Return to Transcripts main page

Fareed Zakaria GPS

U.S.-China Tensions Rise Over Taiwan After Pelosi's Visit; Should U.S. End "Strategic Ambiguity" Over Taiwan?; Is This A Dangerous New Era For U.S.-China Relations?; Al Qaeda's Leader Killed In American Attack. Aired 10-11a ET

Aired August 07, 2022 - 10:00   ET

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

[10:00:32]

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 coming to you live.

(BEGIN VIDEOTAPE)

ZAKARIA (voice-over): Today on the program, Nancy Pelosi travels to Taiwan and sparks a crisis between the United States and China. First, we'll examine Beijing's military response. Are all the sorties and missile firings really Beijing's practice for an actual invasion?

Then we'll look at the many repercussions for U.S.-China relations. Can the two powers recover from this new low? Is this the start of a cold war? I've got the experts on it all.

Also --

JOE BIDEN, PRESIDENT OF THE UNITED STATES: Justice has been delivered. And this terrorist leader is no more.

ZAKARIA: America kills the leader of al Qaeda once again. So just what is the state of terrorism today? How big is the threat to the West?

(END VIDEOTAPE)

ZAKARIA: But first, here's "My Take." The world's two most powerful nations find themselves in a hair-raising crisis that could spill into military conflict, and the strangest aspect of all this is how predictable it was.

Taiwan's status has long been known as the most sensitive issue for both the United States and China. One that has been carefully managed for five decades. And Nancy Pelosi had signaled her desire to go to Taiwan months ago. But on the American side, a series of errors, many of them tactical and driven by domestic politics, have resulted in a dangerous reality. There is no serious working relationship between the 21st Century's two most powerful actors.

From the start, the Biden administration adopted a policy toward China of open hostility and criticism. At the very first face-to-face meeting with senior officials from both sides, Secretary of State Antony Blinken decided to deliver a harangue, to which his Chinese counterpart defiantly responded.

That Blinken's remarks were designed for a domestic audience can be seen on the fact that it was delivered in public in front of television cameras, a format that would only harden Beijing's position, not change it.

As Jeffrey Bader, President Obama's top adviser on Asia, has noted of the Biden team, despite they haven't criticized Trump's foreign policy bitterly, when it comes to the greatest foreign policy challenge facing the United States, how to deal with the rise of China, they have continued and mimicked Trump's destructive approach. He added, "This has prompted glee among departed Trump officials who proudly declared themselves innovators and the Biden administration unimaginative and dutiful implementers."

Ryan Hass, another top Obama China expert, argues that the communication channels for managing tensions have collapsed.

But while the Biden administration's approach has been tactically flawed and can be adjusted, Beijing's errors are much more serious and strategic. Over the past decade, under President Xi Jinping, China has changed its Taiwan policy, with potentially catastrophic consequences. Modern China's paramount leader Deng Xiaoping outlined an innovative solution to the Taiwan problem when he offered it in 1979, a solution that came to be known as one country, two systems.

Taiwan could eventually become a part of China formally, Deng proposed, but it could maintain its own political system, administrative laws, even its own armed forces. Taiwan rejected the offer, but Deng urged strategic patience. He then decided to demonstrate the vitality of this policy by applying it to Hong Kong, once the British handed over the city state to Beijing in 1997. Spelling out these promises in an agreement with Great Britain and in Hong Kong's basic law, its de facto constitution.

For several years, Beijing observed one country, two systems in Hong Kong, and held out the prospect of the same for Taiwan. Trade between Beijing and Taipei increased dramatically. In 2015, President Xi met with Taiwan's then president Ma Ying-jeou and they spoke of enhancing ties, something that is inconceivable today.

[10:05:06]

Deng's basic strategy towards Taiwan was that as long as China remained open, dynamic, and accommodating, time was on its side. Taiwan would come to realize that there were many benefits and few costs to being formally attached to the mainland. But over the past 10 years, President Xi's policies have been to make China more closed, less dynamic and significantly less accommodating.

