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Fareed Zakaria GPS

Biden Pledges To Defend Taiwan From China; The Legacy Of Colin Powell; The 21st Century Arms Race; Examining German Leader Angela Merkel's Legacy; Afghanistan After The Fall. Aired 10-11a ET

Aired October 24, 2021 - 10:00   ET



FAREED ZAKARIA, CNN ANCHOR: 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 from New York.


ZAKARIA: Today on the program, the question being asked in capitals around the globe, how to handle China? Biden's nominee to the ambassador called the People's Republic the greatest threat to the security of the democratic be world. We'll look at China's intentions and we'll examine the ever-increasing military might that may back up those intentions.

And the legacy of Colin Powell. Should we admire him as a soldier and statesman?

COLIN POWELL, FORMER SECRETARY OF STATE: Weapons of mass destruction --

ZAKARIA: Or deride him for that U.N. speech?

Then we will check in on the troubling condition of Afghanistan under the Taliban two months after the fall of Kabul.

And with author Kati Marton, we will discuss Angela Merkel's 16 years in office and what her impending departure means for Europe's future.


ZAKARIA: But first here's "My Take." Are we returning to the 1970s as several commentators have recently claimed? There are surprising similarities. The humiliating withdrawal from Afghanistan echoes the U.S. defeat in Vietnam. Prices are rising along with demands for higher wages, even as economic growth is stalling. A new economic superpower is challenging American supremacy. Back then it was Japan, now it's China.

On closer examination, however, most of these analogies turn out to be superficial. But there's one where the parallels are striking and that one should worry the Biden administration greatly. We are headed for a global energy crisis. Gasoline prices in America are up more than 50 percent in the last year. Natural gas prices in Europe have risen a staggering amount, nearly 500 percent. In Asia, Bloomberg reports that power companies are buying liquefied natural gas at record prices to try to lock in supply.

In Europe a mass producer of fertilizer was already forced to temporarily shut down two U.K. plants due to high energy costs, and there are fears that other industries will follow. The U.S. Energy Information Administration has put out a report warning Americans that they are likely to pay significantly more to stay warm this winter, especially if temperatures drop substantially.

Why is this happening? The simplest explanation is that the demand for energy is currently exceeding supply, which makes prices rise. The reasons for this miss match are many, including extreme and unpredictable weather, as well as bad government decisions about storage, reserves or transmission lines. But there is one common cause -- much of the world has stopped investing in fossil fuels for good reasons, which has led to less supply of them.

But we do not have sufficient green energy today to replace fossil fuels. We will but not today. The numbers make this plain. In 2019 over 80 percent of global energy consumption was provided by three main fossil fuels -- oil, coal and natural gas. Wind was just over 2 percent of power consumption. Solar just over 1 percent. In other words, it would require a 2,500 percent increase in production and deployment to have wind and solar fully replace fossil fuels, which is not going to happen in the next two to three years.

What we need is a transition strategy. Without it, every time there is a shock to the system, bad weather, poor storage, we will face an energy crisis. Modern societies cannot run without steady access to energy, so when these shocks are felt, governments do whatever it takes to keep the electricity flowing.

Look at Germany, which over the decades built an extraordinary supply of renewables, but in the first half of 2021, 56 percent of German electricity came from the very sources it is trying to eliminate, like coal, gas and nuclear. Coal in Germany alone rose from 21 percent to 27 percent of electricity production.

The contradictions of Western energy strategy are becoming almost absurd. Confronted with high gasoline prices, the Biden administration is pleading with OPEC to increase production.


In other words, the U.S. is discouraging its own oil and gas producers from increasing production, while urging Arab countries to drill, baby, drill. Europeans are hoping Vladimir Putin will pump more natural gas to their countries, even while they discourage gas production at home.

A serious energy strategy would recognize that the most important task is to reduce carbon emissions fast. In the short term, and only the short term, the simplest way to do this is to move from coal to natural gas, which cuts carbon emissions almost by half. In fact, most of the reduction in America's CO2 emissions between 2005 and 2019 was precisely because of that switch from coal to gas.

