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FAREED ZAKARIA GPS

Social Immobility Erodes the American Dream; Violence in Egypt; Over-regulation in the United States?; Mideast a Hotbed of Innovation?

Aired August 18, 2013 - 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 will start with violence in Egypt. Bret Stephens and Peter Beinart disagree as usual.

Then, is America over-regulated? Does the government have altogether too much of a say in how we live our lives? I'll ask the man who put many of the Obama administration's regulations in place, Cass Sunstein.

Also, underneath the violence is the Arab world the new start-up society? That's what an American venture capitalist believes.

And while we're at innovation, is North Korea going to beat Apple at its own game? Obviously no, but I will explain.

But, first, here's my take: If there is one crisis that both the American left and right agree is real, it is of declining mobility. The American dream is, at heart, that someone, no matter his or her background, can make it in this country.

A few weeks ago, four economists at Harvard and the University of California at Berkeley released a path-breaking study of mobility within the United States. And last week the Journal of Economic Perspectives published a series of essays tackling the question from an international perspective.

The research is careful and nuanced, yet it does point in one clear direction. The question is, will Washington follow it?

For over a decade now, it has been documented that Northern European countries do much better at moving poor people up the ladder than the United States.

Now, some have dismissed these findings, pointing out that the United States cannot be compared with Denmark, an ethnically homogeneous country of 5 million people.

But Miles Corak points out, in an essay published last week, that Canada is a very useful point of comparison for the United States because it is much like America. The percentage of foreign-born Canadians, for example, is actually higher than Americans. And recent research finds that people in Canada and Australia have twice the economic mobility of Americans.

What is intriguing is that many of the factors that seem to explain the variation across countries also explain the variation across the United States.

The most important correlation in the Harvard-Berkeley study appears to be social capital. Cities with strong families, civic support groups and a community-service orientation do well on social and economic mobility.

That's why Salt Lake City, dominated by Mormons, has extremely high mobility rankings. This would also explain why America in general fares badly. The U.S. has many more broken families, single parents and dysfunctional domestic arrangements than Canada and Europe.

The other notable feature in the Harvard-Berkeley study is the design of cities. Places that are segregated where the poor live far from the middle class do much worse than those that are more mixed.

This probably has to do with geography. It's hard to get to jobs when they are far away. It might also mean that people in poor neighborhoods end up in a self-reinforcing cycle of under-funded schools, high crime and social breakdown.

In any event, these factors, while important, might be difficult to change in any reasonable period of time. Social capital cannot be rebuilt in, say, five years.

Cities cannot be quickly redesigned to integrate them or to create greater density. That leaves the last large factor in explaining the decline of mobility in America and that is public policy.

And here, Professor Corak explains, the United States is the great outlier. Simply put, America spends much less on the education and well-being of poor people, especially poor children, than any other rich country and that retards their chances of escaping poverty.

A recent OECD report points out that the United States is one of only three rich countries that spends less on disadvantaged students than others, largely because education funding for elementary and secondary schools in the United States is tied to local property taxes.

So, by definition, poor neighborhoods end up with badly funded schools. In general, the United States spends lots of money on education, but most of it is on college education and most is otherwise directed towards those already advantaged in various ways.

What's clear from all this research is that countries that invest more heavily in all of their children's health care, nutrition, and education, well-being more generally end up with a much stronger ladder of opportunity and access than America.

Now, that is something we can change and with relatively little money. so if we want to restore the American dream, we now have the beginnings of a path forward.

For more on this go to cnn.com/fareed where you will find a link to my Washington Post column. And let's get started.

(BEGIN VIDEO CLIP)

BARAK OBAMA, PRESIDENT OF THE UNITED STATES: The United States strongly condemns the steps that have been taken by Egypt's interim government and security forces. We deplore violence against civilians.

(END VIDEO CLIP)

ZAKARIA: Let's get right to it with Peter Beinart, a senior political writer with the Daily Beast and an association professor at the City University of New York and Bret Stephens, who is the Pulitzer prize-winning foreign affairs columnist for the Wall Street Journal.

ZAKARIA: So, Bret, when you look at what's going on in Egypt, you now have a military coup that it's very difficult to make the case it was a soft coup. And, you know, I understand the niceties of the American government not calling it that, but you had the military take over a democratically elected government.

