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FAREED ZAKARIA GPS

Ahmed Wali Karzai Assassinated; Interview with Larry Summers

Aired July 17, 2011 - 10:00   ET

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


FAREED ZAKARIA, HOST: This is GPS, THE GLOBAL PUBLIC SQUARE. Welcome to all our viewers in the United States and around the world. I'm Fareed Zakaria.

On an important week, we have an important show for you.

First up, former Treasury Secretary Lawrence Summers on the debt ceiling crisis and on what is really America's most serious crisis, how to boost economic growth and jobs.

Then, new tensions and tempers flaring up in the hot Arab summer. We'll talk about Syria and Egypt with experts from the region.

Next up, yet another consequence of the recession? Green is no longer hot. Bjorn Lomborg explains why that could be good.

Finally, what is the cheapest city in the world for an American ex-pat? Don't pack your bags till you hear the answer.

We'll get to the debt ceiling in a moment, but I first wanted to give you my take on something else of importance that happened this week. Ahmed Wali Karzai was gunned down by one of his bodyguards, a close family associate. Ahmed was Hamid Karzai's half brother and ran the crucial southern provinces of Afghanistan for Karzai.

His death has properly been described as a huge setback for Karzai and for the international coalition that is trying to support the Karzai government in Kabul, but let's try to understand why Ahmed Wali Karzai was such a crucial figure, because it provides a window into understanding the future of Afghanistan.

Ahmed Wali Karzai made deals with the local tribes to extent the central government's rule outside Kabul. He was ruthless with tribes that would not support his brother, cutting them off from any aid and military assistance. In addition, he gave the American and British forces in Afghanistan information on hostile tribes, provided crucial intelligence on key groups and militants.

He was also the first Afghan leader to begin talking with the Taliban about cease-fires and their entry in the government. In other words, he was a practical deal maker.

Now, he was famous in the west or notorious for the corruption that surrounded him. But corruption surrounded all of the billions of dollars in American and Western military aid and spending that were being brought into Afghanistan. Everyone in Afghanistan was corrupt.

Ahmed Karzai was also an ally and an effective deal maker. The journalist Ahmed Rashid recalls he was a wheeler dealer in the classic Afghan mode, but if he was a rogue, he was a loveable rogue who charmed you, one way of doing political business in Afghanistan.

Karzai's death reminds us that it is the kind of political business that he excelled at that we need urgently. That is what will ultimately bring stability to Afghanistan. Whether the United States has 100,000 troops or 50,000, whether it withdraws at a slow or a rapid pace, at some point the Afghan government will have to make deals with those who wield power on the ground.

The effort to totally destroy those hostile forces has not worked for 10 years, and it likely will never work in a country with Afghanistan's geography, ethnicity and history. What will work is a political settlement or a series of political settlements among various parties, supported by the many regional powers that surround Afghanistan and have been supporting these groups. Ahmed Wali Karzai's deal making would have been a huge help in forging such a settlement.

Kabul and Washington will need a political surge to help replace Ahmed Wali Karzai.

Now, let's get started.

(BEGIN VIDEOTAPE)

ZAKARIA: As of this moment, there are exactly 16 days until the United States begins to default on its debt, barring a deal in Congress. But such a deal, sadly, continues to be illusive, as it has been for many weeks and months. Our politicians can't seem to muster the courage of their convictions to compromise for the sake of the country.

To help us put all this in perspective and to talk about much more, I am joined by the former President of Harvard, the former Treasury Secretary, and the former Director of the National Economic Council, Larry Summers.

LARRY SUMMERS, FORMER U.S. TREASURY SECRETARY: Good to be with you.

ZAKARIA: You were Treasury Secretary. Walk us through what happens if there is an actual default.

SUMMERS: With an actual default, that the United States does not pay back money, principal and interest on its debt. At that point, the country is declared to be in default. Financial instruments that people hold that have been regarded as safe cease to be regarded as safe. A panic begins on money market funds and many other parts of the financial system, and a cascade that makes Lehman Brothers look like a very small event unfolds.

