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Fareed Zakaria GPS

China Emerges as Next Superpower?; Is Web Dead?

Aired August 29, 2010 - 10:00   ET


FAREED ZAKARIA, HOST: This is GPS, the Global Public Square.

Welcome to our viewers in the United States and around the world.

I'm Fareed Zakaria.

Today we are devoting the show to ideas today. New ideas, big ideas. I have always been fascinated by ideas, which is, I suppose, the ability to think creatively about the world, to see new patterns, to make new connections, invent new concepts.

There are many people who love to read biographies. Others people love novels. I love idea books, books that make me think about the world.

I would make the case that this kind of thinking is actually very important for a society, especially an advanced industrial society like the United States. After all, everyone agrees that America needs, above all, to be able to innovate. And innovation is really about the creation and generation of ideas, all kinds of ideas in all kinds of fields.

Others will be great at manufacturing, at execution, at agriculture, but America has to be great at, well, thinking, creating, innovating. So we want to invent the iPod, create Facebook, come up with the new electric car.

This actually applies not simply in the economic realm, but even in foreign policy. The United States will have to tackle a fast- changing world without the traditional dominance it has had in the past, which has been about arms, about money, about hard power. It will have to earn its leadership, try to set the global agenda with the quality of its ideas, not the quantity of brute force, persuade other countries to come along because they see a win-win for themselves, not because they cower in fear at Washington. So the skills of diplomacy, conceptualizing and operationalizing ideas, now become supremely important.

On the program, on our big ideas program, we start with big ideas on foreign policy with a great strategist, Robert Kaplan, who will explain to us the new geopolitics of the most important spot on the earth -- East Asia. He will talk to us about the geography of Chinese power.

We then move to a geography closer to home, the city, and how it will change as Americans adapt to a world after the recession. Richard Florida on the great reset in American lives.

Clay Shirky, the great Internet guru, is next up on whether the Web is making us smarter, dumber or more free.

Also, "What in the World?" A big idea about nuclear weapons. How many do we need to keep to keep us safe?

And then a last look at a more invisible soldier. Can you spot him?

Let's get started.


ZAKARIA: This big idea is about China. We have talked countless times on this show about China's rise, mostly about its economic rise. But China has also embarked on a big push to strengthen its military, to increase its political reach both on land and by sea.

So the question is, to what end? Does China want to be a real superpower, a military superpower? And whom does it bump up against in Asia? What is the geography of Chinese power?

That's what Robert Kaplan is here to talk about. He is a senior fellow at the Center for a New American Security. He's also the author of a new book called "Monsoon."


ROBERT KAPLAN, AUTHOR, "MONSOON": It's a pleasure to be here, Fareed.

ZAKARIA: So, you talk about a lot of this in a really brilliant foreign affairs article. One of the things you talk about that I was struck by is there is this great geostrategist from about a hundred years ago, Halford Mackinder, who says that while Russia would never be a true geographic world dominator, China would if it got it ever act its act together economically.


ZAKARIA: Explain why.

KAPLAN: All right. Just look at the map.

Here is Russia, north of the temperate zone, bumping up against Arctic ice. It has a long sea coast which is off the map, but it's all ice-bound.

But here is China, right in the temperate zone. Northern China is the same latitude as Maine. Southern is the same latitude as New Orleans. It occupies the same latitudes as the United States, so it's blessed by climate and geography.

Also, it reaches deep into Central Asia with all of its mineral wealth and strategic importance. And unlike Russia, it has a 9,000- kilometer sea coast, with a lot of good natural harbors in the temperate and subtropical zones.

So, as you said, if China got its act together, China is in a position to dominate Eurasia to the degree that no other Eurasian power is. But let me say this -- that China is not a missionary power like us.

It doesn't seek to export a system like we did or the Soviet Union did. But it's not a status quo power. It's in a strong hunt for hydrocarbons, minerals, and strategic metals in order to lift the living standard dramatically of a fifth of humanity. The fact that China now is at the apex of its reach on land gives it unprecedented opportunity to reach beyond in this age of globalization.

ZAKARIA: So China's sea power now has begun to expand in the building of ports, the building of the navy. Tell us about China's sea power.

