Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're Inside the ICE House. Our podcast from Intercontinental Exchange on markets, leadership and vision in global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week we feature stories of those who hatch plans, create jobs and harness the engine of capitalism, right here, right now at the NYSE and at ICE's exchanges and clearing houses around the world. And now welcome Inside the ICE House.
Pete Asch:
The sunk-cost fallacy in the axiom of throwing good money after bad looms large in finance and frankly everywhere. It's the result of a bias that makes people, companies, and often nations choose to double down time, money and effort on poor decisions. I've been thinking about a corollary to this theory. I'm going to call it the rising cost fallacy. Perhaps the name needs some work, but hear me out. Central to the rising cost fallacy is a problem that grows just a little bit more every day, making the cost to solve it seem even more unattainable. The result, instead of spending money more and more to try to reduce a problem as you would with a sunk-cost issue, there's an increased pressure to do nothing at all. Let me explain with an example.
In the last couple of podcasts, we've been talking a lot about climate change, solving, adapting to, and even slowing the environmental crisis will cost trillions of dollars and fundamentally change how the human population lives and works. We all see its impact and know that the work must begin on a far larger scale to have any real impact. Yet time just ticks by. I refer to this idea as a corollary because often a sunk-cost fallacy, in this case, our dependence on carbon emissions to maintain the modern world, is providing much of the pressure to keep us from acting.
In episode 379, Inclusive Partners founder and activist investor, Jeff Ubben, captured both sides of this issue. To quote him, "We've got to tell people, this is really, really hard. It's not going to be easy like Al Gore tells you, and you're not going to fix the problem by buying an ESG fund and an EV." We have this knack that when we're threatened, we tell the public, "Just go buy something. Just go buy an EV and everything's going to be good." It's that buying that brings us to our guest today, Axel Springer CEO, Mathias Döpfner, who joins us to talk about a related topic that he believes is eroding our freedoms, undermining our democracies, and putting the very world order in an increasingly fragile state. He's calling for a revolutionary shift that according to his theory, will lead to a far better future. Should sound a little familiar.
Our conversation with Mathias Döpfner, CEO of Axel Springer, on his career and experiences that have crystallized into a new way of understanding trade policy that he captured in his new book, The Trade Trap: How To Stop Doing Business With Dictators. That conversation is coming up after the break.
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Pete Asch:
Our guest today, Mathias Döpfner is the Chairman and CEO of Axel Springer. He joined the company in 1998 and became CEO in 2002. Under his leadership, the company founded in 1946 in a pig stable has transformed into the largest digital publisher in Europe. Mathias has also expanded to this side of the pond, acquiring Insider in 2015, Morning Brew in 2020 and Politico in 2021. The latter two funded after a nearly 3 billion Euro investment by KKR. That of course is NYC ticker, KKR.
He joins us Inside the ICE House to talk about his book, Trade Trap: How To Stop Doing Business with Dictators, out now from Simon & Schuster. Welcome Mathias Inside the ICE House.
Mathias Döpfner:
Hi, pleasure being here.
Pete Asch:
So we often see the Morning Brew team around here, but according to my research, this is your first visit to the New York Stock Exchange since 2004. Is that the case?
Mathias Döpfner:
Wow. I just know that I've been here, but I don't know when it was. Maybe it was in 2004, yeah.
Pete Asch:
So things have changed a little bit around here. At the time, I believe your company was only generating about 2% of its revenue from digital, 98% analog. Would it be accurate to say those percentages have more than flipped since then?
Mathias Döpfner:
Yeah, they have flipped.
Pete Asch:
You said last year in a podcast with Brad Smith that despite how much your company's changed and your job along with it, that you still see yourself as a journalist. Where did your interest in journalism come from and how has seeing the world as a journalist helped you across your career?
Mathias Döpfner:
Well, first of all, I started journalism a bit by coincidence because I originally wanted to become a musician. I wanted to become a bass guitarist and studied also at the Berkeley College of Music in Boston. But in parallel, while I found out that my ambition is bigger than my talent, I started to write about music. And so I became a music journalist, worked as a music critic for 10 years, then became Editor-In-Chief of three different newspapers, and then in '98 joined Axel Springer.
