this is gps, the global public square. welcome to all our viewers in the united states and around the world. i'm fareed zakaria. first up, a tour of the world and the united states with a terrific panel. we'll tackle the euro crisis, britain, riots, the united states and much more. then what in the world? should the u.s. be taking economic queues from iran? maybe. i'll explain. next, an inside look at intelligence and the war on terror are john miller who has just resigned as one of the nation's top spooks. finally, a last look at how not to be a spy. first, here is my take. i wrote a blog post for our gps website, cnn.com/gps that has gotten a great deal of reaction. let me talk about it for a moment. it all started because i read a website that pointed out after the s&p downgrade of the united states, no country with a presidential system of government had a aaa rating from all three rating agencies. only countries with parliamentary systems have that honor with the possible exception of france which could be characterized as having a parliament, a prime minister, as well as a president. this brought to mind my years in political science grad school and an essay by a famous yale scholar, juan linz, who said parliamentary systems are superior to presidential systems because they allow for greater stability and purposeful action. in a parliament system, he contended, the legislature and the executive are fused, so there is no contest for national legitimacy and power. think of david cameron in england. he is the head of the coalition that won the election, head of the bloc that has a majority in parliament, and head of the executive branch as prime minister. remember the political battle surrounding the debt ceiling? it's actually impossible in a parliamentary system because the executive controls the legislature. there could not be a public spectacle of the two branches of government squabbling or holding the country hostage. in the american presidential system, in contrast, you have a presidency and a legislature, both of which claim to speak for the people. as a result, you always have a contest over basic legitimacy, who is actually speaking for and representing the people. in america today we take the struggle to an extreme. we have one party in one house of the legislature claiming to speak for all the people because theirs was the most recent electoral victory. and of course you have a president who claims a broader mandate as the only person elected by all the people. these are unresolvable claims. they invite constant struggle. there are, of course, advantages to the american system, the checks and balances have been very useful on occasion. let me give you an example. in 1945, britain enacted a quasi socialist economic blend that set the country on a bad, bad path. but look at the situation we're in today. western countries have all created welfare states and governmental systems that are cumbersome, sluggish and expensive, especially as the population ages. these need to be reformed. and many of these reforms are fairly obvious in social security, tax policy, energy policy. but the american government has lost the ability to actually implement any policy solutions because of political gridlock. look at what the s&p actually said in its downgrade. quote, america's governance and policymaking is becoming less stable, less effective and less predictable than we previously believed. despite this year's wide-ranging debate, in our view the differences between political parties have proven to be extraordinarily difficult to bridge, unquote. this is not just about the presidential system alone. recent developments have added to polarization and paralysis. the filibuster, for example, is not in the constitution. but it is now routinely used in the senate to allow a minority of one house to block all legislation. >> filibuster after filibuster. >> in a fast-moving world where other countries are acting quickly and with foresight, we're paralyzed. it's all very well to say we have the greatest system in the history of the world, but against the backdrop of dysfunction, it sounds a lot like thoughtless cheerleading. let's get started. it is time for our tour of the world. joining me on the journey, four very distinguished guests. jeffrey sachs is professor of economics at columbia university, named by "time" magazine one of the 100 most influential people in the world. from that magazine, rana foroohar, the deputy manager, who wrote last week's cover story on the decline and fall of europe. richard haass is the president of the council on foreign relations and has worked for the state department and national security council and lots of other places. we also have the eminent british historian andrew roberts, author of "the new york times" bestseller "the storm of war." welcome. >> thank you. >> jeff, let me start with you. you talked in the "financial times" piece this week about the way in which both europe and america were fundamentally misreading the economic crisis. i was struck by it because for just somebody who i would regard as a man of the left, and you were saying that even the whole conception in america, the democratic left of the stimulus program, of another stimulus is misguided. we've just -- i took you to mean just extending unemployment benefits, et cetera, is not going to jump-start the economy because you're just trying to jump start a consumption-based economy. and what we need are much deeper, longer-term investments, correct? >> the world is in an economic upheaval, clearly. it's a transatlantic crisis right now. consumers are exhausted. our economies are not competitive right now. there was a little blip, but it's obviously gone away. we're at stagnation at best and maybe entering another recession right now. so we need a different approach. my view is that we can't have consumption-led growth anymore. we have to rebuild the foundations of our economies, both in the u.s. and europe. we have to become more competitive with our new competitors. we have to have better skills, technology, infrastructure. that means an investment-led recovery, quite different from the short-term stimulus. >> rana, your article, one of the things you pointed out was the european strategy of responding to these multiple -- these serial debt crises has been to keep hoping that growth will bail you out, growth in europe, in germany, but most importantly actually growth in the u.s. >> yeah. >> and all of that now, we're all beginning to realize -- and maybe that's what this week's market news is -- we're all realizing -- you put it in