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FAREED ZAKARIA GPS

How Washington Lost Its Way; The End of the American Dream; What Iraq Could Teach Us About Syria

Aired August 4, 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.

First up, the end of the American dream. Can Americans make it no matter where they start from? A blockbuster new study gives us the answers and we will delve into them.

Then, imagine an Iranian president who thinks nuclear weapons are a waste of resources. Well, exactly such a person assumed Iran's top elected job this week. We will talk to people who know President Rouhani.

Later, Prince Alwaleed of Saudi Arabia sounds the alarm about his country's future. Can Saudi Arabia endure?

And, finally, how to make a hamburger without killing a cow and why it might save the world.

But, first, here's my take. The hottest political book of the summer, "This Town" by Mark Leibovich, is being read in Washington with equal parts embarrassment and delight.

It is a vivid, detailed picture of the country's ruling elite, filled with tales of ruthless networking, fake friendships and a sensationalist media. But beneath the juicy anecdotes is a depressing message about corruption and dysfunction.

If you are trying to understand why Washington works so badly for the rest of the country, the book explains that it works extremely well for its most important citizens; the lobbyists.

The permanent government of the United States is no longer defined by party or a branch of government, but by a profession comfortably encamped around the federal coffers.

The result, according to many measures, is that Washington has become the wealthiest city in the United States.

Leibovich describes a city in which money has trumped power as the ultimate currency. Lobbyists today hold the keys to what everyone in government, senator or staffer, is secretly searching for, a post- government source of income. He cites an Atlantic magazine report that in 1974, only 3 percent of retiring members of Congress became lobbyist. Today, that number is 42 percent for members of the House and 50 percent for senators.

The result is bad legislation. Look at any bill today and it is a gargantuan document filled with thousands of giveaways. The act that created the Federal Reserve in 1913 was only 31 pages long.

The 1933 Glass-Steagall legislation that regulated banking was only 37 pages long. The current version, the 2010 Dodd-Frank bill, is 849 pages plus thousands of additional pages of rules.

The Affordable Care Act is more than 2,000 pages. Bills have become so vast because they are qualified by provisions and exemptions and exceptions put in by the very industry being targeted; a process that academics call "regulatory capture."

The entire political system creates incentives for venality. Consider just one factor, and there are many, the role of money, which has expanded dramatically over the past four decades.

Harvard University's Lawrence Lessig has pointed out that Congressmen now spend three of every five workdays raising money. They also vote with extreme attention to their donors' interests.

Lessig cites studies that demonstrate that donors get a big bang for their campaign bucks, sometimes with returns on their "investment" that would make a venture capital firm proud.

Now, taking money out of politics is a mammoth challenge. So perhaps the best one could hope for instead is to limit instead what Congress can sell.

In other words, enact a thorough reform of the tax code, ridding it of the thousands of special exemptions, credits, and deductions, which are, of course, institutionalized, legalized corruption.

The most depressing aspect of "This Town," by Mark Leibovich, is how utterly routine all the influence-peddling has become. In 1990 Ramsay MacMullen, the great Yale historian of Rome, published a book that took on the central question of his field. Why did the greatest empire in the history of the world collapse in the fifth century?

The root cause, he explained, was political corruption, which had become systemic in the late Roman Empire. What was once immoral had become accepted as standard practice and what was once illegal was now celebrated as the new normal.

Many decades from now, a historian looking at where America lost its way could use "This Town" as a primary source.

Go to cnn.com/fareed for a link to my Washington Post column this week and let's get started.

(BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: When the rungs on the ladder of opportunity grow farther and farther apart, it undermines the very essence of America; that idea that if you work hard, you can make it here.

(END VIDEO CLIP)

ZAKARIA: That was President Obama last week. In fact, one thing that both right and left agree on is that social and economic mobility, being able to make it no matter where you start from is at the heart of the American dream.

In recent years, the most depressing statistics about this country have been that that mobility has declined, particularly compared with other countries.

Despite the anecdotes and celebrated examples, most Americans appear to be stuck in the economic strata into which they were born.