Nowhere has the latter policy been more clear than in Hong Kong, where Beijing has reneged on virtually every important guarantee it made regarding the city state's freedom and autonomy. The results are plain to see in Taiwan. In the 1990s, few Taiwanese advocated for independence and many believed reunification with China was inevitable. Today, according to National Chengchi University's Election Study

Center, support for independence is much stronger, nearly doubling since 1997, the year of the Hong Kong handover, though most Taiwanese still hope for a continuation of the status quo. People's sense of Taiwanese identity, as distinct from Chinese identity, is also much stronger and it is now closely wrapped up with being a democracy.

As Xi bullies Taiwan more militarily and economically, these strengths, especially among younger people, grow in size and intensity. China claims its goal is peaceful reunification with Taiwan. If that's really the case, Beijing should reverse course and return to Deng's policies, announce that Hong Kong would be allowed all the freedoms it was promised, promise Taiwan the same, end economic sanctions on Taiwan and stop threatening the island with dangerous military maneuvers.

It is Xi's policies that are making the Taiwanese people reject any prospect of cooperation with the mainland, let alone eventual reunification. But that reversal is not going to happen and it leads to the central dilemma. On the issue of Taiwan, Beijing now recognizes time is not on its side. Every year, the island becomes more likely to break free. And this has created a strategic challenge for Beijing. One that could turn into a catastrophe for the world.

Go to CNN.com for a link to my "Washington Post" column this week. And let's get started.

Battleships, fighter jets, missiles and more. China has sent them all toward Taiwan in recent days in response to Nancy Pelosi's visit to the island. The People's Liberation Army had promised targeted military operations on multiple sides of Taiwan, and it delivered. Earlier today, Taiwan's Defense Ministry said some of China's activities was a simulated attack against the island.

To understand more, let me bring in Oriana Skylar Mastro. She's a fellow at Stanford's Freeman Spogli Institute and a scholar at AEI. She's also an officer in the Air Force Reserve, but she's speaking today in her civilian capacity.

Welcome, Oriana. First, give us a sense, how would you characterize these live-fire exercises? How should we think of them?

ORIANA SKYLAR MASTRO, FELLOW, STANFORD'S FREEMAN SPOGLI INSTITUTE: Well, of course these live-fire exercises are a show of force. China telling us they're unhappy with Speaker Pelosi's visit. But much more importantly, they're a combat rehearsal. You know, the Chinese military hasn't fought a war since 1979. Xi Jinping has been very clear that they need to do more realistic exercises if they are going to prepare to take Taiwan by force.

So to me, what's really significant is the unprecedented scale. It's not only the live fire tests, the missile tests, but we also had 100 aircraft operating, 10 destroyers and support vessels, allegedly also nuclear submarines, aircraft carriers, all these different forces operating together in close proximity towards Taiwan is very sophisticated and complicated and has meant to help them get to the point where they are confident that they can do an operation successfully against the island.

ZAKARIA: And from what you can tell, does it appear to have been as effective as Beijing might have hoped?

MASTRO: As an outside observer, it looks like everything went according to plan. For example, the missile tests, the missiles landed where Beijing had planned for them to land. In terms of the aircraft, they had a hundred different aircrafts, fighters, bombers, early warning, air refueling, you know, tankers and they seemed to have successfully conducted the operations that they wanted to, which ranged everything from joint reconnaissance to air superiority operations, refueling, and ground assaults.

[10:10:06]

So from the outside, it looks like they successfully conducted the exercises that they planned to. Though of course were insert some uncertainty. They were uncontested in these exercises. So it doesn't necessarily mean that they'd be able to do the exact same thing if war actually occurred.

ZAKARIA: Would you compare these exercises for us to the last time China had a big military response, which was the Taiwan Strait's crisis in 1996? How -- you know, since then, China has become much richer and spent a lot on this military.

MASTRO: Right. We have seen military spending go up by over 740 percent. In the meantime, the result has been really significant. So 1995, 1996, China conducted four rounds of live fire tests of missile tests. Every time they did it, they never fired more than six missiles, and they mainly went to the north and south of Taiwan, never crossing over like they did this time.

