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FAREED ZAKARIA GPS

Interview with Michael Bloomberg; Interview With Nicholas Kristof; Interview With the President of Estonia

Aired June 24, 2012 - 13:00   ET

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


FAREED ZAKARIA, CNN HOST: This is GPS, the Global Public Square. Welcome to all of you in the United States and around the world. I'm Fareed Zakaria. We have got a terrific show for you today, starting with New York City Mayor Michael Bloomberg, on Romney versus Obama, on the controversial slashing of soda sizes and on his future plans.

Then "The New York Times" columnist Nicholas Kristof just took a rare journey from one side of Iran to the other without government minders to take the pulse of the people. He's here to tell us what he learned.

Next up, austerity doesn't seem to be working -- or maybe it does work. Meet the president of a country where austerity led to growth.

Finally, Fidel Castro on yoga. Really.

But first, here is my take. It's hard to find any good economic news these days. Europe is teetering on the brink, emerging markets like China, Brazil and India are slowing down and the United States is in a slump.

Let me try to cheer you up. The cost of sequencing a human genome is now down to $1,000 and it takes two hours. That is an acceleration of capacity that is faster, much faster than Moore's law, which says the computing part doubles while costs go down by 50 percent every 18 months.

This is likely to be the beginning of a new technology revolution, one that is already transforming American industry. It's a reminder that, as we confront difficulties across the economic landscape, the one area where America can still move from strength to strength is science and technology, if we make the right decisions.

Take, for instance, the decision to fund the mapping of the human genome. The federal government funded that project at the cost of a whopping $3.8 billion over a 15-year period. But consider the payback.

One study funded by the industry calculates that the Human Genome Project has helped drive $796 billion in economic activity, raised $244 billion in personal income and supported 310,000 jobs in 2010 alone. These numbers might be exaggerated, but the scale of the impact is clear across vast industries like agriculture and medicine and entirely new fields like gene therapy. Federal funding on research and development, which is a drop in the budget bucket, has been in long-term decline, dropping as a percentage of GDP by 54 percent in physical sciences and 51 percent in engineering over the period 1970 to 1995.

In recent years funding increased slightly, but it is now set to continue the long-term decline. This at a moment when countries like China and South Korea are increasing their funding by 10 percent year- on-year.

There is more to encouraging science and technology than simply funding. Government rules and regulations play a large role.

Kiran Mazumdar-Shaw, the dynamic founder of Biocon, one of India's powerhouse pharmaceutical companies, argues that the entire American-style set of regulations, clinical trials and lengthy waiting periods are now a serious deterrent to innovation in drugs and pharmaceuticals more generally.

It takes 12 years to get a drug from conception to market, she says, while it took six years to get the Airbus A-380 from the drawing board to flying in the skies.

The science is clear, the economics is clear. As usual, the politics is the problem.

Let's get started.

(MUSIC PLAYING)

ZAKARIA: Earlier this week Mayor Bloomberg was in Rio de Janeiro for the U.N.'s Rio+20 Conference on Sustainable Development. He attended as mayor of New York but also as chair of a novel organization called C40. It's comprised (sic) of the mayors of 58 of the world's largest cities, who are committed to combating climate change.

Why this agenda? Why mayors leading the charge? The answers are interesting. Take a look.

(BEGIN VIDEO CLIP)

ZAKARIA: Mayor Bloomberg, pleasure to have you on.

MICHAEL BLOOMBERG, MAYOR OF NEW YORK CITY: Thank you for having me.

ZAKARIA: You have set out in your agenda for Rio a very ambitious target. You want to get greenhouse gas emissions down maybe 1 billion tons by 2030.

Can a network of mayors do this without the cooperation of your national governments?

BLOOMBERG: Well, it would be easier if the national governments did something, but I think it's fair to say 20 years ago there was this meeting in Rio. Here it is Rio+20 and they have done very little.

Federal governments and even state governments within countries basically have been immobilized by conflicting interests, conflicting views of what science is and the ability to -- or the inability to lead. They are immobilized, because they don't want to take tough votes and alienate half of the constituency.