Coal being the biggest producer of CO2 emissions of the three main fossil fuels. But there is even lower-hanging fruit. The journal Environmental Research Letters did a study of 29,000 fossil fuel power plants worldwide and found that just 5 percent of them were responsible for 73 percent of global emissions from electricity.

We can easily pay to convert those roughly 1400 plants and reap a huge windfall in the reduction of carbon emissions. And the IAEA estimates that over 70 percent of the methane leakage from oil and gas production can be stopped by using existing technologies.

The goal, not just a long term but the medium term, must be to power the world with renewables. There is lots of good news on this front. Solar and wind costs have come down dramatically and are competitive with fossil fuels. They are now easier to deploy than ever before. Storage once the great problem with these intermittent sources is being solved as batteries become more powerful and other storage solutions are gaining ground.

We still need much larger investments and research and developments in this area but we are making real and fast progress. But in the meantime, we still need to cut emissions today while keeping energy flowing. If not, we will face more energy shocks, which could easily develop into a political backlash against green policies. And then the Democrat in the White House, Joe Biden, will begin to look a lot like his predecessor from the 1970s, Jimmy Carter.

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

After President Biden affirmed at a CNN town hall on Thursday that the U.S. would protect Taiwan from a Chinese attack, the White House quickly tried to clarify that the president wasn't announcing a change in U.S. policy, which was purposely left ambiguous. The question is, is such an attack likely?

Let me bring in our panel. Richard Haass is the president of the Council on Foreign Relations and Oriana Skylar Mastro is a fellow at both Stanford's FSI and at AEI. She's also an officer in the Air Force Reserve but she's speaking today in her civilian capacity.

Oriana, let me ask you a basic question. Why is Taiwan so important to China? I mean, people sometimes, you know, ask, are the Chinese really serious about this? And I'm struck by the fact it's in the Chinese constitution that they would like to reunify with Taiwan. Why?

ORIANA SKYLAR MASTRO, FELLOW, STANFORD'S FREEMAN SPOGLI INSTITUTE: Well, there's political, social and emotional components, obviously. You know, the emotional component has to do with the fact that the Communist Party won the civil war in 1949. The nationals fled to Taiwan. And that war is not over until Taiwan becomes a part of China. 80 percent of wars are fought over territory. We could ask this question about any country.

Why does the United States need to keep, you know, Texas or California? Why does another country need a part of its territory? This is built in to the psyche of the Chinese people and the Communist Party that their national rejuvenation cannot be complete until the seven decades-long civil war comes to an end.

ZAKARIA: Richard, so Oriana says it's almost core, almost existential for China, for mainland China. Should it be core for the United States? As you know, a lot of people wonder, would the United States go to war for Taiwan? Should it?

RICHARD HAASS, PRESIDENT, COUNCIL ON FOREIGN RELATIONS: I would argue with (INAUDIBLE), Fareed. One is we've already given extensive commitments to Taiwan so to walk back from those would have real repercussions all over the world. Our allies in Asia assume we are committed to Taiwan. This is a democracy of 23 million people.


It's the producer of the most advanced microchips in the world. That all has economic significance. It also is a model that there is a future for China which is very different. This shows Chinese society, Chinese culture can support a market-oriented democracy. The People's Republic of China on the mainland is not the only model for China which I would only add to the list that Oriana gave.

This is one of the reasons that the mainland feels so strongly about it, Taiwan by its very existence, represents something of a challenge to the Communist Party.

ZAKARIA: Oriana, Deng Xiaoping wanted reunification with Taiwan just as much as any other Chinese statesman but his strategy seemed to be a kind of kick the can down the road, over time the, you know, the absorptive power of the Chinese mainland economy will inevitably draw Taiwan into its fold. Xi has a very different strategy.

Do you think it's as marked a shift as Xi Jinping actually planning a military invasion of Taiwan?