Furthermore, that was the extent of the exercise, that was the end of it. The United States had sent in carrier strike groups in the vicinity of Taiwan to warn China off. And that seemed to work. We look at that as a lesson that the United States successfully deterred China. But what China learned was they never wanted that to happen again, and so in the meantime they have built up not only one of the most sophisticated and advanced militaries, but also one that can attack and keep out the United States.

So now not only do you have these missile tests, but you had air operations I referred to, as well as naval operations that were this the vicinity of Taiwan. Air bases, naval bases and ports. And so for all these different components operating together is truly impressive. And my view is, we'll probably see additional rounds of military exercises in the future. There's already been an announcement that the Chinese plan of conducting one in the Yellow Sea and the Bohai Sea.

So this one is definitely of an unprecedented scale and complexity and one that's really designed to show that China can take Taiwan whenever it feels ready to do so.

ZAKARIA: How dangerous do you think these are? You know, the Chinese did encroach on the sort of economic zone. It's not really international waters, but it's an area, a sensitive area, let's say. Is there a danger that it could trigger a response from Taiwan, from Japan, from the United States?

MASTRO: So I think these exercises do increase the likelihood of war, but not the traditional path. So I think a lot of commentators are concerned that because of heightened military activities, you might see some sort of accident or incident that could spiral accidently to war. The bottom line is, when China makes a move on Taiwan, if they're going to do it successfully, there has to be an element of surprise. It has to be quick and it has to be fast.

So they don't want to do it right now when the United States has really increased its focus and its operations in the region. However, the more they get to do this level of exercise, the more confident they're going to become in their capabilities. And in my assessment, the only thing keeping them from making a move against Taiwan is right now they're not 100 percent sure that that operation would go well.

So the more they do these exercises, the more confident they are, the more likely we are going to see Beijing initiate force against the island.

ZAKARIA: Oriana, always a pleasure to have you on. Thank you for your insights.

Next on GPS, I will be back with a terrific panel, Richard Haass, Susan Shirk. Is this crisis over or did we just see the prelude to a war?

(COMMERCIAL BREAK)

[10:18:19]

ZAKARIA: A top official at the Chinese embassy in Washington had this to say on Friday. "Taiwan is one of the few issues that might take China and the U.S. into conflict or even a war."

The American secretary of state had a very different take, speaking Friday in Cambodia. Tony Blinken criticized China's military response calling it an overreaction, and saying that the U.S. does not seek and will not promote a crisis.

So can Beijing and Washington recover from this any time soon?

Joining me now are Susan Shirk and Richard Haass. Susan is chair of the 21st Century China Center at UC San Diego. Her new book will be published in October. It is called "Overreach: How China Derailed Its Peaceful Rise." And Richard Haass was director of Policy Planning in George W. Bush's State Department. He is now the president of the Council on Foreign Relations.

Susan, let me begin with you and ask, was this avoidable?

SUSAN SHIRK, CHAIR, UCSD'S 21ST CENTURY CHINA CENTER: Well, once -- of course it was avoidable. Once Nancy Pelosi decided to go to Taiwan, the Chinese side had a choice of how to respond. They got an explanation from the United States about the division of authority between the White House and Congress.

But China chose to react very strongly, and one of the main motivations was Xi Jinping's domestic political situation. He's in the middle of a campaign for a third term that he hopes to receive at the party congress in the fall.

[10:20:07]

And he was struggling quite a bit because of policy misjudgments that he himself had made over the past year or two. So the economy was slowing down. There's no way they're going to meet their growth target for 2022. And there was a lot of grumbling among the public about the draconian zero COVID-19 policy, about the alignment with Russia in the Ukraine war, and about the crackdown on the private sector which resulted in the loss of a lot of jobs.

So we've got youth unemployment, economic problems. That's not the position that Xi Jinping hoped to be in two months before the party congress. So he took the opportunity to distract people away from domestic problems with these very exciting and dramatic war games, which are being shown on China's central television every night. He took the opportunity to strengthen his ties with the PLA because, as Oriana said, these exercises show off the modernization, the reform program that he's devoted a tremendous amount of time and energy to while in office.

