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FAREED ZAKARIA GPS

How Should the White House Deal with Washington's Week of Scandals; The Amazing, Shrinking American Budget Deficit; A Sure-Fire Plan to Reduce Carbon Dioxide Emissions

Aired May 19, 2013 - 10:00   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'll start today in Washington, D.C. It's the week from hell for the White House with three controversies all erupting on them. How in the world do you handle so many problems, so much incoming fire at once?

We'll talk to a man who would know, former White House Chief of Staff Ken Duberstein.

And the amazing, shrinking American budget deficit, I'll ask Mitt Romney's Chief Economic Advisor whether he thinks the problem has gone away.

Also, as America prepares to drawdown from Afghanistan, what can it learn from Britain's withdrawal 170 years ago? I'll ask the author of a great new book.

Next, from the past to the future, a look into the crystal ball of technology with Google's Executive Chairman Eric Schmidt.

Also, a sure-fire plan to reduce carbon dioxide emissions. How so? Well, stay tuned.

But, first, here's my take. Conservatives are, of course, mad at Barack Obama, and we'll talk about the various scandals in a moment, but they are also mad at a country that isn't mad enough at him.

This frustration is now taking over mainstream and intelligent voices within the conservative movement and about broader issues than Benghazi.

Bret Stephens, the columnist for the Wall Street Journal, laments that President Obama is not paying a price for a foreign policy that he, Stephens, describes as "isolationist."

Now, our isolationism will surely come as a surprise to the diplomats, soldiers and intelligence officers working on America's vast foreign policy.

Washington spends more on defense than the next 10 great powers put together and more on intelligence than most nations spend on their entire militaries.

We have more than 200,000 troops stationed at dozens of bases abroad, from Bahrain to Germany to Japan to South Korea to Turkey. We have formal commitments to defend dozens of our important allies in Europe, the Middle East and Asia.

And our vast footprint has been expanded under the Obama Administration. The White House has extended America's security umbrella to include defending Israel and the moderate Arab states against the threat posed by Iran's possible development of nuclear weapons.

It is enlarging the U.S. military presence in Asia with a new base in Australia to deal with China's rise. To call all this isolationism is to mangle both language and logic.

In fact, President Obama's worldview is rooted in American exceptionalism. You see, the fundamental pattern of international relations is that as a country becomes powerful, others gang up to bring it down. That's what happened to the Habsburg Empire to Napoleonic France to Germany and, of course, the Soviet Union.

There is one great exception to this rule in modern history, the United States. America has risen to global might, and yet it has not produced the kind of balancing opposition that many would have predicted.

In fact, today it is in the astonishing position of being the world's dominant power while many of the world's next most powerful nations, Britain, France, Germany, Japan, are all allied with it.

The reason surely has something to do with the nature of American hegemony. After World War II, we helped revive and rebuild our enemies and turned them into allies. For all the carping, people around the world do see the U. S. as different from other, older empires.

But it also has something to do with the way that the U.S. has exercised power, reluctantly. Historically, America was not eager to jump into the global arena. It entered World War I at the tail end of the war. It entered World War II only after Japan attacked Pearl Harbor.

It contained Soviet aggression in Europe but was careful not to push too far in other places. And when we did, as in Vietnam, we paid a price.

From Dwight Eisenhower to Robert Gates-, there is a strand of American thinking, realism, that urges America to be disciplined about open-ended military interventions for just this reason.

We have just gone through a decade devoted to a very different idea, that American power must be used actively, aggressively, preemptively and in pursuit of expansive goals beyond the narrow national interest. The result was thousands of American soldiers dead, hundreds of thousands of Iraqi civilians dead, $2 trillion spent and the erosion of American influence and goodwill across the globe.

Can we get please a few years of respite to rebuild our economic, political and moral capital?

For more on this, go to cnn.com/fareed for a link to my Time column. Let's get started.

Eight days after Ronald Reagan went on TV to admit that his administration had traded arms for hostages in the so-called Iran- Contra scandal, Ken Duberstein was named White House Deputy Chief of Staff.

At that point, Ronald Reagan's approval rating had dropped to 37 percent. Then, Duberstein got the top job, Chief of Staff, shortly after it was revealed that Nancy Reagan had been using an astrologer to pick auspicious dates for her husband's public appearances.

In other words, he is a man who knows White House controversy and how to deal with it. He joins me now.