Last week the most detailed study on this topic was released. It provides lots of fascinating clues about the causes of our problems breaking American mobility down by geography.

For example, if you were born in the Detroit family in the bottom fifth of the income levels, you would have a 5 percent chance of making to the top 5th. But if you were born in San Diego, your chances are twice as good.

Why? We're going to get to the bottom of this. Raj Chetty is one of the authors of the study. He is an economist at Harvard and won the MacArthur Genius Grant last year.

Jeff Sachs is the director of Columbia's Earth Institute and is the author of, "The Price of Civilization."

Megan McArdle is a journalist who has written for The Economist and The Atlantic and Scott Winship is a fellow in economic studies at the Brookings Institution.

Welcome, all.

So, Raj, first take us through what do you think, as one of the authors of this fascinating study, what are the big takeaways that you get out of it?

RAJ CHETTY, ECONOMIST, HARVARD UNIVERSITY: So, the basic fact from this study is that there's a great deal of variation within the U.S. in rates of upward income mobility.

So, traditionally people often perceive the U.S. as the land of opportunity and, as you were saying, recently people have become concerned that upward mobility is declining in the U.S. relative to other countries.

What we're showing in this study is actually you should think about the U.S. very differently. There are some places that are, in fact, lands of opportunity where children do have high odds of moving from the bottom of the income distribution to the top, places like Pittsburgh or San Diego or San Francisco.

And, then, there are other places like, Atlanta or Charlotte or Indianapolis, where the odds of moving up in the income distribution are unfortunately much, much lower.

ZAKARIA: What was the thing that most struck you? Why is it?

CHETTY: Right. So, there are a number of correlations that we're able to document. We don't know for sure exactly what the causes of these differences are.

But what we can say is things like differences in school quality or differences in the degree of income inequality or segregation in a city or things like the number of two-parent families in an area are all correlated with upward mobility.

So, for instance, a place like Atlanta where the odds of moving up in the income distribution are particularly low are -- they tend to be cities where there's a lot of income segregation, the poor are not living in close proximity with the rich for example.

ZAKARIA: Jeff, what was your take of reading this -- what we know of the study?

JEFFREY SACHS, DIRECTOR, COLUMBIA'S EARTH INSTITUTE: Well, I think it helps to explain what's happening more generally which is a crisis at the bottom, of course soaring wealth at the top and a real problem for America in places with very low social and income mobility.

You mentioned Detroit at the opening. That's a place where the labor market has just disappeared. There aren't jobs. It's a place where the school system is in deep crisis, some of the factors that Raj has just indicated and we see that in a lot of part of America.

ZAKARIA: Megan, would it be fair to look at this and say, you know, what this tells you is that there's places in America where there is significant public investment tend to do much better?

Good education -- good public education of some kind, good public transport of some kind so that the poor can get to jobs. Those seem to be the kind of things that are correlated with doing well.

So, again, would it be fair to make a kind of political statement and say blue America seems to do better at this than red America.

MEGAN MCARDLE, JOURNALIST, THE ECONOMIST, THE ATLANTIC: David Leonhardt of the New York Times wrote about this. I don't think it is fair.

You look at places like Salt Lake City which does very well, but isn't what we think of is a thriving kind of blue state model, urban metropolis. It's a (inaudible)-oriented city where people marry extremely young. And I think that that ...

ZAKARIA: And, in fact, Salt Lake City is off the charts. It is the number one city in terms of economic mobility.

MCARDLE: But I think that hints at another issue which is cultural capital. You know, Salt Lake City is an area, you've got a high Mormon population and the Mormon Church is extremely good -- I mean they have their own private welfare system.

They are extremely good at investing in people. If you are in a Mormon parish, call it, and something's going wrong in your life, you're going to have intensive, kind of tag-team efforts by people in your community to get you back on track.

And so I think that what you're looking at and Professor Chetty's book about two-parent families, is that there's a lot of cultural capital that used to be more widely distributed and it's getting segregated.

And that actually goes back to jobs is that as the labor market has declined at the bottom, you have this kind of pernicious effect where men can't make enough to support a family. They're getting detached from their families.