It seems to me that it is an unthinkable financial risk to take. And it seems to me also important to remember that once that threshold has been crossed, there is an uncertainty premium that will continue for a very long time to come.

ZAKARIA: In other words, it would take a lot of - it would take people a long time to get comfortable again.

SUMMERS: A long, long, long - a long, long, long time, and that means that the question cannot be how we will have a default, how we will manage a default, how we will prioritize payments. The question has to be what's the formula going to be for avoiding such a catastrophe.

ZAKARIA: If there were a default, some people have said, you can imagine the borrowing costs for the United States would go up by one percentage point, 100 basis points, which would add $150 billion to the deficit every year. Does that strike you as in the range?

SUMMERS: That's a number you could imagine. I am less worried about the borrowing costs and more worried about the disruption, as there were runs on banks, runs on money market funds, exchanges face the prospect of collapse. Institutions that have been built over decades were swept away, and, as they were swept away, the ability to carry on routine financial business, to clear checks, to pay bills, to meet obligations would be - would be lost. It would be a cataclysm, and it would be a totally self-inflicted cataclysm.

There are countries in the world where there's an issue of whether they can meet their obligations. There's no question the United States can meet its obligations. The question is whether we will.

You know, Fareed, the way I liked to say it is, my daughters are in college. We can argue about how much they should spend, we can argue about how much I should pay, we should argue about how much they can pay. The only thing that you can't really argue about is that we do have to pay the Visa bill. Our family does.

And this idea that somehow that we can not pay because we're having a political fight over how to handle the spending and taxing really is an example of democracy functioning in the worst possible way.

ZAKARIA: So take me through what the - what you think the calculation is, because you were there in the White House. Many of the same characters in the Republican Party. You know, let's talk about what they think.

Eric Cantor, John Boehner, Mitch McConnell say, here's the problem. We always get these deals, and the spending cuts never materialize and the tax raises do, and so we don't want a deal that - that sort of promises cuts in the future. We want something that is rock solid now.

SUMMERS: Well, let's begin with the fact that when a Democrat left the White House, Bill Clinton in 2001, and the Treasury Secretary, me, left the White House, the country was in surplus and was paying back its debt. And then, a set of proposals put forward by a Republican president, enthusiastically supported by a Republican majority in both the Senate and the House were passed, and, as a result -

ZAKARIA: These are the tax cuts?

SUMMERS: The tax cuts, the Iraq War, the prescription drug benefits, huge increases in discretionary spending, much larger than anything that took place during the Clinton years. And, as a consequence, the economy was in substantial deficit. And then, the economy was, because of other problems, poised with a bubble for a crash, and it then crashed.

So they're in no position, I would argue, to lecture others about fiscal responsibility.

Where are we in this debate? The president's health care bill contained very substantial cuts in Medicare. The president has even raised the prospect of raise - of pushing upwards on the Medicare age, something that was unthinkable to many Democrats. The president has indicated a willingness to consider changes in social security.

A Republican like Alan Simpson, who is of the Budget Commission, has said that it is not the president who is to be faulted for an unwillingness to compromise. There is plenty of movement to entertain spending cuts. The question is whether it's going to be 100 percent spending cuts of one type or whether there's going to be any balance.

It's not that the president and his colleagues have talked about the prospect of raising taxes on middle class families. It's not that they've even talked about raising income tax rates. They've talked about eliminating a special tax break for the owners of corporate jets.

ZAKARIA: But those are trivial numbers. You'd have to do a lot more than that.

SUMMERS: Even though that you would have to do - you would ultimately perhaps have to do more, but even corporate jets and hedge fund special treatment is too much revenue increase for the Congressional majority.

So I don't think there should be any confusion here about who's willing to walk a mile to compromise so far. The president has shown that in any of a variety of ways, and the president has never said that it's my way or default. The president would be happy to see an agreement to move us past the prospect of default on almost any terms.