another column of yours -- we're living in a 2% world. in other words, economies aren't going to grow at 4%, but at 2%. >> i wish i could bring better news. we're definitely in a 2% economy. i think that's why you saw the european debt explosion in the last few weeks. it could have happened six months ago or three months ago or three months from now, but it happened as it did because the numbers from the u.s. started coming in and they were very weak. earlier in the year we were expecting 4% growth. we'll be lucky to hit 2%. >> if you have 2% rather than 4% as projected, all your numbers look worse. >> absolutely. >> your budget deficit, debt to "fareed zakaria: gps." >> consumption. you have to remember the u.s. and europe are each other's largest trading partners. stuff flows back and forth across the atlantic. americans aren't consuming, that's bad for europe and vice versa. the debt crisis is bringing this issue home. you see riots in the uk. you see -- you've already seen that in athens. i think you'll see more. and europe will have to deal with this political problem. >> politically, does europe have the kind of leadership it's going to take? they've tried to do a bunch of things and kind of kicked the can down the road with a package that has sort of satisfied the market for a month, and then they have to come up with another package. >> markets only get satisfied for about a day as we've seen this past week. half measures aren't working. the short answer, europe doesn't have the leadership because europe isn't. we talk about europe. we always put out the fiction of europe. let's get real. it's -- nationalism is still powerful. national governments still control many of the decisions. you have the common currency which is genuinely european. the monetary policy the genuinely european. many other of the most important decisions are done nationally. who speaks for europe? is it someone sitting in brussels? is it somebody in berlin? henry kissinger's old complaint, what number do i call? i actually think that question is still legitimate. there isn't a europe in a truly integrated sense. that's the question for europeans. after all these years of talking about it, are they prepared to do it? are they prepared in some ways to become the united states of europe? if not, this crisis is going to linger and this crisis won't be the last crisis. >> the key to solving this crisis, andrew, would be for the germans to agree -- when people say central europe's debt, meaning take all this debt that is difficult for the italians and the germans and the greeks to pay and centralize it, which means let's all stand behind germany, which can pay it all, are the germans -- it seems to me what's happening the germans are becoming a normal country, saying we don't have to keep bearing this cross of europe. world war ii was a long time ago. we're not going to pay for the greeks. >> absolutely. would you want to? a lot of germans want to go back to the deutschmark and who is to blame them? as a britain, i'm thrilled that the sterling is not in the eurozone at the moment. yeah. this is something -- tories, anti-european tories like me have been saying for the last 15 years since the last point that we got to, which is basically that every country needs different inflation rates, different rates of interest all the way along and at different times. so, of course you're not going to have a proper nation unless either they do what richard was saying, which is become a single country, which i believe is completely impossible, or then go back to the nationalisms they had earlier. >> can i say one thing about germany? this is a nightmare. for germany, europe was really the central tenet of post world war ii integration. this was normalization. >> it was their redemption. >> exactly. this is the way you're not going to repeat the errors of the past. for this to fall apart would be psychologically and politically -- really, it would be a fundamental tremor, earthquake, in the history of europe. >> forget what we would like to see happen. two years from now will the euro still exist with all its member states? >> i think it will exist, but possibly not with all the member states. i think what you need to see now is germany and france come together, really led by germany and say, you know what, we're not going to let italy and spain go under, we'll secure the debt. but that's what's got to happen. >> i'm asking predictions. that means euro with fewer countries? >> i think so. >> the trouble is with greece having its debt in euros rather than drachma, you can't really go back to the drachma. >> i think the euro will survive. obviously it's a close call. what i don't think is easy is one or two countries withdraw and the rest holds together so once you start to unravel the contagion effect would be severe. i think they should fight to hold the whole thing together. >> they will fight to hold it. i don't know if they'll succeed. the effort will be ways of building more of a safety net in europe, capitalizing banks, germans will continue to write checks, even though they're unhappy writing those checks. we've not yet seen the end of the effort to have the euro sur sflooif this current form. i think the chances of suspensions, maybe not formal leavings, will come up with some kind of a figment. the idea of suspensions or temporary -- >> soft default. >> something like that has to come. there has to be some correction. >> when we come back, we'll talk about all the other problems in the world. [ female announcer ] in the grip of arthritis, back, or back joint pain? aspercreme breaks the grip, with maximum-strength medicine and no embarrassing odor. break the grip of pain with aspercreme. and we are back on our world tour with jeff sachs, richard haass, rana foroohar and andrew roberts. let's talk about the britain riots because they're sort of interesting. there's a paper floating around the internet that looks at austerity programs for 100 years and points out that they always seem to have some relationship to rioting, that every time you start cutting budgets, you have riots. does that seem plausible to you? >> i think we should see the british riots in the context of a lot of unrest in a lot of countries. this has been a very, very shaky spring all over the world. of course, it's the arab spring so-called, but that's spread to israel with hundreds of thousands of people in the streets. the british riots are obviously a distinct phenomenon, but i think they're part of this and i wouldn't be surprised if it comes to the united states in one way or another. we