursday Congress's chance to vote down the Iran deal ended rather quietly, I might add. But don't forget there's another side to this deal. Now Iran's government has to agree to it and the supreme leader who will give the ultimate thumbs up or thumbs down said he wants his parliament to vote on it. According to the New York Times the head of that parliament said there would be more drama in the Iranian legislature than there was in the U.S. Congress. A parliamentary vote is expected in early October. So will the hard- liners of the Islamic Republic enter into a deal with what they call the great Satan?

I have two Tehran watchers joining me today. Thomas Erdbrink is in Tehran, where he is the New York Times' bureau chief. And Karim Sadjadpour is in Washington, D.C., where he is a senior associate at the Carnegie Endowment. Thomas, let me start with you. You wrote a really terrific piece in the New York Times outlining the incredible push and pull that's taking place in Iran. Rouhani says this deal will begin the process of normalizing relations with the U.S. Khamenei, the supreme leader, says no, not at all, this is a complete one-off. There are people who are predicting there will be direct flights between Tehran and Washington and New York within a month or two. Now there are people saying no, this won't happen for years. At the center of this question, which you posed but don't quite answer in your pieces, is this all an act, and where does Khamenei stand in all of this? Where does the supreme leader of Iran stand?

THOMAS ERDBRINK, TEHRAN BUREAU CHIEF, "THE NEW YORK TIMES": I must say that while writing this piece, I felt sort of lost. I've been reporting from Iran for 13 years, and it's getting harder and harder to really try and get grip and see what Iran's leaders actually want. As you said, on one hand we have supreme leader, Ayatollah Ali Khamenei, who in the past three speeches has been saying really nasty things about the United States. He says the United States will continue to be the great Satan, and he says it's time now after nuclear talks to continue the fight with America, and then on the other hand there's President Rouhani, a man elected by the people here on a platform of promising more freedoms, better economy, and first but not foremost, very important to him, better relations with the United States. He is saying this nuclear deal is the new beginning. These are two very conflicting narratives. In all honesty, I don't know in which direction this is going.

ZAKARIA: Karim, you followed this very closely. Thomas reports that one of the more troubling signs is that for the last week or two, Iranian state TV has been night after night airing very fiery denunciations of the deal. What do you think we should read into that?

KARIM SADJADPOUR, SR. ASSOCIATE, CARNEGIE ENDOWMENT FOR INT. PEACE: I think as Thomas put it very well, Fareed, there is this inherent tension between the national and economic interests of Iran and the Iranian people and then the revolution ideology of the Islamic Republic. I think the supreme leader's position on this nuclear issue has been quite classic Khamenei is that he's been non-committal. He's refused to put his imprimatur on this deal. And it's been very Machiavellian. What's interesting is that both the supporters and the opponents of the nuclear deal believe the supreme leader agrees with their position.

ZAKARIA: Thomas, what is the argument that the hard liners make? You talk to some of these people. Is it that they feel that this deal, you know in America, the hard line has felt that America gave away too much. Is it their feeling that Iran was taken to the cleaners and that Iran made too many concessions?

ERDBRINK: Absolutely. And a former nuclear negotiator, Saeed Jalili, he actually went in front of the parliament commission that is currently reviewing this deal, and he said there are more than 100 of our red lines crossed, which means in Iran's ideological lingo, which means yes, basically we have been taken to the cleaners.

Not everybody thinks the deal is bad. Velayati is a very important foreign policy advisor to Supreme Leader Khamenei. He's said no, this is a good deal. And Mr. Jalili should basically shut up, because in his term in office as senior negotiator, he has not managed to cut any deal, where Mr. Rouhani's team has done so.

[10:40:00]

But we must look beyond this. We must look beyond only the deal. This is also about which direction will Iran take. We are looking at a very divided Middle East and a weakened Saudi Arabia, at problems across the region, and Iran being the only stable state. For 37 years Iran has opposed the United States because of its ideology. People have a feeling this ideology should be corrected, that maybe the hate towards the United States must be lowered down, that the great Satan should be a lesser Satan, maybe. And this will have consequences because will Iran cooperate with the United States in the region? That's what the current debate is really about. Because a nuclear deal, I think Iran will accept that.

