Televising money; ever uttered the line, "That's so provocative there should be a book on it"? Dan Yergin not only wrote The Book on globalization--The Commanding Heights--he produced a fascinating 6-hour televised documentary on the subject. TIE caught up with the idea entrepreneur in an exclusive interview.

TIE: Your book and most of the television series was done before 9/11. If you had written the book and produced the series after 9/11, would the story have changed at all?

YERGIN: The most difficult thing would have been to go out with the series immediately after 9/11--without some time and perspective. We had already thought through some of these conflicts in the revised book's new chapters on globalization, and the whole last third of the show was about the debate over globalization. In our minds--or at least in my mind--I tried to come to grips with whether globalization is irreversible or not.

We had already done a segment about the first stage of globalization--a time of optimism and emerging markets, technology, tens of millions of people coming to the United States without the need for passports. And it all ended with a terrorist's bullet in Sarajevo in June of 1914. So that was already in place. What September 11th did was to highlight that theme and put it into a very stark light. We had quotes from both Keynes and Hayek looking back on the world before 1914. Really, epitaphs. Hayek's quote, which is much shorter than Keynes, was: "We didn't know how fragile our civilization was." And so on September 11th--we already kind of had the material. To be sure, we're talking about the last part of a six-hour series that spans a century.

One thing that 9/11 did was to drain a lot of the optimism out of the age. A certain period that began in the early 1990s ended on September 11. We're now in a different era.

TIE: Is globalization irreversible?

YERGIN: There are a lot of ways that it's irreversible. Technology is not going to go backwards; computers are not going to get slower; the Internet will not be eliminated. But there's another sense in which it is not irreversible, and that's in terms of disruption. After all, the first age of globalization ended with massive disruption. Already, prior to 9/11, there was a concerted effort to disrupt the institutions that help the world economy run fairly smoothly, by making it impossible, among other things, for the people connected to those institutions to meet. So things can go off the tracks. Despite the fore-bodings, it turns out that the economy did not go into a major crisis in the autumn of 2001. There's a lot of resilience in the economy and in the institutions. But confidence is far more conditional today. Which makes the responsibility greater to keep things in kilter.

TIE: Do you think that there's a sense now that maybe we overemphasized the economic aspects during globalization's heyday? That is, we have economic man, but we also have religious and cultural and ideological man. Has communications technology--the Internet and satellite television--exacerbated the crisis, in the sense that people now know or are much more aware of religious and cultural differences, and resent those differences regardless of the economic implications?

YERGIN: Those tools are open to every-body for whatever purpose they want. Some people in transnational networks take advantage of the tools of globalization in order to try and shatter the interconnected world. The very fact that people are getting "closer" creates not only comity, but also conflict and tension, resentments and anger.

TIE: There are roughly six billion people on the planet. In the last 20 years, we've added at least a billion people net to the developing and industrialized world, with the rest of the world living below the poverty line. And as tough as it is to add people to the modern world, the rest just keeps growing. The gap between rich and poor continues to grow simply because we can't expand the rich side fast enough. Do you buy this analysis?

YERGIN: In one sense the gap grows because the advanced nations have grown a lot. Even there, however, the data shows faster growth in the "new globalizers." The notion that globalization creates inequality is really wrong. What creates poverty? Why are countries very poor? Part of it has to with their own institutions--what do they spend on education, for example, and what do they spend on health, and how much corruption is there in the society?

Working on The Commanding Heights television show for three years, I came away with a few basic ideas that are not necessarily the conventional wisdom. They may also sound very obvious. First of all, global poverty: Thirty years ago, what was the poorest continent in the world? It was Asia. Today in many Asian countries, the per capita incomes put them into the middle class. Singapore, which was so dirt poor 40 years ago that people didn't even know if it would survive, now has a higher per capita income than Britain. So this notion that it's just a world divided between the advanced countries and the rest of the countries really is historically inaccurate. Part of the residue of the Asian financial crisis has been to create a fog around this central point, so that many people don't see what's actually happened in the world.

Today, the most dynamic part of the world economy is probably the new globalizers. Two countries we spend a lot of time on in the show are China and India, and with good reason, given their importance in the years ahead. We probably wouldn't have the Internet as we know it today were it not for India and the Indian Institutes of Technology. People just don't see it; they don't see that the growth rates are faster. And as soon as you do start to get this record of achievement, some people dismiss it. Yet when you come down to it--it sounds very simple--but the engine for reducing poverty is trade. But it's not very well communicated and not very well understood.

TIE: The last ten years saw the U.S. emerge as the world's only superpower. In this new global economy, military power was kind of an anachronism. Yet after 9/11, military power seems more important. Is there an emergence now of a new G3? With Europe having just passed the buck militarily, is the new G3 comprised of the U. S., Russia and China? Russian President Vladimir Putin has cozied up to President Bush, and even Flu Jintao, China's heir apparent, seems more cooperative.