You now have the military appointing 17 out of 19 generals as governors. How should we think about this?

BRET STEPHENS, PULITIZER PRIZE-WINNING FOREIGN AFFAIRS COLUMNIST, WALL STREET JOURNAL: Look, first of all, it's a problem with no good solutions. You have in Egyptian politics a kind of a zero-sum game.

I mean, efforts by Senators McCain and Graham, by the administration itself to try to finesse a power sharing agreement between the military and the Brotherhood, have clearly failed.

The Brotherhood aims to topple the military; the military understands that it's in a kind of death match with the Brotherhood and is going to exert itself forcefully, and as we've seen this week, violently on the Brotherhood to stop them.

The question is, can we help? Can we show the military that it's in their own interests to have a political process that if it doesn't quite include the Brotherhood, doesn't suppress them as violently.

Because the government, especially General Sisi, will not be doing themselves favors with the rest of the Arab world, certainly not with Europe and the United States, if protesters continue to be massacred in the streets. So how do you soften those blows?

That being said, I think that the United States ultimately has an interest in seeing his government succeed. We don't want to have the Brotherhood return to power. We saw repressive tendencies by the Brotherhood before they were deposed. Those would become hyper- repressive if they feel that - if get back into power.

ZAKARIA: But imagine if the Brotherhood had killed 95 people on the open street. I mean, yes, what the Brotherhood did was not very democratic often, but killing hundreds of people is not very democratic, either.

STEPHENS: Right. No, it's terrible and we should stress that. And if the Brotherhood - look, the Brotherhood would have acted in the same way. We saw there was a clear tendency in the way the Morsi administration had been conducting itself until the point it was deposed. It's not for nothing that 14 million people came into the streets.

On the whole, though, I think that this is one, and this might surprise you, this is one country and one area where the Obama administration would be wise to the extent possible to follow a Hippocratic, do no harm, and intervene less and even speak less policy. We don't know what's going to ...

ZAKARIA: Which is pretty much what it's doing.

STEPHENS: And rightfully so. And so I think conversations about, you know, let's cut off aid are not helpful. Let's have an inclusive process. It's not helpful. Sometimes it behooves the United States to shut up.

PETER BEINART, SENIOR POLITICAL WRITER, DAILY BEAST, AND ASSOCIATE PROFESSOR, CITY UNIVERSITY, NEW YORK: I couldn't disagree more. I actually - Although I am more often in the position of defending the Obama administration, I think it's clear the Obama administration's policies have been a disaster, and it was people like John McCain and Robert Kagan who are absolutely right to say we don't know how much leverage the U.S. had. Maybe not that much.

But the moment of maximum leverage was right when that coup happened, when there was still a possibility that we could force their military to allow the Muslim Brotherhood to come back and still be a player. We didn't use that leverage.

ZAKARIA; Or it did not work...

BEINART: Well, we certainly didn't use it by coming out and saying we are going to stop aid. We could have said we're going to stop aid, in fact, and we still would have had a grace period where we could have brought it back the next year.

We didn't do that. We had John Kerry going out and basically calling the military an instrument of democracy. And now it turns out that the military has been incredibly repressive, and the Muslim Brotherhood is not going away.

What's going to happen is, the most radical elements of the Muslim Brotherhood are going to come to the fore, and we're going to face the prospect of a Syria-like Islamist insurgency. I think it could go down as the biggest foreign policy failure of this administration. ZAKARIA: But do you think there was a viable path for the Obama administration?

BEINART: I don't know. And I should say, at the time, I also was not wise. I also did not recognize the importance of being willing to put this on the line. But, in retrospect, we should have used whatever leverage we possibly have because now I think the horse is out of the barn.

Now, at this point, after they've killed this many people and they've basically move conclusively towards a military regime, now it seems to me we have little leverage left. It's over.

ZAKARIA: There are people who say that, you know, neoconservatives like you love democracy until Muslim's started voting.

STEPHENS: And many neoconservatives do and I like democracy a great deal. I just don't like liberal democracies. And I think what's important is to emphasize - I mean, look, leave aside the terminology, neoconservatives, because they come in a great ...

ZAKARIA: Agreed.

STEPHENS: Many varieties. What's important is to support processes that lead to liberalism. And you know better than most the distinction between liberalism and democracy.