And, you know, it's hard to tell people wait until you have kids until you've got two parents in the home, you've got enough money to live on because they don't see that as a realistic possibility. I mean it's a whole cluster of things. We're not going to find one cause.

ZAKARIA: Scott, what was your -- what's your reaction to this study?

SCOTT WINSHIP, FELLOW, ECONOMIC STUDIES, BROOKINGS INSTITUTION: My immediate reaction to the results and I've been doodling around with them is that inequality, I guess I would disagree a little bit of Raj, was the dog that didn't bark.

I sort of looked across all of the local areas that are in the paper and I looked across the top 100, the biggest 100 ones, and the relationship between the amount of mobility that the people in the local area have and how much income is received by the top 1 percent.

There's essentially no relationship between those two measures ...

ZAKARIA: In other words, the fact that an area has high levels of income equality does not mean they have low levels of income mobility.

So, you can have highly unequal income distribution, but still the poor have chances to move ahead.

WINSHIP: That's absolutely right. And then I completely agree with Raj about how careful you have to be about drawing causal inferences about all of this.

But there has been this ongoing debate between people who look at inequality across countries where countries that have more inequality tend to have lower mobility.

And there's been this argument that it's because of the inequality that some countries have lower mobility than others. And I think this data refutes that.

ZAKARIA: All right. We're going to come back and what we're going to do is we're going to talk about the United States in the context of other countries.

Why is it that it's easier to move up in the United Kingdom than it is in the United States?

(COMMERCIAL BREAK)

ZAKARIA: And we are back with Jeff Sachs, Raj Chetty, Megan McArdle and Scott Winship talking about economic and social mobility in America.

And, Raj, you were saying that while it's true that income inequality doesn't seem to be that strongly correlated to mobility, that is to say you can have very high levels of income inequality and people still seem to have a ladder up, but that doesn't quite work if you just take out the top.

CHETTY: Yes, so to clarify on the good point that Scott made, what we find is the size of upper tail inequality, so say that amount of income accruing to the top 1 percent of the income distribution is not highly correlated with levels of upward mobility in an area.

However, the degree of what you might call middle class inequality or the size of the middle class, the gap in incomes between the 25th and 75th percentile, that is very highly correlated with rates of upward mobility.

So, our takeaway is that it seems to be something that's related to the extent of which the middle class exists and is pulling away from the poor rather than upper tail extreme concentration of wealth.

ZAKARIA: Now, this ...

SACHS: I wouldn't want to leave the top 1 percent scot-free in this because it also depends on whether they pay their taxes and their strong control over the political system.

And so unless we have a rectification that reflects the fact that the income has soared at the very very top, but not the taxes, we're not going to get right some of these other things.

ZAKARIA: And what about the issue though of the size of the middle class? Because the thing that I'm struck most by, when you look at the comparative data, is how amazing well northern Europe does, particularly Scandinavia where they have a very large middle class, where there is less inequality.

And where, it's sort of a left-right issue, which is you have a fair degree of social stability because it's homogenous even though you don't have the same family structure it's ethnically quite homogenous, but also very large public investment in education, particularly early childhood education.

SACHS: They have what's called social democracy. They pay a lot of taxes, almost half of their national income whereas in the United States it's about 30 percent not 50 percent.

And they use that to support families for example exactly to address the kind of problem that Megan mentioned of families falling apart under the pressures of poverty.

They support early childhood development, daycare for poor families so that the mother can go to work and have the child in a safe environment that also is a kind of preschool environment.

They pay for it and they get great results out of it.

ZAKARIA: Megan, I know you have sort of libertarian inclinations and I've always wondered though would the early childhood education, this kind of daycare, isn't that -- it seems to me that's the big difference between the United States and northern Europe where by six or seven years old, if you're poor kid in America, you've kind of had a very tough time between the nutritional issues, daycare and early childhood education.

We now know that the brain is almost permanently disadvantaged.

