I'm very, very proud to be introduced by Hillary. I've seen her in operation. I have great, great admiration for her. I've seen her deliver a speech in Davos about open society that explained the ideas better than anybody else that I've heard. I've seen her visit Central Asia, where I have foundations, and she was very effective, more effective than most of our statesman in propagating democracy, freedom, and open society. And I think she hit the nail on the head when she said that there are people who have never been involved in a very active way in electoral politics who now feel the need to do so, and I stand here before you as such a person.
I have a deep commitment to the principles of democracy and open society, but I felt that I best devote my energies to other parts of the world. And it is the first time that I feel that I need to stand up and do something, and become really engaged in the electoral process in this country.
In my foundations, basically, I have provided financial support for people in those countries who believed in the idea of an open society. And I think Hillary again said the right thing that it isn't one person with money that can make a difference. It can only make a difference if there are people in the country who believe in those ideas and are willing to stand up for them.
The reason I feel that I had to get engaged is because I don't think this is a normal election. This is a referendum on the Bush administration's policies, the Bush doctrine and its application, it's first application which was the invasion of Iraq. The Bush doctrine, people don't actually talk about it very much as a doctrine, but it really is quite an atrocious proposition.
It's built on two pillars. One, that the United States must maintain its absolute military superiority in every part of the world and, second, that the United States has the right for preemptive action. Now, both these propositions taken on their own are quite valid propositions. But if you put them together, they establish two kinds of sovereignty in the world. One, where the sovereignty of the United States, which is in violate, not subject to any international constraints, and the rest of the world which is subject to the Bush doctrine. To me, it is reminiscent of George Orwell's Animal Farm.
All animals are equal, but some animals are more equal than others. Now, President Bush was not elected on the basis . . .
You are applauding because you are saying he was not elected at all. But he was elected by one vote in the Supreme Court. So he is our president. But he was not standing on the Bush doctrine, he didn't propagate the Bush doctrine. He was presenting himself as a compassionate conservative who was advocating a humble foreign policy.
Now, then came September 11th. He declared war on terrorism and that was when he declared the Bush doctrine. So, the coming elections are, in effect, a referendum on the Bush doctrine. And if we endorse that doctrine, then we have to take the consequences, the mistrust and rage that is directed against the United States today. If we reject it, then the blame belongs where it really should be, namely in the policies of the Bush Administration.
And we have to show that America doesn't stand for those policies. So, let me maybe give you a little bit of background how I came to feel that this is now the most important issue that I'm engaged in. I was born in Hungary. I'm Jewish, and when I was 14 years old the country was occupied by the Nazis, and I would have been killed if my father hadn't taken the precaution or had the foresight to provide a false identity for his family. That year, 1944, was a formative experience in my life.
Then, we survived the Holocaust and the country was occupied by the Soviet Army, and I think that my life would have been wasted if I hadn't taken the precaution of leaving the country and coming to this country. This is the country that I believe in and I stand for.
So I experienced at a very early age how important it is what kind of social system prevails. And when I left Hungary, I went to England, London School of Economics, and I studied and I was very much influenced by the philosophy of Karl Popper who wrote a book Open Society and Its Enemies, and he explained that there is something similar, a common ground between fascism and communism. And that is that they believe that they have access to the ultimate truth, and they want to impose that, their view of the world. Now, nobody has access to the ultimate truth and, therefore, if you believe in it, you have to impose it by force and repression. And he said that this leads to a form of closed society.
And he proposed an alternative, which is the recognition that we all base our decisions on imperfect understanding and different people have different views, different interests, and we need institutions that allow them to live together in peace. And that is open society, democracy. The United States is a prime example of an open society.
Now, Popper was a philosopher of science and he showed that even science cannot reach the ultimate truth because we are participants and what we think is part of what we think about, so that because of that we can't establish the truth of a statement which says that the statements correspond to the facts.
Now, I developed that idea into a concept of reflexivity, that there is a two-way interaction between your perception of the world and reality, because your perception is part of reality. And I use that. I tested it in the financial markets, and I was rather successful. That theory actually works better than the prevailing theory, which is that markets are perfect and they provide you with the best optimal allocation of resources, and markets tend towards equilibrium. I don't believe they do. They always go to one extreme or another and that's how financial markets' behavior booms and busts, and with this theory I was rather good in exploiting that.