It is the House Majority, the Republican House Majority, that has indicated that they want to use the credit worthiness of the country as a hostage to pursue a particular agenda and to pursue it without compromise. I don't think that's the right way to advance the interests of the country.

ZAKARIA: Hold that thought, Larry. We will be back. More with the former Secretary of Treasury, Larry Summers. (END VIDEOTAPE)

(BEGIN VIDEO CLIP)

SUMMERS: The most important thing that makes businesses confident is a thick order book. The most important thing that makes store owners happy is a lot of people coming into their store.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ZAKARIA: And we are back, talking about the fate of the U.S. economy with Larry Summers, the former Secretary of Treasury.

Larry, you wrote a very important piece in "The Financial Times" in which you say actually no matter how this debt issue is resolved, as long as it's resolved, it's - the most important thing is actually to get - to move beyond it. None of these long-term deals matter. Why do you say that?

SUMMERS: The deals matter, but what matters much more is whether the economy grows. Do we create jobs for14 million Americans who are unemployed? Do we lose a generation of college graduates who don't get the first-rung jobs on which they can build a career? Do we lose 10 years early a large group of workers in their 50s who lose their jobs and then never find another one?

That's the most important question, and that's why we need more demand in this economy.

ZAKARIA: But it's -

SUMMERS: Is there ever been a time when, with interest rates below 3 percent, potholes in roads, infrastructure decaying and unemployment rates among the groups that build things close to 20 percent? There has never been a better time to renew and rebuild our infrastructure. And that's an important part of what we should be focusing on.

It is every bit as much a deficit when we let our bridges decay, when we fail to fix our roads, when we allow our schools to collapse, when kids have to go to school in classrooms where the paint is peeling off the walls. That is a deficit of maintenance, that is a deficit of preparation for the future in just the same way that borrowing money is a deficit. And, by addressing that deficit, we can put people back to work.

ZAKARIA: And you make the point in the FT, with very specific numbers, that actually by doing this, by creating more demand, by the government effectively spending money one way or the other, you actually make the deficit better because you get GDP growth up which produces more tax revenues. How sure are you of those numbers? SUMMERS: Look, the most important determinant of where the deficit is going to be three, four years from now is how fast the economy grows. If the economy stagnates, no matter what we do with deficit deals, that deficit's going to be in a terrible place, and that's why growing the economy is so important.

ZAKARIA: And you say you can do it. Now, there are a lot of people who say this is failed Keynesian economics. They tried it. The stimulus was tried. It didn't do much for growth.

SUMMERS: If you compare where the economy is with where it would have been in the absence of stimulus, it is a very different place. Make no mistake, a depression was a serious possibility in the winter of 2009. It didn't happen, and the Recovery Act is an important part of the reason why.

Look at the countries that did more to push their economies forward, countries like China, countries like Germany. Those countries saw larger results. Look at the countries that made less efforts to push their economies forward. They have had patterns of much more stagnation.

ZAKARIA: We're looking at Britain, for instance.

SUMMERS: Looking at Britain, for example.

We've - we've done this experiment in the United States. For the first term of his presidency, Franklin Roosevelt focused on getting the economy to grow and the economy enjoyed rapid growth from the floor of the Depression. Then, in 1937, he turned his attention to deficit cutting, and by the time you got to the 1940 election, unemployment was over 14 percent.

It's very important to avoid an excessively rapid move away from maintaining demand in a situation like this.

ZAKARIA: What do you say to people who say, well, this is temporary. You know, you're going to do it for another year, and then the money will run out, that the long-term solution has got to be that you'd stimulate business investment, that you'd stimulate private sector, and, to do that, you need businesses to feel more confident - confident and comfortable with the economy and the government. You've heard this many times.

SUMMERS: I have indeed heard it many times.

The most important thing that makes businesses confident is a thick order book. The most important thing that makes store owners happy is a lot of people coming into their store. And so creating customers is the most important thing we can do to make businesses be confident.