KAPLAN: First of all, what is the biggest news development in the past 10 years in my opinion that hasn't been covered? I would say the rise of China as a sea power.

And why is China rising as a sea power? Because it has the luxury to do so, and it has the luxury to do so because it settled most of its land borders. As I said, it's at the high point of its land ascendancy.

The fact that it's becoming a sea power across all this area -- and India, too, is rising and becoming a sea power -- brings China and India into competition for the first time in their histories. Now, here comes the interesting part.

If China dominates East Asia, the marginal seas like the South China Sea and the East Sea, that makes it a great regional power. But once China has a presence in the Indian Ocean, it becomes a great power.

And China is busy building ports in Chittagong, in Bangladesh, in Hambantota and Sri Lanka and Pakistan, in Kayukpu, in Kyaukpyu, in Burma here. Why are they doing this? To have military bases? No. The Chinese are far more subtle than that.

They want throughput, warehouse access for their goods, so that they can at some point have their own sea lines of communication between the hydrocarbon-rich Persian Gulf area and China itself. So, for China to protect its own shipments of energy and its commercial goods between the Middle East and Asia requires a presence, not a domination, on the Indian Ocean.

ZAKARIA: This reminds me of the way the British Empire came into being, which is with sea lanes, with coaling stations that were then built so you could in those days -- the ships required coal. And so that, then, of course, meant you had an interest in the stability of the country in which you had the coaling stations.

And so, similarly, if you look at what you are describing, it's here, here, here. You can imagine a Chinese zone of influence -- and this is from your foreign affairs article -- which extends this way.

KAPLAN: Yes. And particularly interesting is that while Pakistan is sort of the Balkans of Asia, in danger of dismemberment, Burma, Myanmar, on the map, is sort of the pre-World War I Belgium, because it's where India and Chinese influence terrifically overlap.

Just north of where China is building a port, in Situai (ph), 50 miles north, the Indians are building a deepwater port. What's here? Natural gas.

They both want natural gas. China wants to build roads and pipelines across Burma into western and central China so they can avoid the bottleneck of Malacca Strait here. So, to take oil and natural gas from the Middle East, all the way to get more natural gas from Burma, and then ship it over land.

ZAKARIA: Do you see Chinese military presence expanding? I mean, they are building more ships.


ZAKARIA: Talk about that.

KAPLAN: Yes. As I said, China is not a status quo power only because it seeks minerals and metals and hydrocarbons. It doesn't have a traditional imperial mindset in that sense.

The Chinese are very smart. They are not buying across the board. They are emphasizing things like attack submarines, the ability to hit moving satellites in space, missiles that can hit moving targets at sea, cyber-warfare.

ZAKARIA: So this is what one would call asymmetrical responses. They figure they can't match the Americans tank for tank, plane for plane, but they can do things that would disable America's technological dominance.

KAPLAN: Yes. The roadside bombers in Iraq showed us the low side of asymmetry. What China's showing us now is the high end of asymmetry, far more subtle, not designed to get into a war but with the United States, but to deny us access in the South China Sea. And the really hot area in the coming years and decades is going to be the South China Sea.

ZAKARIA: Where -- that's right there.

KAPLAN: That's here. It starts in Taiwan, in the north, and it comes down to Malaysia here. This whole area which gets a third of all world commercial sea traffic and a half of all the energy traffic destined for northeast Asia. You know, South Korea and Japan.

Think of the South China Sea as the future Persian Gulf, because you have large deposits of energy here. Just recently, the Chinese declared the South China Sea a core interest, and Secretary of State Hillary Clinton pushed back saying that the U.S. would help mediate disputes here. Why would --

ZAKARIA: And the Chinese responded very angrily to that.

KAPLAN: Why did they respond so angrily? Here's why.

The Chinese look at the South China Sea the way we looked at the Caribbean in the 19th and early 20th century. What makes America a great power ultimately? It's our domination of the Western Hemisphere, which means our domination of the Caribbean.

There was a time in our history when the Caribbean was contested by many European powers, and the U.S. policy was it's technically an international waterway, but, in fact, we will dominate it. And that's how the Chinese see the South China Sea.