The real motivation, the intrinsic motivation to become a journalist and to still see myself as a journalist is driven by the idea to defend freedom, freedom of speech, freedom as a political value in our societies and that in that context, independent journalism, open-ended journalism, critical journalism, journalism as a business model that is not depending on any state money or philanthropist's money remains for me a very important goal in order to strengthen democracy.
And yeah, that is still my intrinsic motivation. That's why I love that job and that's why I still, if I go to a hotel and have to fill out a registration form, if they ask me what is my profession? I write journalist.
Pete Asch:
And you talk about that underlying drive for freedom, you have a very unique upbringing. I was thinking about when I was preparing for this podcast that most people under the age of 35 wouldn't even be aware that Germany was two countries, but you grew up in a divided Germany. You're a young journalist when the Berlin Wall falls. How did reunification shape your understanding of journalism, freedoms, free speech?
Mathias Döpfner:
It in any case, politicized me. Perhaps it's fair to say that this transformation from a music critic, music journalist into a more political journalist and then editor happened in the context of the fall of the Wall. I was working in Munich. I didn't even go to Berlin when it happened. I saw the images on TV and suddenly I felt that this is, although it's far away, is actually very moving. And so I thought, "Okay, freedom has prevailed here. It is basically something that the people on the streets have achieved and not the politicians in the offices and I should better go to Berlin." And then I really in that very politicized context, moved to Berlin and stayed there until today.
Pete Asch:
So you were the editor of three different newspapers, but I found an article from 1998 where you were already saying that media companies should solely focus on the internet. When did you first realize this internet thing existed and it was something that media companies couldn't ignore anymore?
Mathias Döpfner:
I think it was '95 and I checked for the first time a news website of a former only print paper. And I don't even exactly know which brand it was, but it doesn't matter. I saw it, I read it and I found immediately this is going to be a game changer. Why would people need to wait for a deadline in order to print a product, in order to distribute it to the news, in order to go there and buy it or organize subscription, get ink at your fingers if you read a newspaper? So all these issues would be solved and everything would be easier if we focus entirely on digital distribution.
So intuitively, I just realized this is most likely going to replace newspapers as we know them. And then I suggested when I became Editor-In-Chief of Die Welt, a national newspaper in Germany, I suggested to the executive board then that we should transform it entirely into a digital only brand, called it welt.de and that's it, a bold move. I was almost fired because they thought this guy's crazy. Four years later I became CEO of the company and I thought, "Okay, that's my second chance. Now I do with the whole company what I wanted to do with the newspaper."
Pete Asch:
As individual media companies have risen and fallen over the last two decades, but as a profession, do you think the journalists have adapted to this new normal?
Mathias Döpfner:
It took a while and at the beginning there was too much defense of the old rules and old habits. It also took time to convince publishers that the internet is not a marketing tool for print product. The internet is the new newspaper. And so the internet needs to be a business model. And if it needs to be a business model, it cannot rely on advertising only because the platforms are sucking that money out of the ecosystem of publishers. So we got to focus on paid content on digital subscription, and that was quite a fight because many thought, including big American media assets thought in the early years of 2005, 2006, "No, that it's not going to work. In the internet there are different rules. Everything is available for free, it's only about attention." And when I said, "Well, but for attention you can pay your rent," it didn't really changed the consensus.
But now I think it is established, it's very clear. Even digital native content startups monetize with paid content. Some of them don't call it subscription, they call it rather club or whatever. I don't mind how you call it. Most important is that you have two revenue streams in order to be independent and in order to create incentives for a healthy ecosystem that there is enough competition because that is in the end, what really matters. If you have only very few media brands that have too much control or only very few platforms that control who gets which information and what is true and what is not true, you have a problem, you have a problem for democracy. If you have diversity, everything is fine.
Pete Asch:
And that really dovetails into something that you've been on the record about a lot in 2023, how artificial intelligence and journalism are going to interact. And there is the two sides of that story. There is the, "Is artificial intelligence going to really continue to limit the number of options for people as it brings all together?" But I've actually read some of your more positive spins and how can artificial intelligence and that sort of technology actually improve journalism that are still, like you said, struggling to adapt?