ZAKARIA: Karim, let me give you my thought and tell me if it's right. At the end of the day, they'll accept, they will pass this deal because Rouhani is the most popular figure in Iran it seems to me from what I'm reading. There's enormous sense of hope and expectation. For that hope to be dashed, to be shattered by the rejection of this deal would be something that Khamenei would not want to do. He's a theocrat but he's also a canny politician. At the end of the day grumbling they will accept this deal. Does that make sense to you?

SADJADPOUR: That makes perfect sense to me, Fareed. Khamenei doesn't want to stand between Iranians and economic deliverance. But when the deal is passed and it's implemented, I think he will work very hard to totally emasculate Rouhani as he's done with Iran's previous three, four presidents. Khamenei's modus operandi has always been to wield power without accountability, so he wants the president to have accountability without power. He wants to weaken Rouhani and blame him when popular expectations of the deal are not met.

ZAKARIA: Thomas Erdbrink, Karim Sadjadpour, thank you for really fascinating insights.

Up next, what do Wall Street bankers have in common with goat herders in Tajikistan? More than you might imagine. The FT's columnist Gillian Tett will explain when we come back.

(COMMERCIAL BREAK)

[10:46:00]

ZAKARIA: Gillian Tett is one of the most respected economic commentators in the world. She's now the U.S. managing editor for the Financial Times. She is one of the experts who predicted or warned about the financial crisis of 2008. When asked how she did it, she's credited her background and training in anthropology. Tett is actually a trained social anthropologist, with a PhD from Cambridge. She did field work in Tibet and Pakistan and wrote her dissertation on a small goat-herding village in Tajikistan, where she lived among the locals.

So she now looks with an anthropologist's eye at Wall Street, the City of London, and how the financial and economic centers, with their very peculiar, insular cultures and strange practices. And when she looks at these bankers and businessmen, she sees people focused on their own specialized narrow businesses, never noticing what their practices and products do to the economy as a whole. That was one of the underlying causes of the financial crisis. She calls this problem the silo effect. She's written a book explaining how it's not just in finance, but in business in general that people get trapped inside their groups and subcultures instead of thinking outside the box or outside the silo. Gillian Tett, good to have you here.

GILLIAN TETT, FINANCIAL TIMES: Great to be here.

ZAKARIA: You take on these central ideas that we all think of as very good, which is efficiency, specialization, doing what you do to the nth degree. Why is that a problem?

TETT: Here is the issue. We think we live in a hyper connected world. We have our cell phones, our airplanes, our supply chains, our markets. They link us all together. But the reality is, when you look at how we live and think, we are actually as fragmented, if not more fragmented, than ever before. And sometimes that specialization is good. You need to have experts. You need to have departments that do things. You need to have professions. The problem is though that when you have hyper specialization and when you have those different professions and departments that don't talk to each other and connect, then you start to get big problems. You get people who can't see opportunities and they can't see risks either.

ZAKARIA: Sony. One of your great examples of Sony, which was so dominant in the world of consumer electronics, and kind of went by the wayside, what happened?

TETT: My book tells the stories of companies who were filled with bright individuals who do some really dumb things, and tragically Sony is one example of that. If you think back to what happened at the turn of the century, you had a generation of music listeners who were obsessed with the Walkman, and by all logical reasoning Sony should have dominated the era of digital Walkman. Because it had not just computing, it had electronics, it had a great brand, and it had its music label inside Sony. You want to know why it did not happen?

It's because around the turn of the century, Sony tried to get into the whole idea of a digital Walkman, a portable electronic Walkman, an Internet Walkman, and it launched not one but two competing products because it had different departments that could not talk to each other or collaborate, and that created a situation where they cannibalized each other, and essentially Steve Jobs jumped in with the Apple and the iPod, and these days we're all carrying iPods and not digital Walkman.

ZAKARIA: Every business is always telling its employees or senior employees certainly, we want you to think outside the box. How do you do that? How do you do it? How do you institutionalize it?

TETT: Here is a tragedy. Every company says we want you to think outside the box. And yet almost every company these days actually acts in a way that deepens those boxes and makes them more rigid.

[10:50:00]

The incentive is for them to be high proficient, to streamline everything. To cut out people who just roam around the building and to cut out opportunities for employees to stop and think and roam mentally or just collide with each other.