In fact, Chinese officials have told me that. They made the comparison with the Caribbean, not me.


ZAKARIA: And when we come back, we're going to talk about how all this geopolitics affects the United States and its strategy going forward. Will the United States and China come to blows?


ZAKARIA: So what you are describing is a pretty complex set of geopolitical relationships. And all of this is going to have to be managed by China and the United States, principally, very, very shrewdly to avoid some kind of great power conflict.

KAPLAN: It's going to be balance of power flanked with three- dimensional chess, essentially.




ZAKARIA: And we are back talking with the geostrategist Robert Kaplan about whether the United States and China are destined for a great power conflict in Asia.

As China expands, what it is bumping up against is the established dominant power in the region, which is the United States. We have bases in Japan, we have bases in the Philippines. We have relations with every country, military relations, in Singapore through Japan, of course.

How do they view this? What does it mean for America?

KAPLAN: Actually, I see a great opportunity for the United States if we play this smart. We are entering a militarily naval- wise, multi-polar world in the decades to come. We are not going to have the dominance that we did.

Maintaining our bases because of public opinion in Japan is getting harder. One of the only reasons our relations with South Korea are so good is because we have reduced their land presence from about 37,000 troops to 25,000 troops there.

So what's going to happen is that if the U.S. plays it smart, it will put more emphasis on the islands of Oceania outside here, Guam, the Northern Marianas, Palau, et cetera, which are U.S. holdings where we can build up bases, be less provocative towards China, and where we can be, you know, to borrow Madeleine Albright's phrase, the indispensable power. In other words, because we will be the balancing power that has no territorial ambitions in Asia so that all these countries here will need us.

Because on the one hand, they have to accept the Chinese hegemony for trade reasons and distant reasons of distance. But on the other hand, they don't want to be gobbled up by it.

They want a hedging power that we can serve. And we can do this with the Navy of our current size or even slightly smaller, factoring in budget cuts.

ZAKARIA: But we would have relations with Japan, with Indonesia, in the Philippines, with Vietnam, with India. Is China going to see that as some kind of encirclement?

KAPLAN: Not if we try to incorporate China into this concert of powers. In other words, reaching out to China at all levels, all the time, at the same moment that we push forward like-minded others like Japan and India, encourage their military development, particularly in the naval and air sphere.

ZAKARIA: So what you are describing is a pretty complex set of geopolitical relationships because you have economics, you have border disputes, you have different political systems. China is not a democracy. Japan is, India is. And all of this is going to have to be managed by China and the United States, principally, very, very shrewdly to avoid some kind of great power conflict.

KAPLAN: It's going to be balance of power flanked with three- dimensional chess essentially. And this brings us back to the great 19th century and even ancient strategists.

ZAKARIA: Very tough. Do you think the Americans are up for it?

KAPLAN: I think increasingly, they are. I think the naming of the special envoys to Afghanistan, Pakistan and Israel -- Palestine has been criticized a lot. But one thing it's done that hasn't been noted is that it's freed up the secretary of state's time to make more trips to East Asia.

ZAKARIA: And that's where she's going to have to make a lot more trips going forward.

KAPLAN: Yes. ZAKARIA: Robert Kaplan, a pleasure to have you on.

KAPLAN: My pleasure.

ZAKARIA: And we will be right back.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: So, today, I state clearly and with conviction, America's commitment to seek the peace and security of a world without nuclear weapons.



ZAKARIA: Now for our "What in the World?" segment.

What got my attention this week was a drop from about 5,000 to 311. No, it's not a crash in the Athens stock market. It was a proposal from a United States Air Force colonel, the chief of the Strategic Plans and Policy Division at Air Force headquarters.

He says that the United States can safely go from its current estimated stockpile of more than 5,000 nuclear weapons down to 311. Colonel B. Chance Saltzman and two professors at the Air Force's Air University says that's all the country needs.

That includes 100 land-based intercontinental ballistic missiles like the Minutemen-3; 192 sea-land ballistic missiles carried on Ohio- class submarines like these; 19 air launch cruise missiles on B-2 bombers like these. The report says that with that specific number of weapons in that specific configuration, America's nuclear security can rest easily.

