Thank you, Bruce. It's a real pleasure to be here. I have to start with a confession, though. This is not the book I planned to write. You come here, of course, to hear about the Doom Loop, but I had in mind a much cheerier book. So let me tell you a little bit about the book I planned to write and where things sort of ended up and why they ended up where they did. About 3 years ago, I started thinking a little bit about where we are in terms of the evolution of the world economic order. And certainly it seems like there is a lot going on around us. And my view was that there are some fundamental things that have shifted in terms of where the world economic order was and where it is going. So I was going to tell a story. And I spent about 4 months, much to the dismay of my academic co-authors, who would have preferred that I work on papers with them, I spent about 4 months actually, very joyous 4 months, reading not in economics, but in history, politics, international relations, fields that I normally look at glancingly, but which I spent a lot of time spending in terms of trying to make sense of how to explain the present moment. By early 2024, I had a very clear thesis in mind, and it was a good story. And the story was the following. If you think about the 1990s, and you know, having read in history, I was very tempted to go pretty far back in history, but my publisher strongly recommended a 400-page book rather than a 900-page book, so I decided to start in the 1990s. In the 1990s, with the fall of the Soviet Union, the United States became the dominant power in every respect, economic, financial, military. Now, of course, we're in a period where economic power at least is more evenly distributed across countries. And to an economist, and I know there are some very prominent economists in the room, instinctively one thinks about competition as being a good thing. Because competition typically is good for efficiency, for balance, and for stability. Why? Because typically when you have competition, the competitors are kept disciplined to do the right thing. If you think about competition among countries, one country runs policies that run amok, that country suffers some consequences, maybe in international finance, maybe in terms of geopolitical influence, and so on. So one thinks about economic power now as being much more evenly distributed with the emerging market economies certainly becoming as large as the advanced economies, the old industrial powers. So the story was going to be one where we're in a transition to this new balanced equilibrium, which would be a more stable world, and maybe we're in a transition path, which is much more volatile. And certainly there is a lot of volatility around us. So this, to my mind, was a very compelling proposition. You're moving from a world that was stable because there was one dominant power to one where there are at least two powers, or if you think about the emerging market separately, multiple powers, that could be a different world, and the transition path is one of volatility. And the story was going to be a very pleasant one about all the forces that would take us back to this world of stability. And so I started working on the book in early 2024 thinking about all the forces that would get us back to stability. By the summer of 2024, my heart was pulling in one direction, which is the more positive direction, the book I wanted to write, but my head had pulled me in a completely different direction. And this is where the book took a dark turn. Because I began to realize that all the forces that I had anticipated would lead us towards more stability were in fact going to generate more instability. So that unfortunately became the defining theme of the book. So what is the Doom Loop? The notion of the Doom Loop is that economics, domestic politics, and geopolitics are stuck in this negative feedback loop where they're bringing out the worst in each other. So let me break that down a little bit. Let's start with globalization, which was one of the forces I had in mind as generating a better equilibrium. Once upon a time, not too long ago, globalization was seen as a positive-sum game, where countries, by trading with each other, could mutually benefit. So you could essentially have countries engaged in this positive-sum game, and this had a couple of very important implications. Number one, you could have countries generate more productive economic relationships, they would prosper together, so they would see their interests as more closely aligned, but more importantly, this would serve as a counterbalance to the intrinsically zero-sum game of geopolitics. In geopolitics, it's hard to think about a positive-sum game because intrinsically, especially when you have great power competition at work, one country gains influence, the other country has to proportionately lose influence. But in economics, you don't necessarily need to have zero-sum games, you can have positive-sum games, and during the 1990s, when many emerging market economies were opening up to the world, during the 2000s, when there was much financial integration, and Professor Shambaugh, who's in the room, has written extensively about these issues. Professor Jay Shambaugh, I'm sorry, I realize that I have two Professor Shambaughs in this room, both very eminent in their own respects. This, there was a sense that this was working very well. That globalization was this positive force. So if you think about the US-China relationship, which the other esteemed Professor