So, in a country -- countries like Tunisia, which are "democratic" but in which opposition leaders are being killed, in which women no longer have the same kinds of freedoms that they did five or six years ago, those are the real tests of whether a country is moving in the right direction or not.

Simply having a ballot should not be the kind of litmus test as to whether we are going to support a government or not.

We support -- the question is what is that government going to do when it comes to women's rights, gay rights, minority rights, their attitudes towards their neighbors.

So, I think because of essentially a semantic failure very much that the Bush administration was a part of it, we got behind a democracy agenda whereas we should have been getting behind a liberalism agenda.

ZAKARIA: Do you -- yes.

BEINART: But there will be a liberal element and tendencies in Middle Eastern politics. There are liberal tendencies in our own politics. Maybe not quite as great.

But you can't say that because there will be political elements to have illiberal tendencies you're going to shut down the democratic process. Yes, there's a lot to be worried about about Islamist rule, but it seems to me the critical element -- if there's going to be any prospects in the Middle East, Islamists are going to have to be part of the game.

And it seems to me the really important question is how do you divide those Islamists who are willing to participate and abide by the rules of the game from those who will pursue radical jihad.

And what we've seen now is the strongest empowering -- if I were Ayman al-Zawahiri and the al-Qaeda thugs, I would be thrilled by what's going on here, right?

Because a couple of years ago people were saying Islamists can win through the ballots and al-Qaeda was being marginalized. Now, they can say, you see we told you violence is the only way.

ZAKARIA: Is it -- so, if you were an Islamic kind of fundamentalist or politician, I realize that's a stretch, but wouldn't you read history this way; there were elections in Algeria. The Islamists were going to win.

Basically, there was a -- there was a -- you know, they were jailed. There was a martial law declared. Hamas, the Islamists won ...

STEPHENS: Sure.

ZAKARIA: The U.S. -- you know, the U.S. and Europe cut off aid, the Brotherhood. In other words, every time they seem to win in the polls, somehow that election is nullified.

STEPHENS: There's no question that al-Qaeda will take ideological succor and rhetorical succor in what has just happened in Egypt. I mean we're going to find a reason one way or the other.

What was worrying is that when the Brotherhood did have an opportunity to rule, Morsi was moving with remarkable swiftness and, as it turns out, foolish swiftness to establish a kind of autocratic state.

You know, the line was the only way I can impose democracy is by taking authoritarian methods. So, Islamism -- "democratic Islamism" when it was in power wasn't so democratic.

ZAKARIA: All right. We'll have the two of you on to disagree another time.

Lots more ahead. I have a great story about a reform movement in the United States that is being embraced by both left and right. I'll explain.

But right up now, is American over-regulated? If you think so, you will want to hear my next guest who helped put many of those regulations in place. Stay with us.

(COMMERCIAL BREAK)

ZAKARIA: I hear the complaints all the time from businessman, the Obama administration has put in place too many rules for healthcare, energy, finance, the list goes on. And they say it is killing confidence which is the motor for robust growth in this country.

So, who better to answer those charges than the man who oversaw many of those regulations as they were put into place. Cass Sunstein was the White House "regulation czar" for most of the first Obama administration. He has now returned to the Harvard Law School.

Welcome, Cass.

CASS SUNSTEIN, FORMER WHITE HOUSE "REGULATION CZAR" AND FELIX FRANKFURTER PROFESSOR OF LAW, HARVARD LAW SCHOOL: Thank you, Fareed.

ZAKARIA: So you remember the -- you know, forget about these businessmen, who you may regard as, you know, a kind of irredeemably Republican. The Economist magazine, which twice endorsed President Obama, had a cover, which I'm sure you saw, which was called, "Over- Regulated America."

And the argument is, you know, whether it's health care, whether it's finance, whether it's energy, there's a huge amount of new regulation, businesses are trying to figure it out. Is that fair?

SUNSTEIN: I should say that I worked very well with the business community in the Obama administration and they were great partners in a lot of the things we did and they had great ideas.

Numbers don't lie and the number of rules issues in the first term of the Obama administration were actually lower than the number in the first term of the Bush administration and the Bush administration wasn't thought to be regulation-happy.

Also, the cost of regulation in the first term of the Obama administration very much in accord with standard numbers of the last 25 years. So, there hasn't been an explosion of regulation recently.

ZAKARIA: Does that include Obamacare?