Mathias Döpfner:
Well, first of all, we spoke about that moment when I read a website first, that was one of the pivotal moments in my professional life. The second one was when I had the first iPhone in my hand and realized this is the reading device, that is now the mobile device where people will consume news, information and entertainment. And the third pivotal moment was when I used for the first time ChatGPT, put in some questions, got some answers and thought, "Okay, it's very likely that this is going to replace large parts of what we are doing as journalists," and it either can kill us because those are new answer machines where people have the opportunity whenever they have a question, if they want to know what happens with a UN Assembly here. And whereas traffic jam, they don't need to use a website, they can just ask the question and get an answer based on realtime data.
So it may replace us, but it could also, and I'm deeply convinced that that is the more likely scenario, it can empower us, it can empower us and help us to come up with much better products and to focus on what really matters and what really distinguish great journalism from mediocre journalism. And that is the focus on going out, observing and investigating reality. Describe it as a reporter, investigate complicated things that we're not supposed to become public as an investigative reporter, as a correspondent, and create news, break news. That has always been the purpose of a newspaper and it is going to be the role of digital journalism empowered by AI and everything else, aggregating information that is out there anyway, lay out, photo selection, error correction, translation. All that can be done by bots, can be done by machines. And we, human journalists can entirely focus on the intellectual core of our profession, and that's actually great news. So I'm very excited and we as a company, we are starting one initiative after the other, new products, test new things. And I think it's really an exciting phase.
Pete Asch:
I know as you were thinking about digitization in your profession, you went to places like Silicon Valley and met with people. Is there another profession or someone in the AI world that you look to as a leading indicator for how to move forward?
Mathias Döpfner:
Not a particular company or a particular person. I think it is more about the question who is adapting fastest to a different mindset? Where we also see new opportunities for human beings in the context of what I call EQ. IQ is and will always remain important, but certain elements that define IQ, for example, the analysis of existing data can simply be done better by artificial intelligence. Now, if we try to excel on levels where the machines will be most likely very soon much better than human beings, I think we are in a desperate corner. If we focus on the new opportunities in that context, we do better. And that is prioritize EQ intuition, creative intelligence, and perhaps in that context, count on the charisma of the imperfect human being compared to the perfect machine.
And if I'm saying that, I do not mean that technology is less important. On the contrary, I think that is the second big learning that we have to acknowledge that tech that has always been an important tool in order to come up with great media products is now an essential part. It's also an essential part of the creation of innovative and successful media products. And whoever is at the forefront of these developments and is driving that change is a role model for us and we try to be leaders ourselves in that context. That is the ambition. Axel Springer wants to be the leading AI empowered media tech company.
Pete Asch:
And AI is a good transition into the book, which we're to talk about, Trade Trap. It's a topic that pops up and you offer your own foreign policy lens to it. When did you first realize that you had something to say about the very world order we're living in? That you had more to say than just about how to build your company?
Mathias Döpfner:
Well, you could say I've always been obsessed about freedom as the most important value and about anti-totalitarianism. That has to do with the German history, that the trauma of the Holocaust and the genocide that the German people organized needs to lead to some concrete lessons and to the right lessons. And so driven by that, I've always been very interested in that field, but the very concrete event that made me thinking more concretely and systematically about trade and trade order was really the annexation of Crimea in 2014 by Putin. And I think that was after the Georgian War, which remained mainly without consequences.
The second step that Putin did that remained without consequences where the West basically let him do what he wanted to do and achieve his goals. And I thought that's going to be dangerous because he's going further, particularly if we allow him to do so by funding his aggressive plans. And that has happened concretely through an irresponsible and shortsighted energy policy of Germany. The German dropout out of nuclear energy after Fukushima in 2011 led to a very fast increase of dependency on Russian energy. When Angela Merkel took office, Germany consumed 33% of its gas from Russia. When she left office, it was north of 60%.