MASTRO: I think so. If you had asked me four years ago what is the likelihood China that would attack Taiwan, I would have put it at zero percent. And now I put it at 60 percent. And that is largely because Deng Xiaoping had to kick the can down the road because he didn't have a lot of options. And then they decided to build their economy so they had the economic power base, and then under Xi Jinping they really accelerated the military modernization.

I think what most Americans don't understand is if you look back at China 20 years ago, you know, their Taiwan invasion plan was to commandeer a couple of ships and paddle their way over. The United States was not particularly concerned. You know, their pilots couldn't sail over water or at night. Their ships had no defenses and had to hug the coast to rely on land-based defenses.

So what's changed in the past, you know, 10 years and it's coming to an end in the past 18 months is they have undergone these major military reforms, particularly to be able to conduct exactly the type of operation that allows them to take Taiwan by force. And according to internal discussion, and my discussion with other military colleagues in China, these reforms came to an end in November and now they're ready. And that's why I think Xi Jinping can be very tempted to take Taiwan by force.

ZAKARIA: Richard, the cost to China would be very significant, I assume. I mean, not just the Americans defending or helping Taiwan defend how it goes, but sanctions, Europeans would presumably not be able to have the same trade relationship, the Asian countries like Australia and India. I guess my question to you is, what would deter Xi Jinping? The Chinese regime is fairly rational. How do you make clear that the cost would outweigh the benefits?

HAASS: That's the essential policy question to ask. What we've got to do is raise the cost, bring in the Europeans and our partners and allies in Asia and basically be explicit to China. If you are to act coercively against Taiwan, here's the economic price you would pay. Here's the diplomatic price you would pay. We've got to put far more military assets in the theater. We've got to get even closer above all to Japan, which is the essential ally if there were to be a crisis.

Deterrence is always a function, Fareed, of capability and perceived will. So we've got to increase our capability, we've got to increase the economic cost that would accrue to China, and I think we've also got to signal to China that this is serious. And then I think the Chinese will have to calculate. Is it worth it for them to risk all, the role of the Communist Party, all they have accomplished over the last 70 years to what they would call rejuvenate their country?

I don't want to shape Chinese decision making. I do not think that is an impossible task.

ZAKARIA: Richard, I'm going to stay with you for a second. Oriana, I hope you will forgive me, because I do want to get a thought or two from Richard on Powell because, Richard, you worked for him in a very senior capacity when he was secretary of State.

So I guess my simple question is, how should we remember Colin Powell? And why should we not remember him the way a lot of his critics want him to be remembered, which is that disastrous U.N. speech when he supported -- when he presented what turned out to be, you know, at least incomplete, if not fake evidence about the casus belli for war with Iraq?

HAASS: I'd say three things very quickly, Fareed. We should remember him as a great American, the son of immigrants who dedicated his life to public service both in uniform and as a civilian. It's a really wonderful, wonderful role model. I think his intellectual legacy, as the so-called Powell Doctrine, essentially a set of caution, the questions to ask before the United States uses force in any situation. And they're wise questions that need to not just be asked but be answered. That for him was I think the lesson of Vietnam.


In terms of Iraq, I think a lot of the criticism is wildly unfair. He was not enthusiastic to say the least about the war. The speech he gave at the U.N. was totally cleared with the CIA. It was the best assessment we had at the time. Yes, we now know certain parts of it were wrong. There was zero intent to deceive. He didn't quit his job over this. The question of whether to go to war, again, even though he thought it was flawed, it was a policy judgment based upon the assumption that Iraq had weapons of mass destruction.

He did not know or favor the way we went to war. He thought that was wrong. But again, it was outside his lane. He was secretary of State at this point, no longer chairman of the Joint Chiefs. So when I look at his performance on Iraq, I think it's honorable. When I look at his career, I think it is a model.

ZAKARIA: Yes, he was very, very -- a man of duty. And I think his duty to his country and the administration made him reserve some of his stronger judgments in that case.