Now, you have to remember that the commander-in-chief that these three men work for has very strong thoughts of his own on how many nuclear weapons we should have.


OBAMA: So, today, I state clearly and with conviction, America's commitment to seek the peace and security of a world without nuclear weapons.


ZAKARIA: Now, I personally don't think it's realistic to believe we will ever get to a nuclear-free world or that we even should. We have had no major conflicts between any of the world's major powers since 1945. That is, in some measure, because of the caution induced by nuclear deterrents. The Cold War, for example, never became a hot war between the United States and the Soviet Union because both sides feared the consequences of going nuclear.

But we have always wondered just how many nukes would be enough to fulfill the basic mission of deterrents. And this study says a pretty small number.

Interestingly, the study's authors claim that the U.S. could actually go to 311 unilaterally, that we don't even need the other nuclear powers to come down to that number. Why? Because even if, say, the Russians were to strike first, they could only take out our land-based missiles. That would still leave 211 sea-and-air-based missiles for the U.S. to use against the Russians and thus have retaliatory capacity.

All in all, it's an intriguing idea, an idea that might gain some traction. And it's a number, 311, that you might hear again in the future.

We will be right back.


UNIDENTIFIED MALE: You can't be a modern state if people don't have a camera phone in their pocket that works.





ZAKARIA: So, is "Wired" magazine's cover correct? Is the web really dead? Or is surfing the internet killing our brain cells? Or is all of our 21st Century connectivity making us smarter, more creative, more collaborative, better citizens of this earth?

One of the smartest people I know is bullish on the internet, the effect it's had on us and the effect it will have in years to come. And his big idea is laid out very smartly in new a book "Cognitive Surplus: Creativity and Generosity in a Connected Age".

Welcome back to the show, Clay Shirky.

CLAY SHIRKY, NEW YORK UNIVERSITY: Thanks, Fareed. Thanks for having me.

ZAKARIA: I guess you would be called an internet guru. Are you comfortable with that?

SHIRKY: I don't like the term, but, you know, whatever.

ZAKARIA: So, what is happening with the web? It's - it's going - getting on the mobile devices. Mobile devices are getting more portable.

SHIRKY: Yes. Yes.

ZAKARIA: Is that the big thing happening? And what does it do to the web? SHIRKY: That is certainly a big change, and - and Chris Anderson, who cut his teeth at "The Economist", adopted "The Economist's" style to the - to the headline "The Web is Dead". "The Economist" house style is simplify than exaggerate. So, in fact, the web is not dead.

But what is happening is that all kinds of other ways of marshaling the resources of the internet, the underlying platform, are coming to the fore. So anybody who's used an application from an apps store, on an iPhone or an Android, has seen an alternate way to get hold of data. You've got things like -

ZAKARIA: Well, wait. But that means - what you're saying is the old-fashioned way - the old-fashioned way, which is Google search.

SHIRKY: Right. Sit down on Google, open a web browser search - or sit down on a web browser, open Google, search for something -

ZAKARIA: That - that may not - on a small portable device, you're not going to do that.

SHIRKY: Right. It's a lot of extra steps. And, in fact, one of the things that you get when you open an application is the application knows, I know what you're already looking for. Right? If it's an application about restaurants, it's already got some knowledge of the domain you're interested in. If it's an application about being a tourist, it's already got some knowledge of the domain.

So this move away from this completely general purpose browser, the most general purpose platform literally in the history of the software industry, down now to these very specific apps that are custom-designed for purpose. A lot of that is being driven by the fact that these little devices in our pocket, they don't have the memory, they don't have the bandwidth, and, frankly, we don't have the patience and the little thumbs necessary to do all of the typing.

So we're - we're swinging away from the completely general purpose web into this world of a much more tightly designed experience.

ZAKARIA: And what does that do to the - to the experience? And, you know, what does it do in the broadest, most sociological sense? Because it sounds to me like one of the things that the internet did was it - it got rid of the sort of broad, general platforms like newspapers, frankly, and - and you instead do information retrieval.

SHIRKY: Right.

ZAKARIA: Where you would say, I want this story. I want this subject.