And he himself, as commander in chief, is probably wearing his uniform, directing these exercises. And he may even have undercut the grumbling among other politicians who may have been maneuvering to force some more power sharing on him during his third term. So domestically, this has -- the Pelosi visit gave a very good opportunity to Xi Jinping.

And actually, Fareed, it resembles a lot what happened 10 years ago, on the eve of his ascendence to power, when the Japanese purchased several of the Senkaku-Diaoyu Islands to keep them out of the hands of the nationalist Tokyo mayor. And China reacted quite strongly, not so much on the military side, more with gray zone, fishing boats and other operations. But it was a great distraction at a time when Bo Xilai was making a play for power and the Chinese leadership was in the middle of a conflict.

ZAKARIA: Let me interrupt you there and get to Richard in. Let me try and get Richard in on this, because I feel like you described very well the domestic pressures that led Xi to do what he did. It feels like the U.S. also there are political pressures here. I saw some reporting that said that Pelosi had sort of indicated that had Biden personally asked her not to go, she might have not gone but would have publicly made that clear.

Richard, how do you see the administration's handling of China, and is it also constrained by domestic politics?

RICHARD HAASS, PRESIDENT, COUNCIL ON FOREIGN RELATIONS: The short answer is yes. I don't disagree with anything Susan said, Fareed. This is a crisis of choice. This is a crisis not about Nancy Pelosi, it's about the Chinese using her visit as a pretext to put in motion a lot of preplanned exercises and economic sanctions, almost to create a new baseline, vis-a-vis Taiwan heading forward.

But I think one of the reasons they were willing to do this is they saw no upside, no potential in U.S.-Chinese relations. People always call for bipartisanship in this country. We have a kind of competitive bipartisanship now when it comes to China policy. Which of the two parties will be tougher on China? Republicans under when Mike Pompeo was secretary of state, he called for regime change, to get rid of the communist party. He's now calling for the independence of Taiwan. Nancy Pelosi is talking about human rights and so forth.

The president wasn't willing to tell the speaker of the House not to go, that it would be bad. I think in large part because he was worried that it would be criticized as appeasement of an increasingly aggressive, repressive China. And what's missing, and you said it in your set-up piece. This is the most important relationship of the 21st century. And what we don't have is a serious, strategic dialogue.

[10:25:00]

We no longer even have the military-to-military conversations in case there is an accident at sea or in the air. And this ought to worry people. Even at the height of the Cold War, the United States and the Soviet Union had a more developed, more structured relationship than the United States and China have now. That has got to be fixed. That is in the interest not just of both countries, but literally everyone.

ZAKARIA: Stay with us. When we come back, I am going to ask Richard Haass and Susan Shirk about an article Richard Haass wrote in which he said it's time to end the ambiguity and declare that the United States will come to Taiwan's defense in the event of a Chinese attack. Is that a good idea? When we come back.

(COMMERCIAL BREAK)

And we are back here on GPS with Susan Shirk and Richard Haass. Richard, you argued in a recent foreign affairs essay, we should make it clear, we will defend Taiwan if China attacks. That would end five decades of strategic ambiguity.

A lot of people wonder, is that wise, given they are a long way away from the United States? They're very close to China. China will be able to militarily overwhelm them pretty quickly in all likelihood. So is it -- you know, Tom Schelling used to say, two things are very expensive in international relations, threats when they fail, and promises when they succeed. Is there a danger here that this is a threat that will fail?

HAASS: The danger of that, Fareed, is also a danger -- the stakes are enormous. The stake is not just the democratic country of some 23 million people. It's not just the most advanced semiconductor industry in the world. But all the countries in the region expect us to be there.

At stake is the entire alliance and stability system that has worked for three-quarters of a century. So we shouldn't kid ourselves. This is not just about Taiwan. This is about the entire Indo-Pacific, Asia- Pacific, Japan, South Korea, Australia, U.S. interests there.

Plus, I do think we have options. If among other things we strengthen our military presence, if we set up various economic sanctions that could be -- that could be triggered. But also, Fareed, I'm not arguing for a change in policy. Let's get that clear. I think we ought to continue to reassure China that we don't support Taiwan's independence. As you say it has worked well for 50 years.