And the EU is transferring every day roughly a billion Euro for energy to Russia, which means we Europeans, we Germans have funded Putin, have enabled him to entertain his aggressive wars and we now have to live with the consequences. That shows that trade and business is very political and it shows that this old rule from Milton Friedman, the only purpose of business is business is wrong today. Business has never been as political as today. And yeah, that was the beginning of my project to rethink our trade order and to perhaps come up with new proposals. If the old model doesn't work, we have to try out new ideas.
Pete Asch:
And I think an example of the old model is, as you mentioned earlier, it's UN General Assembly week. Yesterday, Ukrainian president Vladimir Zelenskyy addressed the Assembly and he really was hammering on what he saw as inaction by the gathered governments out of fear of a larger reaction from Russia, what you alluded to. His words echo a lot of the writings that you have about fear of allowing bad actors at the upper hand out of fear of doing something. Did you catch his speech? And in general, what is your thoughts on the effectiveness of a multinational organization like the UN?
Mathias Döpfner:
The UN is an example for big multilateral organizations that got weakened and even dysfunctional over the last decades. That is true I think for the World Health Organization that did a poor job during the pandemic. That is true for the UN, which is doing a more and more dubious job if it is about criticizing small democracies for minor errors in their legal systems and human rights like Iceland and ignoring the big wrongdoings of clear-cut dictatorships like China, like Saudi Arabia, like Russia, like Syria and other countries. So I think there is a growing credibility issue with regard to the UN, and that is also visible in the context of recent developments, also in the context of the present war.
Now, the multilateral institution that I'm most interested in the context of my book is of course the WTO. And I think the biggest mistake that the WTO has made happened in 2001 when after 15 years of negotiations, they accepted China as a full member based on that special status as a developing country, which is quite ironic from a today's perspective that the second-biggest economy of the world is considered to be a developing country and enjoys with that, extra rights, exemptions from certain rules and privileges that led altogether to a very asymmetric trade policy.
China could do things in our economies that we would never have been allowed to do in China, and China benefited from the exemptions and exceptions and privileges that they had and was able to grow its contribution to world GDP from 3.8% in 2001 to more than 18% 20 years later, while the United States went down from 32% to 24%. That shows who is the beneficiary of that asymmetrical trade policy, and the big misunderstanding is it's not about competition. It's not the question who does better? It is the question, do we do business and do we do trade based on the same rules? Or is it like in a sport match where one's team is playing according to... Let's take basketball, is playing according to the NBA rules and the other team is playing according to its own rules? It's clear who is winning. If for one team a foul doesn't count, they're going to win. And I think that's what has happened here.
We have weakened ourself, driven by a very short-sighted opportunism, and we have seen the consequences in Ukraine with regard to the Russian War. We will see the consequences in China with regard to Taiwan and how these countries behave that are economically dependent on China. And that's why I thought it is absolutely overdue to come up with a new proposal that strengthens democratic economies and defines fair, transparent rules which recreate level playing field.
Pete Asch:
Well, as we head into the break and we'll definitely talk more about all those topics after the break, it might be helpful to establish why nations began doing more business with dictators in the first place? Can you explain the thesis that the West has traditionally used to leverage trade to influence more totalitarian nations and how it was supposed to work? And then we'll discuss how it didn't work.
Mathias Döpfner:
So just briefly, I think the reason why companies are doing business with non-democratic markets is very simple. That is an opportunity to grow sales and profits perhaps sometimes easier than with countries and economies that are rules-based. And I don't blame companies for that because it is about profits and value creation. So they need a framework. And that leads me to the second reason, why do so many politicians and business people defend that? That is because they use this wonderful, let's call it alibi, and that is change through trade. They say, "If we do trade with these non-democratic countries, that will bring the systems closer to each other, that will help these countries to open up to provide more freedom and a rules-based system to their people."
Now, if we look to the last 30 decades, yes, change through trade happened, but unfortunately the other way around. Russia got more autocratic the more trade they did with democracies. China got more autocratic the more value creation they could shape with trade relations among democracies and dictatorships. So this idea, change through trade just is a wrong idea. It didn't work. It achieved the opposite and that's why we have to pivot.
