the french philosopher who was responsible for getting france and perhaps the world to intervene there. he's just back from tripoli. then as another baseball season comes to a close in america, we sit down with michael lewis, the author of "moneyball," to talk about baseball and its lessons for business and life. but first, here's my take. regular "gps" watchers will know that i was in tehran last week to interview president mahmoud ahmadinejad. you can go to our website and watch excerpts of the interview. but being in iran made me think it abouot our policy toward that country which strikes me as being stuck in a time warp. you will remember that early in the 2008 presidential campaign, barack obama signaled that he was going to have a different foreign policy than george bush, less black and white. and he chose as his example, iran. he argued that simply pressuring the country was not a policy, and obama offered to talk to iran's leaders to try to establish a dialogue and reduce tensions. well, two years into his presidency, obama's iran policy looks a lot like george w. bush's. pressure, pressure, and more pressure. now the punitive tactics have paid off in some measure. iran faces economic problems. but they are also having a perverse impact on the country as i witnessed last week. the sanctions are stifling growth, though not as much as you might imagine. the basic effect is to weaken civil society and strengthen the iranian state. the opposite of what we should be trying to do. by some estimates, iran's revolutionary guard, the hardline element of the armed forces supported by the supreme leader, now controls 40% of the economy. is that the goal of our policy? in fact, what is the goal of our policy? is it to overthrow the iranian regime? is it to make it bleed until it gives up its nuclear program altogether? a wholesale revolution continues to strike me as a distant prospect. the regime still has domestic support. it uses a mix of religious authority, patronage, and force quite effectively. and we keep forgetting that even if the regime changed the nuclear energy program, which is popular as an expression of iranian nationalism and power will continue, even the leaders of the green movement strongly support that program. obama should return to his original approach and test the iranians to see if there is any room for dialogue and agreement. engaging with iran, putting its nuclear program under supervision of some kind, and finding areas of common interest as exist in afghanistan would all be important goals. it might not work. the iranian regime is divided and often paralyzed itself, but it's worth trying. strategic engagement with an adversary can go hand in hand with a policy that encourages change in the country. that's how washington dealt with the soviet union and china in the 1970s and '80s. iran is a country of 80 million people, educated, dynamic. it sits astride a crucial part of the world. it cannot be sanctioned and pressed down for decades and decades. it is the last great civilization to sit outside the global order. we need a strategy that combines pressure with some path to bring iran in from the cold. let's get started. a deal to save the euro, 2.5% growth in the u.s., business spending up more than 16% here. is this all good news? what does it mean? that's what i hope to get to the bottom of with my two guests. niall ferguson is a professor at harvard university and business school. he's the author of a new book "civilization." jeffrey sachs is the director of the earth institute at columbia university. jeff has a new book, too, "the price of civilization." both of them have "civilization" in the topic so we are going to have a very civilized conversation. niall, does this -- explain what this deal in europe means and does it save the euro? >> well, the deal in europe is in fact more vague than it's precise, and i think there's a great deal of what used to be known as wishful nonthinking going on here because the devil really lies in the detail. and any deal that leaves greece with a public debt to gross domestic product ratio of 120% and requires the recapitalization of who knows how many banks doesn't by any means solve europe's problems. i think we're going through what we call a relief rally, and i wouldn't be at all surprised to see it displaced by an anxiety sell-off within a matter of days. >> would you agree with that? >> i think the euro is going to survive. and i think they took steps forward, and i don't think they're going to let the euro fall down. so the divisions between northern europe and southern europe are real and serious. and i think they could be doing better than dancing at the edge which is where they've been operating for more than two years. but they made progress this time around, and there still, in fact, are a lot of details to be worked out in this agreement. i do think that it shows that each time when push comes to shove, they do step forward, and they do get their act together to preserve the common currency. >> so you see a relief rally. you think that there is still the possibility that a bank one day calls up and says, we're -- you know, we're going under, what's the scenario in which things just spiral downward? >> the two things that haven't been solved here. one is that there are really a large number of banks in europe that are teetering on the brink of insolvency. and if you mark their balance sheets to market, particularly the sovereign debt holdings, they'd all go under. we don't know the size of the problem because we've been given so many different answers and not to mention fake stress tests. the second problem is that if this is a problem to be resolved at a national level, there are states that don't have the fiscal room to maneuver to bail out their own banks. that may include france, it certainly includes spain, portugal and italy. so the problem hasn't really been solved. and what i fear is that they're going to limp along in just this way with piecemeal solutions, never quite enough, never quite making it to a federal state. and the result will be practically zero growth. i mean, the nightmare scenario is that europe's actually turning into a version of japan here, weighed down by public debt, with zombie banks and practically no growth. and then the problem becomes political backlash. many populist movements are gaining strength from