Oriana, thank you so much. We will have you back because the subject is not going away. Richard Haass, as always, a pleasure.

MASTRO: Thank you.

ZAKARIA: Next on GPS, David Sanger says it's beginning to look a lot like a cold war. I'll ask him why when we come back.



ZAKARIA: It seems a new arms race is maybe upon us. It's all about hypersonic weapons right now, ones that travel more than five times the speed of sound. They can go into orbit in part to evade missile defenses. The "FT" reported about a Chinese test in August that was mostly successful, although Beijing denies it was testing hypersonic weapons. Then on Thursday the U.S. had a failed hypersonic test in Alaska.

Why does all of this matter? Let me bring in David Sanger, national security correspondent for "The New York Times."

So, David, first explain to us what is the significance of the Chinese test of hypersonic missiles? We have them. We know that the Russians have been testing them for a while. Now the Chinese seem to have successfully deployed them. Why does it matter?

David, can you hear me? We are going to try and get David Sanger back. We're going to take a quick break now and we will be back with David Sanger.



ZAKARIA: And we're back with David Sanger to talk about that Chinese hypersonic missile test.

David, what is the significance of the hypersonic part of this? DAVID SANGER, NATIONAL SECURITY CORRESPONDENT, NEW YORK TIMES: I think

the only real significance of this, Fareed, is that the Chinese want to show that our $400 billion investment in missile defenses is basically useless against them, and that you could use these hypersonics in conventional ways to keep the United States out of their region, to keep aircraft carriers and other ships from going anywhere near Taiwan, to tie back to your earlier conversation.

But in a larger sense, it is part of the series of cold war behaviors that we have seen on both sides as we try to both build up our militaries against each other and as we participate in efforts to disentangle key parts of our economies, mostly involving technology exports as we try to starve the Chinese of the most high-tech of our semiconductors, they try to make sure that they've got control over our supply chains as well, spreading Huawei and other technologies in telecommunications from around the world to dominate networks.

It's pretty worrisome behavior.

ZAKARIA: So let's talk about one very market shift, which is that for years, decades now, China has had a minimal nuclear deterrent. The U.S. and the Russians have 5,000 to 6,000 warheads. The Chinese have maintained an arsenal of just a few hundred nuclear warheads. That appears to be changing, correct? How significant is that?

SANGER: It is changing or it looks like it's changing. Over the summer we began to see new fields of nuclear silos. We don't think they have nuclear weapons in them yet. The Chinese have always had just a few hundred nuclear weapons, compared to the 1550 that we and the Russians have deployed today. That is a fairly small number, but you'll remember that President Trump tried to get them engaged in the new START negotiations, the arms control agreement between the United States and Russia.

The Chinese resisted, but I think that sooner or later, they feel they're likely to be brought into arms control and if that's the case, they want to start with as many chips on the table that we have and that the Russians have.

ZAKARIA: Generally speaking, the Chinese effort seems pretty asymmetrical, right? They're not trying to match the United States aircraft carrier for aircraft carrier. We have, what, 11 and they have one and one more on order. What is the nature of that asymmetrical strategy?

SANGER: So they recognize that spending on the kind of weaponry and troop deployments we have around the world isn't their most efficient way to do this. They believe -- and I think more and more in the United States believe, that if there is a conflict with China, even over Taiwan, the opening shots aren't going to look traditional. They will be cyber. They will be in space. They'll be efforts to blind us.

Even if they seek to take Taiwan, I would doubt that it would look like a traditional military engagement. It would much more likely involve cutting off their liquid natural gas and cutting off the cable connections, the undersea cable connections that connect Taiwan to the world.


I don't think that's terribly likely to happen soon because China is so dependent on Taiwan's semiconductors, the huge semiconductor producer on Taiwan that also supplies the U.S., but this would be an asymmetric war from the start and one that might not even look like a war when it started.