MCARDLE: Well, I think that, you know, there's been some really promising research on early childhood education, I'm sure Mr. Chetty has done some of it, but it's difficult.

I mean its actually -- it's a tough issue when you look at these projects, things like the Abecedarian Project, which had great results in terms of long-term improvements in the life outcomes of kids they worked with.

But, you know, this costs tens of thousands of dollars in today's dollars, required intensive home visits, full-day preschool and the results were more in line of moving people a little bit farther into the working class, lower middle class.

It wasn't that you took kids who grew up very disadvantaged and gave them a shot at getting into the top quintile. Most of them didn't.

That said, that's a really good thing to do. Keeping people out of prison, keeping them from having babies when they're 14, keeping them graduating high school.

Those are great things to do and to the extent that we can replicate that, I'm all in favor of it. The big question when you do one of these projects, you know, you've got gung-ho researchers who hire top-notch teachers, make sure everyone's really committed to this project.

When you're trying to roll this out to 4 million kids in America at once, do you get this or do you get Head Start which hasn't really produced much in the way of outcome.

ZAKARIA: Well, there's controversy. The one study on Head Start is a -- I think a flawed study.

What do you think is the reason that you have this disparity where the other countries are doing better? Part of it is they're doing better at some of these things. They -- You know, Britain used to be a very class-ridden society. It's less so.

But I'm struck by the fact that even Canada does better than we do because it's also quite diverse. It has lots of immigrants. It's -- you know has big cities.

Many of the excuses of oh well, Denmark is a tiny country and it doesn't count don't apply when it you look at Canada.

WINSHIP: That's right. And I think the honest answer is we don't really have a good sense of why countries differ in terms of their mobility rates.

Miles Corak has done some -- he's an economist at the University of Ottawa, has done some really interesting research on U.S.-Canadian differences.

And what he found is Canada does a few things that very clearly are different from American policy and so, at the end of the day, he sort of noted that Canada has more family leave, more generous policies when -- for both fathers and mothers when kids are born.

It also has very different demographics than the U.S. as well. So, the United States has a lot more teen childbearing, a lot more entrenched poverty.

We have a lot of segregation of a lot of our poor population which I think is a really important result that jumps out in Raj's paper.

But I don't think we really have a good sense at all of how to weight this or that, how much of it is institutional differences between countries, how much of it is demographics, how much of it is economic growth, how much of it is culture and values.

ZAKARIA: I know you don't look at, you know, the cross-country comparison as much, but what is your sense about why is it that other countries seem to do well.

CHETTY: Well, you know, what's fascinating to me is that it's true Denmark has much higher mobility rates than the U.S. and so does Canada, but there are places within the U.S. that have mobility rates that are quite comparable to these countries.

And so I think that there's such variation within the U.S. potentially provides a lens into why there are these differences across countries.

And so if I were to offer candidate hypotheses it would come back to early childhood education or school quality more generally, things related to segregation or the degree of inequality.

I think a key question going forward is which of these are really the causal mechanisms. And the hope is by using the data within the U.S. we'll be able to get a much sharper sense of what matters.

ZAKARIA: Last word.

SACHS: I was going to say that it's long been known that where there are high concentrations of African Americans, white populations don't vote for school funding. They don't vote for public goods. They pay a very heavy price for that.

And so there is a very obvious and direct reason for what Raj has found and that is an absolutely poor environment for public services, for early childhood development and quality of schools.

ZAKARIA: And it affects everyone. Fascinating. Thank you. We're going to have to leave it at that. We will come back to this very important subject.

A look ahead at Iran's new president. Is he moderate? Does he really call the shots? I will speak with two experts who can shed light on the man who might be able to stop the next Middle Eastern war.

But, up next, What in the World. A Middle East country held hostage by al-Qaeda with regular bombings. It is not Syria. It is what many believe is a great success story. I will explain.

(COMMERCIAL BREAK)

ZAKARIA: Now, for our What in the World segment. You've all seen or heard or read about the grim situation in Syria with thousands upon thousands of civilians dead.

You might be less aware that the second most violent country in the world these days is Iraq. Yes, the country that we intervened in, with 180,000 troops at the peak, and hundreds of billions of dollars.