Shambaugh has written extensively about, there was a sense that there were things holding the relationship in a stable way. So if you think about business interests, you know, there were many businesses that viewed China as a very important market for their final products and services, as a very important part of their supply chains. So when there was a sense during the 2000s, after China had joined the World Trade Organization, that China was gaining a lot from this trade relationship with the US and with the rest of the world, but perhaps not quite playing by the rules of the game. There was a sense that there were many businesses that wanted to keep the relationship on an even keel. So they too served as a stabilizing force in this relationship. That is now gone. Now we're in a world where even globalization, free trade, is seen as not a positive-sum game, but a zero-sum game, or potentially even a negative-sum game. And this has very serious implications if one thinks about the nature of geopolitics and the fact that now we don't have this balancing force. But in addition to the geopolitical element, there is a very important domestic element as well. When we think about the last two or three decades, there have been enormous gains generated by globalization, but not just globalization, but other elements like technology that have pushed productivity forward in a very positive way. The aggregate gains have been measurably large. So, you talk to any economist, we will tell you that there are enormous gains from free trade. We can measure those gains, more or less. But, the problem was, and I'm hardly the first to say this, we did not quite think, especially as economists, about the distributional consequences of those gains. There are many people who felt left out of these gains. Now, in a market economy, there is always churn. There are some industries that are going to do well, some that will not do so well, some firms that will prosper, some firms that will close. So, the notion of people losing jobs, getting displaced because their industries or their firms don't do well, that's accepted. But, what I think has really come to infect domestic politics, and I use the word infect rather than affect, because what is very important is that I think a lot of people feel they've gotten left out of opportunity. So, what does this mean? So, it means that a lot of people in these declining firms and industries not only are losing jobs, they don't have a good safety net to catch them, and they also see that the political process is being captured by the economic and political elites. And this provides a very fertile ground for certain politicians to evoke what I call the politics of resentment. Essentially, you can argue that the problems that people are facing are caused not by seemingly benign forces like technology, but by the other. And the other can be defined in different ways. It can be immigrants streaming across the southern border or perhaps even the northern border. It could be the forces of globalization. It could be the political and economic elites, you know, those of us who teach in eminent universities like GW or my own. It could be others who are involved in the system. Or it could be China. So, suddenly you have a very potent force at work that argues that the real problems are caused by these extraneous wild actors. So, now you have economic forces infecting domestic politics, which in turn has an effect on geopolitics, because now, once you start blaming China for a variety of things, you know, for immigrants, for fentanyl flows into the US, for a variety of other ills that face our society, it becomes a lot easier to argue that the problems festering in the society are not a function of domestic policy failures, but because of these wild external forces. So, this is where the doom loop starts playing a very important role. You now have the feedback loop between economics, domestic politics, and geopolitics. So, globalization is one very important element of it. But, there are other forces at play. One of the forces that could potentially lead to more stability is the rules of the game. Everybody agrees upon a common set of rules, that intrinsically generates stability. Because there might be some people who waver from the rules, but if there is not only a set of rules that everybody has to play by, but also an enforcement mechanism, then you can restore some degree of balance. The rules of the game were largely instituted in the post-war period with the United States playing a very important role. And these institutions, I would argue, have played a very important role in promoting domestic prosperity, international prosperity, but also international stability. This includes international institutions, of course. One dear to my heart, the International Monetary Fund down the road where I used to work for a long time, the World Bank, the United Nations, and of course, the General Agreement on Trade and Tariffs, which then became the World Trade Organization. So, all of these played a very important role. That rules-based order is fraying. It's fraying because there is a sense that these institutions don't have legitimacy, and this notion of loss of legitimacy is coming from both sides. We see the United States pulling back from major institutions. I know that when Professor Shambaugh was working in government, he was working very hard to make sure, I should keep saying Professor Jay Shambaugh. Although David, I know again you had a role in this as well. So, it