Mayors don't have that luxury. Mayors are responsible to the people every single day. The press is there. People can see the results. They hold the mayors accountable.

And so if you look, all of the improvements in education or fighting crime or the environment, the pressure for change in immigration laws, the pressure to get rid of guns in America or on the streets, these all come from mayors.

ZAKARIA: Take the issue of greenhouse gas emissions. You've taken a very strong position. You're really trying to move it down. You want New York to have lower and lower greenhouse gas emissions.

BLOOMBERG: Yes.

ZAKARIA: You know this is a subject of great controversy in the United States. What do you, as a businessman, someone very conscious of not imposing costs on business, why have you decided to go down this road?

BLOOMBERG: Well, the costs of not doing these things dwarf the cost of doing it. The problem is that people don't think about, oh, you saved my life, and they don't say thank you for that, and they don't want to spend any money for the possibility of saving their life, unless they're actually facing something.

What government should be about is leading from the front and explaining exactly what you pointed out, that some people don't want to spend any money. But the truth of the matter is it costs you an awful lot more to not spend the money.

And so, for example, in New York City, we've worked very hard to clean up the air in your workplace, in your restaurant. It's called getting rid of smoking. That's the biggest contaminant in those environments. And in fact, we've reduced the smoking to virtually zero in confined spaces.

Because of that, bringing down crime and fewer accidents -- traffic accidents and fewer deaths by fire, New York City's life expectancy is now three years greater than the average in America.

Just think about that. You've got 8.4 million people living in New York City who, on average, are going to live three years longer than if they lived on average anyplace else.

ZAKARIA: So then I have to ask you about the issue most recently that you have taken up with regard to helping people's health and well-being, the super-sized soda drinks. You're a free market businessman. You still think that this is an area where it is appropriate for the government to place restrictions on private business, to stop people --

BLOOMBERG: No, I don't think that we should restrict you from drinking full sugared drinks. I do think we have an obligation to explain to you that that is not good for your health.

And one of the ways to explain is we're going to require that restaurants and movie theaters, if you want to drink more than 16 ounces, they sell it to you, but they sell it to you in multiple containers, that no container should be bigger than 16 ounces.

ZAKARIA: But you're regulating business. And you know there are lot of Republicans say this is the nanny state.

BLOOMBERG: You know, come on. They just say that. You're not cowed by that, you're not buffaloed by that. Let's assume there's a building with asbestos in it. Do you really think what they mean is we should let you go into that building and send your kids into that school with asbestos in the air? I don't think so.

We regulate and protect the health of lots of people in lots of different ways. We have 10,000 fewer deaths from smoking, so about 7,000 deaths a year from smoking. Obesity or the causes -- the results of obesity are already at 6,000, and in a year or two will be much greater, and smoking will continue to come down.

Obesity is the single biggest public health issue that is growing and not declining in this country. In fact, the average family is approaching 1,000 pounds and we'll be there pretty soon. If you just think about what that means, the average family is four people. Now, you know, it's going to be a ways before you get there. It's not going to be 1,000 for a long time, maybe it's 800. But it is enormous.

The number of people who -- we find in hospitals 6-year-old kids that, when you look at their blood, they have type II diabetes that you never saw in anybody younger than 19.

We look today at 19-year-olds and their blood looks like 60-year olds. This is an enormous health problem. It's -- as a matter of fact, Fareed, it's the first public health issue that has gone from a rich man's disease to a poor man's disease. Things used to go in the other direction.

Today, if you -- remember back in the days of -- before the Great Depression, when there was all of this excess, these guys -- you'd see the pictures with their big bellies. It was a sign of success. Today those guys are at health clubs. But unfortunately, people who don't have the knowledge, which typically is poor people who we're taking advantage of, they are putting on weight at an enormous speed.

ZAKARIA: So liberal or conservative, how do you think of yourself? BLOOMBERG: I never really thought of it in those terms. I've always found myself much more liberal than conservatives and much more conservative than a liberal, some place down the middle. And if I can antagonize both, it's probably I've got it right. I just think of myself as a pragmatist. I don't have any agenda.