Some people think we should take from workers, take from other people and give it to business. You know, it's very interesting to look at the statistics. If you look at the corporate sector in the United States, corporate output, the amount the corporations are producing, is actually lower than it was at the end of 2007. Despite that, corporate profits are more than 20 percent higher, even after adjusting for inflation. So we've done a lot to give more to corporations.

That's not the problem, that they don't have profitability. The problem is why should they hire more people if they don't have the demand for their product? Why should they invest in new capacity if the factories they have now aren't being fully utilized?

That's why, for most economists, it comes back to making sure that we have enough demand.

ZAKARIA: Do you think that if the - if we did a major debt deal, would businesses gain confidence? Would that be - would that be some kind of a powerful boost for the economy? Or are you saying even that, at the end of the day, is not as important as a thick order book?

SUMMERS: I think a thick order book is the most important thing. Would it help to have a sense that we were on a more sustainable path? Absolutely.

ZAKARIA: But you say -

SUMMERS: That's why I hope we will make those long-run decisions.

ZAKARIA: But you -

SUMMERS: But the most important thing, strengthen today's order book.

ZAKARIA: If Tim Geithner leaves the - his job as Secretary of Treasury, would you be willing to do a second round?

SUMMERS: Oh, I'm - I had my time in government as Treasury Secretary and at the NEC, and I'm enjoying the opportunity I have now to reflect in a longer term way.

ZAKARIA: But you're a young man. If the president asked you -

SUMMERS: Reflect in a longer term way on the policy - on the policy choices that we - that we face and the problems that aren't this year's problems, but are the problems like innovation, like education that are over the horizon.

ZAKARIA: I will code that as having sidestepped the question.

Larry Summers, thank you very much.

SUMMERS: Thank you.

ZAKARIA: And we will be back.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ZAKARIA: Now for our "What in the World?" segment. Here in America, we've had some rare good news this week.

(BEGIN VIDEOTAPE)

CROWD CHANTING: USA! USA!

ZAKARIA (voice-over): Our Women's Soccer Team has been making us proud at the World Cup in Germany, but, of course, they don't call it soccer over there. It's football. And the football that makes the most news is Men's Club Football.

Every summer, soccer fans around the world are fixated on their favorite players. These guys are traded from team to tame, like tech stocks, for many, many millions.

Among the players likely to make a move is this man - Carlos Tevez.

UNIDENTIFIED MALE: Yes.

ZAKARIA: He's an Argentinean who left home to play in England's lucrative Premier League. Tevez is one of the world's most lethal goal scorers, and he has a salary to match. Manchester City pays him $21 million a year, about what Derek Jeter makes. And that's just salary. Add to it his multimillion dollar endorsements.

You'll be surprised to know who's trying to buy Tevez. Not sheiks or oligarchs, but a small club from Sao Paulo, Brazil - Corinthians. They're offering $55 million to buy this soccer superstar. And that's just the transfer fee.

Now, Tevez may or may not be sold, but it's a huge statement of intent, and it's yet another sign of a rising, powerful Brazil, not just in soccer, but in many fields. For a decade now Brazil has been a Latin American success story, a record 7.5 percent growth last year, 33 million people lifted out of poverty in eight years, household incomes growing consistently faster than GDP and more.

These are great statistics, and they're often attributed to one man -

CROWD: Lula! Lula! Lula!

ZAKARIA: Luiz Inacio Lula da Silva led Brazil for eight successful years. President Obama once described him as "the man."

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: That's beautiful.

ZAKARIA: His Bolsa Familia welfare scheme brought prosperity to millions of Brazilians, a heady alchemy of subsidized housing, generous pay rises, easy access to credit. (INAUDIBLE) has made Brazil's favelas a more prosperous place. You could even say it's put an extra zing in the samba moves at Rio's Carnival. But the party might be soon over. Rising agriculture and a surge in commodity prices over the last decade have fueled Brazil's boom, but they've taken the pressure off the government to do structural reforms. Economists worry that Brazil's growth has turned into a bubble and it is about to burst.