Ten years later, it has levels of violence that would be described as a civil war anywhere else. More than 700 people died in a spate of bombings last month alone and the death toll, according to the United Nations, is over 3,000 in the last four months.

For many Americans, Iraq is a forgotten country. But recent events there provide an important set of lessons not only for Iraq, but also for its Arab Spring neighbors, and for Syria in particular.

But let's go back to what sparked the current bout of violence. In April, Iraqi security forces killed more than 40 people when they stormed a camp of protestors. The demonstrators were Sunni Muslims. Iraq's government, of course, is led by Shia Muslims. For years now, these Shias have gained power and used their majority to win elections and then brutally sideline the Sunnis.

Remember, much of this is retribution. Saddam Hussein was a Sunni leader who brutally mistreated the majority Shias. The wheels of revenge keep turning.

Where did Washington fail? Some point to our withdrawal in 2011, when the White House failed to convince Baghdad it should retain a small presence of U.S. troops to train Iraqis and boost security.

But even that would not have been more than a Band-Aid. Remember that when the Iraq war was at its worst, when sectarian violence killed thousands every month, we had more than 100,000 troops on the ground. Foreign troops cannot stop an internal civil war.

When the violence finally declined in Iraq, the real reason wasn't just coercion from American troops, but inclusion. General David Petraeus did wonders with a counterinsurgency campaign, but his chief contribution was to make peace with the Sunni tribes that had, so far, been battling the new Iraqi government.

That effectively ended the insurgency. The Baghdad government promised, for its part, to treat the Sunnis as genuine partners and share power in every respect.

But within a few years, it became clear that these were false promises. Instead of reassuring other sects, the Shia-led government has dominated and intimidated.

Its relations with the Kurds for example have become dysfunctional; with Sunnis they are now poisonous. Sunni discontent has bred conditions ripe for militant groups to flourish.

Al-Qaeda, which is Sunni-run, is fueling violence in Iraq. It is also working across the border in Syria where it helps Sunni rebels as they battle the Shia Alawite regime of Assad.

Now, what can we do? Washington's failing is not a lack of military support so much, but a larger inability to broker a lasting political settlement (ph) among the key sects in Iraq. Of course the biggest culprit here is Prime Minister Maliki who has shown himself to be a Shia thug rather than a Mandela-like statesman. In any revolution or upheaval, peace, stability and even democracy can only really emerge if the majority shares power with the minorities. Let's keep that in mind as we think about the rest of the Arab world, especially Syria. Getting rid of Assad and the Alawite sect that he represents would be a great step forward, but if the Sunni majority then chooses vengeance and reprisals, it will mean years of violence and instability, whether the United States is involved or not. Just take a look at Iraq.

Lots more ahead. We have a fascinating look inside a country where 90 percent of the private sector jobs are held by foreigners, Saudi Arabia.

But up next, Iran's new president. Is he a moderate or is he a tool of the ayatollah? I have two expert voices.

(COMMERCIAL BREAK)

CANDY CROWLEY, CNN ANCHOR: I'm Candy Crowley in Washington with the check of the headlines. In an unprecedented move, 22 U.S. embassies and consulates across the Middle East, North Africa and beyond are closed today. A global travel alert is also in place. The decision is in response to intelligence that says al Qaeda or its affiliates could attack at any time. The move comes less than a year since the deadly September attack on a U.S. diplomatic post in Benghazi, Libya.

Meanwhile, CNN has learned that some U.S. military forces have been put on a higher state of alert. Combat-equipped Marines in southern Spain and southern Italy could begin moving in about an hour after they get orders. The U.S. military has taken similar measures in recent months during unrest in Yemen and Egypt. CNN will continue to monitor the situation and keep you updated throughout the day.

Egypt's defense minister met with Islamist leaders today to discuss the country's political crisis. The violence has gripped that country since President Mohamed Morsy was overthrown in a coup last month. Hundreds have been killed in clashes between the Egyptian military and pro-Morsy backers. Those are your top stories, now back to "Fareed Zakaria, GPS."