ZAKARIA: I've got 20 seconds but I just want to get a quick reaction from you, David. I mean, China is the second richest country in the world and maybe the -- should Western strategy be expected that at the end of the day they were going to build up something at least parity with the Russians if not the United States?

SANGER: Absolutely, and you know, that's what makes this cold war a little bit different. Remember that the cold war with the Russians was largely a military affair. We have great economic interdependence. We have a lot of technological interdependence. You can't define it in your own mind as a cold war that would look like the one that is so familiar to us. It would be new. It be would different.

ZAKARIA: And we have to close it on that. Very wise words. Thank you, David Sanger.

SANGER: Thank you.

ZAKARIA: Next on GPS, for 16 years Angela Merkel has been the face, the voice, the brains, the brawn of Germany. What happens when she's gone? We'll explore in a moment.



ZAKARIA: Angela Merkel's impending departure from the world stage is one of the most consequential events for Europe since she assumed the chancellorship almost 16 years ago. Many people are reflecting on what her leadership brought and didn't bring to her country and her continent. Many others are looking at the post-Merkel future.

I want to do both with Kati Marton. She's a journalist and an author whose terrific new book about Merkel has just been published. It is called "The Chancellor."

Welcome, Kati. First I want to ask you about writing about somebody who is so private. I remember when "TIME" chose her as Person of the Year, they had to use a painting of her on the cover because she would not sit for a photograph, and I remember asking the editor of "TIME," Nancy Gibbs at the time, when was the last time somebody wouldn't sit -- let alone an interview, wouldn't even sit for a photograph?

And she said I think it was Ayatollah Khomeini in 1978 or '79. So this is an extraordinarily guarded person. Did that -- how did you get through? KATI MARTON, AUTHOR, "THE CHANCELLOR": Well, you're absolutely right,

she is the most private public person in the world, I would say. And, of course, that made it the Everest of writing projects because I wasn't interested in writing a book about German politics, frankly.

I wanted to capture the woman and this astonishing journey of this East bloc scientist who broke through the all-male German political culture and got herself elected four times chancellor. I wanted to know how did she do that because she has so few visible performance skills or rhetorical skills. And so the mystery was, how?

ZAKARIA: So what is the secret of her success? At one level I have to assume that there's a level of political skill, but also ruthlessness because she comes to power taking down the man who mentored her, Helmut Kohl, the chancellor of Germany.

MARTON: Absolutely. So it's a combination of -- first of all, she's brilliant. She has a photographic memory. And, yes, when necessary she can be ruthless, as a lot of male politicians learned to their detriment. She has benefited, Fareed, from being underestimated every step of the way, and she likes it that way. She was 35 when she became really a refugee, because her country of East Germany basically disappeared.

But the idea that she is a refugee is really relevant to her saga because, of course, her singular legacy will be that she allowed one million mostly Middle Eastern refugees to enter Germany in 2015.

ZAKARIA: Where do you think the core of her beliefs lie other than this, clearly this issue of refugees and asylum?

MARTON: Yes, that's only one piece of this very complex woman, who the portrait that my readers will get from this book is an unexpected one, because she is a combination of so many qualities that we don't attribute to her. I mean, one of them is this human warmth, which she doesn't like to have people see, but she's also a very canny deal maker, and in her final years, of course, she had to become the defender of what was left of the West, which was not her chosen role.

There's that iconic photograph of her leaning in toward Donald Trump, who has his arms folded, while the rest of the NATO heads of state, the G7, I should say, powers lean back and Merkel is leaning in, which really it's a picture that tells a thousand words because she really was the only one who successfully withstood the Trump era's destructions of democratic values. And I attribute that to the fact that for 35 years she lived without freedom and without rule of law.


ZAKARIA: What do you think the legacy will be, you know, in a post- Merkel future? Because she was in some ways also -- she held Europe together and held it in a kind of pro-Western, pro-democratic way. She was very tough on Russia. Insisted that Russia be sanctioned after the annexation of Crimea.