Ken, thank you so much.

KEN DUBERSTEIN, FORMER WHITE HOUSE CHIEF OF STAFF: Fareed, it's a pleasure always to be with you.

ZAKARIA: On the scale of White House Scandals, how does this strike you? A lot of people say well, you know, there is no crime underneath this or at least it does not appear to be like Watergate. How do you look at it?

DUBERSTEIN: Look, I don't think we know the answer to that yet. I think it's premature. You know, very second term president, certainly since Eisenhower, has gone into a ditch.

The cardinal rule is when you go into a ditch, you stop digging. And so far, this White House has not stopped digging. You know, on one hand, the president says it's outrageous and then he goes to Baltimore on Friday and says, well, it's just a Washington distraction.

This is serious business when you're talking about the IRS or perhaps changing talking points or the AP and wire-tapping reporters, let alone Secretary Sebelius and HHS basically asking for money from industries that she is regulating.

You know, people start saying it's a trifecta, it's really a superfecta, the top four and the confluence of all of them erodes trust in government. It erodes trust in the president.

At a time when the president needs to be working on immigration reform, on debt reduction, on the fiscal situation, on all the international issues, this has got to be a major distraction and we don't know yet where things are going to lead. ZAKARIA: So ...

DUBERSTEIN: The IRS matter is something that everybody in America can relate to. You know, we -- everybody hates the IRS and this just confirms the narrative. The White House just to dismiss it as low-level employees is not really what I think the American people expect.

ZAKARIA: So how would you handle it? Because surely there is some trade-off here where you don't want to feed, you know, enemy fire with every charge and you jump and respond

On the other hand, you do need to deal with this. I mean how do you figure out that balance? You've been there.

DUBERSTEIN: You figure out the balance is the president has to focus on his agenda.

But he also has to deal with the people around him so that everybody understands that the arrogance of power has no place in this White House, in any White House, that the politics of destruction and demonization that come from a campaign have to stop when you start governing.

The president has to set the tone with the American people not that something is a distraction, but let's take this very seriously and get to the bottom of it.

You know, holding the president accountable, not simply cabinet or subcabinet agencies or people at the IRS, but the president saying I accept responsibility. I am the Commander-in-Chief, I am the president.

You know, the American people understand mea culpas and if the president were to stand up and say, look, clearly mistakes were made and it's on my watch and I am going to fix each and every one of them, that makes a big, big difference.

He needs to ...

ZAKARIA: So you still think ...

DUBERSTEIN: He needs -- Wait a minute ...

ZAKARIA: OK.

DUBERSTEIN: He needs to lose a bunker mentality. Right now, everybody in the White House seems to be cloistered. They have to get out. They have to answer press questions. Not necessarily just the president, I mean everybody.

ZAKARIA: Do you think he needs ...

DUBERSTEIN: One of the things ...

ZAKARIA: Do you think he needs new people? DUBERSTEIN: Well, I think always in a second term, you need fresh faces and new ideas.

Look, when President Reagan had Iran-Contra, he got rid of Don Regan and John Poindexter and others and he appointed Howard Baker and myself and Frank Carlucci and that little known general at the time, Colin Powell, to come in and set his White House straight under his leadership.

I am not saying we're at that point yet, but I'm saying that new blood and fresh ideas are something that are fundamentally important. The other thing that you can fall back on is a reservoir of good will that you've developed with the Congress and with the media.

And one of the things that I think everybody would say is lacking is that the first four years at least, those trusting relationships on Capitol Hill on both sides of the aisle, fundamentally have not been developed.

Now, whether it's disdain, whether it's dislike, you always have to develop those kind of trusting relationships and right now the White House is suffering because they did not create those relationships.

When all you do in a second term is fundamentally change a congressional liaison to somebody who nobody's ever heard of on either side of the aisle, that's not to me beefing up a White House staff and starting reaching out to build some of these trusting relationships.

ZAKARIA: Ken Duberstein, thank you very much. That was tough love if I've heard it before ...

(LAUGHTER)

ZAKARIA: From a man who did support the president for his election.

DUBERSTEIN: Right.

ZAKARIA: Up next, have we magically fixed our deficit problem? I have two experts on the economy, Glenn Hubbard from Columbia and Zanny Minton Beddoes from The Economist. Right back.