That's a worrying problem, not just for a country of 200 million, but for the entire continent that looks to Brazil as a model for growth. In the past few weeks, the Brazilian real, its currency, has hit a 12-year high against the dollar, a surge of nearly 50 percent in two years. That might sound good, but it's actually making Brazilian exports much less competitive. Interest rates in Brazil have now crossed 12 percent, so borrowing costs are very high.

Brazil's new president, Dilma Roussef, is the country's first female leader and she will need to make tough decisions. Brazil's savings rate is just 17 percent of GDP. Now, that's what developed markets averaged. But developing countries usually have much higher savings rate, around 30 percent. China, for example, is closer to 50 percent.

And then there's the issue of what to do with your money. China plows more than 50 percent of its GDP into infrastructure. For Brazil, that figure is just two percent. For a developing country that number needs to go up.

So keep an eye on Brazil. It will be the center of the world's attention in three years when the Men's Soccer World Cup arrives at that sport's spiritual home in Brazil. And then once again, when a real carnival has been planned for the 2016 Summer Olympics in Rio, let's just hope the party is still going strong at that point.

(END VIDEOTAPE)

And we'll be right back.

(COMMERCIAL BREAK)

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: I'm Candy Crowley. Here are today's top stories.

Former "News of the World" editor Rebekah Brooks was arrested today in connection with British Police investigations into phone hacking and police bribery.

Casey Anthony walked free from a Florida jail shortly after midnight this morning, about a thousand onlookers stood outside the jail watching as she left with her lawyer. Anthony was released 12 days after a jury found her not guilty on murder and child neglect charges in the death of her two-year-old daughter, Caylee.

The first stage of NATO's handover to Afghan Security Forces began today. The handover took place in Afghanistan's Bamiyan Province, the first of seven areas set to assume security responsibilities this month. And Libyan leader Moammar Gadhafi is vowing never to leave his country. Gadhafi's remarks were broadcast at a rally of his supporters this weekend after the United States recognized the Opposition Transnational Council as Libya's legitimate governing authority.

Those are your top stories. Now back to "FAREED ZAKARIA GPS."

(BEGIN VIDEOTAPE)

ZAKARIA: This week, the American administration confronts Middle East where events are heating up once again, throngs of protesters continue to occupy Tahrir Square in Cairo and disrupt the political life of Egypt. Across the Mediterranean Sea, in Syria, the U.S. and French embassies in Damascus were attacked by pro-regime forces.

So what is going on?

Rami Khouri is Director of the Issam Fares Institute of the American University in Beirut. He joins us from there, about as close as an outsider can get to Syria. And Ayman Mohyeldin, is Al-Jazeera's Cairo-based Correspondent.

Rami, I'd looked at some of the stuff you've written and you suggested Syria may be going through a slow motion revolution. Is it a slow motion revolution or has the regime really been able to shut down this revolution?

RAMI KHOURI, DIRECTOR, ISSAM FARES INSTITUTE: I wouldn't say it's a revolution. I would say it's widespread and growing citizen revolt among many, many people in Syria, but there are also many people who still support President Assad. The regime has pushed back very hard using all kinds of tools that it has available, both military force and trying to co-opt or placate the rebellion and hasn't done very well so far in most people's views.

And this is a struggle looking more and more like the situation in Yemen where - or in Bahrain where this may go on for months and months.

ZAKARIA: Do you - do you see any significance or anything particularly significant in the fact that they unleashed these - these thugs on the - the American and French embassies?

KHOURI: This is normal operating procedure in many parts of the world. It's one of the ways that regime sends signals to each other. This happened after the American and French ambassadors went to Hama and sent their own signals to the demonstrators.