MARTON: Yes. ZAKARIA: Do you worry that, you know, Europe will not have somebody

like that at the helm?

MARTON: Well, here's a leader who never identified herself with her office, and she will leave the chancellery and return to her rent- controlled apartment, which she never left for the past few decades, and never lost her talent to be normal. She will assume the life of a normal citizen and make herself scarce in Berlin. She will be --

ZAKARIA: She did her own grocery shopping all through the time she was chancellor.

MARTON: Always. Yes, she loves to cook. She's not a great cook but she loves to cook. And she will, I think, leave both Germany and Europe in a very strong place.

ZAKARIA: Kati Marton, pleasure to have you on.

MARTON: Thank you, Fareed. Wonderful to be with you.

ZAKARIA: Next on GPS, the Taliban is back to a lot of its old ways. Afghanistan faces economic collapse and a series of terror attacks have shocked citizens there. I will talk to the Afghan activist Mahbouba Seraj, whom we've had on before, about the sorry state of that war-torn nation when we come back.



ZAKARIA: It's been 10 weeks since Kabul fell to the Taliban. Since then Afghanistan, already one of the world's poorest nations, has teetered on the edge of economic collapse. The country has been rocked by terror blasts that have killed scores. Many thought such events would end when the hardline Taliban took over, and there's been great fear about that group reverting to its medieval treatment of women.

I invited Mahbouba Seraj back on the show to give us a status report. She's the founder of the Afghan Women's Network.

Welcome back, Mahbouba. Before we get to women, let me ask you, what is the atmosphere like day to day? What is life like in Afghanistan now?

MAHBOUBA SERAJ, FOUNDER, AFGHAN WOMEN'S NETWORK: Well, hi, thank you for having me here. There is a lot of discontent in this country, a lot. Actually people are getting hungrier, people are getting poorer, and especially with the last two explosions that happened in the mosques, one in Kandahar and one in Kunduz, a whole lot of, how shall I say, this kind of comfortable feeling that people had that at least, OK, now the Taliban are here so we are safer because there is no explosions or anything.

That kind of is also disappearing. So a lot of the people and their families are trying to get out of Afghanistan because if this thing continues, then the girls are really going to lose and their education. So there is a very uneasy feel in the air all together and not a whole lot of trust and they're kind of waiting for the Taliban to take the first step and do something, but they're being extremely slow and they're not doing it.

And the thing is that the Taliban kept on saying for the people of Afghanistan, that, OK, we are talking to the world and we are asking the world to release the money because that's what is going to change a whole lot of things for us, but in reality, what is really happening and the way they can really get that money is not by asking the world to give them, you know, the money, but by doing the right thing by the women of Afghanistan, and by the people of Afghanistan.

Once they start doing that, especially by the women of Afghanistan, the money will be coming to them. But this is something that they don't want to admit, so we are on the -- on square one, where we were with not much change to say about, you know, life here.

ZAKARIA: So watching the Taliban in power now, do you get the sense that they are different from the old Taliban? Are they more moderate, actually as extreme, incompetent? Like how would you characterize the Taliban? Because we are looking from the outside and we can't tell.

SERAJ: You know, we had 20 years of democracy in the country and everything was set, everything had its place. We had institutions, we had institutionalized a whole lot of things in Afghanistan, so that was making life a lot easier for us. But now, you know, they don't have anything like that. They don't have anybody that really understands how to make this big wheel of government or governance turn.

They have nobody actually to do that. And they need the help of the people that they were there and the government already and they need the help of women, but this is something that they do not want to admit that they really have to have done.


ZAKARIA: You know, if you look at it from the outside, the numbers look terrible. It looks like Afghanistan is headed towards a real period of economic crisis because the economy is almost a shadow of what it was.

SERAJ: Absolutely. There is no money in the banks. The banks are running out of whatever money they have so far because, even now, they're giving rations to people as far as money is concerned. You know, we are going towards a complete collapse of the economy and that complete collapse of the economy is going to be very dangerous because it's poverty that will give room for any kind of -- you know, any other actions or any other things that are going to be happening in Afghanistan.