already had tens of thousands, hundreds of thousands of people out in madison earlier this year. there's a lot of unhappiness in a lot of parts of the world right now. it can manifest itself in hooliganism as in the uk. it can manifest itself in massive political demonstrations. i think we've just in a very shaky period and it's contagious. >> what you said at the beginning, governments are really having trouble performing and meeting expectations. i think it is different in every place of the world. in china you have problems where the government is being held to higher levels of accountability. when 40 people dies in a train cash, the internet gets going. people say what's going on here? why season the communist party in china -- >> look at the corruption in india. >> we talked about israel where 250,000 people out of a population of roughly 6 million saying, hey, we're not participating. i think the thing in the middle east is different. much more political. to me the commonality is the popular frustration with governments that are not seen to be delivering the deal. it's only going to get tougher given the ability of governments to deliver and insulate their populations from either globalization or technological innovation, that capacity is diminishing and i don't think people have essentially taken that on board and governments haven't been straight with them about it. >> andrew, as a brit, why are your countrymen rioting? >> my countrymen love rioting. they've been rioting for 200, 300 years. but in this particular case there are lots of sociological reasons as well as political and economic ones, not least because the cuts haven't started to bite in britain. they don't begin until next year. we have had a broken society with regard to parental control, with regard to appalling educational standards, with regard to a cowardice on the part of the police to crack down on especially young people, and a society that is dominated by fear of the young. it's terrifying on the streets of some of our -- even our rural cities on a friday night. so i think it's too easy to place this in an international context. i think there are lots of very british things that were responsible for this. >> rana, you see this as economic? >> i do. i think there's certainly some truth in what everyone said. if you look at the numbers, britain is the most unequal rich society in europe. it is also the least socially mobile amongst all the developed countries. it has a large underclass that's been around for many decades. i wouldn't blame the problems on cameron necessarily. i think it's interesting that i think in tottenham and hackney, some of the first areas to riot, poor areas of high unemployment in north london. you had an announcement of 10% budget programs, youth programs, housing allowances, things like that. i don't think those things are uncorrelated. >> it's interesting you can say on all those counts the u.s. is even more extreme. >> absolutely. >> more inequality. we have a more broken and serious underclass right now. so on all of those dimensions, we have a pressure cooker in the united states. it hasn't exploded that way, but it is a real pressure cooker and, of course, legitimacy of government is at a historic low ebb right now in the united states, very dramatic. >> what do you think happens in the united states? >> the president has put himself in a very tough position, hyping this speech in september about jobs. i would be shocked if there's anything he can articulate that could get politically passed the congress that would make a significant debt in the american employment picture between now and the election. i just don't think those tools are available to put into play. >> i think it is all about jobs and it's all about growth. we've been so preoccupied with debt. really the solution is growth. how do you get there? i'd like to see the pendulum swing back to the private sector because they're sitting on $2.5 trillion in capital in the u.s. i think obama could get closer to business, the right kind of business, perhaps not the banks this time, but job-creating companies around the country and try to come up with ways to reward these companies for unleashing some of that capital, be it via tax policies or whatever. getting the private sector involved is the only way to create jobs and solve the problem. >> businesses are not spending in the united states because we're not competitive in large swaths of industry. the labor force lacks skills. and where skills are demanded, there's often a number of unfilled job positions right now. try to hire a good programmer. there's huge demand, but the labor market isn't supplying that. we have an education challenge. we have an infrastructure challenge. we have an energy challenge. i don't think the problem in america as it's usually depicted is accurate, that this is a stalemate between two parties. this is actually a duopoly, two parties that are pretty much aligned, protect the rich campaign contributors, protect the big businesses. they're both on the side of cutting right now. nobody is on the side of investing for rebuilding the economy because that would take sacrifice at the top. the top doesn't care. they're off in the world markets, off in the emerging economies, off making money elsewhere. they've left america, at least one foot out the door. and that's the real problem that neither party is facing honestly. >> andrew, do you think, as somebody has studied the decline of britain, living in america now, does this feel like britain in the '20s? >> not yet, no. you do have various areas of excellence. you have your universities, you have some companies that are world leaders, and you also seem to have a sense of -- you don't see a function of it at the moment, but there is something about american optimism, which means that in the past historically, you have been able to talk about having -- being special, being exceptional, being an unusual force that can regenerate. i'm not seeing that right now at the moment. i can't believe that that's been entirely driven out of the dna of america. >> andrew roberts, rana foroohar, richard haass, jeff sachs, thank you so much. we'll be right back. introducing the schwab mobile app. it's schwab at your fingertips wherever, whenever you want. one log in lets you monitor all of your balances and transfer between accounts, so your money can move as fast as you do. check out your portfolio, track the market with live updates. and execute trades anywhere and anytime the inspiration hits you. even deposit checks right from your phone. just take a picture, hit