SUNSTEIN: Yes, that does include the regulations that have been issued. Having said that, it is true that there are many areas that are over-regulated.

And it's not widely known, but President Obama did embark on a regulatory look-back which has already saved billions of dollars in regulatory costs and eliminated a large number of regulatory controls thus freeing up business from restrictions that really weren't doing anybody any good.

ZAKARIA: You can imagine -- I think I can imagine what some businessmen friends of mine are thinking as they're listening to this, but they're going to say it. Obamacare, 1,000 pages of regulation, Dodd-Frank, 800 pages of new regulation. All the new EPA rules, hundreds of pages of new regulation.

Isn't that -- is that part of the problem?

SUNSTEIN: Well, I think it is true that there are new regulations, fewer than under Bush, but there are new. And the question is whether these are good regulations.

So, in the environmental context, there's rules that are increasing the fuel economy of cars so the United States can have a pretty clean fleet going forward. It's already cleaner than it was a number of years ago.

That imposts costs, but the benefits are just worth the cost in terms of air pollution productions, energy security so the United States is closer to energy independent and consumers are saving money at the pump because their cars aren't going to cost them as much to operate.

And actually, for consumers, they're net winners. There's a rule that involves illnesses from Salmonella from food which is going to prevent up to 79,000 illnesses a year including dozens of deaths.

That rule, that's a good rule. So, the fact that it's a rule that imposed costs doesn't mean it's a bad idea. The question is is the individual rule doing more good than harm.

ZAKARIA: You have a book called "Simple" or "Simpler" depending on whether one takes the "r" that's been crossed out, "The Future of Government." And that's essentially the thesis, as I see it, it's that the question isn't good regulation -- it isn't more or less, but it's smart regulations.

SUNSTEIN: The basic idea is that you have technologies now like an iPad which has a great deal of complexity in it. Probably 15 years ago it would have been very hard even to fathom all of the technical capacity that went into drawing it up, but it can be navigated even by a young child.

So, one thing I tried to do was to have for every regulation a simple, short executive summary so everyone could get it. And that not only made navigability easier, which is a great way to promote predictably.

But it also made accountability better because if a rule was simply described and seemed to have terrible flaws in it, then we'd hear from the people who were going to be regulated or maybe the people who were going to be benefited and they'd say here's what you can do and then we could fix it.

So that simplification can be a great engine of democratic self- government as well as reduce the risk that I think a lot of people are rightly concerned about which is the regulatory system can be so messy that it can impair economic growth.

ZAKARIA: You worked with President Obama close up in the White House, is he friendly to business? SUNSTEIN: Very much so. You have to keep in mind that when he came into the presidency the economy was in free-fall and the stock market has exploded in a good way since he's been president and that's because economic growth and increasing employment have been top priorities for him.

So I think the rhetoric about unfriendliness to business and excessive regulation doesn't really fit with reality. The proof of the pudding really lies in implementation and that continues to be a challenge.

Things that have done well in both domains and in other that I've worked on were ones where the business community was a partner and someone to whom we listened very closely.

ZAKARIA: Cass Sunstein, pleasure to have you on.

SUNSTEIN: Thank you.

ZAKARIA: Up next, What in the World, so good news from a very dark place, American prisons. I will explain.

(COMMERCIAL BREAK)

ZAKARIA: Now, for our What in the World segment. I was struck by a piece of news recently that is good for America, shows that our politicians are learning from their mistakes, and are actually cooperating with each other, on both sides of the aisle. Sounds too good to be true? Well, listen in.

For many years, the United States has had a growing problem in its criminal justice system. As I've pointed out before, we are number one in the world when it comes to incarceration, by far.

In 2009, for example, for every 100,000 citizens, 760 Americans were in prison. That was five times the rate of incarceration in Britain, eight times the rate in Germany and South Korea, and 12 times the rate in Japan.

This trend began about 40 years ago. In 1970, state prisons had a combined total of 174,000 inmates. By 2009, they had 1.4 million, an eight-fold increase. And these correctional systems cost a lot of money of course, nearly $80 billion a year, more than the entire GDP of Croatia or Tunisia.

Well it seems that finally, common sense is prevailing. Attorney General Eric Holder made an important speech this week admitting that our prisons are overcrowded and costly. He specifically called for a reduction in mandatory sentences for low-level drug offenders.

