China now has the world's fastest super computer. This isn't just faster. A little bit faster. This is a whole lot faster. We don't even know how they did it. They have blown us out of the water.
Do you remember the big -- anybody remember this under Clinton? When we gave them a super computer and everybody said don't give them a super computer. Now, we beg for their super computer -- which leads you to China's military making quick advances. They have a stealth. We thought this was years away. Our military is now saying, uh-oh, trouble.
And finally, we should be more like the Chinese.
I want to start with a little history. Over the centuries there have been empires on earth. None of the empires remain an empire. Perhaps the most famous story of imperial decline is ancient Rome. Ming dynasty in China came and went. It was once the world's most sophisticated civilization.
And in the recent times, the sun never set on the British empire. Never. That was 10 decades ago.
And another obvious example, Soviet Union.
People here say it will always be this way. Why? What tells you that? Where are you getting that? Have you read a history book?
We're not immune to losing our place as the world's number one superpower. And while it makes -- it sounds great because I don't want to be the world's policeman anymore, I'm tired of it, things change. And to understand that, you have to study history a little closer.
So, China overtakes Japan as the world's second largest economy this summer. According to estimates, like PricewaterhouseCoopers, the country is on course now to overtake the U.S. as the world's largest economy in how many years. They will be the largest economy, which is the only thing we got going for us. That's why the world bows to us, because we have to buy their crap. Nine years -- in nine years.
Now, what factors go into the growth of an economy? There are five and in no particular order. But there are five. Let's see how many we have left.
One is entrepreneurship -- people who are smart and think out-of-the- box and know how to do business.
Two, innovation. People who are smart and think out of the box and say, wait a minute, I can do that better.
Then you have capital. Who has money? And who has debt?
Labor. Who can build it cheapest?
And five: technology and raw materials.
Now, let's take a look at China. It certainly has the labor. It has the capital. It now has the fastest super computer that knocks ours into the dirt. It has raw materials. Not because China is full of the raw materials, but because while we have been taking loans, they have been buying everything up all over the planet, everywhere.
They've been in -- I think the Chinese foreign minister has been to the U.S., what, twice in the last few years? Maybe? Once or twice? And he's been to Africa in one six- or eight-month period like four times.
They're buying everything up, raw materials. They're buying up oil fields everywhere. I know they're waiting for to us lead on global warming. They are buying everything up.
But one thing it doesn't have is entrepreneurship and innovation. It doesn't have those two.
What do we have? Well, we're no longer the labor leader. We no longer have the capital. We no longer have the technology. We're still pretty good on that.
We have entrepreneurship and we have innovation. We're down to two and barely. Our policies today are killing the very thing that we have
left: innovation and entrepreneurship.
One of the most disturbing studies that I saw in how many months ago this was -- I can't find it again and I wish I would have pulled it out. It shows that the ability of children now in America to think out of the box is declining. Why? Because you don't have to, nobody pays consequence. Nobody suffers. Nobody has a problem.
Necessity is the mother of invention. What have we really invented lately?
The government is snuffing things out. China is fostering innovation. They're taking our innovation and they're making it bigger and they're better.
Americans are losing the ability to think out of the box. We need to be hungry again. But we're being stopped from innovating ourself and redesigning ourself because the problems may just go away. And we have little imagination.
We have to find our Eli Whitneys to invent the cotton gin and Alexander Graham Bell for the phone and Samuel Morse to create the telegraph, Thomas Edison, the light bulb. Are we imagining anymore?
That's what this is about. Find out who you are. Educate yourself.
Tonight, we're going to focus on education. And then know that you are the solution. And entrepreneurship -- think out of the box.
If you don't think that we -- that the world is changing, I want to show you two books. I've read these. These are tremendous. They're unbelievable, 1421 and 1434.
This one is -- this one here is the year that China discovered America. What? Did you know that?
And this one is 1434, the year a magnificent Chinese fleet sailed to Italy and ignited the Renaissance. How many people here have ever heard that Leonardo da Vinci, knowingly or unknowingly, copied his ideas on the Codex and everything else from the Chinese? Did you know that?