this in some unlikely countries. from finland to the netherlands, places you don't really associate with radical politics. and if anything is going to cause europe to begin to disintegrate not only economically but politically, it will be populism. >> do you think that when you look at europe's growth issues, that this problem, the fundamental problem niall was talking about, that you have germany but northern europe in general pretty competitive, and southern europe not, is -- does that have to ultimately be resolved in order for this to work? or can the northern europeans kind of bail out, you know, the southern europeans? i mean, northern italy has been bailing out southern italy for 100 years. >> i think the real point is that every part of the high income world is in trouble right now. so there's something more systemic going on than what's going on within the euro zone. you have the united states which fit the same description that niall just gave. you have japan which is the example that he gave. you have ireland, you have the u.k. it doesn't really matter whether you're in the euro zone or outside of the euro zone. we're seeing the weight of globalization and how it is reacted to by different countries as really the underpinning of what's happening right now in my opinion. now there are a few countries that are doing quite well. there are big winners. and then there are large parts of society or large regions that aren't winning that can't face the competition from abroad very effectively. and that's a more general phenomenon. >> all right. we are going to talk about one country in the developed world in dollar and that is the united states when we come right back. it seems to me actually rather reckless, and having watched what you said at occupy wall street, i have to say i thought you overstepped the mark and ceased to be an academic and became a demagogue at that point. >> whoa. 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[♪...] >> announcer: now get a $250 airfare credit, plus save up to 65%. call 1-800-sandals. certain restrictions apply. we are back to talk about america, the decline or rise of civilization with niall ferguson and jeff sachs. jeff, you were at occupy wall street. you've in a sense lent it support. why do you do that? what do you think is going on there? >> i think they have a basically correct message that when they say "we are the 99%," they're reflecting the fact that the top 1% not only ran away with the prize economically in the last 30 years, but also took the power, manipulated it, twisted it, broke the law. brought the world economy to its knees actually, and it's time to correct things. and i think that that's what occupy wall street is really about. the fact that every marquee firm on wall street broke the law in a major way, it's paying a series of fines. some people are going to jail. people are disgusted about this. >> but isn't what has caused the 1% or 5% of the top to do well, these very broad forces of technology, the information revolution which have empowered global knowledge workers which have empowered capital rather than labor? so if it's all these much bigger structural forces, is it going to be remedied by some kind of political solution like a buffett tax? >> i don't think it is all that. i think that markets caused a widening of inequalities in just about every high-income country. but some governments did something constructive about it, where starting in 1981 the u.s. government amplified this in quite reckless ways. because when ronald reagan came to office, rather than saying we have globalization, we have competition, we now have to do something about our skills, our technology and so forth, he said that government is not the solution to our problems. government is the problem. it was a fateful call. and this is the path that we've been on for 30 years of dismantling that part of our social institution which -- institutions which could actually help with job training, help with education, help with science and technology in a more effective way. but more than that, wall street didn't just gain from globalization, it has been completely reckless. they gamed the system, they packed toxic assets, they sold them to unwitting investors. they let the hedge funds bet against them. and the s.e.c. is finally calling them to account. but the public is disgusted because after that happened, lo and behold the next thing is that they begged for bailouts, they got the bailouts. the moment they got the bailouts, they said, leave us alone, deregulate free markets. so they're completely hypocritical in this behavior. we want everything of ours until we need help, then we want your help, once we get your help, then we want everything again. and it's that kind of impunity that has brought people out around this country deeply angry. >> well, first of all, i think it's important to avoid criminalizing 1% of the population which you just did, jeff. i mean, there's no question that major financial institutions have been fined and rightly so. but to turn that into an indictment of three million people seems to me -- >> well -- >> wait a second. let me finish. seems to me actually rather reckless. having watched what you said at occupy wall street, i have to say i thought you overstepped the mark and ceased to be an academic and became a demagogue at that point. >> whoa, niall. you're the one who said that this -- >> let me finish, jeff. hang on, hang on. >> close to rule in america -- >> i let you have your say. >> no, don't call me names like this. >> this is a demagoguic argument especially for somebody who knows that the principal driver of inequality has been globalization, not malpractice by wall street. the second part of your argument is that banks misbehaved in europe, too. those countries who did not go down the reagan route have got banks that are insolvent, banks that were guilty of incompetence and malpractice. >> yes, people are demonstrating there also. >> right. the degree of leverage -- you argued that this was something specific to the united states. and the full -- >> and the city of london led a great deal of -- >> under ronald reagan. >> of course it was. >> just a second. the banks in europe are in just as big a mess but they didn't go down the reagan route. it's not only bad economics, it seems it's bad history and certainly bad politics. >> let's