(COMMERCIAL BREAK)

ZAKARIA: Is America's deficit problem so bad? Well, not any more at least not for the next decade.

The nonpartisan Congressional Budget Office now projects, it did on Tuesday, that in 2015, the deficit will be only 2.1 percent of GDP. That's down from 4 percent this year, 7 percent last year and a high of 10 percent in 2009.

So, should we celebrate? Joining me are Glenn Hubbard, the dean of the Columbia Business School, who was the chief economic advisor to the Romney campaign. He's also the co-author of a fascinating new book, "Balance: The Economics of Great Powers From Ancient Rome to Modern America."

And Zanny Minton Beddoes is the economics editor of The Economist.

So, Glenn, you've seen the charts. You basically -- if you look at this chart, the deficit essentially goes up a lot during the financial crisis and its aftermath.

And it's now down essentially to what it was under the Bush administration where you were, at one point, chairman of the Economic Council of Advisors.

So it would seem to vindicate those people who say, look, the reason the deficit went up was a collapse of tax revenues, more than anything else, and we're back now -- now that the economy is growing, it's down to a completely manageable place and so all the scare stuff about the debt was unfair.

GLENN HUBBARD, DEAN, COLUMBIA BUSINESS SCHOOL: Well, of course it is good news that the deficit has fallen. But before we celebrate with champagne, I think there are a couple of big problems.

If you look at the 10-year numbers, they didn't move very much at all. In other words, the deficit gets better in the near-term, but continues to get worse.

ZAKARIA: And that's because of Medicare more than anything.

HUBBARD: Correct. And we still have a long-term entitlement problem that's really bad that not only raises the deficit, but threatens to crowd out every other kind of spending we do as a country.

ZAKARIA: What do you draw from these numbers?

ZANNY MINTON BEDDOES, ECONOMICS EDITOR, THE ECONOMIST: You know, I think Glenn is right that the long-term problem is one of entitlement spending and Medicare particularly.

And that remains a big problem, but I think that what -- you're absolutely right that the increase in the deficit in the wake of the financial crisis was there because of plunging tax revenue and, indeed, because of some stimulus spending, but that was entirely appropriate.

When you had -- in the aftermath of this huge financial bust, it's appropriate for the public sector to take over for a bit.

I'm actually slightly -- I wouldn't take these numbers as being all good news even in the short-term because we've actually had some fairly big tax increases this year and we've got the sequester in place. We're cutting spending in the short-term.

I don't think that's really optimal policy. I would much rather have more of a focus on what Glenn is concerning about, rightly, as being the medium and long-term problem, which is entitlements, and I'd had have less fiscal tightening right now because we would have had a stronger recovery is that was the case.

ZAKARIA: So you'd rather have larger deficits than the 2.1 percent of GDP right now because it would stimulate more demand.

MINTON BEDDOES: To me, it's the policy is what matters rather than the actual outcome. If the economy is stronger than anybody expects and that's where the deficit comes down, then that's great.

But, in terms of policy, I'd much rather a policy that focused on what the real problem is, which is the medium and long-term, and not on sequester cuts and tax increases in the short-term.

ZAKARIA: And ...

HUBBARD: This is exactly right here and in Europe ...

ZAKARIA: Are you willing to endorse a vague infrastructure spending push?

HUBBARD: Well, I don't think an infrastructure spending push is going to be very stimulating. It takes years for it to happen. If there's an argument for infrastructure, it's about long-term capital planning not stimulus.

I agree 100 percent with Zanny that things like the sequester make very little sense. We need to focus on long-term problems and, unfortunately, our political process can't seem to do that.

ZAKARIA: The other numbers that came out this week, Zanny, were European growth numbers which are looking terrible.

MINTON BEDDOES: (inaudible)

ZAKARIA: And this is the flipside of the story, which is is it fair to say now that the evidence is in and that too much austerity, a lot of cuts in government spending in countries across Europe, with the exception of Northern Europe and German, has produced slower growth.

MINTON BEDDOES: Well, you're completely right that the European numbers are grim; six consecutive quarters of recession in the euro zone, no sign of things changing.

Yes, in part, it in an indictment of too much short-term cutting, but I think it's more than that. It's a failure to deal with the basic problems of the euro zone.

It's the failure to get credit going again in the periphery. In the periphery of Europe, not only do they have huge budget cuts, they have very, very tight access to credit. They -- where is the growth there going to come from?