YERGIN: History allows you to have hindsight and to be very perceptive. But it's clear that for ten years there was a very exaggerated sense of confidence about security, that everything can take care of itself. And it also seemed evident that everyone would like to be part of the club. But it turns out that a lot of people don't necessarily want to be part of the club, and that things can even malfunction as part of it.

The Europeans--they are tied up in knots about their own European project, and also their relationship with the United States. There's a lot of complexity in that, and complexes there. Some Europeans like to claim a ground of higher morality and almost imagine that the United States is some 19th century free-booting cowboy country when what it is, in fact, is a relatively highly regulated welfare state.

One of the consequences of 9/11 so far is to point very much to a new direction in U.S.-Russian relations. It preceded 9/11, of course. It goes back to that first meeting between Bush and Putin, which started things in a different direction. With the Russians, it is seen as a new strategic relationship, with Russia kind of willing to give up some of the symbols and nostalgia of the old great power to modernize and get richer and become part of the 21st century economy. Also, for the first time since 1945, the United States and Russia have a common enemy.

There are a lot of different elements in China, but the Chinese also made this commitment to modernization and are trying to manage this transition from one kind of society to another. Look at the number of Chinese who have studied in the United States. There's always the potential for a crisis in a relationship that can come from a number of different directions.

But when the Chinese entered the WTO, they really said, "We're going to take the consequences to get there." Their economic prowess clearly makes their neighbors, beginning with Japan, very nervous. But they're obviously going to be one of the great drivers of the 21 st century. So better that there be this spirit of cooperation and collaboration than not.

There are a lot of difficult transitions China will have to go through, and a lot of finessing to get there. But how are people going to be less poor except by being part of the larger global economy?

We have this very poignant segment in The Commanding Heights about a Chinese teacher. He earned virtually nothing as a teacher, and lived in abject poverty. So he gets up and moves from the interior to the coast and goes to work in this very modern bicycle factory. This is not a sweatshop; it's highly computerized. Now he's earning 30 times as much as he earned as a pathetically underpaid teacher, and he's able to bring his family with him. He's not living the life of a middle-class person in Europe or North America, but he's living so much better than he did. And so is his family. That's the change that going on. It's easy to forget with its high economic growth what a poor country China is.

TIE: Having done the book and the series and spoken with as many people as you have, what would you say if somebody came to you and asked: "What does it take to be a success story in this new economy?" What's the magic formula?

YERGIN: If you think back to the `90s during the era of celebratory globalization, Argentina was the poster child of the new era, and the bad boy was Russia. And now it's flipped around. Now Russia has a 13-percent flat tax and doing better than people thought, and of course Argentina is in a desperate crisis.

It's useful to look at Argentina next to Chile and say, "Well, what did Chile do that Argentina didn't do?" It's a comparison we pursue to some degree in episode two. It strikes me that Argentina's problems weren't rooted in too much reform, but rather in not enough reform. It didn't reform its budgets; it didn't reform the role of state government and expenditures. It ran up a lot of debt and of course the exchange rate was a big problem after 1998. And corruption has been a consistent, destructive problem.

There was this theory that Russia could never be a market society because it wasn't in the DNA of Russians. But that's ridiculous; it isn't the culture. I think someone like Hernando de Soto has a lot to say on this. It's rule of law, contracts, education. It's deciding to orient yourself to the world economy or not. When we interviewed Roberto Lagos, the president of Chile, he said that they got those reforms at a political cost--it's been a democratic government for 14 years--but their path to reform got them prepared to be a part of the global economy. So it's pretty straightforward. It's creating the basis for people to be entrepreneurial and to be secure in the process--and providing the education and the safety nets.

TIE: How do you look at the Russians? Where do the Russians fit in in terms of the global oil market.

YERGIN: The number one problem for the OPEC countries last autumn--aside from the weakness of demand of the world economy--was the rapid growth of the Russian and Caspian oil output. Meanwhile, you have this new kind of proto-strategic relationship with the U.S. And the Russian oil industry has gone through a lot of modernization. There is the internationalization of management and the introduction of new technology, and they have money to reinvest in it, which means production is going up. Maxim number one for energy security is diversification. Suddenly there are a lot of people who now look to Russia to play a larger role in the world oil market.

Based on the numbers, one knows Russia's not going replace the Middle East by any means, but it could be an important additional element. The politics and strategic interests support it. At the end of the day it's going to be driven by economics. But in the most modernized parts of the Russian oil industry they say that they're close now towards Middle East cost levels. If that's the case, then Russia will play a much more important role. That's one of the things highlighted by the Bush-Putin summit in Moscow.

