Nicolas Berggruen - Chairman of Berggruen Holdings HARDtalk


Nicolas Berggruen - Chairman of Berggruen Holdings

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demanding to know why they were not told earlier about the FBI

:00:01.:00:10.

investigation that revealed an extra-marital affair.

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Now on BBC News, it is time for HARDtalk. More than ten years ago

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he gave up almost all his possessions, only hanging onto a

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private jet. But he is more than just a bored, wealthy playboy, he

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spent millions trying to change the way that America is governed. He

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says that developed countries are in crisis because their leaders are

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too focused on trying to get re- elected. They should be taking

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We had a very recent example of US democracy in action. What was wrong

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with it? Let's start with what was right. It seems to work. Every four

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years. It engages people all across the country, it gives them a chance

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to cast a vote. That is very good. It works quite flawlessly. What is

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not so good about it, it polarises things between two parties in the

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US, and to have a system of a loser and a winner, and in a world that

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is much more global, much more competitive, you need countries,

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including the US, which used to be the dominant country, but now it

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has to compete against a lot of other countries that are rising,

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you need a country that comes together. This election, as we have

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seen, has been an election between two very different ideologies and

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in some ways, a failure to come to agreement in the last four years.

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The question is whether the next four years will be better or not.

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The same issues are there. The two parties are still quite polarised.

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An election every four years does not prepare citizens enough to be

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engaged. Does the winner get a mandate to govern for the country,

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or does he get a mandate from their party and the other party does not

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co-operate? The flaws are that in a very competitive environment, does

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the leader truly have the mandate of all the American citizens or

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not? And one election every four years...

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You think they should be held less frequently?

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There should be other ways for citizens to express their political

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or civic opinions and duties. Local elections. Citizens seem to

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care about their rights and their parties. They are partisan,

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ideological, and hugely expensive. The whole election cost $6 billion.

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President Obama in his victory speech makes the point that these

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arguments, that you are talking about, and it has been divisive in

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many ways, they say they are a mark of our liberty, we can never forget

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that people in destinations are risking their lives for the chance

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to argue about issues that matter. Symbolically it is very important.

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But does it really help the country in a collective way? Does it

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include the party and the people who voted on the other side? Maybe

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not enough. Isn't that the way democracy works,

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the majority get their way. It is what the people want, the majority

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of the people. True, but it is a thin majority.

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You have to make sure the systems, the institutions, have to carry out

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the will of the country as a whole. And if you have got one side

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winning and one side losing, it is polarising. The system,

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ideologically that Westerners believe in, and it has worked

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incredibly well, allowed us to progress. The question is, is it so

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polarising in the case of the US, that in the last four years, maybe

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less was achieved than could have been achieved?

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There is an argument that because President Obama has won his second

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term, he cannot stand for another, he is now free to do what he wants

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for the next four years. He has to bring the House of Representatives

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with him, but he is much freer. True, and in that sense, he has a

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mandate to lead the country again, and therefore he can hopefully get

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two things done. Get his party to agree to difficult decisions and

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get the opposing party to sense that he is going to be there for

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this term no matter what and that the country needs to progress. This

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mandate is an important mandate. You have written a book about this

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crisis in democracy. One of the things that you argue, you have

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described Singapore as one of the best-governed places in the planet.

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The book, which is called Intelligent Governance In The 21st

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Century, it is about looking at different systems of government,

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and when we compare the different systems, there is good and bad. We

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are not advocating one system or ideology being the only answer, or

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the answer. We are saying something quite different. We are saying that

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that popular elections, with respect to individual

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accountability, and some of the key factors that make democracies work.

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We are also saying that in the case of Singapore, the civil service

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capability that is tested, that is consensus-building, has long-term

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objectives, and that is something that can help government, and

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therefore there are examples both East and West.

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You point to Singapore as an example, but was does happen is

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that the opposition, who in the recent elections got 40% of the

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vote, only got six of the 86 parliamentary seats. It suggests

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the government, with its 60%, has an overwhelming legislative power.