(BEGIN VIDEO CLIP)

ERIC HOLDER, UNITED STATES ATTORNEY GENERAL: Will no longer be charged with offenses that impose Draconian mandatory minimum sentences.

(END VIDEO CLIP)

It's important the attorney general brought up drugs, because the numbers are startling. Federal prisons, the group Holder was referring to, account for about 14 percent of our total inmates.

In these prisons, the most serious charge for nearly half of all inmates is a drug offense. Compare that with state prisons, where only 20 percent of the inmates have a drug offense as their most serious charge.

Now, here is what is interesting. The federal prison population has increased every single year since 1980. On the other hand, state prison populations have been declining in recent years, so much so that the overall number of inmates, state plus federal, is actually down in each of the past three years.

And here is the best part: the declines encompass 28 states, red and blue. Part of these declines are because budgets were simply collapsing. But it could also be because of a growing acknowledgment that the war on drugs has failed.

According to the pro-reform Drug Policy Alliance, the United States spends about $50 billion a year on the drug war, adding up to a trillion dollars in the last four decades. But there has been no real change in addiction rates.

Americans are not more prone to drugs or crime than citizens of other countries, so why should we put so many people in prison? Well, the good news is that the numbers are finally too large to ignore. The states are already acting. And Holder's comments will add momentum to a growing chorus for reform.

(BEGIN VIDEO CLIP)

ERIC HOLDER, UNITED STATES ATTORNEY GENERAL: This isn't just unacceptable, it is shameful.

(END VIDEO CLIP)

ZAKARIA: The greatest challenge in pushing these numbers further down will be the prison lobby. Believe it or not, many of our prisons are run by private companies, that then lobby state legislatures massively for bigger prisons, larger budgets and, of course, more prisoners. According to the nonprofit Justice Policy Institute, the two largest private prison companies in America together generate revenues of $3 billion a year, paid by taxpayers, of course. These private prison companies also happen to be major donors to a number of state campaigns, lobbying for more resources. If our politicians can take on the prison lobbies, there really is hope for America.

Up next, a different way of looking at the Middle East. It's the new hotbed of innovation. How? Stay tuned. I have a great guest who explains.

(COMMERCIAL BREAK)

CANDY CROWLEY, CNN ANCHOR: I'm Candy Crowley in Washington with a check of the headlines. The head of Egypt's army sent a message to protesters today. In a stern warning on the Army's Facebook page, General Abdel al-Sisi tells supporters of deposed President Mohamed Morsy that there is room for everyone, but that securing the state will remain the main objective and the sole mission of the Army, the police and the Egyptian people. Muslim Brotherhood protesters cancelled today's protests for security reasons.

President Obama is wrapping up an eight-day vacation on Martha's Vineyard. His break included lots of golfing. Among his partners, Seinfeld producer, Larry David. The president hits the roads later this week to highlight his proposals for helping the middle class. His campaign-style bus tour will take him to Buffalo, Syracuse and Binghamton, New York. Thursday, he travels to Scranton, Pennsylvania, Friday. Those are your top stories, "Reliable Sources" is at the top of the hour, but now back to "Fareed Zakaria GPS".

ZAKARIA: Entrepreneurial is not the first word or one of the first ten words that come to my mind when I think of the Arab world, but my next guest is here to tell me that I'm wrong and the media is missing a big story in that part of the world. Chris Schroeder is a Washington D.C.-based entrepreneur and venture capitalist himself. He has a new book called "Start Uprising, the Entrepreneurial Revolution, remaking the Middle East." So, as I say, when you tell people this, their first reaction must be you're talking about Asia, right?

CHRISTOPHER SCHROEDER, AUTHOR "START UPRISING": Yeah. Which is -- is -- it's unfortunate way, because as you know from your travel, there are multiple generations of entrepreneurship and the list's going back a thousand years. But people don't think of it as particularly a technology hub, which I think is a mistake that I've even made overall because the fact is, software now is everywhere. And when a new generation gets a hold of software, it does some very, very interesting things.

ZAKARIA: But give me of sense of, you know, what is the basic evidence for this? Because I would agree with you, this is an old trading culture. Mohammed was a merchant. But the states of the Arab world are highly status. They are the state tends to own large swaths of the economy. I don't think of them as places where you'd see, you know, the growth of entrepreneurship.