So I think we need to see this as diplomacy practiced in rather unusual ways by both the French and the American ambassadors, as well as the Syrian government. So I wouldn't see this as anything unusual. But it's certainly marks a ratcheting up - ratcheting up of the western involvement or intervention in this and, of course, Clinton's remarks after that. So this is a very serious escalation of the diplomatic battle that is part of the battle that's going on in the streets, the political battle, as well as the physical battles in Syria.

ZAKARIA: Ayman, when you look at what's going on in Tahrir Square, some of us - some of us wonder whether - are Egyptians getting tired of this - of this standoff, the reformers, the protesters seem to feel the military has not reformed enough. And the military seems to feel the protesters are now just disrupting normal life in Cairo. What's happening?

AYMAN MOHYELDIN, CORRESPONDENT, AL-JAZEERA ENGLISH: Well, certainly from the perspective of the protesters who are in Tahrir Square, who are back in Tahrir Square, what they're seeing really is two fundamental issues that are at play here. One is whether or not the military leadership of this country understood what this revolution was about. And secondly, whether or not the transitional government is actually in power to do anything about it.

The key issues for the protesters, there's a long list of issues, specific issues, whether it's putting former members of the regime on trial, whether it's raising the minimum wage, whether it's purging the security services from officers who may have been involved in the killing of protesters. It was only when the protesters escalated their sit-in, went to the Tahrir Square, went to Suez, blocked off some of the roads on some of these major highways, that it jolted the military and the transitional government into action.

And I think they've gained the upper hand at least at this stage. There's no doubt there's a little bit of revolution fatigue in the country, but no doubt this is what's at stake right now at Egypt.

ZAKARIA: Would bit fair to say, Ayman, that the - whatever happens, the luster of the - of the Egyptian military is off, that is, it has been tarnished somewhat? There used to be a sense of the Egyptian military was the protector of the nation and the people. And now, the people, at least some large segment of them find themselves at odds with the military.

MOHYELDIN: Absolutely. You know, when the Egyptian military took to the streets in February with the departure of President Hosni Mubarak particularly running the country, so to speak, they were very much welcomed. Then people had put a great deal of hope in the military's capability in leading this transitional process. They now have five months' worth of the military's track record and that has been a great cause of alarm for many people here.

On one hand, they have almost 11,000 civilians who are being tried in military courts. They have a military that is not necessarily engaged directly with the people. As you said, the military was seen as a protector to the revolution. Some are now seeing it as actually being an obstacle to the progress. But nonetheless, there are people that are still banking on the military to be the sole institution that can shepherd this transitional period amidst all the insecurity that exists in Egypt. ZAKARIA: Rami, can you make sense for us of these - these two scenarios and throwing all the others? And if I were to simply ask you what is the state of the Arab revolutions, the Arab spring, the Arab revolt? Call it what you will.

KHOURI: Well, I think what's really fascinating and historically incredibly important is what you're seeing in Egypt and Tunisia and Syria and other places, civilian authorities, people in the street have become empowered and have challenged and engaged the military- dominated regimes in several Arab countries and have forced those regimes to respond to them in a political way.

So what you're getting in the Arab world is the first significant civilian challenge to military-dominated regimes and government that have dominated the modern Arab world for the last 40, 50 years. In Egypt, next year, it will be 60 years of military-led government.

So this is an incredibly important turning point where their military regimes are being forced to and are, in fact, engaging in political bargaining with civilian-led demonstrators. In some case there there's clashes and they're fighting. But if - if you look at Syria, for instance, the concession that the Assad regime has made, that people may not think they're sincere. They may not think they're enough, but they are making concessions about changing the electoral law, changing the media law, allowing for pluralism.

And it's a very, very exciting moment to see this process. And you have to see it really as the birth of the Arab citizens, the birth of Arab politics and hopefully the birth of civilian sovereignty for the first time in the modern Arab world.

ZAKARIA: Rami Khouri, Ayman Mohyeldin, thank you so much for that wonderful, fascinating update. And we will doubtless (ph) be back to you for more very soon.

And we will be right back.