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But it is hardly fair. The systems in the East are

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probably not representative enough of the voting population. On the

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other hand, they have been able to deliver a system which allows the

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government to have a very strong mandate.

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So we should give up a bit of democracy in the West, is that the

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thrust of your argument? A balance is needed. Once a

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government is elected, give that government the mandate to progress

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the state of the country. Let's look at what you have tried

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to do. You have gone for a vote in California. It has a system which

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allows you to try to put a ballot to the people. This is what you

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have done, with Proposition 31. It was overturned by the voters. It

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was trying to provide a balanced budget, give longer terms between

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budgets, and increase local accountability.

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Yes. California is a wonderful example. It continues to be

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successful in many areas, technology, media, agriculture. It

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also has very high unemployment by US standards so it does not work

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for everyone. That is one issue. Secondly, the infrastructure of

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California, which historically has been one of the best, intellectual

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infrastructure and physical infrastructure, no longer has the

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capacity to be financed. It has got structural issues. In the case of

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California, they are issues of governance. The Governor needs a

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two-thirds majority to get anything major done. It is difficult in the

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environment when you have Democrats and Republicans historically fairly

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close to each other. But this has changed today. So the Governor may

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have two thirds. So that is a big pass. But California, bizarrely

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enough, has resorted to direct democracy, which means referendums

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to get anything major done. And that has been good and bad. Every

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initiative, every referendum, is on somethng very precise, and often

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very narrow. On its own, it may be interesting, may be good, but it

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does not regard the effects on everything else. Citizens, who are

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self-interested and for good reasons, over the years, increase

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their entitlements, decrease their taxes. So there is no money to do

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any long-term investment. It is your beef with your voters.

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They say they are too egotistical. It is not their fault. Definitely

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not. Everybody acts in their own self interest.

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As a result, you think that power should be taken away from them.

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You need somebody who thinks of the next generation. Are they going to

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pay higher or lower car tax... What happened in California is that

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whenever there is a crisis or a fiscal crisis, the measures that

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were voted in this election, was an increase of taxes. It is there to

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fill the budget gap, that is good and very important. On the other

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hand, the tax does not fix the long-term issues. It needs long-

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term financing to remain competitive and make investments.

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What you have done there in a sense, you put an awful lot of money in

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that ballot trying to change the system. How much did you spend?

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There are reports of $2 million to $20 million.

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There is a committee for California. It is a bipartisan group. We spent

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more than a year meeting to come up and propose very long-term reforms.

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They are fiscal reforms, governance, constitutional reforms. We have not

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put those on the ballot on purpose and rightly so, because the big tax

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measure would have clashed with the other tax measures. We are looking

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to see if we are going to put it on for 2014. I supported one measure

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which is to make government more accountable, more effective.

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It is the principle. One of the criticisms of what you have done

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and what this panel has done, and it is a professor from the

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University of California, you assembled a blue ribbon panel of

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notable people to fix the system, and the suggestion that actually

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what Californian needs is a blue ribbon panel of notable individuals

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who can bypass the existing political process.

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It included labour leaders, it included people from the education

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sector and politicians, both left and right. They came up with deep

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long-term solutions, which if it had been an open forum, probably

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would not have got an agreement. It is the smoke-filled rooms that

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work, it is the behind-closed- doors...

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In some cases, you need a place where people think logically about

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the issues, come up with something that is frankly a compromise

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between two different ideologies. It would not have been possible

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outside. It did not pass in the end. Exclude the voters, close the doors.

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In the end, the voters still get the last word. The question is

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whether we have the capacity to put in front of the voters other ideas,

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ideas that are highly political. The voters should always get the

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Let me go back to why you are here and why you are doing this. It was

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a remarkable turnaround about 12 years ago. You gave up all your

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possessions, as one of the world's which his men, that is remarkable.