And I think the one part of the comparison with the U.S. is the U.S. didn't have so much tightening -- fiscal tightening, although now it's got more. The U.S. got to grips with its banking mess. It cleaned up the banks. It recapitalized them. We kind of got that bit of the crisis out of the way and Europe hasn't done that.

ZAKARIA: And the Fed opened the spigot ...

MINTON BEDDOES: And the Fed -- exactly. And those three are different in Europe.

ZAKARIA: I have to ask you about the IRS, the IRS Commissioner. Some of these people were appointed by Bush. Did you know any of them? Do you have any thoughts about this IRS issue?

HUBBARD: I don't know the individuals at the IRS, but I do think that the IRS scandal raises an important point that people have gotten and one they haven't.

The one that they have gotten is that any abuse of power needs to be investigated. I mean both sides would agree with that. But the part that's really subtle is the fact that there's actually value in a lot of political competition.

I don't happen to be part of the Tea Party, but I would support any political group that is trying to compete in the marketplace for ideas. And I think that, frankly, the Citizens United decision was a big plus in advancing that competition. That's the big story.

ZAKARIA: The part that I'm puzzled by is why do these people have tax exempt status in the first place? Why should you be tax exempt if you're a ...

MINTON BEDDOES: That gets us to a very big discussion about the whole breadth of tax exemptions of all sorts and I completely agree with you.

And the bigger picture there is the more exemptions you have for all kinds of things, the higher the other -- the tax rate on remaining people.

ZAKARIA: And the more power you give the IRS ...

HUBBARD: That's true.

(CROSSTALK)

ZAKARIA: Because somebody has to determine who's exempt and who's not.

HUBBARD: (inaudible) not.

ZAKARIA: OK. What is the big point relating to all this that we should learn from your book.

HUBBARD: Well, two points in the book; one, people have a declinist view of the United States with all that's going on. And Tim Cain and I have a very different view in the book. We don't think the U.S. is in decline.

We also believe though that the fiscal policy problems the country faces really have that potential if they're not addressed and we're going to have to change rules of fiscal policy. It's very hard to see our political process really coming to grips with the challenge.

ZAKARIA: Can democracies, whether in Europe or the United States, impose short-term pain for long-term gain because that's really what Glenn is talking about?

MINTON BEDDOES: I think they can when they are forced to and when something precipitates action. I basically agree with your broad analysis, but I worry that have too much faith perhaps in rules for achieving that.

It's very, very hard, I think, to design rules that are the appropriate rules in advance. And I think we have to, in the end, have faith that politicians will act in a way when they're pushed to that is the right way.

And I think main thing that you can expect from fiscal policy is that you have to force things to be as transparent as possible.

So I think the CBO, for example, is perhaps -- the Congressional Budget Office is one of the best things that's happened to U.S. fiscal policy ever because it forces people to come to terms with the consequences of what they're doing.

But rules I worry a bit that it's seen as a magic wand. We write a rule, we right an amendment and everything will be fine.

HUBBARD: It's not a magic wand, but the transparency is important. If you even did something as simple as putting changes in the entitlements on the budget for the public and the Congress to see and have to deal with, I think that's critical.

ZAKARIA: Glenn Hubbard, Zanny Minton Beddoes, thank you so much. Terrific book, "Balance: The Economics of Great Powers from Ancient Rome to Modern America."

Up next, What in the World. Why the United States needs to share its secrets with China. It could be the solution to climate change. I'll explain.

(COMMERCIAL BREAK)

ZAKARIA: Now, for our What in the World segment. I've been thinking about an idea in the opinion pages of the New York Times to tackle one of the great challenges of our times, cutting carbon emissions to slow down climate change.

It would result in the single largest reduction of CO2 emissions globally of any feasible idea out there. But there are a couple of hitches. Let me explain. Here's the idea, it's time to help China master fracking safely. By now, it is clear that fracking, the process of extracting shale gas, has dramatically lowered America's carbon emissions.

According to the U.S. Energy Information Administration, in 2006, a fifth of our electricity came from natural gas, while almost 50 percent came from coal.

By 2012, natural gas had increased its share to 30 percent of our electricity and coal's share dropped to 37 percent. The change was because of fracking. Over that same period, shale gas production grew 800 percent.