was very important to see the US as being engaged in these institutions, and of course there were certain flaws. But, I think the reality is that right now we are in a period where the United States sees these institutions as not serving its interest very well, although these national interests are now very, very narrowly defined, as we all know. But, at the same time we have the emerging market economies feel that the major international institutions are not serving them well, either. If you think about the International Monetary Fund and the World Bank, there is still this paradoxical situation that while voting rights, which again are a zero-sum game at these institutions, are supposed to be distributed according to the evolution of economic size, you still have these weird situations like the Indian economy being far larger than the Japanese economy, but having a slightly smaller voting share. If you think about all the emerging market economies put together, they don't have anywhere near the voting share that they need to have again, because this is a zero-sum game, and there are many traditional powers that won't give up their importance in these institutions. So, what has happened? What has happened is that the emerging market economies have started basically setting up their own institutions. We have the Asian Infrastructure Investment Bank set up by China and other emerging market economies. You have the five major emerging market economies, the BRICS, Brazil, Russia, India, China, and South Africa, setting up the New Development Bank, which is sort of a competitor to the World Bank. Now, the interesting element about these institutions is that they get around some of the problems of the legacy institutions, such as one institution, one country, the United States, having veto power over major policy decisions, because it has a 17% voting share, and major policy decisions at the IMF and World Bank require an 85% vote. In principle, the AIIB and the New Development Bank don't have these sorts of weaknesses, but we know, everybody knows that nothing can happen at these institutions without China's assent. So, we have this paradox of institutions that seemingly are set up on principles that are exactly the ones that people have been trying to reform the IMF and World Bank towards for a long time, but since they're starting with a blank slate, they look great on paper. Whether in practice they're as democratic is far from clear. But, the crucial point from the perspective of the theme of my book is that now the rules of the game are no longer playing a stabilizing force, because rather than cohesion, we have dissension with different institutions essentially trying to manage the rules of the game in slightly different ways. So, there isn't a common set of rules of the game that everybody agrees on with these institutions having enforcement power. So, if you think about the rules of the game, they too, rather than fostering stability, have become instruments of instability. Now, there is one group of economies that could play a very important stabilizing role, and these are the middle powers. One question when I, when you think about my notion of superpowers is who are the superpowers? One could argue that Russia is still a superpower, but Russia really, you know, has a lot of nukes, but has always been an economic shell. And this was true even during the period of apparent Soviet dominance during the 1980s and 1990s. So, I really think we're in a world where there are two very large powers, the United States and China. And the implication of that I will come back to in a little bit. But, the rest of the world is stuck in the middle. Now, there are probably Europeans amongst you, given how, you know, cosmopolitan GW's Elliott School is. My European friends are not thrilled when I talk about Europe as being a middle power. But, the reality is that Europe has the potential to be a great power, but it has not coalesced. We see that Europe continues to be striven by centrifugal forces that continually threaten to pull the zone apart. So, everybody is sort of stuck in the middle between these two very unsavory alternatives. The United States, which used to be seen as the paradigm that everybody aimed towards, the paradigm of liberal market-oriented democracy, and on the other hand, you have China, which is a very different vision of the world, and China would like to play a far more important role, but it's not quite there. So, you probably all heard about the Trump speech at Davos, which sort of, this year's Davos, which basically sucked all of the air out of the, out of that meeting. So, I have yet another confession to make. I couldn't resist. I was one of the throngs who stood for an hour in line to get into the Trump speech to just listen to the man in person. So, I was one of the, I was there only an hour in advance of the many who had queued up, you know, 2 hours in advance, you know, multi-millionaires all standing in line just to hear the man speak. I got one of the last seats in the main auditorium and the five overflow rooms were also overflowing. So, it was quite a spectacle. I couldn't stand it for more than 45 minutes, just to state for the record. That speech got a lot of attention. There was another speech that got a lot of attention also. Mark Carney's speech, and it seemed like, so I was doing the soft launch of my book at Davos because, you know, the book hadn't come out yet. But, it was almost like Mr. Carney took the words out of my mouth and of course stated