Now, when I made enough money or when my fund reached 100 million dollars, I thought that was enough money, and I really reflected on what I wanted to use the money for. And that's when I established the foundation devoted to fostering the concept and principles of an open society. That was in 1979 and my first involvement was in South Africa where you had the apartheid regime, which really needed to be broken open. Then I got involved in my native country Hungary and the neighboring countries and eventually established a network of foundations, covering mainly the countries which were coming out of the Soviet regime.
There I made the discovery that the collapse of a closed system doesn't automatically lead to an open society, that you need to give a helping hand, because an open society is more complex than a closed society and you can't get there without some help from the outside. As I said, basically I provided support for people in the country who were trying to build open societies, and the foundations did make some valuable work.
Then basically the revolution ran its course and I became involved with the problems of globalization and the inequities, the imperfections of our global world order. Then came the election of President Bush and September 11th, and the response, the way President Bush responded to it by declaring war on terrorism and fighting it by military means, and the Bush doctrine and the decision to go to war in Iraq.
Now, the, when President Bush was elected, they say he came with a humble foreign policy, but there was an ideology. That was basically a pretense because behind the election platform there was an ideology, and I describe it as an ideology of a crude form of Social Darwinism, mainly that life is a fight for survival and the survival of the fittest depends on competition and not cooperation. That is where I think the ideology is false because, yes, we need to cooperate and competition, by itself, is not enough.
Now, this philosophy expresses itself in the economy, in the belief that you should rely only on the markets for the allocation of resources. Now I'm not opposed to markets, I'm a teacher of markets, and I fully appreciate the great benefits they bring. But they can only serve the allocation of resources among private needs, and there are public needs which require cooperation, and markets are not designed to provide public goods, only private goods.
That is the distortion in globalization. I'll come back to that. This fight for survival of the fittest, international relations express itself in what is called dual political realism. Kissinger saying that states have interests but no principles and it's the interest of the state that determines international relations. Now this idea was then taken to an extreme by a group of people who are in the Bush administration. They are usually described as neo-conservatives, but I think that may not be the appropriate description. I call them American supremacists.
They say that international relations are relations of power. The United States is the most powerful and therefore it must use this power to impose itself on the world. Now, there's an element of truth there because America in fact is the most powerful nation on earth, but this, the concept of power particularly expressed in terms of military power is a false concept.
All together, this idea of power is borrowed from natural science, and it doesn't work very well in social science. I think that power is much more complex and I think the right definition of power is in the children's game stone, scissor, and paper. We now see actually an example, stone is, let's say, military power, it's supposed to be able to crush everything. Paper, let's say, is public opinion, and paper can lift the stone, and we see that happening in Iraq. So this idea of military power is a false idea, and the idea that we can impose our will on the world is really just the wrong idea.
Now we went to war in Iraq on false pretenses.
There was no connection between Saddam Hussein and al Qaeda. There were no weapons of mass destruction. But, what I find the most galling is the pretense that is now presented that we went into war in Iraq for the sake of the Iraqi people.
If we had done so, we would have sent in more troops, and we would have protected not only the Ministry of Oil, but also the other ministries, and the museums, and the hospitals.
Since I have devoted the last 15 years of my life in helping to introduce democracy and open society in various countries, I can speak from personal experience, that using military power to bring democracy is absolutely not it's a quaint idea.
So this led me to write a book called The Bubble of American Supremacy, and also to put my money where my mouth is.
Now in my book, 'The Bubble of American Supremacy', I actually applied the theory that I developed, the boom-bust theory that I developed for the financial markets to the Bush administration's policies. Let me just explain very briefly, see, bubbles don't come out of thin air. They always have a basis, a solid basis in reality. But, there is a false ideology or a misconception that is applied to that reality and that is what carries that reality into what I call far from equilibrium territory. You could see it in the stock market with the Internet and technology boom, which was very real. Internet is a very real thing, but it was misunderstood, which actually led to its development going faster, but then it became unsustainable and collapsed. So you have originally self-reinforcing, and then self-correcting process. That's the boom-bust.