SCHROEDER: One of the great stories about entrepreneurship now is the fact that so much is happening bottom up, again enabled by technology. And so, as you know better than anyone, all emerging markets have tremendous complexity and histories and legacies, which is hard to work at. But all of a sudden when young people have these devices in their hands and they have the access to technology, they can collaborate, share ideas, solve problems in very, very different ways.

ZAKARIA: So what have you found going around?

SCHROEDER: So, what I have found overall are sort of three buckets of entrepreneurs. And by the way, this is as true in North Africa as in Yemen. In midst of all the things that are going on. As you see often in emerging markets, you have entrepreneurs who are taking things that have been successful elsewhere and they are taking it to the Middle East. So there's a wonderful company called "Maktoob," which is the Yahoo! of the Middle East, which, by the way, Yahoo! bought for almost $200 million. There's another great company, called Souq.com, which is a multi-hundred million dollar company, which is very much like the Amazon.com of the Middle East. But one of the most exciting things that I see are these young people who look at the problems around them. They use technology to solve them. So, traffic is terrible in Cairo, as you know. And so, now there are several wonderful apps to crowd share, how you can get through and navigate traffic. I would say as much as 15 percent of the startups I see are education. I mean a lot of people don't realize in Egypt alone, that tutoring, supplemental education is already a $2 billion business. And now technology is coming in to not only bring courses and videos online in Arabic, like Khan Academy, but now it can reach hundreds of thousands if not millions of more people.

Of course, everything is one click away, which means that some of these companies I'm seeing are right now reaching American audiences. I discovered a year ago that I had been using for six months a weather app. I had no idea it was made by 30 young people in Alexandria, Egypt. But I had it, because I can access (inaudible) as you could never before.

ZAKARIA: And the youth is the large part of your story. We often heard about the youth bulge in the Middle East, you know, whatever it is, about 60 percent of the Middle East ...

SCHROEDER: Yes.

ZAKARIA: ... is under 35. But you see that as actually one of the advantages powering this entrepreneurial revelation.

SCHROEDER: So, it's an advantage with a caution. So, if you compare the youth bulge in the Middle East, compare it to the opposite in Japan, I'm very, very optimistic about the potential there. But as you know better than anyone, when you have a youth bulge that is unemployed or not working, this has other very interesting ramifications. What is important is, as more and more young people have access to technology, they have more and more opportunity to take initiative into their own hands and create things, which I think are very, very powerful in the ways I do not believe government or traditional business will be able to absorb that bubble.

ZAKARIA: Another piece that you see as very important is women. That this entrepreneurship is empowering women in societies that have many structural barriers to women's empowerment.

SCHROEDER: Yes, it's absolutely true. So, I've seen studies that say and certainly box anecdotally, from all the multi-thousand person, startup competitions I've seen over there as many as 35 percent of these entrepreneurs are women. MIT had a great startup competition that they have in the Arab world every year. Last year over 40 percent were women, which I can't find an event anywhere in Silicon Valley that could boast that. And so, it is a culture surprising thing, when you think about it. But again, when you have technology, whether you're at home or you're out in the workplace, you have abilities to make things happen that you couldn't even five years ago.

ZAKARIA: The other advantage the Arab world has, is, you know, you do discoveries again -- a network effect. And I think about one of the things people don't think about is despite the fact these are many countries, 29 countries, it's one language.

SCHROEDER: Yes.

ZAKARIA: Which in the world of computers and apps, it provides you with a much bigger market than you would normally be able to have if you were, say, Portugal.

SCHROEDER: 350 million people in the Arab world alone and that's only, you know, a part of, I think, the opportunity in this great geographic location north, south, east and west. But I know great entrepreneurial organizations that we're building ecommerce companies in Istanbul. In Istanbul, it's the wonderful ecosystem. But in the end, that's Turkish only.

ZAKARIA: Right.

SCHROEDER: So, I know one group that decided to take out their ecommerce efforts there and they shifted them to Dubai and all their emphasis is there. I think in large part, just because of what you just described.

ZAKARIA: So, you say, you know, in a sense don't look at the headlines, don't look at the police. Look at the bottom up entrepreneurship of young people plugged into the world, aspiring to have the same kind of success that their counterparts have had in so many parts of the world?