talk what i said and what is important here. what i've said is that in a society that is so unequal as our and where the very top has abused the system repeatedly in the banks, the ceos of this country taking home take-home pay hundreds of times their workers' pay, unlike any other part of the world, the hedge funds and the banks got unbelievable terms of the deal to get capital gains taxes, carried interest down to 15% tax rates. so outrageous compared to what the rest of america bears. >> but wait a second, jeff -- >> then they repeat it. the big hedge fund -- >> you can't believe that this is the reason why the bottom part of the population is in poverty and has very limited social mobility. that's nothing to do with what happens on wall street. as you well know. the real problem that we have in this country, it seems to me, is declining social mobility, and not enough is said about that. >> i write a great deal about it. and the big difference of social mobility -- >> what is the principal of -- >> let me just get to it -- >> the big difference of social mobility in this country is the lack of public financing for early childhood development, for daycare, for preschool, for early cognitive development, for nutrition programs, for decent schools, unlike all of the rest of the high-income world. we do not help the poor. and that's why our social mobility has come to the lowest level of any of the high-income countries. >> but jeff -- >> and we are 10% or 15% point lower in government revenues to help for that. and i'm asking in the book for just a few percentage points and some decency at the top that they start paying their taxes at a decent rate so that we can actually pay for preschool and pay for childcare. and that's what's -- that's what low social mobility is about, niall. >> but when you look at the equal of public education in this country, you can't simply attribute its low quality to a lack of funding. and i think there's a legitimate argument that the biggest obstacle to social mobility in this country right now is not the fat cats of wall street whom i do not rush to defend, but the teachers unions, who make it almost impossible to improve public school in cities like new york where we are today. >> yes, would you comment on jeff's basic point which is, you know, yes, it's not true that the gap has been produced entirely because of government policy but that you could use government policy and resources to help in various ways. education may be one part of it, child nutrition would be one part of it. and that that becomes impossible because you're taxing at 14% and spending at 23%? >> a major problem here is that the project of transforming the united states into something more like a european country does imply significant increase in taxation as well as an expenditure. and that the two obstacles to this. one, it's clear that this would not be timely given the situation that the economy finds itself in. and two, most americans don't believe that that is going to deliver the kind of improvement that they would like to see in education. look how the federal government fares and the programs that it does spend a lot of money on. health care, social security. i mean, it's already insolvent with its provision through medicare. this is one of the hugest unfunded liabilities in the world. and the answer that jeff has to the u.s. problem is let's create an even bigger federal spending program on public education. i mean, it's just not critical, jeff. >> niall, you're confusing so many issues. my point is that if we are going to be decent and competitive, we have to invest in it. that's paying the price of civilization. that costs money. the fact that the united states collects in total revenues at all levels of government right now about 27% of national income compared with 35% and above in other country is the gap of decency right now where -- >> it's also the gap you're saying of competitiveness. the path to competitiveness for you -- >> absolutely -- >> -- is a larger government that spends more, correct? >> if it invests properly, of course. and on -- >> you can understand why people might be september call about that, jeff. >> i'm talking about investment in education. i'm talking about investment in job skills. i'm talking about investment in science and technology. talking about investment in 21st century infrastructure. and we've been for 30 years demonizing government. we've been demonizing taxation. we have neglected to understand that a proper economy runs on two pillars, a market and government. and until we come back to that basic level of understanding that we need a mixed economy, not just a market economy, we'll continue to fail. >> final thought on -- >> i'm sure the chinese are listening to this debate with glee thinking, well, there are still academics in the west who think that the route to salvation is to expound the role of the state because that's certainly not what is happening in china. it is not what is happening in india. it is not what is happening in brazil. the most dynamic economies in the world are the ones which are promoting market reforms and reining in the rule of the state which in those areas grew hypothrophically. in the 20th century and that's a big problem for jeff sachs' argument. >> thank you for the lesson. but the problem is that the united states and other high income societies face right now, and for us -- >> the falling behind phenomenon. >> for us to be able to have high prosperity at the living standards we want, we need training, we need education. we need infrastructure, we need governments that can pay for that. and if you want to -- >> and we need higher progressive taxation on the private sector. that's the most important point you're making. >> we need the rich to pay their way, absolutely. they've run away with the prize. and they've run away -- >> there's a simplification. >> unfortunately -- >> part of the solution, stop calling it just one thing, niall. >> all right. >> i think this is one of the rare cases where i was superfluous as a moderator. jeff sachs, niall ferguson, thank you very much. we'll be right back. at adt, we get financing from ge capital. but they also go beyond banking. we installed a ge fleet monitoring system. it tracks every vehicle in their fleet. it cuts fuel use. koch: it enhances customer service. it's pretty amazing when