It will happen because of poverty if not because of anything else. So the terrorism is going to have its -- you know, absolutely a feast on Afghanistan with the poverty in this country because a parent who has no food to give their children, there are actually people here in Afghanistan now that they're selling their kids because they don't have any money. So this is the situation, It's very, very bad. Very bad.

ZAKARIA: When you talk to the women you've been helping for so many years, do many of them just want to try to find a way to get out of Afghanistan?

SERAJ: Absolutely, absolutely. Every single one of them. Every single one of these women, they want to get out of Afghanistan. There is not one single person, one single woman that I have talked to, that does not want to get out of Afghanistan. I mean, there's not even one.

ZAKARIA: What about you?

SERAJ: It's like empty. No, I'm staying. This is not -- this is just the beginning of whatever it is that's going to happen. God only knows what will happen. No, I'm staying. Right now I'm staying.

ZAKARIA: All right.

SERAJ: We will see what happens.

ZAKARIA: You stay there --


ZAKARIA: You stay there, Mahbouba, and we will keep talking to you.

SERAJ: Thank you. Thank you so much.



ZAKARIA: Now for "The Last Look." Welcome to Strike-tober. That is what labor activists are calling the wave of walkouts by American workers this month of October. Last week 10,000 workers of the farm equipment manufacturer John Deere went on strike over pay and retirement benefits. 1,400 workers at Kellogg's have been striking for weeks and more are potentially on the horizon. Thousands of nurses and other workers at the health care conglomerate Kaiser Permanente are poised to strike as they negotiate their contracts.

Now most workers in the U.S. are not unionized so they may not be inclined to organize a strike. But that doesn't mean they can't walk off their jobs, and indeed, the latest job data shows that a record 4.3 million workers quit their jobs in August. And it's not just August. Since April, an average of about four million workers have quit their jobs every month. It is a trend economists have called the great resignation.

It's difficult to overstate how extraordinary this is. As Carl Smith notes in Bloomberg, the scale of resignations this year is beyond anything on record. Many believe it echoes what we're seeing with the strikes, workers seem to be unhappy with long hours, low pay and generally poor working conditions. And the record number of job openings gives them the freedom to demand more or walk away. This phenomenon has inspired panic in some employers who are desperate

for workers. Their fears that the shortage will hurt small businesses or that a rise in wages would make businesses less competitive in general. But these fears are misplaced. These trends are actually good news, especially for American workers who are in dire need of good news.

As the MIT professor David Order recently wrote in "The Times," the U.S. economy has long been plagued by a glut of bad jobs. Take a look at pay. Low-skilled American workers are some of the lowest paid in the industrialized world. They make almost one-third less per hour than their counterparts in Canada. Low-skilled Norwegian workers are paid more than twice as much.

But pay isn't the only problem. MIT's author writes, "American workers also receive let's notice and severance when they're fired compared to workers in other wealthy countries. They take less vacation. Unlike their peers in most other rich countries, they don't have guaranteed paid parental leave."

Order says that the labor shortages we are seeing, the record job openings alongside record resignations are a market phenomenon that compels companies to improve on some of these policies to attract workers. We've already seen this in terms of pay. Average hourly earnings for workers have risen by more than $1 in the past year. That's not just good for workers, it's also good for the economy.

That's because since the dot com era of the 1990s, worker productivity has stagnated but in the past year productivity growth has picked up significantly in part because employers are compelled to invest more in the workers they've got. A more productive workforce is actually good for competition. And if this strength continues long term, it could boost the economy's growth.

Finally, a glut of open positions gives workers the leverage to experiment. Many workers have left their jobs to start their own businesses, and a rise in entrepreneurship would add some much-needed dynamism to the American economy.


So, striketober, terrible word, and the great resignation may look chaotic, but this is just the kind of chaos the American economy needs.

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