I don't have any belief -- you say government should or should not be involved. Tell me the issue. If government could save a million lives tomorrow, yes, government should be involved. If government would hurt the economy and there's no benefit, then, of course not.

The real world is somebody is going to win. Somebody is going to lose. There's cost to everything. But if you make the long-term investments, which is an investment in education, investment in public health, investment in infrastructure, those kinds of things, we will have a better world.

ZAKARIA: A "New York" magazine article says that you have privately expressed a lot of criticism about President Obama.

BLOOMBERG: No, I don't think that's fair. I don't agree with him on everything.

(COMMERCIAL BREAK)

ZAKARIA: Mayor Bloomberg, what does the campaign look to you so far like? You've watched it from the sidelines. Do you think we're having the right debate?

BLOOMBERG: Well, there hasn't been a debate yet. And I -- unfortunately when we get to the debates, as we all know, these are never debates, they are questions where there's never a followup, where you ask a question and either candidate gives an answer that has nothing to do with your question. And then we go on and somebody else goes to the other person and back and forth.

I think, unfortunately -- and it's not just the fault of the candidates. We tend to have to have a simple, short answer to complex problems for the sound bite requirements of modern day journalism and perhaps the education level of the modern citizen. Complex problems can't be reduced to that.

ZAKARIA: When you look at the debate that's taking place at the presidential campaign, it's happening with the backdrop of what's happening in Europe.

Do you believe that what this country needs is to cut government spending in order to balance the budget, perhaps raise some taxes? Or does this economy need a stimulus?

BLOOMBERG: Well, I think, number one, you can't let the deficit keep growing and growing, and neither candidate has given any credible plan that would balance the budget and when I -- and also neither has Congress, Republicans or Democrats. When you look at what they've propose, they are stopgap things which basically they know they're never going to get implemented. It just lets them go to the public and say we did something. But I've not seen a real plan, with the exception perhaps of Simpson-Bowles and getting rid of the Bush-era tax cuts on the revenue side that would balance the budget over the next 10 years.

The monies that are sequestered would be a disaster if we cut that way. It was deliberately designed so that everybody knows you can't use it, it will never go into action. And it doesn't save very much money anyway. So I don't think either candidate has come up with a comprehensive plan that leaves you to close an $8 trillion deficit in 10 years.

Now, we have spent a lot of money on stimulus, an enormous amount of money on stimulus. And I don't think there's very much evidence that that has helped. I think the problem we have is we don't have private sector job creation, and that needs to -- that will only be done, not by subsidies, but by increased confidence in future.

Banks won't make loans and business people won't borrow to build plants and hire employees unless they have some confidence in what the tax code is going to be, what regulation is going to be, what the courts are doing to do, whether or not we're going to address some of these social issues like guns and education and immigration and that sort of thing.

And just spending money isn't going to do that. I know why elected officials want to spend money. It's great. I can get a vote from you if I give you some money. OK. But that doesn't help your children, it just helps you.

ZAKARIA: Do you think the Bush tax cuts should be allowed to expire, because that would raise a huge amount of revenue across the board (inaudible)?

(CROSSTALK)

BLOOMBERG: I have said I do not think populism of just taxing some and not others is the right thing. We're all in this together. If you just would let expire the Bush-era tax cuts on the very wealthy, it does almost nothing to balance the budget, it's just a punitive thing to whip up a populist sentiment and get a few votes and say that's good.

What we should be doing -- and I've said this to the president -- I think he should stand up and say I'm going to let the Bush-era tax cuts end for everybody. Incidentally, it's politically doable, because Congress is not going to vote anything this president wants until after the election, and then only if he is re-elected.

But if the president were to stand up and say I've got enough votes to sustain a veto and I'm just going to let them all expire, he would then be able to turn to the Republicans and say, you want more revenue? Well, I got us $4 trillion more revenue between now and 10 years from now. Now you want to work with me on an equivalent $4 trillion of cuts done intelligently?

And how do you do that? I would just pick the Simpson-Bowles, because it wasn't done in horse trading, one for you and one for me and one for the other guy if they support -- if he supports you and i. This is an intelligent way to do it and it's politically possible.