But this is an even more advanced version of that because even the general search -

SHIRKY: Right. Right. ZAKARIA: -- becomes too general. And you say, no, I actually just want the "New York Magazine" restaurant application because I want to figure out what restaurants I want to go to.

SHIRKY: Well, this is exactly it, which is every time we get better at predicting what people are going to want, there's some risk to serendipity, right? The idea that I was looking through a magazine and I came across a story that, you know, I would never have thought I would have cared about the price of corn in Iowa, but now I read this article and it makes it - you know, it makes it interesting, puts it in this long context.

Those are the kind of things that it's easy to come across in print, it's harder to come across on the web, hardest of all to come across on the phone. And, in many ways, the challenge, particularly for people who care about an informed public for - for disseminating news, the challenge is to design back in the serendipity we used to get for free.

ZAKARIA: But all these things that you're talking about, the web becoming more narrow -


ZAKARIA: -- people being less exposed to opposite points of view, comes on top of the fact that people are frankly reading less as a result of -

SHIRKY: Right.

ZAKARIA: -- of the web and as a result of the ability to retrieve information very -- in very narrow packets. So isn't it making us dumber?

SHIRKY: Dumber's a - dumber's such a sort of one -- one-value question. It is certainly making us wider and shallower, which is to say people are aware of a wider range of things but, as you say, are - are digging in less.

Nick Carr's fantasy covered this in his book "The Shallows", and Carr's basic this thesis seems to me to be correct, right, that - that there is no such general intellectual capability as multi tasking. We're just not good at doing two things at once, by and large. But when you look back at the - the great revolutions, what you see - the great - when you look back at the great media revolutions, what you see is that in a certain point, society, in integrating new technology, also creates structures around it that hold it into place.

So there was, at some point - depending on the country, and some time between the 18th and 19th Century - this idea that children should, in general, be literate. We should teach 5-, 6-, 7-year-olds to read. And that is an extraordinary expense and effort that society takes on for itself. But it's necessary to integrate the value of the printing press into the culture.

So the question I've got around these tools is, how are we going to manage all of these distracting freedom, right? Because the upside of these same tools is that it is an extraordinary increase in freedom of the press and freedom of assembly, right? We've got three communicative freedoms in the first amendment, and the internet create a world in which all three of them now are broadly available, not just - not just freedom of speech. But that freedom comes at a cost, and that cost is, as you - as you noted, distraction.

So we need a set of institutions that says if you have to take on the cost of managing distraction, what do you do? In the same way that - that 150 years ago we - we said, if you have to take on the task of producing literacy, what do you do?

ZAKARIA: And the reason this enormous upside that I often feel people don't talk about enough - I mean, I find that doing research for writing with the internet is just a Godsend. There was - there was a time I was writing a - a column on Iraq and I remembered from a biography that I - I had read of - of Gertrude Bell, the British foreign service officer who was in Iraq, that she had written these very evocative letters to her father describing the situation in Iraq, this Sunni-Shia divide.

And so, I thought to myself, gosh, wouldn't it be great if I could find one of those letters? And, five minutes later, I'm at the University of New Castle's website, which happens to have every letter that she has ever written -

SHIRKY: All digitized -

ZAKARIA: -- all digitized and searchable.

Now, I remember when I was in graduate school, this would have been a four-month exercise with interlibrary loans and microfiches. But you can literally do it in five minutes. And that is probably not the most commercial application. Not a lot of people are trying to retrieve the letters of Gertrude Bell -

SHIRKY: But the thing is everybody has something strange they're trying to do - and strange not in the sense of - of odd in the human experience, but rather strange in the sense that not a lot of other people are doing it. And this - this is - this is the amazing thing about the internet, which is the ability to have a medium that caters not just to our mass tastes, not just the tastes we all have in common, but to the very particular thing you needed to do that afternoon.

And I was doubtless doing something that afternoon that was very particular to the work I needed to be doing that was completely different from what you needed to be doing, and the medium worked for both of us. And the - the change there in terms of access to what - all that has been done and said in human history is - is really, literally unparalleled.

You know, when you look at something like the readership of the "New York Times" or "The Guardian," say, you see that the web readership is 10 or 20 times higher than the readership of the paper, which meant that there was this incredible untapped demand, rather there's an incredible unsatisfied demand for people to know what was going on.