(END VIDEOTAPE)

(BEGIN VIDEO CLIP)

BJORN LOMBORG, DIRECTOR, COPENHAGEN CONSENSUS CENTER: We have gotten disenchanted with doing anything about global warming because we realize, damn, it's very expensive.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ZAKARIA: Just a few years ago, all the talk in governmental circles was green subsidies for, one, environmental effort, tax breaks for the next one. But the financial crisis and economic recession has put a stop to that. One of the first things to get slashed in budget cuts around the world has been environmental initiatives, and so today our reliance on oil and natural gas is actually increasing.

To discuss this seeming paradox and the future of energy in general, we're delighted to have back with us Bjorn Lomborg, the Director of the Copenhagen Consensus Center.

Bjorn -

LOMBORG: Glad to be here.

ZAKARIA: -- in your first book you were described as skeptical environmentalist. So I want to begin by asking you before we get to that issue of subsidy, you know, I was watching the Bill Maher show and he constantly says, look, you're just seeing this crazy weather. There are all these floods. There are all these, you know, hurricanes. Obviously you're seeing massive climate change and - and people want to deny it. So what is the recent evidence?

LOMBORG: Well, a couple things. I'm a skeptical environmentalist, because I think very often we're told a very one- sided story. But definitely global warming is real. We don't actually have to look for more of that evidence. But, yes, it's also true. We're very often being told, oh, see, this next hurricane or this next flood is because of global warming.

Now, it's true that most of these things are compatible with global warming, but they're much more direct reasons for why we get more flooding. Fundamentally, we've pent up most rivers. We've dammed them in. And so naturally when there's enough presentation, they have to flood somewhere. Likewise, hurricanes have disappeared or dropped dramatically over the last five years and they're down to some of the lowest we've ever measured.

Now, this doesn't mean that there's no problem with global warming. But it means that we have this, if you'll excuse me - the CNN effect, as we call it, that you hear a lot about it, that you see it every time it happens, but even if this was predominantly caused by global warming, of course the solution to having more hurricanes or more floods is to create better infrastructure, to put it very, very bluntly.

If you wanted to help people in New Orleans from a hurricane that we knew would eventually hit New Orleans, it was not to cut carbon emission, but it was to have better levees.

ZAKARIA: And what - the criticism, of course, as the people say what you are advocating is adaptation, not mitigation. So explain the lingo that is that you're saying let's just adapt to the fact that there's going to be climate change. Let's not work to - to prevent it from happening.

LOMBORG: Well, I'm actually not saying that. I'm saying we should definitely look at adaptation. And I think it's immoral not to talk about adaptation, because that's the only thing that will matter for the next 20, 30, 40 years.

But we should also be looking at tackling global warming in the long run. But fundamentally we have gotten disenchanted with doing anything about global warming because we've realized, damn, it's very expensive. And that's why we can't get people to do anything about it.

What I'm saying is instead of trying the same approach that's failed for the last 20 years, namely let's promise large carbon cuts and then not do them, let's try to get technology to become much cheaper.

ZAKARIA: But you've often said take the money and put it into technologies of the future so that we can get to a - to a green place.

LOMBORG: Yes. But the - the trick, though, is there's a tendency for most governments to want to put the green tech money into existing, inefficient technology. So we see Germany being the leader in solar technology in the world, which is a little odd, they're not the most sunny country in the world. But they basically put up lots and lots of inefficient solar panels. They know they're inefficient. They're paying about 100 times more than what they could have bought carbon cuts elsewhere. But it makes them feel good and, of course, it supports their businesses.

I would like us to put that money into research into better solar panels. Because, it's not about getting the Germans to get 0.1 percent of their energy from solar, it's about getting everybody to eventually use solar and other green technology and that will only happen if the technology is cheaper than fossil fuels.

ZAKARIA: What about wind? Should we - what should we be doing with wind?