What we simply have to do is adjust how we implement that policy. China has dramatically raised the military threat to Taiwan. We would be derelict if we didn't raise our capacity to deal with it. And that's a question of capability and a question of signal (ph) strategy, simply for how we implement our strategy.

ZAKARIA: Susan, you disagree why?

SHIRK: Well, I disagree because I think the best way of keeping the peace in the Taiwan Strait is to maintain the continuity of this policy that we have had for so long. It's very hard to explain it to people. It sounds really silly.

Strategic ambiguity, what does that mean? What it really means is that all three parties have an interest in preserving the peace. And we certainly don't want Taiwan to provoke a war, and that was the aim of strategic ambiguity.

But now we need, I would agree, kind of greater clarity about the ambiguity. And I think that because what we are committed to is the status quo. And I think Tony Blinken has done a good job in what he said recently during this crisis. To say that, we oppose efforts to change the status quo, and we're committed to the status quo.

And the other thing is that what we really need to do to help strengthen -- prevent a war in the Taiwan Strait is for Taiwan to undertake new efforts to defend itself militarily, that are not these big, symbolic purchases, but things that will really harden Taiwan as a target for potential Chinese aggression. Things that they're -- I forget what they're calling it now, the strategy, but it is to strengthen Taiwan's capability to defend itself.

ZAKARIA: To make it a porcupine.

SHIRK: Porcupine, right.

ZAKARIA: Richard, what about -- what about the danger that this kind of competitive nationalism that we are seeing, both in China and the United States, gets out of hand, do you -- do you -- talk a little bit about the dangers of that.

HAASS: Again, it's the reason you need two kinds of dialogues now with China and the United States. (INAUDIBLE) strategic (INAUDIBLE) dialogue about their overall relationship. That's why God invented diplomats. And then you need a very tactical conversation about the rules of the road for dealing with Taiwan. [10:35:03]

What we have here is a real-world wakeup call about just how fraught this is with dangerous possibility. And we have got to establish some ground rules and that's a mixture of reassurance, what is not going to change in terms of our policy but also a question of messaging.

China has to understand that any effort to do this forcibly, coercively, would not exceed, that the cost would outweigh any perceived benefits. There has got to be a -- use (ph) the (ph) phrase (ph), clarity again. I think we have to introduce greater clarity to China about what we're prepared to do and what we're not going to do in terms of changing policy.

They can make their points to us, but this is too important to simply let it drip. I think that's the whole lesson of the last couple of days. This has now been teed up to a point where we have got to take it as the most serious threat to regionally, if not global order.

We have already got a major crisis in Ukraine. We could face one with Iran. We do not need a third simultaneous crisis in the world.

ZAKARIA: Richard Haass, Susan Shirk, pleasure to have you guys on.

Next on GPS, I will talk about to Peter Bergen about the demise of Ayman al-Zawahiri. What does the al Qaeda leader's death mean for the future of terrorism?

(COMMERCIAL BREAK)

[10:40:28]

ZAKARIA: Last Sunday morning in Kabul, Ayman al-Zawahiri wandered out onto his balcony in Kabul's green zone and was killed by an American drone strike. Al-Zawahiri had been Osama bin Laden's second in command, then took charge of al Qaeda after his boss was killed in a 2011 American attack.

The two terrorists had been master minds behind 9/11, and for years after that attack, the U.S. and the West were on edge, always worried about the next big strike. Can that guard now be let down?

Joining me now, CNN national security analyst Peter Bergen, author of "The Rise and Fall of Osama bin Laden." Peter, welcome.

Let me first ask you, you have written a very interesting piece saying that Zawahiri was actually not a particularly good head of al Qaeda. He was not inspirational, in many ways he was not intelligent, he did not revive the group as many had thought. So what does his death do to a group that was already, in many ways, in trouble?

PETER BERGEN, CNN NATIONAL SECURITY ANALYST: Fareed, his successor may prove to be more effective, which is low bar because al-Zawahiri, as you said, you know, hadn't really been able to revive the fortunes of al Qaeda. There is a potential successor. His name is Saif al-Adel. He's been part of al Qaeda from the beginning. He's a former Egyptian special forces officer, well regarded within al Qaeda.