SHIRKY: We didn't even know that it was there because those newspapers couldn't reach those people.

"The Guardian" - Ellen Ripperger (ph) of "The Guardian" - found some of the old log - ledgers, some of the old financial ledgers from "The Guardian" when it was a Manchester newspaper. They would send 650 copies overseas. Out of the entire print run, 650 copies went to any expatriate anywhere. "The Guardian's" audience is now principally outside the U.K., which is to say they are a more an international paper than they are a U.K. paper.

ZAKARIA: So the problem of the business model, then -

SHIRKY: Well, yes.

ZAKARIA: -- for all these places -

SHIRKY: Yes. Yes.

ZAKARIA: -- will the iPad save them? What will save them?

SHIRKY: You know, I don't think anything is -

ZAKARIA: Newspapers?

SHIRKY: I don't think anything will save newspapers in the sense of preserving the old model. The new business model is going to be - is going to be some combination of advertising revenue and cost- cutting, frankly.

I mean, the thing is that newspapers got large, very much bloated around things that weren't hard news, right? You could always add more sports reporting, and so forth. All of that stuff is being stripped off by the niche sites, right? A niche sports reporting site is going to go deeper on your team than any newspaper can - can.

ZAKARIA: Now, when you look at the web and you look at what's going on around the world, what I'm struck by is there is - there's a great deal of - of ferment or turmoil. You have Google in China.


ZAKARIA: You have BlackBerry and the United Arab Emirates, but then it turns out BlackBerry in India. And in each of these cases, it is the technology and the technology companies' attempt to be entirely open and a government's desire for some degree of control.

SHIRKY: Right.

ZAKARIA: Who's going to win this battle?

SHIRKY: I think - I believe that - in the short haul plan, the technology companies are going to have to give more. The governments of the world are plainly going to have some degree of ability to look into the communications stream of their citizens and visitors. No government would sign up not to do that as these - as these tools become general purpose.

I think that in the long haul the governments are going to have to give more for the simple reason that - you pass a certain point, you can't cripple yourself on network without exiting a modern economy, right? You can't be a modern state if people don't have a camera phone in their pocket that works.

And so, what you saw with - what you saw with the Iranian regime after the - after the June 2009 elections was they would periodically just shut down the cell phone network because they couldn't think of any other way to contain the ability of the dissidents to coordinate with one another.

ZAKARIA: But people look at China and they say, well, China has been very effective at - at monitoring -

SHIRKY: China has been very effective at monitoring -

ZAKARIA: -- and to use the technology to actually monitor its people.

SHIRKY: China has been effective at using the technology to monitor the web. They've been less effective at using the technology to monitor cellphones, right? When the - when the Sichuan quake broke out, everybody found out about it on QQ, which is China's large - largest internet service. The - the - in '79, when they had an earthquake of similar size, it took them three months to admit that there had been an earthquake.

So the cellphone has stripped - stripped the Chinese government of the ability to prevent events from being announced in real time.

ZAKARIA: And, of course, the - the expectation should be that once the Chinese use all these technologies more and more, they will - they will start having ADD and fragmented memories and stop reading and working so hard. So we'll be finding -


SHIRKY: Exactly. We'll find that - we'll find that we can just - we can - we can flood them with spurious e-mails and tweets and then they can - yes. We'll - we'll re-level the economic playing field.

ZAKARIA: Clay Shirky, pleasure to have you.

SHIRKY: Great. Thanks very much, Fareed. Thanks very much for having me.

ZAKARIA: And we will be right back.


(BEGIN VIDEO CLIP) RICHARD FLORIDA, THE ATLANTIC: What's interesting to me is how naturally and organically in the United States we quickly begin to reset our economy and, you know, we see this only happening in its infancy or again on this new period of reinventing the new American dream and a new way of life.




ZAKARIA: Our next big idea is from best-selling author Richard Florida. He's the author of a wonderful new book, one I recently recommended, called "The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity." So what the title doesn't explain, he will.

Welcome to the show, Richard Florida.

FLORIDA: Thanks for having me. It's great to be with you.