LOMBORG: Wind is a good example. I mean, I come from Denmark. We've put up lots and lots of windmills. We felt very, very proud about putting up all those windmills. They're all incredibly inefficient. We've actually - we put up about 10,000 in '70s, '80s, early '90s. We cut down virtually all of them and replaced them with more efficient windmills.

Now, they're still not efficient. They actually have to have substantial subsidies yet. But wind will definitely be one of the things that could give us a substantial part of our green energy. But, again, I want it to be efficient. Because as long as it's inefficient you really just (INAUDIBLE) -

ZAKARIA: And how do you do that? In other words, what's the mistake governments are making now and how would you rather they do it?

So, right now, you're saying they're funding existing windmill technology. You want them to try and kind of place big bets for technologies of the future?

LOMBORG: Yes. Fundamentally if you give $100 billion in solar panels, you get - you probably pay $95 billion of them in existing inefficient technology. The last $5 billion goes to research and developments and new technology. That's great. But if what we wanted was to get the new technology that eventually everyone including the Chinese and Indians will buy, we should have spend all the hundred billion on research and development. So the trick is to not buy technology too early.

If you'll allow me a metaphor, if you think about computers back in the 1950s, you know, if you wanted to get computers to be cheaper so eventually everyone could buy them, the answer was not to promise to buy a computer for every American family in 1960. That would have been terrible. It was not to tax alternative technology or tax the typewriter and then hope that we get better computers.

It was dramatically invested in research and development, which is what we did in the space race and the military technology. And that actually got us to a place where IBM and Apple were making computers that everyone wants to buy.

In Europe, we actually wanted to - there's a big movement afoot for banning the patio heaters, because they felt, you know, that was luxurious. You're going to - you're supposed to freeze outside.

And at the end of the day, it shouldn't be about saying, no, thou shall not. You cannot do this or that. It should be about efficiency. It should be about not just rich, well-meaning westerners, you know, cutting their patio heater, but actually us getting towards a new technological stage where everyone will be using the green energy.

ZAKARIA: Bjorn Lomborg, a pleasure.

LOMBORG: Good to know (ph).

ZAKARIA: We'll be back.

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ZAKARIA: Our question this week from the "GPS Challenge" is, what is Scotland Yard's code name for its investigation into phone hacking by British tabloids? Is it A) Operation Weeting; B) Operation Tweeting; C) Operation Zoomania; D) Operation Pocklington?

Stay tune and we'll tell you the correct answer. Make sure you go to CNN.com/GPS for 10 more questions. And while you're there, make sure you check out our website, the Global Public Square. You'll find smart interviews, takes from some of our favorite experts including myself. And don't forget you can follow us on Twitter and Facebook.

This week's book is a terrific read. Frederick Kempe's "Berlin 1961." The book reminds us of a time much scarier than the present when geopolitical tensions was sky high and people truly feared an all-out nuclear war. In 1961, the epicenter was Berlin. Nikita Khrushchev called it the most dangerous place on earth. The book is a fascinating history of a now forgotten time and place that was a turning point in the Cold War.

And now for "The Last Look," if all the infighting in Washington is getting to you and you are thinking of decamping or perhaps more placid choice, we found a surprising study this week that might help you decide where to go and where not to go.

Mercer's cost of living survey says the most expensive place for ex-pats from the States is not London, Zurich, Tokyo or Moscow, as you might imagine. It is the capital city of Angola - Luanda. No idea where that is? Let us help you. Exhibit A of its costliness, a club sandwich and a soda there is said to cost $20.38.

Looking for something a little more cost effective? Well, the study says your best bet is Karachi in Pakistan. Now, perhaps that's not the best place to move at this point.

For more on the study, go to our website, CNN.com/GPS.

The correct answer to our "GPS Challenge" question was A, Operation Weeting. It's the code name for Scotland Yard's hacking investigation. I wasn't aware of this, but Scotland Yard reportedly has a book called fittingly enough, "The Book," and operations are randomly assigned code names from the book.

Go to our website for more.

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