One of the things you can do is to try to fight back and recognize that having some slack matters. Take a company like Facebook, who are incredibly interesting because they tried to be the anti-Sony. They have deliberately implemented systems where you move employees around the building. You swap people around teams. You bring them together from time to time to try and collaborate on different projects. You have architecture that forces people to collide the whole time.

But the other thing Facebook does, which is perhaps the most important, is that they think. They recognize that human beings need organization. You need to have dedicated teams and departments, but you also need to recognize that as soon as you create a box or a boundary, that can potentially be dangerous. Unless you step back from time to time and actually think about the social structure that you've created for that company and the world you live in.

ZAKARIA: Is this all really somewhat similar to those goat herders in Tajikistan?

TETT: I actually think there's a lot of benefit in having a background in cultural anthropology when you try to make sense of how modern companies or modern institutions exist. We love to fool ourselves into thinking we're these incredibly wise 21st century individuals, who live inside this space and actually aren't captured by our social and culture rules anymore.

The reality is we all are. We are just as shaped by our social rules that we inherent without thinking about them as the Tajiks or any other society that anthropologists study. And if you want to get a sense of this, stop and ask yourself, if you're on Twitter, look at who you follow. And ask yourself how many of those are people who are actually outside my own social tribe or have views different from me. What would happen if I was to suddenly change half the people I follow on Twitter and put instead people from a completely different social tribe?

How would that change my perception on world or life or understanding of the world? In a sense, that's all that anthropology does. We try to think ourselves into another world, another mind set. We try to understand the alien out there, so we can look back at ourselves better and see ourselves in more context and see the cultural rules and boxes that tend to control us unless we actually challenge them.

ZAKARIA: Completely fascinating. Terrific book. Wish you all the best.

TETT: Thank you.

ZAKARIA: Next, you've heard of the sacred cow. Now meet the sacred chicken in India. I'll explain when we come back.

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[10:57:00] ZAKARIA: Ahead of the pope's visit to the United Nations, the U.N. voted to allow the flag of the Vatican to fly alongside the flag of the U.N.'s 133 member states. But it brings me to my question of the week, what other non-member entity was granted the right to fly its flag outside the U.N. this year? Taiwan, the Palestinian territories, Kosovo, or Gibraltar? Stay tuned and we'll tell you the correct answer.

This week's book of the week is Gillian Tett's "Silo Effect." If you just heard her, you'll know why this is valuable book. It uses Tett's training as an anthropologist brilliantly to shed light on one of the key problems in any organization, the tendency to hole information, become insular, and close yourself off to the outside world. The examples, all from the private sector, are wonderfully written and give you deep insight into the challenges of overcoming some very natural, deeply ingrained human behaviors.

Now for the last look. India is well known for its sacred cows. Literally. It's of course a majority Hindu country, and cows are sacred for Hindus. Cattle are known for freely wandering the roads and causing traffic jams. But now there's another, lesser animal, that seems to be getting special attention in India, the chicken.

That's right, Mumbai's local government had planned to enforce a ban on the slaughter or sale of the lowly fowl. In honor of a festival celebrated by the vegetarian Jain community. Jainism is an ancient Indian religion, and its practitioners are often seen as supportive of the party in power in India, Prime Minister Modi's BJP. Critics view the ban as the party's attempt to curry favor, pardon the pun, with the wealthy Jain community. So they have been protesting by waving live chickens and raw meet in the street, and selling them despite the ban. Modi's party is often described as Hindu nationalist, and since his election last year, there has been some increasing rhetoric and some actions that promote religious practices and symbols of hard-line Hindus.

There have also been some disturbing actions that are anti-Muslim and anti-Christian, both of which are minorities in India. This time, people spoke out in protest, and the government relented. Chicken meat is back on the menu in Mumbai. But this has now become an ongoing struggle and one of India's greatest modern achievements, its secularism and religious tolerance is under pressure.

The correct answer to the GPS challenge question is B. Along with the flag of the Holy See, the U.N. voted to allow the Palestinian flag to fly alongside those of the U.N. member states, against the objections of Israel and the United States.

Thanks to all of you for being part of my program this week. I'll see you next week.