This guy has done history like you would not believe. It's fascinating. But it turns everything upside down. Whether it's true or not -- and I think it is -- but whether it's true or not no longer matters because they are now the world's superpower, or soon will be. And the world will wake up and they will set history right.
They have always felt that America was just a blip. It was a -- it was something that will be corrected over time and it will be corrected now.
This is what we're facing. This is what you have to understand. I've had several people who have been in business for a long time, many of them billionaires, say to me, Glenn, you can no longer compete against China. It's over. We will never beat them in manufacturing or anything else.
We had health care going for us. We were innovators in health care. We're not anymore. Or we soon will not be.
I had one billionaire tell me that he was meeting with the Chinese. And they said, you guys were screwed. I mean, they were much more polite than that. They're Chinese. So, they were much more polite.
But they said, you have very few options, but you have one thing. You guys think out of the box unlike any others.
That's what we must focus on.
Now, I want to introduce you to a couple of guests. Can I go -- should I go to a break now or? OK. We're going to go to a break. I'm going to tell you who we have.
And his first piece of advice -- Jim, correct me if I'm wrong -- your first piece of advice is my advice to my wife as we home-school, and I said, honey, we must teach our children Mandarin Chinese. Is that your first piece of advice, Jim?
JIM ROGERS, ROGERS INTERNATIONAL COMMODITY INDEX: The best advice I can give anybody. Make your children and grand children learn Mandarin.
BECK: He created the Rogers International Commodity Index. He's the author of several books including "A Bull in China" and "Gift to My Children." Jim strongly believes Asia is the future. He moved his whole family there.
So, he didn't handicap his children. He knew they had to get into that culture.
And in the studio is my good friend, David Buckner, president of Bottom Line Training and adjunct professor at Columbia University.
How many times do you go to China a year?
DAVID BUCKNER, COLUMBIA UNIVERSITY: Four or five times a year.
BECK: Four or five times a year. So, we're going to give you a look at China and what the future is for America if we don't wake up. And waking up, what does that mean? What do we do?
Back in a minute.
(APPLAUSE)
(COMMERCIAL BREAK)
(APPLAUSE)
BECK: We're back now talking a little bit about China with global investor and capitalist, Jim Rogers, and Columbia university adjunct professor, David Buckner.
Jim, I want to start with you because if I don't point this out, "Media Matters" will. You started the Quantum Fund, if I'm not mistaken, with George Soros.
ROGERS: That was 41 years ago. Yes. Right.
BECK: Right. I just want to point that out because everyone else will say, and he was talking to a guy that knew George Soros and worked with him. Glenn Beck thinks he's a spooky dude.
I'm not going to put you on the spot, but George Soros is a spooky dude, isn't he? No.
ROGERS: I don't know.
BECK: OK. All right.
ROGERS: I haven't seen him in over 30 years.
BECK: And that is a very good thing. That's what you would ask me about --
All right. Jim, let me talk to you about China. David, chime in here. The opening monologue, I talked about these headlines that are all up here and how they all tie together. Either of you guys have any headline or anything that I'm missing that the American people need to see untying the change of America and the takeover of the global economy and everything else by China? Either of you guys see anything I've missed? Or
--
ROGERS: Well, Glenn, what surprises me is everybody hasn't noticed. I mean, I packed up and moved my family to China, up to Asia -- not to China -- to Singapore. I thought everybody understood this. I'm very impressed that you figured it out and are bringing it to people's attention.
BECK: I think most people -- I mean, Jim, I think the first time I talked to you, you said, you know, you should live in Singapore. And some of these people have said, you know, really Singapore is the place to be. I'm like -- I'm American. I don't -- I don't just hop on to a, you know, Gulfstream and go to Singapore. I don't even know how that's done. And I don't know, are they looking for talk show hosts?
So, most people can't do that. So, we have to be here and say, OK, now, what do we do? That's the message that I think America needs today
is: What do we do if this is the case?