ZAKARIA: Welcome back. In 2006, an op-ed in "Time" magazine began with the following words. "A nuclear weaponized Iran destabilizes the region, prompts a regional arms race and wastes the scarce resources in the region." The author of that article was at the time a member of Iran's Supreme National Security Council. He was also Iran's former top nuclear negotiator. And as of this week, he is Iran's president. Hassan Rouhani. But what kind of president will he be? Is he as moderate as his words suggest? I have two experts. Hamid Dabashi is a professor of Iranian studies at Columbia University and in Boston, Nicholas Burns. He is a professor at Harvard and the former undersecretary of state of the United States in charge of Iran. Welcome.

Professor Dabashi, let me ask you, what did you make of Rouhani's "Time" magazine article? Did it suggest to you that he for one thinks that while Iran should have a nuclear energy program, he's absolutely against any kind of weaponization of that program?

HAMID DABASHI, PROFESSOR OF IRANIAN STUDIES, COLUMBIA UNIVERSITY: As you know, Fareed, no politician, no statesman can be -- can be looked at only on the surface of what he says. There must be measures of checking him and making sure what he says are verifiable within international confinements, but there's no reason to believe that he goes out of his way to publish an article in "Time" magazine in which he commits Iran -- if you go down the article, in fact there is nothing other than committing to Iran to transparency in multiple number of ways. On the surface, this article has to be taken seriously. And as President Ronald Reagan once said, trust but verify. Within that confinement, I think even as back as 2006 that statement could have been the beginning of a negotiation.

ZAKARIA: Nick Burns, you have studied these issues very carefully. You were at the State Department at the time. You were in charge of Iran, but, of course, in the Bush administration that meant you were not allowed to meet with or directly negotiate with these guys. When you read that "Time" magazine essay, what did you think and what do you think of Rouhani?

NICHOLAS BURNS, FORMER U.S. UNDER SECRETARY OF STATE: Well, I think that Rouhani is an intriguing person, Fareed. The relevant experience here is the European negotiations with him between 2002 and 2005. This is Britain, France and Germany. And I think the Europeans found him to be fairly pragmatic and fairly straightforward. So if we're trying to gauge can a President Rouhani take Iran into direct negotiations with the United States and the other countries of the permanent -- members of the Security Council, there may be some basis for slight optimism. On the other side of the ledger, however, he's just one in a leadership. And of course, the Supreme Leader Ali Khamenei is a more powerful figure. He's more cynical. He's certainly been much more hostile to the United States and much more supportive of Iran's nuclear program. So I think you have to weigh that as well.

ZAKARIA: Let me ask you, Professor Dabashi, about the Supreme Leader and Rouhani's power within this very complicated Iranian system that at least from the outside very few of us understand, because the president, if you look at Ahmadinejad, if you look at Khatami before him, the president of Iran does have power, but not ultimate power and not enough, you know, often to get his way entirely. So what should we make of that? Will Rouhani have the power to make a deal with the West?

DABASHI: Not entirely on himself. The fact of the matter is Iran is a very complicated regime consisting of security, intelligence, military and clerical establishment and the network. And it is that network that has to be considered at one at the same time. However, it is not that Rouhani does not have any power. He is a consummate insider. He is far more powerful -- he would be a far more powerful president than Ahmadinejad would have ever dreamt or even before him anybody else. Even Rafsanjani. And ...

ZAKARIA: Why do you say that? I mean that's fascinating. Why do you say that?

DABASHI: Because his revolutionary credentials are absolutely impeccable. He's very close to Khamenei and he doesn't have to prove, if you were to follow the course of the presidential debates over the last two or three months, he was constantly talking in a language that means that he's very close to not only Khamenei, but also to the security and the military establishment. And also he talks from that confidence because we have to keep in mind that regionally Iran is in a very delicate position. Iran is in trouble in Iraq. Iran is both involved and in trouble in Syria. The region is in turmoil. So one should shift, Fareed, the context of our nuclear negotiation, in the context of the region and the readiness of Iran and the fact that even somebody like Rouhani was suggested to become the next president in order to understand the readiness and the -- of the situation as we have now for resolution rather than laser beaming whether or not there would be a power struggle between him and Khamenei, one has to look at the larger regional issue, which is now ripe, in my judgment, for direct negotiation and resolution.