The reason this shift is important is that coal is the world's dirtiest source of energy, both in its emissions of CO2 and particle pollutants.

Thanks in large part to our reduced dependency on coal, U.S. CO2 emissions hit an 18-year low in 2012. U.S. emissions fell over the last five years by more than all of Europe's did.

So, and this is the first hitch, environmentalists have to understand that whatever our dreams and fantasies, natural gas is in reality producing a dramatic reduction in carbon emissions.

But now the second hitch. Why is it a good idea to help what some consider our greatest rival catch up with us? Why should we help China copy our winning formula? The answer is simple. It is actually a win-win scenario.

In the past two decades, despite global investments in solar, wind and nuclear energy, the International Energy Agency says net-net, the world's energy consumption has gotten cleaner by only 1 percent.

We've essentially made no progress. Why? Well in large part, it is because of the means by which China and other such countries are powering their super-fast growth.

IEA data shows that if you exclude China, global consumption of coal has increased only slightly in the past decade. China, by comparison, has more than doubled its consumption. It now burns nearly as much coal as the rest of the world put together. And it won't stop there.

Every week, it opens new coal plants, leading to increasingly polluted and hazardous air. This, of course, is not just China's problem, but the whole world's problem.

As it turns out, we're not the only ones sitting on top of a shale gold mine. According to our own Energy Department, China actually has shale gas reserves that are 50 percent larger than ours.

Now, Beijing is going to try and mine these reserves in every way it can, but many experts worry that China lacks the experience and the technology to frack effectively. As important, it really has no understanding of how to frack safely. Here in the United States, we have environmentalists and a free press to push authorities to regulate and monitor this very new industry. China, on the other hand, may not have the same checks and balances. This is why the United States needs to share its expertise and not keep it secret. One of the perennial dilemmas at any climate summit is how to wean developing countries off the dirtiest forms of energy. China can understandably argue that its overriding priority is growth. As the last few decades have shown, a fast-growing China translates to a fast-growing world. A cleaner China would have a similar impact on the environment.

Up next, a fascinating account of the first Afghan war and the lessons it holds for today's war in Afghanistan. The historian William Dalrymple joins me.

(COMMERCIAL BREAK)

CANDY CROWLEY, CNN CORRESPONDENT: I'm Candy Crowley in Washington with a check of the headlines. North Korea fired a short- range missile into the Sea of Japan today. That's according to a South Korean news agency. This is their fourth launch in two days. They come despite pleas from South Korea and the U.N Chief to halt the launches at times of high tension.

Pakistani politician Zahra Shahid Hussain was shot to death Saturday on the eve of a highly contested rerun election in her district. Her death comes after she made allegations about vote rigging in early balloting. Hussain was killed in what sources describe as an execution-style attack.

Oxbow claimed the second of the Triple Crown races Saturday winning the Preakness stakes. The colt long-shot victory dashed any Triple Crown hope for Kentucky Derby winner or, who finished fourth in the race. The third and final race, the Belmont stakes is June 8th in New York. The last horse to win the coveted Triple Crown was affirmed in 1978.

And someone in Zephyrhills, Florida, is waking up nearly 600 million richer today. Lottery officials say the single winning ticket was sold at a public supermarket in the Tampa suburb. The Saturday's jackpot of $590.5 million is the largest in Powerball history with a cash value of nearly $377 million.

Those are your top stories. Now, back to Fareed Zakaria "GPS."

ZAKARIA: The jumbo jet that crashed in Afghanistan recently was taking part in an extraordinary effort to pull out all allied supplies before the end of 2014. There are believed to be some 125,000 containers and 80,000 vehicles that need to be withdrawn in addition to about 100,000 troops. A logistical nightmare for sure. I thought of all of this as I read about an earlier rush into Afghanistan, almost 200 years ago. In 1839 the British invaded and brought with them 21,000 soldiers, 38,000 servants and 30,000 camels, 300 of which were solely for carrying wine. In 1842, mostly all retreated. William Dalrymple is the author of the great new book that tells this story "Return of a King, the Battle for Afghanistan 1839 to '42." He joins me now. William.

WILLIAM DALRYMPLE, AUTHOR: Thank you.

ZAKARIA: Pleasure. To talk about retreat. What do you think retreat is going to look like based on history?