BUCKNER: Well, the one notice that we don't see and it goes down to what we do is there are two pieces that really dictate growth in a country: people -- labor -- and money, capital. The one thing we're not watching is that the money is leaving America. And what I mean by that, is you're seeing, I spend most of my time in Asia and in China and other places, is helping American companies that have placed themselves there with Americans teaching those -- the labor over there how we run our companies.
BECK: OK. Jim, may I ask you a question? And I have friends who have done what David has said. So -- look, business is business and I don't think that makes you un-American. But let me express a point of view.
You're an American. America gave you an awful lot of benefit. And some people could say, well, when the going gets tough, Jim takes his money and his knowledge and his kids and he goes to Singapore. Tell me --
ROGERS: Wait, wait, wait. Wait a minute. I am still an American citizen. I pay American taxes. I vote in America.
What are you talking about? Americans are not allowed to live where they want to? Glenn, is this North Korea? Is this Cuba?
BECK: No, no, no. Not yet.
Jim, here's -- so how do -- how do companies that move over to China, because I agree, you cannot manufacturer the way things are. You can't start -- somebody told me that Bill Gates could not have started Microsoft today the way he did before, because America is too overregulated and too expensive.
BUCKNER: And the point that's being made here is it's not about whether we want to move to Asia or whether Americans want to shift companies there. It's the natural economic forces.
BECK: Right.
BUCKNER: What we're seeing is what we inspired in America in the past 100 years is now being inspired in China and China is now using the very skills that we used to use and wrestling, if you will, away from America its preeminence in the marketplace.
BECK: So, what -- go ahead, Jim. Go ahead.
ROGERS: Glenn, America is now the largest debtor nation in the history of the world. China is the largest creditor nation in the world right now. They have been saving and investing for the future. We have been borrowing and spending.
That is not a way to success. You know that. I was impressed with your knowledge of history before.
BECK: I will tell you that in just -- we're going to take a break here in a couple of minutes and I'm going to come back and I want to show you one piece of history. And I haven't really shared it with anyone. But I think you two can answer the question. I think we're repeating exactly something from our own history. And I'll get into that.
So, again, Jim, let me ask you. The average person -- and the average person who's a union member and working, you know, manufacturing cars. The reason why the unions are now becoming global is because the labor force is not -- I mean, it's just not going to happen here in America. You can't continue to do that.
So, when a union here says, hey, we're going to -- we're going to fix global wages, does that mean they are going to bring China and everybody else's wages up to our level? Or our wages -- do our wages, must they come down for us to be able to compete at all?
ROGERS: No, no. Our wages -- listen, Japan has much higher wage levels than we do. Germany has very high wage levels. They can still compete.
Germany is still a net exporter. Japan is still a net exporter. You can do it with high wages.
BECK: OK. So, then what is the secret? What is keeping people from manufacturing and making things here in America? If it's not wages, what is it?
ROGERS: Well, part of is it the excess cost which Americans have. You mentioned health care before. Massive litigation costs we have in the United States. Many things in the United States which other countries don't have in their expense base, which cost us and makes it more difficult for us to compete. Plus, education, which you mentioned before.
You know as well as I do, American kids do very badly on tests on the international tests. I mean it's, I don't like saying any of this. I'm an American and pay taxes.
BECK: OK.
ROGERS: But we have to face facts.
BECK: OK. Back in just a second.
(APPLAUSE)
ANNOUNCER: Chinese is now even out-capping America. It's beer market is now the biggest in the world, worth $30 billion. And with more money to throw around, China's rising class is dropping on pricey whiskey and wines. In 2009 alone, Chinese spent $80 million on bottles of scotch. They're even acting like Americans now.
(COMMERCIAL BREAK)
(NEWSBREAK)
BECK: We're back. I'm talking a little bit about China today. And we have global investor and capitalist, Jim Rogers, and Columbia University adjunct professor, David Buckner. I respect these two men a great deal. And I want to ask both of you this question. I want to go through little piece of history, and I never share this before, at least, I don't think. And I think you, guys, could see the parallels.