Pete Asch:
Well, after the break, Mathias and I will dive deeper into that trade trap and his plan to free democracies from it. We'll be right back after this break.
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Pete Asch:
Welcome back. Before the break, Mathias Döpfne, CEO of Axel Springer, and I were discussing his own career and the genesis of his book, The Trade Trap: How To Stop Doing Business With Dictators. You mentioned the reality that businesses often do find it easier to make deals with more autocratic countries and you referenced two deals, one that happened and one that didn't happen in your own experience, one in which you chose to go to the UK Prime Minister, Tony Blair at the time, to see if you could get his support for the deal. And the other you met with Turkey's Erdogan to find his support for a deal. In the end, the deal in Turkey happened. The deal in the UK didn't, despite you wanting both to happen. How was that an example of the trade trap? Because in the end you ended up unhappy on both levels?
Mathias Döpfner:
Well, actually, it was a very simple experience. If you meet a real centrist politician who respects the democratic institutions, he can only tell you, "The institutions will decide, I can do anything for you." If you meet a more autocratic politician, a strong man, he pretends that he can solve everything for you and he will be very helpful. The only downside is if he later changes his mind or has a personal conflict with a company that you had invested in, you feel the other side of the coin and you may suffer from that by losing a lot of money. So I'd rather prefer politicians who don't offer too much help.
Pete Asch:
Something I hadn't really thought about how the United States' big investments we've made in infrastructure under the Biden administration, our response to COVID in many ways had pumped money into the economy the same way the Chinese have done in their economy over time. But you write that in the West, it tends to cause the economy to go to sleep. Wherein, obviously in the East we've seen China go from a, as you said, now the second-largest economy in the world on the way to become the largest.
Mathias Döpfner:
Well, these economies have fundamental differences. China is a state-led economy. It is, you could say an authoritarian way of capitalism, which may be sometimes much faster, much more efficient because simply, there is no possibility for people to object. If some people are saying, "Well, look how fast they were able to build the Chinese airport in Beijing in a few years, whereas in America or in Europe, we would have had years of protests of people against it and it took much more time." Yeah, of course. Democracies are slower because they respect the individual. In a state led company, that doesn't exist.
Now in a truly competition-based market economy like America, you need to empower the individual to strive for excellence. And it is not the state who does it. If then in crisis like a pandemic, the state aid is getting to a level where people have the impression whatever happens, the state is taken care of, it transformed into a sleeping pill. And it can indirectly, if that continues, develop into a direction that is getting closer to this state led capitalism that we see in China. That's why I said in my book, well the Chinese model is knocking at our doors. That is a bit exaggerated, but we should be careful.
Pete Asch:
Well, it may not be quite knocking on the doors here, but India is an interesting case. They just held the B20 and the G20, but then it comes out this week that Canada's Prime Minister, Justin Trudeau actually confronted Modi at the G20 and now has publicly accused him of an assassination of a Canadian citizen in the British Columbia. What's your view on India and do you see this as potentially becoming the Indian version of the Khashoggi murder?
Mathias Döpfner:
That would be a bit too quick for me. I don't have any inside knowledge in order to really judge that concrete case. I simply don't know, but we should take it very seriously. India is clearly under Modi on the edge and sometimes shifting more to autocratic elements, also with regard to media freedom. Nevertheless, India is a democracy. It's not a perfect democracy. Perhaps it's a democracy on the edge. Perhaps one day it is not a democracy any longer, but so far it is a democracy, an imperfect democracy that we should not compare with pure play autocratic systems or dictatorships where you simply have no free elections, where you have no media, independent media, where you have no human rights. And if somebody says something that is not liked by the government, she or he can be killed. That is still a difference.
And to answer your question concretely, in the concept of my freedom trade alliance that I want to establish based on these three principles of rule of law, human rights and CO2 targets, India is a very important player. It's 1.4 billion people. If we win India, if the fundamental of that alliance, which is the United States and Europe, find new members like Japan, like Canada, like Australia, that's great, but the decisive nation is India because of its size, because of its dimension.
And so we should be very careful to only criticize India. I think we also should come up with an inviting proposal in order to make sure that this country on the edge is developing to the right direction and that is the direction of open society and democracy.