DALRYMPLE: Well, the British retreat from Kabul really couldn't have gotten worse. There's every reason to hope this will go a little bit better, and not at least because you will add transport. In 1841, there was a huge uprising against the British. It began in the south in Helmand, it spread north and very soon the British were surrounded in the same cities in a sense in which American troops are surrounded today in Kandahar, Jalalabad and in Kabul. A small area of Kabul, a fortress against a largely hostile rural hinterland. And the British lost their supplies very early in these days, they had stupidly kept their better ammunition and their food in outlining forts, and so all that -- the wine you talked about, it was captured by the insurgents very early on. They were given safe passage back. The retreat from Kabul that followed began on the 6th of January, 1842 and is one of the great imperial disasters. 18,500 men and women and children, of whom only about 5,000 were British, the rest were Sepoys from north India, from Bihar, from Uttar Pradesh, they marched out into the snow. They had no idea how to cope in winter warfare. They weren't equipped or clad or trained for it and six days later, one man made it through to Jalalabad. Everyone else was either killed, enslaved or taken hostage.

ZAKARIA: Now, the hostile forces that you describe are in, as you say, the south of Afghanistan, Kandahar, this is precisely the same problem that the United States faces. Which is that the area of Afghanistan that is hostile to America and to Karzai and the government we put in place is the Pashtun area, is the heartland. Why is it that the Pashtun don't, you know, seem to be the same guys oppose -- who opposed the British opposing the U.S?

DALRYMPLE: Oh, it's history repeating itself very, very closely. And I wish I'd been able to give a copy of this book ten years ago to -- to be able to Tony Blair, because, I think, apparently, in British Tory Party there was a tradition of that you keep well out of Afghanistan until even the 1950s when Alex Douglas Home took over the keys of Downing Street from Sir Harold Macmillan. The old man said, let me give you one piece of advice, young man. And looking back from his (inaudible), saying, as long as you don't invade Afghanistan, you'll probably do fine.

(LAUGHTER)

DALRYMPLE: And we kind of wish that poke (ph) wisdom had lasted another 30 years, you know, 40 years. Because done with that -- if you invade Iraq, you can run off with the oil revenues. But if you invade Afghanistan, you always just pull money in. It's a huge economic hole in the budget and the kind of low-level insurgency which Afghans are so brilliant at. Just a slow attrition of foreign forces in the end, and one throws up their hands and says, well, it's just not worth it. ZAKARIA: In the middle of all of this, it's Hamid Karzai, the man we've backed for president. And one of the things I noticed in your book, is that Shah Shuja, the man who the British put in place, their Karzai, if you will, was so reviled within the country as a kind of foreign puppet that for decades and decades, for centuries there, you say in 2001 you would hear Afghans say, make sure, you are not a Shah Shuja, meaning don't be a western puppet who has no support domestically.

DALRYMPLE: Well, this is in a sense, this is -- and in a sense the main reason for writing this book is that President Karzai, amazingly, is the chief of the same tribe, the Popalzai, as Shah Shuja was. In other words, the west has put the same guy on twice. And he's being brought to justice -- Shah Shuja was brought down by the Ghilzai tribe. Today, the Ghilzai make up the surge and the Taliban -- in many ways what we have is simply a replay of existing tribal rivalries. Slightly different flags.

ZAKARIA: But Karzai seems attentive to this issue. I mean I assume that he denounces the west every third week, precisely because he's trying to make sure that people don't think he's a Quisling.

DALRYMPLE: Karzai is a much cunning, clever and more cultured man than I think people make out. He read this book when it was published in India within a week and I got called to Kabul and I spent 90 minutes with him discussing this book. And he really knows this history. Not like, you know, Bush or Blair or any of the other players who in a sense are blundering in ignorantly, as we all are. And he is terrified that he like Shah Shuja will be remembered as a Quisling of the West, which is why he makes these outrageous statements, which, you know, play so badly on American TV, this guy we put it in, soldiers are dying in Helmand, we're throwing bundles of cash at him and then he says, well, you know, I'm going to join the Taliban. You guys are in league with Taliban. He makes these kind of crazy statements. But what he has to do, he's an elected, democratic parliamentarian, he has to appeal to his electorate, and if he's seen to be the puppet of America, it is curtains for him. He said to me personally. He said, so-called allies, they treat me as they used to treat Shah Shuja. I'm determined that no one will ever mistake me for him. I'm an independent ruler and I'm going to rule my people myself. I'm never going to be remembered as a puppet. And I will continue to speak out like this.