ZAKARIA: And what did the president say when you said (inaudible)?

BLOOMBERG: He said he appreciated the input.

ZAKARIA: The "New York" magazine article says that you have privately expressed a lot of criticism about President Obama.

BLOOMBERG: No, I don't think that's fair. I don't agree with him on everything. I happen to think that Obama has been a much better president than people give him credit for. He's in a very difficult situation. You've got a Congress that is very polarized and partisan. There are problems all over the world. Our two big markets, China and Europe are in big trouble.

Actually we've done pretty well in this country. You know, I would always like to -- and I agree with the president on a lot of the social issues. I'd like to see him do more.

But you'd always like to see him do more. And it's easy -- you know, the way I phrase it, I can tell you how to raise your children. Raising mine is a little more difficult.

It's easy to say that the president should be doing more. But he's got a lot of things to balance. And on balance, I think he's done a good job. I also know Governor Romney. I've known him for a long time. He did a good job as governor of Massachusetts. I liked a lot of things he did up there. He actually put in a health care plan that worked.

And I don't know what's going to happen with the health care plan that is called the Obama health care plan but, in fact, was passed and written by Congress. But we have to solve the problem of health care costs that we cannot continue to afford, and the president has tried to address that.

And every time he turns around, everybody says, yes, we've got to solve the problem, but don't cut mine. And that's the real world. So he's got a very difficult job. And if I've ever criticized, it's only I like some of the stuff he's done. I wish he had done more. I don't agree with some of the stuff he's done. I wish he had done a little bit less of that. But I would say that if it was anybody in there.

I think he's hard-working and cares very much and has a big fan base. And you can say the same things about Mitt Romney.

ZAKARIA: So any chance of an endorsement?

BLOOMBERG: You know, you never know what's going to happen.

ZAKARIA: Mayor Bloomberg, thank you very much.

BLOOMBERG: Thank you for having me.

(END VIDEO CLIP)

ZAKARIA: Up next, "What in the World." At the G-20 Summit signs of the quiet success of one of America's neighbors. And I'm not talking about Canada. We'll be back.

(COMMERCIAL BREAK)

ZAKARIA: Now for our "What in the World" segment. This past week Las Cabos, Mexico, was quite literally turned into a global public square. Leaders from 19 top economies plus the European Union gathered to discuss the world's major crises: the euro, global growth, Syria. But the G-20 Summit, as it's called, also shed light on a few crucial relationships.

Take the U.S. and Russia for example. Much was made of how Presidents Obama and Putin leaned away from each other during talks. Commentators said it felt as chilly as a Moscow winter.

Contrast that with Obama and the Chinese president, Hu Jintao, a warm handshake and big smiles.

But the meeting that really got me thinking was the one between two Latin American leaders, Mexico's Felipe Calderon and Brazil's Dilma Rousseff.

How and why, you ask? Well, right now Brazil has the world's attention. It is a much vaunted BRIC economy in the company of China, India and Russia.

On the other hand, the perception of Mexico is that of a poor country with regular drug-related killings.

That may be true. But very quietly Mexico is stepping out of Brazil's shadow. To understand why, let me first explain Brazil's recent rise.

Ten years ago Mexico's economy was bigger than Brazil's. But as you can see from this chart, Brazil suddenly began to grow much faster, so much so that its GDP overtook Mexico's and became twice as large.

If I had to cite one main reason for this, it would be China, Brazil's biggest trading partner. China's growing appetite for commodities led to a boom in resource-rich Brazil. But just as China buys from Brazil, it competes with Mexico. After joining the World Trade Organization, Chinese manufacturers have undercut Mexican ones selling at lower prices and in bigger quantities.

Not only that, Mexico's biggest trade partner has had its own troubles. And I'm talking about the United States of America.

But it seems we're now at another twist in this tale. Brazil can no longer count on a sustained boom in global commodity prices. Growth has slowed from nearly 8 percent in 2010 to 2.7 percent last year.

And Brazil has become uncompetitive. Its minimum wage is three times that of Indonesia and Vietnam. The World Bank ranks Brazil 126th in the world for ease of doing business.