them much more eloquently. The notion that number one, we are in a world of instability where instability is the norm rather than a passing phase. And secondly, middle powers, everybody other than the US and China better get used to it. And, you know, he argued for a very pragmatic approach that essentially the middle powers are not going to agree on everything, but should just find issues that they can agree on and move forward. This is a very pragmatic, sensible approach. The middle powers include large countries, small countries, rich, poor countries. They're not going to agree on everything. So, going issue by issue seems very sensible. And in fact, I talk about this in my book as issue-based alliances. India has been a master at playing this game. So, when Russia invaded Ukraine, India did not participate in the sanctions on Russia because access to cheap oil is very important for India. So, it allied itself with Russia and China. But, India sees its fundamental values as much more closely aligned with America and the West even when Trump occasionally, you know, pushes India away. This actually worked very well for a while. But, the problem that I argue in the book that this approach poses to India, to other middle powers is that if you have these very transactional relationships, they may work well under specific circumstances, but these are not based on shared values, on any fundamental agreement about how the world ought to be and how it ought to function. So, I don't think these are going to be very durable. So, if you take India for instance, rather than serving as a source of stability, it is now teetering from one side to other while it tries to find its place and therefore, it becomes a source of instability in itself. Now, the Carney speech and the Trump speech got a lot of attention. There was another very important speech at Davos which fell flat. You didn't hear very much about it. This was by the Chinese Vice Premier He Lifeng. And this speech was very important because the Vice Premier, following up on other leaders from China who've spoken at Davos in the past, sent a very different message to the world. It said, "There is this country which shall go unnamed in Premier He Lifeng's speech that is pushing everybody away, trying to thwart the rules of the game. And here we are, China, we are willing to take everybody into the world into our open and wide embrace because we have now become the defenders of multilateralism, of globalization, of free trade." That message fell flat, much to the consternation of the Chinese because there isn't that much trust in China yet. And this is where a lot of the middle powers, especially in Asia, but also in Africa and Latin America are stuck. On the one hand, like I said, the US is now seen as an untrustworthy and unreliable ally. On the other side, you have a country that is willing to open up its arms to other countries, but everybody else, you know, feels that they cannot shy away from China. You had Mark Carney himself and also Premier Starmer of the United Kingdom going to China, but signing very limited deals. Because there is a concern that their economies, their manufacturing sectors could get swamped by a China that now is largely growing by exporting. So, for much of the middle powers, it's a very unstable world. But unfortunately, their inability to coalesce or contribute to stability is actually, I think, fostering more instability. So, we've talked about globalization, the rules of the game, the middle powers, all of which I thought would really help to promote stability. And again, in the cheerful version of the book, would be part of the answer, but didn't quite do so. There is one other force that is very important. We've just finished rebuilding our house. We've put in a new audio video system. We have multi-function remotes. I can't get the blasted things to work. But, I'm a firm believer in technology and the promise that it has. I think technology really is the answer to many problems. And if you think about increasing resources, and if you think in as a corollary about the lack of resources or the paucity of resources being the source of most conflict, it should reduce conflict. In my book, I talk about three specific technologies. AI, digital currencies, and social media. All of these have the power not only to generate productivity and prosperity, but also to bring us closer together in principle. If you think about digital currencies, you don't even need fancy cryptocurrencies. If you think about digital payments, these have been absolutely transformative in many countries, low-income, middle-income, and so on. You go to China and as you go to India these days, you know, you can get easy access to digital payments. You don't need to have access to a bank account or credit card. So, financial access through digital payments has really transformed people's lives, but it's not just digital payments. These have become portals for people to get basic banking services, to manage credit, savings, risk. And this makes people feel that they have a vested interest in their country's prospering because they feel that they can now share in that prosperity. These have been remarkable forces. All of us in this room, I'm sure, are now using AI to some extent or the other. As a professor, I worry. As a student, you're probably delighted if you have your assignment to hand in at 9:00 in the morning, you know, at 8:45, you have your assignment done. And you can probably fool us pretty easily, although we professors