ZAKARIA: So the premise of the book is that we - we have experienced a very deep economic crisis, a recession that is more than just a recession because it comes off a long period of credit expansion and consumption expansion. But you say that there's actually an upside to this, that these - these moments produce opportunities as well. Explain that.

FLORIDA: Well, when the economic and financial collapse occurred, I had the opportunity to go back and look at analogous events in U.S. history. So, obviously, I was able to look at the Great Depression. My dad had lived through the Great Depression, so I heard his stories.

The story I tell in the book is my dad was eight when the crisis struck in 1929. He was 40 when he bought his first home and enjoyed that prosperity at the (INAUDIBLE). Second thing is -

ZAKARIA: So he - so his lesson was save, save, save, save and only when you've got a whole bunch of cash -

FLORIDA: Absolutely.

ZAKARIA: You know, no mortgages for him.

FLORIDA: Yes. He was a typical working class, Depression-era, ethnic thinker. And what we found is in the Great Depression, again, in 1929 - again in 1873, these were two of the most innovative decades in American history, certainly much more innovative than the recent tech boom.

And what happens in these crises is America, particularly, invents new ways of living and working. We were and agrarian nation, going into the crisis in 1873. We came out an urban industrial nation, with great cities - New York, Chicago, Detroit and Cleveland. What's interesting to me is how naturally and organically in the United States we quickly begin to reset our economy and, you know, we see this only happening in its infancy. We're again on this new period of reinventing a new American dream and a new way of life.

ZAKARIA: So let's talk about that. What is the reset and how will we live in the future?

FLORIDA: It's not a big top-down government reset, and it takes a long time. I think the way public policy works - just like in the new deal, we're in the 1870s, and it's trial and error. Things go slow. Something works. It doesn't work. We try something new. But, over time, we begin to get a sense of what a new way of life is.

What I'm finding, older couples selling off that big McMansion in the suburbs - they might be moving to an inner ring suburb. They might be moving back to the city. Young people -

ZAKARIA: Why - now explain that. So they - they leave the big house and they move to an inner ring suburb, maybe something like Bethesda, Maryland. But -

FLORIDA: Absolutely. Bethesda's a perfect example.

ZAKARIA: Why? Because you can walk around there? There is density? There are restaurants you can get to?

FLORIDA: Sixty percent of Americans would prefer, if they could, to live in a walkable neighborhood. What makes a great neighborhood in a city or a suburb is the same thing, and one of the things I've been thinking about is our cities and our suburbs are becoming - they used to be so different. They're becoming more alike.

Young people, postponing buying that car and - and saying I'm going to stay in a rental apartment longer. Then I think we're already seeing the infancy of our economy shift. Homeownership is going down.

ZAKARIA: Are we becoming more like Europe, though, in the sense of more city dwellers, more renters? These are all characteristics of European cities.

FLORIDA: We're certainly not as dense as European or Asian nations, but I think the United States is - is having certainly a higher degree of concentration. And, you know, there's a good thing to that, which is becoming more productive, but we're getting terribly uneven in our economic development.

So the Boston, New York, Washington Garter has - has dealt with the recession, but it's not been terrible. The Bay Area has been hit by the recession, but what's happened in the middle of the country, in the older Rust Belt cities, in the Sun Belt. So we're getting a country that's - that's no longer on one playing field.

You know, people talk about economic and social inequality, income inequality, that's really overlaid by a geography of economic or class inequality as well. Our cities and our regions are growing further apart than they've ever been.

ZAKARIA: When you've talked in the past, you've written in the past about the - the strength of diversity and I want to bring that up because we're having this big debate in America yet again about immigration. And one of the points you have tended to make is that in the cities of the future and the economies of the future that are going to thrive and prosper you actually need a lot of diversity.

FLORIDA: Yes. I'm worried. I think actually a great part of these resets is the ability to attract the world's best and brightest. But now, in this country, I think the fear and anxiety amongst people losing their jobs - men, particularly men who don't have - lower skilled, factory, blue collar men who don't have opportunity, they're lashing out. And one of the groups they're lashing out against is immigrants.