Mexico, on the other hand, ranks 53rd. Its economy is set to grow 4 percent this year. Take its auto industry, for example. It generated $23 billion last year, more than oil or tourism. Mexican factories are slowly replacing Chinese products in America, thanks in part to regional trade agreements, but also because China itself is facing rising labor costs.

Mexico's growth is crucial for America. The more Mexico rises, the less America will need to worry about illegal immigration.

In fact, studies show migration patterns have already been reversed. And while Brazil tries to play a role as the alternative power to America in the western hemisphere, harkening back to the days of nonalignment, Mexico is more in tune with America's ideas. It is a solid foreign policy partner.

As Mexico gears up for elections next month, its new president will have a long checklist of problems to fix. State monopolies need to be broken down, corruption must be confronted. Creaking infrastructure needs repair, but top of the list is drug related violence which shaves off 1 percentage point of GDP growth every year.

Brazil remains a bigger economy and will likely stay that way for a while. But don't let perceptions of Mexico fool you. Despite all the violence, despite being overshadowed by its flashier neighbor, it is quietly on the rise.

We'll be right back. Up next, a rare look inside Iran. Journalist Nick Kristof had unprecedented access to the country and he's going to share what he learned.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

NICK KRISTOF, COLUMNIST, "THE NEW YORK TIMES" (voice-over): The government claims it has broad support outside of the capital.

And to see if that rhetoric holds true, I spent a week talking to various people, from uneducated farmers to struggling factory owners, from self-confident women to a grand ayatollah. Iran is a country of contradictions, but there was a common thread.

UNIDENTIFIED FEMALE: Thank you so much.

(END VIDEO CLIP)

ZAKARIA: That clip was from "The New York Times" columnist Nick Kristof's recent journey to Iran. Iran is a tough place for a journalist, almost impossible to get a visa in the first place. Then if you're able to get in, you're under tight restrictions.

That's why Kristof's access was rather extraordinary. Not only was he granted a visa, but the Iranian authorities allowed him to travel from Mashad in the east to Tabriz in the west unescorted. I invited him to come in and talk with him about what he saw and what he heard.

Welcome back, Nick.

KRISTOF: Thank you.

ZAKARIA: So what was your dominant impression, given this access? Because you have been to Tehran, but what felt different about being outside Tehran?

KRISTOF: Well, as you know, one of the extraordinary things about Iran is how pro-American everybody seems at the grassroots. You go to Pakistan, you go to Egypt, and we pour billions into these places and everybody seems to hate us.

We go to Iran and everywhere you go, people want to buy you tea or invite you into their homes. It is -- I mean, it's just stunning, the pro-American quality of the country. I think more broadly politically, I was reminded, absolutely, there is still support for the regime, for the government in rural areas, among less educated people, people who don't have access to satellite television.

But all of the larger social forces seem to me to be working against the government. More educated people, more urbanized people, people who do have international connections just are more and more fed up with the system. They're upset by the economic downturn and they don't really blame the West for sanctions. They blame their own government.

ZAKARIA: Did you get a feel for whether or not the religious nature of the regime is being questioned? In other words, they don't like the government, but that doesn't necessarily mean they want a whole-scale regime change and a revolution.

KRISTOF: I was struck by how often I heard religious people say that their system is not really Islamic and were questioning it on religious grounds.

Many people seem to yearn for something a little more like Turkey, where there's a strong Islamic component to the society, yet much greater democracy, warmer ties with the West, and none of this isolation that I think really leaves people embarrassed, that here you have a country with a great civilization, an extraordinary history, and whenever you travel outside the country, you're regarded as a terrorist. I think people are, frankly, kind of fed up with the regime.

ZAKARIA: And it feels like also it's a great trading culture that has been closed in and hemmed in. And I was struck by, in Tehran, how the businessmen, in particular, really hated the fact that they were so isolated from the world. KRISTOF: Yes, absolutely. And, as you know, because Iran is now outside of the banking system, so just the simplest transactions, simplest international transactions can't be done through banks any more. They have these hawala systems, where -- the traditional Islamic system of money transfer. And that seems to be the only sector of the economy that has actually been prospering.