like to think that we can smell out, you know, work not done by you. We really can't. Each of these, I think, has enormous potential, but I worry. I worry about these technologies because for all the positive aspects, the reality is that they're increasing the concentration of economic and financial power. If you think about digital currencies for instance, yes, we now have stable coins that are backed by dollars by and large because everybody in the world still wants dollars. If you think about other types of cryptocurrencies, they're enabling more efficient payments, especially cross-border payments, which are very important for exporters, importers, economic migrants sending remittances to their home countries. Right now, international payments are a mess. You know, they're very expensive. They take a lot of time to undertake these transactions. They're very costly. What cryptocurrencies have shown us is all these technologies or all of these problems can be gotten around by using technologies. So, are cryptocurrencies the right answer to the question of how do we improve domestic and international payments? Not necessarily. But, I think they're really serving as a catalyst to many of these improvements. But, one can well imagine a world now where digital currencies of various sorts, including stablecoins, which maintain stable value because they're backed up by stores of fiat currencies like the US dollar. Those can be used for international payments and one can well see currencies of countries that do not have credible central banks, that have high levels of inflation, essentially being swept aside by easy access to stablecoins, which could soon be easily available worldwide. So, you could actually have a lot of currencies face existential threats. Even the Eurozone right now does not have a unified payment system. So, they're moving forward with the digital version of the euro, the digital euro, which is likely to come on board in 2027 or 2028. Why? Because they're equally concerned about being swamped by dollar-based payment mechanisms. So, I think there is a real concern that such technologies could lead to more concentration and we see the same thing with AI, of course. You know, again, at this meeting in Davos, I met a lot of African entrepreneurs who absolutely, you know, gushing about the prospects that AI had of allowing them to compete with the big boys from the industrial countries, whether they were in manufacturing or services. When the talk turned to employment, however, it was a completely different story. Because there was a sense that while these new technologies might actually be very helpful in terms of increasing productivity, in terms of improving competitiveness, in terms of employment generation, which is already a problem in many of these economies, I think there is a real concern. So, when I think about technology again, I think it has the potential to create a vast amount of new resources, but just like with the inequality created by globalization, I worry equally that especially if we don't have guardrails on these technologies, they could lead to much more concentration of economic and financial wealth and power. And of course, if you take the combination of technologies like AI and social media, these give disruptive actors, either domestically or nations like North Korea, the ability to foment a lot more destruction. So, the notion of technology generating instability is not quite there. At this point in the evolution of my book, I was a little concerned because as I said, my heart had wanted to go in one direction, my head had pulled me in a completely different direction. I was not completely willing to let go of my original thesis, however. So, I wanted to resurrect it and I started thinking a little bit again, limiting myself to relatively recent history. This is not the first time we've had, you know, shifts in global economic power or seeming shifts. I spoke about the 1990s about the US becoming the dominant power in every respect with the fall of the Soviet Union, but then Japan began to rise as a rival to the US and then it sort of faded away. In the 2000s, it looked like Europe might rise as a rival to the US and then it's kind of fading away. There is one very important difference relative to the present competition, which is that if you think about Europe, Japan, the United States, the fundamental values about how you organize a political, economic, legal, social system, all of these countries basically saw eye to eye. So, it was just an economic rivalry. But now we have a rivalry where I think it's really about the vision of the world. What is the type of society? What is the type of economy? What is the type of legal system that you want to become pervasive? Why does this matter? You know, when one thinks about great power competition, one can argue that there have been many instances in history where the only way this has resolved itself is through military conflict. I actually don't think that cataclysmic outcome is the most likely scenario. Yes, Trump talks about wanting, you know, Greenland and of course in Davos, sometimes instead of Greenland, he started saying Iceland, which got a lot of people in the room very worried. Who knows what else he wants. China does want, you know, parts of Asia around the Spratly Islands and so on and perhaps Taiwan will bring things to a head, but who knows, but fundamentally, it's not like the US wants China's territory or China wants the US territory. But I think this clash about the visions of