ZAKARIA: One of the great lessons that at least I drew from some of this history is that at the end of the day, one doesn't even quite understand why the British were in Afghanistan. There was a sort of false -- this rumor of Russian involvement. Will we look back on this and to a certain extent we understand why we went in because of al Qaeda, but ...

DALRYMPLE: Correct.

ZAKARIA: ... vast expenditure and the enormous time frame, will we have much to show for it?

DALRYMPLE: Well, I mean I think in a sense the Chinese have played the trump card. They didn't send any single soldier, they didn't send in any aid or development. They've just bought up the mineral rights. And they've got the largest copper reserve in the world at Mes Aynak. They bought lithium, rare earths, to build touch screens, and they're now building a road network and a railway network to extract it. And I think as any foreign power in its early days, but if any foreign power manages to manage Afghanistan, it might be the Chinese and they'll do it simply by doing business with them.

ZAKARIA: William Dalrymple, pleasure to have you on. Terrific book.

DALRYMPLE: Thank you.

ZAKARIA: Thank you.

Up next, Google's Eric Schmidt on the future of technology. Fascinating tour.

(COMMERCIAL BREAK)

ZAKARIA: The last two decades have seen an explosion of technological advances and it's all getting faster, smarter and smaller. So, what are the next set of advances and who is going to win? I had a fascinating conversation recently with two people in the know. Eric Schmidt, the executive chairman of Google and Jared Cohen, the director of Google Ideas. Together, they have written a great new book, "The New Digital Age Reshaping the Future of People, Nations and Business." Listen in.

Thanks for joining us.

So, when people talk about the future of technology, everyone has their favorite trend that they talk about, you know. It's the rise of super computing, it's the cloud, it's big data. I figure you're the guy to ask. What is the single, what is the big trend in technology that excites you?

ERIC SCHMIDT, EXECUTIVE CHAIRMAN, GOOGLE: Well, our industry goes through transformations. We went through the PC. phase, the Internet phase, the Web browsing phase. The phase we're now going in is the mobile first phase where it's all fundamentally about mobile phones and tablets and indeed you see that in the transition from PCs to tablets and phones, which is going on in the industry today, but it's not just the phone, it's the phone connected by a 3G or 4G or Wi-Fi network to powerful super computers, which is known as big data cloud computing. And it's the sum of those two that will define I.T, computing, the media and so forth over the next five to ten years.

ZAKARIA: So, in a sense the phone has really become the computer because once you can -- once you have connectivity and it can process data. There is no real distinction between the phone and the computer.

SCHMIDT: The most bizarre thing about the phone, is people never use the phones to actually talk on them any more. But they use them for everything else. And what we've seen is an explosion in growth rates in mobile computing, mobile surge, mobile applications. If you go to startups today in our industry, the startups are all building applications for iPhones and android phones, which are the two -- and they are all releasing on them first and they do interesting things. The phones, remember, know where they are and they tend to be highly personalized and with opt in they can help you out. They can make suggestions. Where should I go? What should I do? What should I learn? They can make predictions. How long will it take for me to get home because of traffic? Will there be a traffic jam this afternoon because of the baseball game? These are very, very useful things in our world.

ZAKARIA: What does it mean for a company like Intel whose trips have been dominant in PCs or company like Apple, which has used a closed, very elegant system. How do you think the landscape affects them?

SCHMIDT: Well, with Intel, of course, they are a great player with PCs, but they also have mobile chips now that are appearing in phones that you will be purchasing at the local store. So, that has been their strategy and it seems to be working. With Apple, Steve brilliantly drove the model from the traditional Mac and enterprise model that they had to a tablet and an iPhone model. Their issue, of course, is their system is completely closed in the sense that they curate it. They make sure it is a certain size. Today, the android marketplace and, of course, this is what Google does, is much, much larger. To give you an example of the scale of android there are more than 750 million android phones in use today and we activate more than 1.5 million phones per day. Those prices, by the way, are coming down. Today they're in the couple of hundred dollars and coming down to 100 and eventually over some number of years to $50 and $30, I would expect. The combination of all of that means that android will be the primary mechanism, by which the average person uses the Internet, because the average person is not going to have a PC, they're going to have an android-based phone somewhere in the developing world.