He's been living for years in Iran. He may already be back in Afghanistan and he is the likely successor. But he still inherits a group that, you know, hasn't been able to carry out a significant attack in the West since the London bombings of 2005. And, you know -- but they do have more freedom of movement. The fact that al-Zawahiri was found in Kabul in a safe house, was known to be living there by leaders of the Taliban, sort of speaks for itself.

So they will have considerable freedom of movement in Afghanistan. They can regroup, it may take them years. What it means, you know, for the West, you know, that it's still some time off before, I think, they can carry out a really serious attack outside the region.

ZAKARIA: Now, bin Laden had been the kind of innovator in saying, let's attack the West. A lot of these terrorist groups from the '70s and Zawahiri, the one he was involved in was Islamic Jihad in Egypt, had been trying to overturn what they saw as the sort of secular tyrants who were terrible rulers because they were not Islamic.

Bin laden says, why don't we go for the head of the snake, the far enemy, the United States, that supports and gives security guarantees in a sense to all these regimes, the Egyptian regime, the Saudi regime?

Where does that debate in al Qaeda stand? It's obviously much easier to do local terrorism. Does al Qaeda and other groups still want to do global terrorism?

BERGEN: Yes, they may want to, but do they have the capacity in any meaningful way? The victory of the Taliban in Afghanistan, the first anniversary, which is about to come upon us, sort of speaks for itself. I mean, you know, now they run an entire country. And so -- and if you look at what ISIS did in Iraq and Syria, they control a territory the size of Great Britain and population the size of Bulgaria.

So, I think, people in the jihadist movement they look at all this and say, well, attacking the United States may be desirable, but maybe we can do more locally in Yemen or Somalia or Syria or Iraq or Afghanistan. Pick your country with a weak or failing government in the Muslim world.

ZAKARIA: And when you look at the Taliban's decision to let Zawahiri in, do you think that they were, you know, exceeding to a request from a kind of old confederate? Or do they -- you know, they must have realized that this would almost certainly make the United States do something -- I mean, help us understand that decision.

BERGEN: It was a bad decision. But, you know, Siraj Haqqani, who is the acting minister of the interior, so he's equivalent with running the FBI, running the Department of Homeland Security, is described by the United Nations as a member of the leadership council of al Qaeda.

So it's the first time in history that member of al Qaeda has actually got a cabinet position and that's inside the Taliban. So the fact that they brought Zawahiri in, yes, as you say, an old confederate -- and, you know, these are -- they've known each other for decades and they're friends and they basically share a world view.

[10:45:03]

And unfortunately, there was a lot of wishful thinking about the Taliban as the peace agreement with the Taliban was negotiated. I didn't share that wishful thinking. I've spent time in Taliban controlled Afghanistan and they just -- you know, it's an ideological group within an ideological project, and part of that is bringing al Qaeda back into the fold and also, of course, excluding women from the workplace and girls from education.

ZAKARIA: You described the extent of ISIS which, I think, people don't recognize and -- you know, in terms of territory and population. But is it -- how lethal a threat does it pose to the West and to, you know, other kind of advanced industrial societies, or is it that they're just trying to create another version of the kind of Taliban, Afghanistan in northern Syria?

BERGEN: Well, certainly, you know, in 2014 they controlled a lot of population, a lot of territory. Now they're sort of reduced in size. The U.N. estimates about, I think, 6,000 to 10,000 ISIS fighters. We also have this big problem of 60,000 ISIS related women and children in refugee camps and another 10,000 ISIS fighters in prison held by Kurdish forces.

The Turks have keep threatening to invade that part of northeastern Syria, and the U.S. government has repeatedly said that they're very opposed to that, because this would really distract from the Kurds who were kind of keeping these camps and prisons open. You know, so ISIS hasn't gone away.

You know, what threat they pose to the West right now, I think, is pretty limited either in terms of inspiration or in terms of people going to get training, or in terms of their ability to kind of carry out an attack in the West. That said, you know, it can change. If the Turks invade northeast Syria and these prisons and these camps sort of disperse, they can kind of regenerate the geographical caliphate that basically was destroyed by 2019.