the world is really important for one critical reason. Countries that have similar forms of organization tend to stick together. Yes, the United States is now pushing away some of its very close allies, but typically, the US, Europe, Japan have stuck together because they view the world in exactly the same way. If you think about the autocracies of the world, they tend to stick together because they view the world in the same way. So, I think this is where we have come to a point right now where if you think about a resolution to this great power conflict that ends up somewhere in the middle, it's going to be very difficult because there is no middle. I think these two powers have very, very different visions about how to organize the world, which is why I think that the notion of the doom loop and this notion of instability being the norm for a while is really where we are going to be. Now, having told you all these dark things, I have to provide a way out. I can tell you what the way out was going to be in the cheerful version of the book and even in the darker version, I think that is the answer. It's really about institutions. You know, I spoke about international institutions, but domestic institutions are equally important as well. And what are the domestic institutions that are important? It includes the rule of law, an institutionalized system of checks and balances, a free and fearless press that holds public officials to account, and it includes, you know, even specific institutions like the Central Bank that need much more independence in order to operate effectively and with a degree of credibility. All of these institutions are of course under severe pressure. The international institutions, as I already argued, are under severe pressure as well. I think ultimately, this is where the answer lies. Now, one could think about this, depending upon your political predilections, as, you know, either a shining moment or a dark moment in US political evolution, but the reality is that the US, you know, has gone from one side of the political spectrum to the other, but of course, the US is very special, so you don't just go from one side to the other, you lurch from one side to the other and back. But there is a very important dynamic that is, that is relevant for this lurching or shifting from side to side, which is the corrective mechanisms. And the corrective mechanisms, in addition to the specific institutional elements that I spoke about, include the democratic process working very well. I think we have a great deal of reason to be worried about whether these elements of the corrective mechanism are going to work well either domestically or on the international front. So, I think we are at a very fraught moment in the evolution of the international order. And while I think we would like to comfort ourselves that this may be an aberration, you know, certainly humanity has been through very volatile periods. I think this dynamics of the doom loop are going to be very difficult to get out of in the foreseeable future. If you ask me how long do I mean by the foreseeable future, I will refuse to be pinned down, but it's not going to be anytime soon. And to get out of it is really going to take a lot of work. It's not that we can't get out of it, but it's going to take two critical ingredients. One is, you know, for us to become more engaged as citizens, as citizens not just of our countries, thinking about our narrow, short-term interests, but as citizens of our communities and of the broader international community, to recognize that it's really only shared prosperity that will work well for all of us. We also need leaders, you know, community leaders, business leaders, and of course, national leaders who'll enable us to look past our short-term prejudices and fears and, you know, inspire us by thinking about a better future. We don't have that now. And in fact, you know, when I think about the book, the other thing I forgot to mention is that I had actually finished the full first draft of the book in October of 2024. In the last couple of weeks of October 2024, I read through the whole manuscript and said, "Damn, this is too dark. Let's just wait it for a couple of weeks, you know, we're going to have elections here, things are going to sort of settle down and maybe, you know, I should give my heart another chance and rethink the thesis of the book or at least tone it down a bit." Of course, unfortunately for the world, fortunately for the book, everything that has happened in the last 15, 16 months has validated, if not turbocharged, the thesis of the book. But I think it's really a very difficult moment and I view the contribution of the book as not really about solutions. We need to think very hard about solutions. But what is important is understanding the dynamics, the forces, the interactions between the forces that got us here. And I think it's worth thinking about this combination. Now, it's not that economics, domestic politics, and geopolitics have always, you know, been moving on different tracks. They've always moved in parallel tracks and intersect with each other. But we are at a moment right now where this intersection, the intertwining of these forces, is very, very difficult to separate. So, what it's going to take to get out of the doom loop is really a lot of very hard work, a lot of institution rebuilding, a lot of institution creation, and ultimately, it's going to be a tough path out, but it's incumbent on every one of us to do our bit. Thank you.