Well, we live in Toronto now and I just looked at the data. New York and Miami and L.A., yes, they have a lot of immigrants, but not nearly the amount as Toronto and Vancouver, which are now nearly half of the people are new in migrants. So I think America has got to get this back.

ZAKARIA: Because the Canadians have seemed to have learned our - from our success, right?

FLORIDA: Oh, yes.

ZAKARIA: And they - they are now - they do allow lots of visas based on skills. They allow immigrants to self apply for visas. Microsoft has set up a research lab in Vancouver because it finds that it's much easier to get - to get green cards and things like that for people in Canada than it is in the - in the United States.

FLORIDA: And we actually studied, we did a big study at our institute at that lab, and it was remarkable how - how it was located just outside of Seattle, just close enough so headquarters, not only in the same time zone, easy commute. But it was a portal, literally a portal. There was virtually nothing there except of the fact that it could encourage people to come from all over the world and it literally built a location out of this openness factor - openness to immigrants, openness to gay and lesbian people, open - equal openness to new ideas. Really, that's the thing.

ZAKARIA: What happens to the - the great lands in between? What happens to people who are - you know, have high school educations, maybe a couple years of college, don't have any particular skills, don't manipulate symbols, words? In a world in which, you know, there's two billion people around the world now trying to do everything that we used to do.

FLORIDA: We have 60 million Americans toiling in low skilled service jobs. Home health care aids, personal care assistants, food service and preparation, retail clerks, office clerks, and no one's talking about this in the jobs debate. They are going to - talking about how we create more skilled work, of course we have to do that. How we bring back manufacturing, and we still have. We have about 10 percent of our workforce still engage in manufacturing, producing like gang busters. We have 45 percent of our people, 60 million plus Americans in these service jobs.

Who would you rather pay more actually? Let's keep schoolteachers out of it. But the person who assembles your car or the person who takes care of your kids or your aging parent? To me, it's a no-brainer. We've got upscale those jobs. We've got to do for service jobs today, of course, that means Americans are going to have to pay more.

But the deal was, be that our whole economy will grow, we'll create demand, we'll create consumption. Henry Ford said we needed a $5 a day, we're going to buy cars. We need to pay people, a human, a living weight (ph), engage their intelligence.

I think the service sector is the last - the last great frontier of inefficiencies, making those service businesses more effective. It's going to improve our productivity. It's going to make our cities and suburbs stronger. It's going to make us a stronger country.

ZAKARIA: So you're, at the end of the day, optimistic, even in the face of this great recession.

FLORIDA: I'm amazed at how fast America turns on a dime. I think this is going to be a big struggle. I think as you - you know, Washington is completely out of touch. But the Americans, the American people get it. The American business gets it.

So yes, in the long run I'm optimistic. But this is not going to be a short-term fix. I mean, it's the 8-year-old kid who's going to be our age - our age some day who's going to be living in the next era of prosperity. This is a 20- to 30-year rebuild that we're in the middle of and we better get with the program quicker and do it as fast as we can. But it's not something that's going to solve itself overnight.

ZAKARIA: Richard Florida, pleasure to have you on.

FLORIDA: It's great being with you. Thanks so much.

ZAKARIA: And we will be back.



ZAKARIA: There is no question of the week this week. We want to give your brains a rest and ours, too.

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Now, as I do every week, I want to recommend a book. You might think a war book isn't compatible with being on the beach, but this one is. "War is Boring" is a graphic novel, essentially a comic book for adults about the glamorous life of a war correspondent - or maybe not so glamorous. The book's writer, David Ax, is a real life war correspondent and the book tells the tale of how war is boring, until it's not. And life back home is really boring until you get on an airplane back to war.

We follow him through Somalia, Lebanon, Afghanistan and much more. It's a fun, quick read.

And now for the "Last Look". Can you spot the soldier in this picture? We'll zoom in. Just shout when you see him. Not too loudly. In case you haven't found him yet, we'll put a yellow circle around him.

Amazed that you couldn't find him? Well, this is the U.S. Army's new camouflage for Afghanistan. Changing out all of those uniforms is expected to cost more than $200 million. Here's hoping it will be a lifesaver.

Thanks to all of you for being part of my program this week. I will see you next week. Stay tuned for RELIABLE SOURCES.