You know, you can still walk into a hawala with a suitcase full of cash and pick it up two days later in Beijing. But that's a very expensive way to do business. And anybody in business is really suffering and, for the most part, blaming their own government.

ZAKARIA: You were with your kids. How did that change the two of your kids.

KRISTOF: With two of my kids. Oh, it was fascinating. I had my 14-year-old daughter and my 18-year-old son, and my daughter in particular -- I've been a little bit nervous because she would have to wear the hijab and a monto, kind of a cloak. And she, I must say, was a wonderful icebreaker. And it was fascinating to see Iranian women interact with her, because Iran, as you know, is not monolithic. There were more conservative, traditional women, who were always trying to lower her head scarf and cover her up a little more.

Meanwhile, young women all over Iran were saying, "Oh, you're young, you need to live a little bit." And they'd pull back her head scarf so that it was barely covering anything. And it was interesting to see the degree to which hijab can both mean truly covering things up and alternatively just be kind of a come-hither approach to traveling around.

ZAKARIA: Did you find that when you were in the rural areas there was any kind of suspicion or greater suspicion because you were a foreigner or an American?

KRISTOF: People were so welcoming just everywhere we went, including regime supporters. And even in rural areas, I would just stop and talk to farmers. They were -- I remember one woman who shouted out, "Be careful what you say. They're foreigners."

And people were much more cautious in speaking out than on my visit in 2004. I think my sense is that Iranians can still feel comfortable criticizing the regime amongst each other casually. They don't mind if they're overheard on a bus criticizing the government.

But doing anything public or formal that smacks of activism, including speaking formally to a foreign journalist, that crosses a red line. So people were much more cautious about speaking on camera, but they were friendly everywhere we went.

ZAKARIA: What conclusions do you draw? What conclusions do you draw about the sanctions and then about what we should do with their nuclear program?

KRISTOF: My sense is that sanctions are working about as well as one could expect. I mean, I think sometimes we mislead ourselves in thinking they're hurting top officials, and they are. But mostly they're hurting ordinary people. And I think we need to acknowledge that.

But they are working in the sense that they're imposing tremendous economic pain around the country and that people are, for the most part, blaming their own system for it. And I think they're creating pressure for change.

But the one thing I think that could really rescue the regime and would bring about it much more -- and keep it in existence for longer would be a new war between Iran and the West, possibly started by Israeli strikes on Iranian nuclear sites.

And to me, at a time when sanctions are to some degree working, when the regime's removal or transition seems to me to be a matter of time, I think it would be a tragic mistake to engage in a military option that, I'm afraid, would freeze that regime in place.

ZAKARIA: Nick Kristof, pleasure to have you on.

KRISTOF: Good to be back.

ZAKARIA: And we will be back. Up next, a rare Eurozone economic success story, a country that's growing faster than India, has almost no debt, and it does this all by practicing austerity. I'll explain.

(COMMERCIAL BREAK)

ZAKARIA: There is only one country in the entire European Union that has a budget surplus. Its national debt is just 6 percent of GDP, less than a 10th that of Germany's. Its economy grew nearly 8 percent last year. The country is Estonia and it does it while employing a very unfashionable practice, austerity.

My next guest got into a Twitter argument with the economist Paul Krugman when Krugman questioned Estonia's status as a poster child for austerity. He called Krugman "smug, overbearing and patronizing."

The author of that tweet is the president of Estonia, Toomas Hendrik Ilves now joins me from the capital, Tallinn.

Mr. President, thank you for joining us.

TOOMAS HENDRIK ILVES, PRESIDENT OF ESTONIA: Well, thank you for inviting me.

ZAKARIA: The basic point Paul Krugman makes is your numbers look very good, but after a depression-level slump, you have still not even returned to your 2007 levels of GDP, whereas the United States and Germany have well surpassed those, so that, in fact, your recovery is not that dramatic after all.

What would you say to that?