This is in fact what applies to the Bush administration's performance because you have a reality, an underlying reality, and that is that the United States is the most powerful nation on earth. But, then you had this ideology of this crude Social Darwinism applied to it, which is a false idea. And it was the terrorist attacks of September 11th that moved you from, let's say, what you might call near equilibrium to far from equilibrium conditions, because it was the war on terror and the attack on Iraq that took us into this very, very, very dangerous area that we are in now.
Now, the boom-bust process is usually tested and if it is tested and it survives the test then it is reinforced, because it looks like it's working, but eventually the perceptions move too far away from reality and become unsustainable. There is a moment of truth when the falsehood prevailing misconception becomes apparent and then there is a reversal and then that becomes self-reinforcing, and you have the bust.
Now, in my book I argued that Iraq was this test. It is, in fact, the moment of truth when we realize that we've been deceived and we have embarked on a policy that cannot possibly succeed.
I think that the reason that we were carried so far away from equilibrium is because the President, by declaring war on terrorism, basically stifled criticisms, because to criticize his policies was to be unpatriotic. He said those who are not with us are giving support to the terrorists. Ashcroft passed the PATRIOT Act saying that those who oppose the act are giving aid and comfort to the terrorists.
So for about 18 months the critical process, which is so essential to a democracy, was stifled. And it is only when things started going wrong in Iraq that it was re-opened. I think that the picture of torture in Abu Ghraib, in Saddam's prison, was the moment of truth for us, because this is not what this nation stands for.
I think that those pictures hit us the same way as the terrorist attack itself, not quite with the same force because in the terrorist attack we were the victims. In the pictures we were the perpetrators, others were the victims. But, there is, I'm afraid, a direct connection between those two events, because the way President Bush conducted the war on terror converted us from victims into perpetrators.
This is a very tough thing to say, but the fact is that the war on terror as conducted by this administration has claimed more innocent victims than the original attack itself.
So I think that the American public has now seen that they have been misled, and they've turned against the Bush administration and I think that we are now well underway of the bust.
Now it's not plain sailing, because just as the self-reinforcing part underwent tests, the self-defeating part also is going to be tested. And I think that the Bush administration does have a plan to disengage from Iraq, it is being implemented. And the objective is to reduce the number of body-bags. For that purpose the administration is willing to abandon all its other objectives, both those that were publicly announced and those that were the real motives in order to achieve this.
It's actually a very cleverly perceived plan, because by transferring sovereignty on June 30th, and holding elections in January, and withdrawing the troops, disengaging the troops, it is possible that the number of attacks will, in fact, diminish.
Now this withdrawal means that the various factions can maintain and develop their militias. We have allowed them to survive both in the Sunni area and the Shiite area. The Kurds already have their army the Peshmerga. So it sets up for, effectively, a civil war, after the elections. It's very much like Bosnia, where you had three ethnic groups, each with their own militias, going into elections, and then going into civil war.
Now, it's very important to realize that the Iraqi involvement has been an utter disaster for the United States. Even in terms of the American supremacists who wanted to demonstrate America's military power. Actually our military power has diminished our ability to project military force has been diminished, because our Army was not trained for occupation. It was trained to bring overwhelming power to bear. And the fact that we are now bogged down in Iraq reduces our military might. Of course, the damage that it has done to our standing in the world hardly needs to be explained.
Now, I wanted to go into an alternative vision for American's role because I personally am convinced that there will be a change of regime in this country.
I think the general public now recognizes that they have been misled and we will reject the Bush doctrine, but we need an alternative vision. We need an alternative vision to reestablish our position in the world. Let me just say very briefly what that vision is.
We are the leading power in the world. We are the most successful dominant economic power. And that imposes on us a unique obligation to lead the world in improving the present world order. To correct the deficiencies of globalization, because we can't impose our will on the world. We can't do just whatever we want, but there can be no cooperative effort without our participation and leadership. So we must change our attitude, and recognize the need to work together, and to correct the deficiencies, to improve our arrangements for security.
How to deal with the likes of Saddam is the great unresolved problem of our world order. The way we went about it makes it more difficult to deal with that problem. We must change that approach, and but we must help to develop better methods of intervening when it is necessary. We must not turn away from the world, because we are increasingly interdependent, and what happens, what kind of regime prevails in Iraq or Afghanistan does have a great bearing on our security and on our prosperity. So we must develop ways of intervening when there is a repressive regime or a rogue state, or a failed state. But we cannot do it alone, we must do it in cooperation with others.