SCHROEDER: The nuance, I would say, to anyone who's not been there, is you have to look at the headlines because those hard realities are realities as well. Well, of course, as we know there are hard realities everywhere in the world. But no one is spending enough time looking at something that's happening in parallel just as large and again where the future is going. Where do you want to spend your time supporting, solving the 20th century challenges or a lot of times solving there what's happening where the things are going. And so, it's as much as be cognizant of the things that we all know about, but realize, question yourself to know that was just happening everywhere else in the world, is going to happen here because it's happening here. It's happening in Africa. We already know it's happening in South America, in Eastern Europe and elsewhere. This is the world that we're entering.

ZAKARIA: Chris, pleasure to have you on.

SCHROEDER: Thanks for thinking of me.

ZAKARIA: Up next, on GPS which cereal should you eat for breakfast, what songs should you put on your iPod, which shoes should you wear? Do we have altogether too much choice in our lives? I think so. We'll talk about it when we come back.

(COMMERCIAL BREAK)

ZAKARIA: Have you ever noticed that President Obama only wears dark suits? They're always similar shades of gray or blue. Now, the reason he does this is not just sartorial. In fact, the president is trying to pare down the number of choices he has to make every morning so he can focus on decisions that are actually important. Choices can exhaust us. I know business leaders who always eat the same tuna salad lunch every day so they don't have to agonize over what to eat. I've been thinking about the topic so I decided to bring in two academics who study choice. Sheena Iyengar is the author of "The Art of Choosing." Sheena has been blind from a young age, but that hasn't stopped her from becoming a top social scientist and expert on this subject. And Kent Greenfield is a professor of law at Boston College. He is the author of "The Myth of Choice."

So, Sheena, let me start with you. What is wrong with choice? Choice seems to be -- you know, it's as American as apple pie, with or without ice cream, so you get the choice. And everything about American life today is about choice. You think about, you know, that during the Cold War we were always so proud of the fact that when Russians would come to America and they would look at a supermarket, they could buy 55 different kinds of cereal, which is probably now up to 200 or something like that.

SHEENA IYENGAR, AUTHOR, "THE ART OF CHOOSING": I got interested in the question of choice a long time ago. There was a fancy upscale grocery store that I used to go to when I was a Ph.D. student at Stanford. It was called Draeger's. And at this store, I did this very simple experiment. We put out either six different flavors of jam or 24 different flavors of jam. And we looked at two very simple things. The first was whether -- in which case were people more likely to stop and sample some jam? And the second was in which case were people more likely to buy a jar of jam. And what we found was that people were more likely to stop when there were 24, 60 percent, than when there were six, 40 percent, but when it came down to buying behavior we saw the opposite effect. So of the people who stopped when they were 24, only three percent of them actually bought a jar of jam. Whereas when there were six, 30 percent of them actually bought a jar of jam. This was actually the first time that we actually ever saw the possibility of that when people encountered more, they might actually be less motivated to make a choice, that more wasn't always better, that it could actually be less.

ZAKARIA: Kent, does that resonate with your research?

KENT GREENFIELD, AUTHOR "THE MYTH OF CHOICE": Absolutely. It's easy to be overwhelmed with choice. In fact because we are so easily overwhelmed, so much is noise. And that means that we're open to manipulation by people who know more about our own tendencies than we do. So, for example, that's why sex sells in the marketplace because our brain -- parts of our brain are very reptilian and so there's an appetite center that if triggered by various ways, you know, maybe view of an attractive person or a spokes model or the smell of cookies or perfume in the department store counter, it can awaken this part of the brain that really wants to be satisfied. And if you can ...

ZAKARIA: And that's the sort of non-rational -- you know, like analyzing these choices. You would just ...

GREENFIELD: You're just going to -- all these studies show that people, when that part of the brain is activated, people get really short-term oriented, but very creative in satisfying those choices. It's almost like we all become teenage boys.

ZAKARIA: When you went to Japan, you have this story about you asked for tea with sugar, right, at a restaurant?

IYENGAR: Yeah, I did.

ZAKARIA: And what did they say?