Let me tell you my understanding of history. And you, guys, tell me if this matches where we are now, because if it does, it's disturbing. The 1800s, the sun never set on the British Empire. It was the world's largest most powerful navy. It dominated everything. But then, somehow or another, it seems if you just kind of casually read history, it just kind of stopped and we took over. And I think what happened here was in 1915, they had World War I. And it was England, but it was also all of Europe.
And they were strapped for cash. And nobody had any cash. But we had a ton of cash. We had a ton of gold. And we were also coming into our own. We were really starting -- we had the labor, we had the thinkers, we had the doers, we had all of it. And we also had gold, and they needed money to finance the war. And so, we gladly gave it to the U.K. We gladly gave it to Europe. We gave it to France. Did we give some to Germany? I think we did, didn't we?
We gave money to Europe. We made loans. And everybody went in to massive, massive debt. See any parallel, so far? Then, after the war, we brokered the peace. And we told the navy, the British navy, sink some of your ships. We were about to build blue water navy for the first time. And we said sink your ships. It's the way to peace. And so, they sunk some of their ships. And so the Germany, because we told them to, and then, we told the U.K. because they owed us so much money, you have to choose between a Japan ally or us.
You can't have both. Which one is it going to be? Churchill said he knew, you got to stand with the United States. It's the emerging power. That brings us, and this is where I think we are. I think we're about 1920-ish. But it's going to be much faster acceleration. We had the roaring 1920s here in the United States. China is about to hit maybe their roaring 1920s. And there will be an event or something where the world will wake up.
It took us because of the depression until the 1940s before, all of a sudden, we unleashed this giant, and we controlled the world. Because of what china is doing, not only with us but the rest of the world, they own everybody. Jim, let's start with you. Parallels?
ROGERS: Well, I want another thing that you left out, the decline of the U.K. was they were at the end of 19th century and the beginning of the 20th century, they were the world's policemen. I mean, they were having wars everywhere, Africa, South Africa, the Great War. Strapped them in enormous amount of cash, manpower and everything else.
So, they were already declining by the time the First World War came along, and they were already deep in debt. It's true that in 1918, everybody thought they were the richest, the most powerful country in world, but they were already weakened from within and on the decline.
BECK: Right. And we had, they owed us money. We had all the capital in the world. The parallels, David, now, on that, to China. China just said I think it was this week that China said here's what is going to happen. Don't worry, Europe. You don't have to worry about anything, and because we'll bail you out. They're going to finance what's happening in Europe.
BUCKNER: Well, it's analogous to the piece that you've identified there, but I think there's even a second part to that. When you look at what it created in Europe by lending all of this money and then having them owe us, similarly to China and the United states owing them, that was the beginning in the seeds of Weimar.
So, you're starting to see what happens to countries that owe lots and lots of money that are not in a position to exploit those factors of growth you've talked about, and then are not in a position to leverage using the economic levers because they're owned. I think you see that model. You know, exactly what happened with us, you're now seeing it, China being us at that period of time.
BECK: Jim, Jefferson said you're going to be a slave to somebody who you owe money to.
ROGERS: Throughout history. Throughout history. Thinkers and visionaries have said, you go deep in the debt, you're going to have a problem. No country in world history has gotten itself in our position, i.e., huge debt and gotten out without a crisis or a semi-crisis. Again, I don't like saying it, but read history. Nobody gets out of something like this without a problem.
BECK: OK. So, now, let me go there, because I want to start right what Jim said but on the positive side. So, you guys are big thinkers. You consult people all around the world. You get it. Now, tell the American people, OK, so here's what we have to do. If you want to change history, if you don't want to be a repeat of history, here's what you have to do, and we'll do that next.
(CLAPPING)
(COMMERCIAL BREAK)
(CLAPPING)
BECK: Back with global investor capitalist, Jim Rogers, and Columbia University adjunct professor, David Buckner. Jim, I want to start with you. You have a forum now to talk to the average American person. What do they do? What do they -- because they're not global whatever. What do they do?