ILVES: Well, first, my first objection was simply the cherry- picking of data. I mean, anyone who has studied statistical methodology knows that where you put your graph and your axes can make anything look big or small.

Secondly, I think there's a fundamental mistake here made with cause and effect. I mean, e had a slump as a result of the September 15th, 2008, collapse of Lehman, in which, being outside of the Eurozone and having no European Central Bank funds to access, we just had a -- lost all our liquidity, and so the government lost all its revenue or a large part of its revenue.

So there was not much else to do but cut costs.

ZAKARIA: Would you argue, though, that you represent a kind of viable strategy?

ILVES: Well, we're one example. But again, I would argue, also, we didn't have much choice. But it is true that, on the one hand, cutting dramatically our expenses -- we cut the budget ultimately by 9 percent of GDP, which affected everyone. I mean, we all took 10 percent to 20 percent cuts in salary. This was -- that was the only way to go.

So I mean you could argue in another country's case that they ought to borrow. But we did not have access to those funds at the time. But the point is that you can get growth through different policies. Growth is a result. It is not a policy in and of itself. And so this kind of category mistake that many politicians make is not proper.

ZAKARIA: The central argument against austerity, as you know, is that at a time of weak economic demand, if you cut spending, if you fire police officers, other government workers, you are going to slow the economy further.

Those people who have just lost their jobs won't be able to buy things that -- you turn the -- you send the economy into a kind of downward spiral, which certainly seems to have happened in a place like Greece.

ILVES: Well, we suffered an 18 percent decrease in GDP from 2008 and 2009. That was pretty much of a downhill spiral.

Yes, that's true. But I think that if you take -- if you, for example, if you liberalize the labor market, clearly you get rid of closed shops, closed occupations -- which is a big problem in Europe; not so in the United States -- that in fact you stimulate economic activity.

And I would argue that one of the things we need to do in Europe is, in fact, decrease the barriers that exist in the single market. The opposition to free movement of services -- which again sounds pretty bizarre in the United States but, nonetheless, is a fact of life in Europe.

So I think we can, in fact, stimulate economic activity by removing barriers rather than simply trying to get -- getting additional money from others. And ultimately the problem is, where does the money come from? Who has it? And when one says, well, the Germans should be paying, well, Germany does have a democratically elected government. And if the people don't want to pay more, then how are you going to change that?

ZAKARIA: Mr. President, thank you for joining us.

Up next, how a world leader who loved to make long speeches learned the art of brevity.

(COMMERCIAL BREAK)

ZAKARIA: Many world leaders and their entourages converged on Rio de Janeiro this week for the U.N. Sustainable Development Conference. But my question of the week pertains to the people who were already there, the ones who live in that beautiful city.

What are the residents of Rio de Janeiro known as -- is it A, Rians; B, de Janeirians; C, Rococas; D, Cariocas? Stay tuned and we'll tell you the correct answer.

Remember, if you miss a show, go to iTunes; you can buy the show but you can also now buy our GPS specials there. Go to itunes.com/fareed.

This week's "Book of the Week" is "Fate of the Species" by Fred Guterl. In elegant, compelling prose, the author, who is one of the great science journalists of today, lays out the megachallenges we confront -- super viruses, climate change, disappearing species -- it is enough to make even an optimist like me very worried.

And now for the last look. Fidel Castro is not a man known for his brevity. He once delivered a speech that clocked in at seven hours and 10 minutes. He has a Guinness record for the longest speech at the U.N., four hours and 29 minutes.

His opinion pieces have often filled whole pages of the state-run newspaper, "Granma."

But this week he offered just 35 words, not exulting communism or denouncing capitalism, but praising the power of yoga. He said, "Yoga does things with the human body that defy our imagination. There before our eyes is imagery that arrives instantly from enormous distances through the passage to the unknown." Deep.

The correct answer to our GPS challenge question was D. Residents of Rio de Janeiro are known as Cariocas. It seems it's what the native people call the houses built by the Portuguese, and it stuck. Don't forget, Rio doesn't just host U.N. conferences. It will host the 2014 Soccer World Cup and also the 2016 Summer Olympics. So that bit of trivia might come in handy.

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