IYENGAR: Yeah, well, so I went into this restaurant and I asked for a cup of green tea. And then I asked for some sugar. And the waiter tries to tell me, no, no, no, in Japan we don't put sugar in our tea. And we go back and forth. And I say I understand that, you know, you're not supposed to put sugar in your green tea, but I really like to have sugar in my green tea. This then created such a controversy, the waiter went and had to have a chat with the manager and they go back and forth and finally the manager comes over to me and says I'm really very sorry. But we don't have sugar. So then I ordered a cup of coffee. And when I got the cup of coffee, on the saucer were resting two packets of sugar.

ZAKARIA: Now, Kent, the implication of all of this in some sense is very much the kind of work that's now very hot in economics ...

GREENFIELD: Right.

ZAKARIA: ... which is the way you frame a choice makes a big difference. Is that the point here, that you want more paternalism and less individual choice?

GREENFIELD: One of the central implications of all of this, this is the context and situation matters. So the recent gains in childhood obesity, and in fact decreases in childhood obesity in the United States is not because we've just been more successful in telling kids not to eat, but realizing the situation matters. That the architecture and design of school lunch lines. You know, putting the healthy foods at the beginning of school lunch lines, for example. A healthier park, so that the kids go and play rather than watch TV. All these things are really important for public policy experts to understand.

ZAKARIA: Sheena, finally, what would you say -- what's the takeaway for somebody listening to your research and saying, OK, I get it, I can get overwhelmed with choice, I can make bad choices. So what should I do?

IYENGAR: So I think the most important thing is to realize that choice is not the end, right? Choice is really just a tool that helps us get where we need to go to accomplish our goals. And so two quick tips, things that we do with a lot of executives to help them improve their decision-making, one is when you're making a choice, right, some is good, more is too much. So when you're making an important decision, you don't just say -- don't just choose one option, whether or not I should do this. Should I launch this product, should I buy this house or not. You have to have at least two choices. Maybe even three. They should be meaningful choices. But you don't need hundreds. And the second tip that's very important is because we live in this world where we have so many choices, I mean the average American is making at least 70 choices per day, one of the things that's imperative today is you've got to be choosy about choosing. Which means you've really got to think through what are all the tasks you're engaging in in a day. Which ones are worth doing, which ones are not worth doing. Get rid of the choices that aren't worth your time.

ZAKARIA: So I don't know. Wear a blue suit every day.

IYENGAR: Sure.

ZAKARIA: As President Obama does or something like that.

IYENGAR: Exactly.

(LAUGHTER)

ZAKARIA: Sheena, Kent, pleasure to have you on. Thank you so much.

IYENGAR: Thank you very much.

ZAKARIA: Up next, North Korea's breakthrough indigenous innovation, but no one there can use it. I will explain.

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ANNOUNCER: West Germans can no longer worship at the church where their forefathers were christened and were buried. The communists have never learned that they can never erect the law between the people and their God.

(END VIDEO CLIP)

ZAKARIA: 52 years ago this past week, the East German government began construction on what it called its antifascist bull work, the Berlin Wall. It brings me to my question of the week. How many miles long was the Berlin Wall when fully built? Seven miles, 15 miles, 38 miles or 96 miles? Stay tuned and we'll tell you the correct answer. Go to cnn.com/Fareed for more of the "GPS Challenge," lots of insight and analysis. You can also follow us on Twitter and Facebook and remember, you can go to iTunes.com/Fareed if you ever miss a show or a special. This week's book of the week was inspired by the recent sale of the "Washington Post." The transaction got me thinking about the good old days of journalism and that in turn brought to mind Evelyn Waugh's "Scoop." It is probably the best novel ever written about journalism. It's well worth a read or a re-read this summer.

And now for the last look. The iPhone probably doesn't have much to worry about, although the BlackBerry might. Why? The Arirang is here. The what, you ask? The Arirang is described by North Korea's state news agency as the nation's first indigenous hand phone. And none other than the young dictator Kim Jong-Un went on tour of the factory recently. He's said to have (inaudible) the patriotic enthusiasm in the assembly plant and noted how very convenient the camera on the phones would be to use since the cameras have high pixels. There's just one problem, nobody would ever realistically be able to see those fancy pictures, since nobody in North Korea has Internet access.

The correct answer to our "GPS Challenge" question was D. As of July, 1989, a few months before it fell, the Berlin Wall measured 96 miles. Remember, it not only separated East Berlin from West Berlin, but also West Berlin from the rest of East Germany. Still, the wall couldn't stop over 5,000 people from escaping from East Germany.

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