ROGERS: The average American has got to start with education, with their children and grandchildren. I have a daughter. When she was in the first grade in Singapore, had more homework than I ever had in any year of my elementary school. She's doing things in the second grade that I'm having trouble helping her with in her math. I'm going to have to call you, Glenn, and when she's in the fourth or fifth grade.
BECK: Yes. She'll really be in trouble then.
ROGERS: I mean, I can't believe what they're demanding of her. It's very rigorous. It's very demanding. And all these kids are working their heads off. She's in the second grade. You know, China produces something like 20 or 30 times as many engineers every year as we do in America. We don't teach math. We don't teach science. We teach self-esteem. In Singapore, you have to earn your self-esteem. You know, you're not told about self-esteem, you have to earn it.
BECK: And used to be called here in America, Jefferson called it a meritocracy. That's what made us different. You had to earn your own way. David, what does the average person do?
BUCKNER: The individual has to inspire innovation. What I mean by that, there are a couple of things you can do on a small level and on a large level. You got to put yourself in a position where you're inspiring with children, grandchildren and others to innovate, to create because we're not going to be manufacturers anymore.
BECK: Right.
BUCKNER: America won't be there. So, you got to create entrepreneurship, ideas, and innovation. That second step is you've got to make sure that government officials and policies allow for entrepreneurship. That foster entrepreneurship and don't snuff out the entrepreneurship that, in fact, we will only live by.
BECK: OK. Let me ask you both the same question. I'll start with you, Jim. Are you -- do you have faith, because I do, faith in the American people or if the American people were unleashed, told the truth and -- because I think a lot of people are awake now in America. And they're just looking for somebody to tell them the straight truth.
If they were told the truth and they were left to solve their own problems and the government was responsible and lowered the spending dramatically and lowered the bureaucracy of getting stuff done, do you believe we could turn the corner and turn the country around?
ROGERS: Of course, we could. We have many advantages. We're a nation of immigrants. Many foreigners come with their brains and their capital as has been happening in America for over 100 years. We've got a lot of very smart people. But Glenn, we've got to stop spending all this money in the government. We're running up gigantic debts. You have to change the tax code to encourage saving and investing instead of huge consumption.
BECK: OK.
ROGERS: Nobody ever got rich consuming. You get rich saving and investing.
BECK: Devil's advocate. They will tell you, Jim, that if we stop spending, then the economy stops because we are in a -- I mean, President Bush said, hey, you want to help the country, go out and spend. That's a nightmare. But they'll say that if you do that, then the economy will stop and then we're in real trouble and we have the great depression.
ROGERS: Glenn, Glenn, it defies comprehension to me that people are going to say the solution to too much debt and too consumption is more debt and more consumption. I cannot believe that grown-ups can say something like that and expect people to believe them. This is madness. You have to cut spending like an axe, with an axe, draconially (ph), and you have to change the tax code to encourage us all to save and invest instead of borrow and spend. It's madness.
BECK: What are you doing in 2012? I just think we'd like somebody who spoke this language to run. David, President Bush said, go out and spend.
BUCKNER: I have absolute confidence in two things. Hunger and knowledge. If people know that spending without receiving, without innovating, without growing is only debt, and not only that, spending other people's money is even worse debt, I know that that will fail. I also know that with hunger comes innovation.
So, when we look at these failures, you have to look at the fact that when you allow something to dive because it's naturally failing, it will have hunger, and hunger will innovate. You look at every single recession we've had. Then, following every deep recession has come the boon, the huge upside, because people that are hungry innovate.
BECK: OK. When we come back, final thoughts, and I want to focus on this. They say that state capitalism, what a managed economy, what China does, is the answer. I don't think it is. Two people who spend a lot of time there and know about America. They'll answer that next.
(CLAPPING)
(COMMERCIAL BREAK)
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BECK: You know, I have several friends in China. And one of them, when he came back from China, I said I want to understand this suicide thing and the strike that is going on in China. What people in America don't understand is they will build their factories and their eating places and their apartments in the same building. So, you live above your work space and you eat and you shop and you do everything there. And people were starting to kill themselves.