Pete Asch:
And that's the crescendo of your book is this three bullet plan. Can you go through that again? And then also, how do you plan on quantifying? At ICE we're very big on you need the data to back up.
Mathias Döpfner:
The book is an idea and not a recipe. So I don't have a solution for everything. And we should really rely on professionals and experts like the Freedom House, this independent think tank and democracy monitor who is on an annual basis analyzing on very clear criteria, the state of freedom and democracy and is since 17 years downgrading one country after the other from free to partly free or from partly free to unfree. So that definitely illustrates a decline of democracy, but this institution for example, has based on very clear criteria, a list that categorizes countries and where these criteria rule of law and human rights acceptance are clearly reflected.
So I think the criteria that we should define for that trade alliance and where this membership allows you then to do tariff-free tate with each other, the criteria for that should be very basic. They should be not perfectionist. It is not the role model democracy, I don't know like Norway or Switzerland, that can only become a member. We should also allow democracies in free societies mistakes and weak spots because what is definitely needed is a critical mass. If the critical mass of members is big enough, if we get close to the 70% of world GDP that is still in democratic economies, then I think the magnetism of that idea is so big that one country on the edge, after the other will shift to that direction, will become a member.
And that is then stimulating value creation and growth in that alliance. And also, of course then strengthening democracy and open society. So we really need as many members as possible and it should be open. The whole idea is based on incentives, not on prohibitions.
Pete Asch:
Still an idea, still needs to be worked out, but we've actually seen some things, and I want your reflection on them in the last couple of weeks, Apple announcing that it's going to make its new iPhone in India. Russia needs to go to North Korea to obtain arms because no one else would give them the arms. Are these suggestions from flags along the roadmap that your idea may work?
Mathias Döpfner:
Absolutely. Highly symbolic events and that is the beauty of capitalism in the free market society, that this healthy opportunism also leads to changes that can then do good. Take ESG. At the beginning, a lot of companies thought, "Oh, that's not for me. I don't need to comply to that. That's something for idealists. I have to care about business." Now everybody realizes you cannot be successful without accepting that.
And here comes another push for my model. Not only that Apple decides 7% of our production is now shifting to India because India is a more rules-based market than China, which is a clear amplification of that trend that I'm describing and that I'm advocating in my book. But also, if you see the whole handling of ESG topics. We have stricter and stricter rules in America or in Europe. And there are companies where the CEO in the morning is giving a speech to explain that we have to even be more tolerant to minorities and that we cannot accept that some of our leaders are using unsensitive gender pronouns or whatever, where even people get fired by making a respectless remark. And at the same time, the same CEO is shifting large parts of production into a country where women get stoned because of adultery, or a man is sentenced to death because of being gay. These are double standards that are just not sustainable.
And talking about sustainability, that is one of the biggest topics and that is why this third criteria is an acceptance of mutual CO2 emission targets. We cannot discuss seriously how to reduce the 2% of CO2 carbon emissions through global air traffic by not doing this or that airlift, and at the same time not doing anything that China is the biggest CO2 producer in the world with 32% of CO2 emission and has quadrupled its coal plant power in '22 compared to '21 in one year. Either we find a solution how China can be incentivized or pushed by a very powerful trade alliance of democracies to comply to certain standards or we are not achieving our goals but weaken our economies. That's not going to work. We have to deal with China and with other non-democratic players in the context of climate policy. And if it doesn't work through negotiations and nice conferences in Paris or elsewhere, perhaps we have to do it through a more robust economic incentive or power play.
Pete Asch:
And speaking of power play, to go back to Europe for a second, despite some initial energy price shocks, the global economy sort of weathered disruptions of the Russian-Ukraine war. Going back to China now, China is watching this very closely. It definitely portends to what they plan to do with Taiwan. You write a lot about that impact. What are the two paths that a Chinese invasion of Taiwan could lead to and what is your certain risk on that?