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That was a personal thing, it was a matter of focusing your time and

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energy and doing what you wanted. You got rid of the private island

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near Miami and sold many of your things. I shifted to my interests

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since I was a teenager, and other things like the function of

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governments, philosophy, things that I found more interesting and

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more challenging. If we can make changes and progress and debate

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certain issues, like government. You could study that in a house

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that's your own, but you chose to give up an apartment and you don't

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need anything and you had an art collection that you gave away. Is

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it that you thought you were owned by your possessions? In a way, one

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is. Think of yourself. You worry about the things you have. You need

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to replace them? You have things to worry about, in my case, I have a

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family, it takes so much energy to worry about the things that really

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matter and that's the best with that energy rather than things in

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life you miss about. It was liberating? In my case, yes. What

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did you get rid of? All the things you've mentioned. I read that you

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even got rid of your watch. Well, again, what are you left with? It's

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an unusual thing. The most important things in your life are

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your brain, the ability to connect and to make a contribution and to

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experience the extraordinary gift that has been given to us. That's

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the most important. Possessions that would fit into a paper bag?

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ambition ambition to have physical comfort,

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that's part of what makes society work. It's quite healthy, but

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everybody should do what is comfortable to them if they have

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the choice. I suppose that's easy and that's what many did. It's your

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choice. If you have a family things will change. The children, you need

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to pass on your possessions and wealth to them. But I want to give

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them the opportunities. People speak a lot about inequality.

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That's an important subject and one that's becoming bigger. The most

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important thing is inequality and opportunity. Children need

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opportunities to grow up happy and healthy. That means, a reasonable

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physical environment, and, importantly, an intellectual

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environment with education. It's a competitive world. The opportunity

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to be part of the world, that's the most important. I don't personally

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believe in passing on wealth from generation to generation. I don't

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think frankly that's a great incentive. Actually think it's the

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opposite. 100 % inheritance tax? Most of the world gets recycled,

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anyway, and when people die, not only what they have, in my mind, it

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will get recycled and regenerated in any case. But the best thing to

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give your children is an education? I think, at a minimum, allowing

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them to function and to be happy, but beyond that, they need to build

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their own lives. Speaking of building lives, you were given

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$150,000 from your father and you were phenomenally successful with

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your investment records, which are quite remarkable. You describe

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being bored making billions on stocks, is that still the case?

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it's a question of focusing. If you have only so much time and

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resources, at an intellectual level, and with physical things, what do

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you focus on? In my case, the political work is currently the one

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where all the time, if successful, it has the most impact. That's what

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I need to do. Your cause is for the common good. I like to speak about

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a particular company of yours, whose journalists, the Spanish

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newspaper El Pais', with a huge circulation, the biggest in Spain,

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the journalists are on strike because of the loss of jobs. They

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are worried about the cuts in salaries. They say this is not

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necessary. Do you feel uncomfortable or perhaps worse,

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about something like that happening in a company of yours that your

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own? There are two things. The first is no question. Any company

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that's been challenged, where the challenge means the workforce, it's

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very regrettable. Many of those journalists have spent years in

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that environment and it's like a family. In that sense, they would

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argue it's not necessary. The New York Times' has reported on you

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making a lot of money for that paper. That's right, but that's the

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way I feel. In this case, its owned by a large conglomerate and by the

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shareholders. I have no involvement in those decisions. I think the

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decisions by the management, sitting here at the BBC, as one of

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the surviving media companies in the world, but the newspapers in

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Spain, are being challenged to the point where there will not be many

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survivors for two reasons. The first is - media is changing

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enormously. The circulation of most newspapers in Spain, or any other

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country generally, as a whole, will slow down. Advertising is going

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down there. New forms of media are under enormous challenges. We only

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have a few more moments. I recognise the differences between

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the common good and the big picture, and that the smaller labels, and

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newspapers that are actually making money. Here, it's about to not make

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much money any more. It needs to restructure. It so happens, I've

:23:57.:24:07.
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put money into the parent company so that it can survive. If I had

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not done that, it may not have been existing today. But, it has gone on

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