ZAKARIA: Nick Burns, finally and briefly, are you optimistic, given where we are today?

BURNS: I'm optimistic that talks will open. This is a time for diplomacy. I think for the rest of 2013, Fareed, we're going to see a big negotiation, hopefully direct talks. But the onus really is on Iran. Iran is the outlier here, not the United States. And Iran is going to have to, president Rouhani, convince the rest of the world that it's time to be serious and honest about its nuclear program. But I think that there's that opportunity and we ought to embrace diplomacy at this point in time.

ZAKARIA: Gentlemen, fascinating conversation. Thank you both very much.

Up next, will Saudi Arabia go the way of the Soviet Union? I have a guest who really knows Saudi Arabia and believes that to be the case.

(COMMERCIAL BREAK)

ZAKARIA: There is a country in the Middle East that has more people using Twitter and YouTube than almost any other nation in the world percentagewise. I'm not talking about Egypt or another Arab Spring nation, I'm talking about Saudi Arabia. But with all of those citizens governed in an almost medieval monarchy, could the House of Saud be on its way out? I sat down with two experts who see it quite differently. Thomas Lippman is a former Middle East bureau chief for the "Washington Post." He's the author of "Saudi Arabia on the Edge, the Uncertain Future of an American Ally." Karen Elliott House is a Pulitzer prize-winner who wrote "On Saudi Arabia, Its People, Past, Religion, Fault Lines and Future." Listen in.

Karen Elliott House, Thomas Lippman, thank you for joining me.

THOMAS LIPPMAN, FORMER MIDDLE EASE BUREAU CHIEF: My pleasure.

KAREN ELLIOTT HOUSE: Karen, but you have this point where you say Saudi Arabia to you is reminiscent of the Soviet Union in its dying decade. With one aged Politburo leader leading to the next. And you look at these kings, each of them over 80 years old. Do you think it's that bad?

KAREN ELLIOTT HOUSE, AUTHOR "ON Saudi ARABIA": I think it is equally stagnant. As the old Soviet Union was at that period of time. So it's not just the aging leadership. I think the country is quite ossified, the economy and, obviously, the politics, there are none. But people are finding a voice, and I think they understand that the myth just as communist myth of we're better off than everyone else, Russians figured out that wasn't true. I think the myth of we, Wahabbies are the purist Muslims in the world, people see that there is an awful lot that's not pure in Saudi Arabia.

ZAKARIA: The sort of objective data that Karen points out, this, you know, even I knew some of this, but I was stunned to see how, you know, how again, how bad it is. So, one out of every three people in Saudi Arabia is a foreigner. You point that two out of every three people with jobs in Saudi Arabia are foreigners. And in Saudi Arabia's private sector, nine out of ten people who hold jobs are non- Saudi. So basically you've imported this vast class of people who actually work to support Saudis who, you know, it's fair to say do nothing.

LIPPMAN: Well, that is true and it has been true. Partly it's because Saudi Arabia's economic history is built upside down. They didn't have the stages where they went from agrarian subsistence, through dirt under the fingernails jobs to move up slowly the way we imagine our society did, leaving aside the imported labor in the form of slaves that built our country. Right? We imported plenty of labor. But it's true that they got rich overnight. And the first task that they faced was building the space. You do that by hiring people to work for the state. But they haven't grasped the fact that in the private sector employers want to hire as few people as possible. They're not in business to hire more workers. They want to hire fewer people and cheaper people. It's an understandable instinct.

ZAKARIA: The question I have for you, though, Karen, is the things you describe about Saudi Arabia have been true for a while. What gives you the surety that it's unstable?