Mathias Döpfner:
Let me exaggerate a little bit in order to get my point across, and that is sometimes I have the impression that the Russian War is just a proxy war. The Russian war is actually the test case for China to find out how far they can go? If Putin gets away with it, if he achieves his goals, if there's a peace deal in the end and Putin has gotten what he wanted to get and is the big winner of that and the West and democracies are the losers, China will go for Taiwan, 100% and pretty fast and as soon as possible because as long as Taiwan has still 90% of the sophisticated semiconductor production, that is the biggest leverage then in the hands of China to increase economic dependence of America and Europe on China.
On the other hand, if we succeed, if NATO stays firm, if perhaps we Europeans double up and go all in, in order to really make sure that Putin doesn't win that war, then I think China would be a bit more hesitant and would perhaps at least develop a bit more patience or perhaps even postpone the idea so long or at a point that it is perhaps not happening because other incentives have worked and China came to the conclusion that to give up a bit of authoritarianism is going to provide a great deal of prosperity to people and will add more stability for the system as a whole.
So I think both is possible, a kind of almost dystopian outcome, World War III, and a very constructive, prosperous outcome where a more globalized world order really leads to peaceful coexistence and fruitful and value grading trade, but based on mutual principles.
Pete Asch:
Do you have a sense that the European Union also is learning their lessons from becoming so energy reliant on Russia? Do you think they're looking at in this country the chips asked, there's been a lot of movement to try to get some of that high-tech manufacturing back on at least this continent, if not in this country? Is that happening in Europe as well?
Mathias Döpfner:
I think yes, there is a big learning experience. The Russian War was a wake-up call. It has shown that this naive idea of change through trade and there will be no problem if there is economic dependency because it's independent from politics. This kind of old paradigm is over, it's discredited. Europe is more careful with regard to energy dependency and Europe is also more careful with regard to China. This term of de-risking, which is not decoupling in the purest sense, but in any case, a policy of creating more independency is already a big step in the right direction. And now at the moment China is weaker, the economy is not doing so well. What a wonderful moment now to really come to terms with China, but we won't do it, as always with strong men, by just offering nice diplomatic dialogue and increase at the same time business dependency. We have to reduce business dependency. We have to build our case more self-confidently and successfully. And then out of this position of strength, negotiate and have dialogue. That's deterrence and that works also in the context of economic policy.
And this is a wonderful moment. It's an opportunity. A weak China is a way better partner to negotiate with than China that has unlimited growth and the idea that they could do everything almost alone. They can't. They find it out at the moment, and that's a good moment now to negotiate.
Pete Asch:
It's a great lead into our final question. In the book you ruminate about Otto von Bismarck saying, "Politics is the art of the possible, the attainable, the art of the next best." How can the art of the possible allow governments to embark on this radical plan you lay out in the book despite the fact that and the reality is democracies are fickle to the voters and classically move towards short-term upside at the expense of the long-term.
Mathias Döpfner:
So two things. First, big changes are only doable if there is a sense of urgency. So if people think that they can get away with the old model and old habits, they will never change. The shockwaves that we have experienced in the recent past are so significant that I think the sense of urgency is growing, will grow further and then bold moves are possible. And that is then my second remark, the art of the possible. The art of the possible is one of the most misunderstood quotes. I think Bismarck didn't mean it in the sense that politicians can only do what is possible anyway because the today's opinion polls tells me that's already the consensus in the majority of the population. Then it's no art. It's simply possible. It's boring, everybody can do it. The art of the possible means that you do as a politician a bit more than what seems possible in that very moment. That is leadership, that is shaping unconventional ideas to the well-being of your people, and that's what I'm calling for.
Pete Asch:
Thanks so much for joining us Inside the ICE House.
Mathias Döpfner:
Thanks very much.
Pete Asch:
That's our conversation for this week. Our guest was Mathias Döpfner, the Chairman and CEO of Axel Springer. His new book Trade Trap: How to Stop Doing Business With Dictators is out now from Simon & Schuster. If you like what you heard, rate us on iTunes so other folks know where to find us. Got a comment or question you'd like one of our experts to tackle on a future show? Email at us at [email protected] or tweet at us at @ICEHousePodcast.
Our show was produced by Sam Yannotti with production assistance from Ken Abel. I'm Pete Asch, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 17:
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