ZAKARIA: Peter Bergen, always a pleasure to hear from you. Always a pleasure to get your insights and your reporting. And to remind people, is one of the few people who actually met and interviewed Osama bin Laden. This is a long story which probably won't go away and we will be back to you.

BERGEN: Thank you, sir.

ZAKARIA: And we will be back.

(COMMERCIAL BREAK)

[10:51:24]

ZAKARIA: And now for the last look. America is facing a series of economic difficulties and good solutions are hard to come by. The chief challenge, how to dampen inflation without triggering a recession.

Well, there's one aspect of this problem to which there is a simple solution -- the problem is labor shortages. In industry after industry, the United States has too few workers. Nearly two openings for every job seeker in America. That meant this summer camp owner had to take fewer kids this year.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: It is so hard to find good staff. It's so hard to find good people to work.

(END VIDEO CLIP)

ZAKARIA: This farmer had to look at expensive automation for harvesting crops.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You kind of get in panic mode because we need to have people in the seats when it's go time. It's the bottom line.

(END VIDEO CLIP)

ZAKARIA: This cafe owner had to raise wages to compete for workers.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: That means the price of coffee is going up. The price of that muffin is going up.

(END VIDEO CLIP)

ZAKARIA: The link between too few workers and higher prices is true across large parts of the economy. The reasons for the labor shortage are varied. One is the so called great resignation. People quitting their jobs to pursue education, start their own businesses, or simply retire early. Lack of child care is another.

COVID has killed a quarter of a million working age people and continues to keeps people away from work. But one of the biggest underappreciated factors, as "The Economist" notes, is low immigration.

Even before COVID, the Trump administration was making it much harder in a variety of ways for people to get a visa, all kinds of visas. When the pandemic hit, he largely shut the country's borders. Immigration collapsed.

Under President Biden, immigration has bounced back. But the lost Trump years left a big hole. Giovanni Peri and Reem Zaiour of the University of California, Davis, estimate that as of May, the U.S. was short 1.6 million foreign born residents compared to growth before Trump's restrictive policies. Now, the European Union has a labor shortage, too. But in a rare, bright spot of the Ukraine war, Europe is seeing an influx of refugee workers. Imagine how the U.S. could ease its worker shortage if it took in more refugees and economic migrants. That would also go a long way toward fighting the other problem on everyone's minds, inflation.

Goldman Sachs said in April that in order to slow wage growth and get inflation back near the Fed's two percent target, the gap between available jobs and available workers would need to shrink by about 2.5 million. The Fed's tools like raising interest rates can help with that, but mainly by slowing business expansion and reduce the number of new jobs. Already the gap has began to shrink as of openings fall, but if we want to avoid a bad recession, we should be trying to close the gap the opposite way, increasing the labor force, the number of workers, not killing job creation and slowing businesses.

Some Americans worry about immigrants taking their jobs. But today, we have a clear case where there just aren't enough American workers. Remember, almost two openings for every job seeker. Immigrants won't be taking jobs away. They will be doing work that is desperately needed, essential work like harvesting crops, child care, and food services, work in factories and driving trucks to alleviate supply shortages.

[10:55:02]

Now if we were really smart, we could offer more temporary work visas for certain industries and expand longer-term immigration, as well.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The latest highly anticipated jobs report.

(END VIDEO CLIP)

ZAKARIA: Friday's strong jobs report doesn't change the trends we have seen. Businesses are slowing down, facing a lack of workers.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I don't know where the workers are.

(END VIDEO CLIP)

ZAKARIA: And inflation means real wages are declining. If inflation stays too hot, the Fed will have to push the economy into a recession in order to cool things down. Then people will really lose their jobs.

Bringing in some foreign workers will ease labor shortages, slow down inflation, and help big a bigger, stronger economy for all. After all, America is the country built on this theory, on and by immigration. We simply have to embrace this quintessentially American solution to our current problem.

Thanks to all of you for being part of my program this week. I will see you next week. (COMMERCIAL BREAK)