ELLIOTT HOUSE: I am not saying it's absolutely done for, but I think at least two things are very different from the past. One is simply information, social media, satellite TV, the Internet. People -- Saudis know what's going on in the world in a way they never did. And the more the king has tried to inch things in the direction of progress, the more the conservatives pull in the opposite direction. So I think the divisions in society are greater, number one. Number two, the information is greater. And number three, the royal family, the band of brothers, is running out and they are going to have to make a generational change. And a lot of Saudis who watch this kind of cartoon time bomb with the fuse burning, you know, they have nothing to say about it, but they do worry that the grandsons, all of these hundreds of grandsons who would be king, that some of them will wind up fighting amongst each other.

ZAKARIA: You say in the book that, look, a lot of young Saudis flirt with jihad and things like that because they confront this kind of what they see as a ...

ELLIOTT HOUSE: They're bored.

ZAKARIA: Right. They are bored. ELLIOTT HOUSE: They have nothing to do. And they're frustrated. They're unhappy because they feel they should have a better life. Their view is the oil wealth belongs to the country, not the royal family. They don't really want to work any harder, but they want more. So they're frustrated. And they are bored. Imagine if you worked in a company where you couldn't aspire even to be a regional manager, and Saudi Arabia is fundamentally Al Saud inc. The Sauds control the board, the president, the CEO, all the provincial governors, all the regional managers but one, 12 of the 13 are princes. So you -- it's not surprising that people go to work and take their salary and don't really care, because you can't be -- you can't aspire to have any influence on your own country.

ZAKARIA: We're going to have to leave it at that. A fascinating conversation. This is a crucial country, and if it does -- if it does go the way of the Soviet Union, there will be ripples felt all over the world. Thank you both very much.

BURNS: Thank you.

ELLIOTT HOUSE: Thank you.

ZAKARIA: Up next, the world's first test tube hamburger. It could save the world. Right back.

(COMMERCIAL BREAK)

ZAKARIA: This week, the Amir of Kuwait announced pardons for all the people convicted of offending him. Yes, that is an actual offense in Kuwait. One activist was recently sentenced to 11 years in jail for insulting tweets. That brings me to my question. In which country did it recently become legal to insult the president for the first time in 132 years? Is it a, North Korea, b, China, c, Turkmenistan or d, France. Stay tuned and we'll tell you the correct answer. Go to cnn.com/fareed for more of these questions and lots of insight and analysis. Don't forget to follow us on twitter and Facebook. If you miss one of our shows, they're all online. Go to iTunes.com/Fareed.

This week's book of the week is Mark Leibovich's "This Town." I talked it up at the start of the show. A picture of the corruption and culture of Washington today. The book doesn't step back enough in many ways, it seems to revel in the world it reveals, but whatever its flaws, it provides a vivid picture of power and money in Washington today and it will make you a little queasy.

Now for "The Last Look." Look closely at these images. In this petri dish are a cow's stem cells. They will ultimately become the world's first test tube hamburger. Sounds appetizing? Mark Post, a scientist from Maastricht University in the Netherlands says it takes about nine weeks to grow just one five-ounce burger. It will be made from a mixture of 20 thousand strips of cultured meat. Add in a dose of lab-grown animal fat and some $384,000 later, presto, a hamburger. It is expensive for now. But remember real meat costs resources too. According to the U.N.'s FAO, raising animals for food takes up 30 percent of the planet's land mass and more than eight percent of global human water. Meanwhile, global demand for meat is expected to double in the next 40 years. I really hope that that tube burger tastes good, we need it. There is a live demo in London this week.

The correct answer to our GPS Challenge question was D, France. After a ruling from the European Court of Human Rights, the French parliament overturned a law last week that had made it illegal to offend the head of state. The law dated back to 1881 when the first person to be prosecuted under the law called President Jules Grevy such slurs as cover your children's ears, profane thug and iconoclastic cad. The law embodied the concept of lese majeste or injured majesty, probably in all monarchies, still isn't many of them, but not in France anymore. So we probably need to figure out how to say lese majeste in Arabic or Thai or something like that.

Thanks to all of you for being part of my program this week. I will see you next week. Stay tuned for "Reliable Sources."