ZAKARIA: Do you think that what you're seeing is kind of an explosion of entrepreneurship and invention because it, the costs, the barrier to entry to come up with some nifty little product seems to be so low now.

JARED COHEN, DIRECTOR, GOOGLE IDEAS: What's extraordinary is when you go to a place like Pakistan or you go to different parts of Africa or you go to countries where Smartphones are truly new and where people's first experience connecting to the Internet is not on a PC, it's on a phone. What they're doing is, they're exporting enormous amounts of creativity and ideas back into the communities that actually in the environments that built these products. And so, there is a nice partnership between the developed and the developing world where -- yes, the beautiful products will always be developed by companies in, you know, the Western Europe and the United States and parts of Asia. But the most creative ways to use those products will always come from the parts of the world that are written with the greatest number of challenges. And that is the next 5 billion.

ZAKARIA: When you ask technological seers (ph), what the future is going to look like and they paint these kind of pictures, if you look back historically, many of those things have not happened. You know, and in the '50s people thought we wouldn't have plane or jets and like cars that will fly and things like that.

SCHMIDT: Well, we're still going to have those, just 50 years later.

(LAUGHTER)

ZAKARIA: Why do you think this is different? Why do you think these things are different?

SCHMIDT: Well, the claims that we're making are straight forward extrapolations of work that is going on now in labs. And so, the educated guesses based on trends that have continued for a very long time. If you go back to 10 and 15 years ago, the predictions about the arrival of the Internet, the impact of personal information and so forth have all, in fact, come through.

ZAKARIA: And is the United States the center of the world for this stuff for now?

SCHMIDT: For the moment. There's evidence that Asia will get there. The number of engineers being produced in Asia, the commitment to education in Asia, the connectivity in Asia, are all catching up and eventually there's a numbers game and there is simply more incredibly smart Indians and Chinese and so forth just numerically than there are Americans. And this, of course, is the other aspect of our industry, which is that we focus on the globalized competition, the need for immigration and the need for education reform so that we can remain competitive as a nation.

ZAKARIA: Eric Schmidt, Jared Cohen, pleasure to have you on.

COHEN: Thank you.

ZAKARIA: Up next, the link between money and happiness. Does more money make us more happy? And how happy are Americans? The answers will surprise you.

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ZAKARIA: Iran is getting ready for presidential elections next month. The incumbent Mahmoud Ahmadinejad is not allowed to contest because he's already served two terms. I found it interesting to see that Iran's voting age is now 18, because only a few years ago it had the world's lowest voting age, 15. That brings me to my question of the week. What is the world's highest national voting age? Is it "A" 18, "B" 20, "C" 21 or "D" 30. Bonus points if you can name the country, as well. Stay tuned, we'll tell you the correct answer. Go to cnn.com/Fareed for more of the "GPS Challenge" and lots of insight and analysis. You can also follow us on Twitter and Facebook and all that stuff. If you missed one of our shows, remember you can go to iTunes.com/Fareed.

This week's book of the week is "Return of a King" by William Dalrymple who was on the show today. Dalrymple's fascinating history of the first Afghan war reads like a novel. It's a great and beautifully written yarn and it also has some important lessons for the present.

Now, for the last look: economists have always been fascinated by the link between income and happiness. In the 1970s, we learned of the Easterlin paradox. The economist Richard Easterlin argued that more money does not always lead to more happiness. Instead, more money often means more demands and desires. Well, a new paper by the economist Betsey Stevenson and Justin Wolfers turns that thesis on its head. Look at this graph plotting satisfaction against income. If you were in a relatively poor country like China, India or Iran, the study found that more money meant more satisfaction. But even if you were in a rich country and this is what is new, the results hold up. Look at France, Germany or the U.S. on this chart. What I also found interesting was that Americans hit the highest levels of satisfaction among the 25 most populous countries in the world.

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UNIDENTIFIED MALE (singing): I can't get no satisfaction.

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ZAKARIA: But I guess you can get satisfaction as long as you can pay for it.

The correct answer to our "GPS Challenge" question is "C," 21 years. A number of countries require you to be 21 to vote including Kuwait, Lebanon, Saudi Arabia, Oman, Singapore, Malaysia and a few others. Thanks to all of you for being part of my program this week. I will see you next week, stay tuned for "Reliable Sources."