Some people went on strike, et cetera, et cetera, which is a new idea over there. And they just raised everybody's, you know, wage from 50 cents to $1, and then they moved to another province and built it there and started paying people 50 cents there. It is state controlled. It was the idea that the progressive loved at the turn of century with Mussolini.
They said this is fabulous. You can move. You're nimble because the state will control it, but it will still have some capitalism in it. Jim, everyone says that I've heard in, you know, business on television and everybody else, state capitalism is the wave of the future. That's not America.
ROGERS: No, no, no, no. Come on, Glenn. The Chinese call themselves communists, but listen, they're more capitalist than anybody in the world. Massachusetts is more communist than China these days.
(LAUGHTER)
ROGERS: California. Come on. What are you talking about?
BECK: I'm just saying. That's what I'm hearing. I have heard -- it's the progressive movement. State capitalism, the model in China is the future, and you can't compete, unless, you have, I mean, honestly, I had a very big person in my office, and I almost threw him out of my office because he said, hey, the way to solve the oil thing, and he said I advise the administration on it. Dead serious. We have to take control of the oil companies. And I said, get out of my office. I mean, this is crazy.
ROGERS: It's not going to work. You know that as well as I do. It's only entrepreneurship and capitalism that work. And the Chinese know it too.
BECK: But they say that it's working now.
BUCKNER: Well, state capitalism -- you know, the concept of state control still relies upon the fact that they're focusing on the greater good. You go back to Confucius and the whole principles. The good of the larger community still comes first there. That's culture. So, there's a lot that has to shift. We start from the bottom with the individual. I say bottom meaning the individual, the soul.
BECK: Yes.
BUCKNER: And move out to the greater good. They start with the greater good and move down to the individual. And the individual that does for the greater good is still a cultural issue and still very difficult for them to break out of. I mean, largely, as a business culture.
BECK: You guys spent time there. Yes, go ahead, Jim.
ROGERS: Glenn, Deng Xiaoping, the one who started this 30 years ago in 1978 when he said, we've got to try something new. Communism is not worked. Said I don't care if you call it a black cat or a white cat as long as it catches mice. And that's the approach in China now. Forget what they call themselves.
BECK: I understand that, but it's not really capitalism because the state still dictates. You can't make a certain level, over a certain level, right? The state still says we're moving in this direction. They move all of the structure for people.
ROGERS: Wait. They're moving away from socialism, state capitalism, if you will. We're moving towards it.
BECK: Right.
ROGERS: You pick the way you want to go. Now, Glenn, it's important to know. China will make mistakes. In the 19th century, we, in America, made some horrible mistakes. We had a civil war. We had very few human rights. We had massacres in the streets. We had 15 depressions with a "D." You could buy and sell -- you can still buy and tell congressmen in America, but in those days, they were cheap.
(LAUGHTER)
ROGERS: I mean, we didn't have much --
BECK: We know who they are, and we're just haggling over price now.
ROGERS: Right. So, china will make mistakes like we did. We had a great 20th century, though, even after the mistakes. So, don't worry. There'll be plenty of mistakes in China.
BECK: I know there will be. I know there will. But the power that they wield and the amount of people in where I've got 20 seconds now. So, may I ask you both if you could come back because I want to ticking up there, maybe do another hour with you on the trouble that China has. Correct me if I'm wrong.
I need just a yes and no answer from both of you. The Chinese officials are worried themselves about instability in their own country. They know how delicate the system is, and they know they're sitting on a powder keg, do they not?
BUCKNER: Very delicate.
Friday, January 14, 2011
Special Guests | Jim Rogers, David Buckner
ROGERS: And so does Washington. Washington is sitting on a powder keg, too.
BECK: Back in just a moment.
(COMMERCIAL BREAK)
BECK: Tonight was the beginning of education on China, but it should lead you in the E-4 solution to entrepreneurship. The only way for America to regain her place in the world is with entrepreneurship and innovation. Foster it in your own family. From New York, good night, America.