TIE: You're obviously talking to a lot of people since the television special appeared. What's the most frequently asked question?

YERGIN: The biggest question I get is the pendulum question. It comes down to this: "Is the pendulum that seemed to be swinging in the 1970s away from state control towards greater confidence in markets, is that pendulum swinging back now?" And you look at California, Enron, the power markets, financial markets, Argentina--and then, in a very different way, 9/11.... So is the pendulum swinging back, or are we going to continue to see the world economy knit together and more confidence in markets? The answer will come not from what has happened so far, but it will happen over the next few years.

It's been clear for some time now that the age of "The CEO As Hero" is over, with its vision of everything being synergistic with everything else. But it turns out that it doesn't really work in the real world. Are we going to see more big failures, more bankruptcies that will shake markets? Looking back, we can see that there was a much higher degree of confidence during the preceding ten years or so than people stopped to think about. People just took it for granted.

Now, with very good reason, there's a deeper sense of insecurity about what's next and what's going to happen. And that affects how companies mn their business and figure out what do they do about everything from protecting their operations and their people to managing their supply chains and their inventories. There's a fear that there could there be a disruption in the payment system, or scenarios that people never would have thought about now you have to think about.... I don't think heads of companies previously spent a lot of time thinking about security--they thought about it, but not a lot. Now they have to think about it a lot and in many dimensions.

The optimism isn't there anymore, and the mood is much more skeptical and cautious. Consumer confidence has come back. But we're in that part of the big political/economic cycle now where people are saying, "Well, how much is all this rigged?" That will be reflected in a lot of congressional hearings.

The U.S. economy has been pretty amazing since the period of reform that we went through. The term "reform" is not generally applied to the U.S. economy, but between about `74 and `82 we went through reform. That's one of the things we focus on in episode one of the series. And the economy became much more flexible and limber and did this incredible thing: It created close to 40 million jobs in two decades. It's an amazing thing to do that. And the critics said, "Oh, they're all going to be hamburger flippers." Well, wrong. Way wrong.

But part of the way we got there was by developing this enormously intense cult of quarterly performance. Each year the pressures for quarterly performance increased. So in the mid to late 1990s, unless you were out there playing the game, you were lunchmeat for a takeover or being thrown out by your institutional investors who were mad at you. But now we're in a period where, in retrospect, prudence would have been a good thing. But a few years ago you were penalized for prudence.

I find myself often coming back to the question of who's calling the shots in the economy. To me, a lot of it's being called by our aggregated retirement savings, which demands quarterly performance, demands it of fund managers and then the fund mangers demand it of companies. This became increasingly fevered, and the ultimate froth of it was in the 1999-2000 period, where every year you were suppose to get 20 percent returns and everybody was going to be in the upper quartile--which is mathematically impossible. I don't know what other kind of imperative that you could see but that quarterly performance created inordinate pressures that encouraged people to take risks and to behave in a somewhat inebriated way.

The wealth game got so out of control. How does the head of a major telecommunications company borrow $400 or $500 million from his own company so that he can buy other things? It really fed on itself. It's not 1933 or 1934 or 1935, but there are elements of a kind of a purgative going through the system.

TIE: Prior to this you wrote the book The Prize that won The Prize.

YERGIN: Frankly, I was convinced that a book called The Prize could never really win the Pulitzer Prize. When I got the phone call, my first reaction was, seriously, to ask if this was a telephone prank.

But The Commanding Heights is the first major show on the global economy on American television for 22 years. There hasn't been one since Galbraith and Freidman duked it out on PBS. And so we met a huge load of skepticism about it.

And that was really the challenge. This was about four times as hard as The Prize because The Prize, in retrospect, was not only about geopolitics and business. It was also an adventure story. The Commanding Heights was more complex. How do you illustrate and tell stories about ideas, and how do you capture them and their intersection with great events? The challenge was to find the stories, and the personalities, that could carry the telling. We wanted to be true to the material, and yet also be cinematic and riveting. It wasn't easy, but we found our way.

One of the most gratifying things is when people tell me that they can't believe that they saw something like this on television or now on video. Some people have even told me that they sat down to watch the first hour, and ended up watching it straight through. So the message is that we found a way.

Mr. Yergin coauthored with Joseph Stanislaw The Commanding Heights: The Battle for the World Economy, now a PBS documentary series. He has written a number of books, including The Prize: The Epic Quest for Oil, Money, and Power, which won the Pulitzer Prize and the Eccles Prize, and Shattered Peace, the classic account of the Cold War. Mr. Yergin is chairman of Cambridge Energy Research Associates, a leading analytic firm in the energy industries. He is also a Fellow of the Center for Business and Government at Harvard's Kennedy School and a trustee of the Brookings Institute.