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tv   Key Capitol Hill Hearings  CSPAN  December 9, 2016 9:00am-11:01am EST

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>> we all have heard you talk about stem. stem just isn't people with ph.d.s and degrees in medicine. stem is about quantitative skills. if we are going to fill this gap, we have to create a system where young people who may not have the opportunity or aspire to it can get kahnty tay tiff skills. >> can you leave us with a hopeful note. >> all of these things are doable. we deployed a math class called college algebra.
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it is not about algebra. it is a fantastic class with intelligent tutors, personalized learning platforms. if you stay with the class, you will master college algebra. if you do, there is very little else you can't comprehend and can't then actually master. we're figuring out how to teach everyone to move noord. forward. >> i am going to take that class. >> i am sorry we went over. thank you very much, our distinguished panel. thanks all of you for being here. i know it will be a great day.
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ladies and gentlemen, releasing key findings from the new u.s. council on
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competitiveness, gallop report, no recovery. please welcome the chairman and ce of, mr. jim clifton. >> debra, congratulations and thank you for having gallup be a part of this anniversary. congratulations on the great contribution in business and industry and also to our country. we want to talk about
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productivity and more specifically about growth. i don't want to go through the report. you can read it yourself. we have a slide deck with one slide. die ref i do refer to it as my deck. >> the guy that founded our company was a guy named dr. george gallup. he usually makes that really good list, not the one that has real good lists with chefs but the one with george washington and franklin. he loved democracy so much. he said, if democracy is about the will of the people. some people should go and find out who that is.
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he would report that to washington. he said, if you are wrong about the will of the people, when you make policies and you lead, and you are wrong about that premise, the more you lead, the worse you make things. what a bop der fuwonderful miss. i was thinking about how that applied to right now and about growth. are we in a recovery? are we in a recovery? >> i didn't actually know what productivity was. i know what gdp was. i know that 2.5% is a lot better than 1.5% or 1.7%. i node we need 2.5% to break
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eefb. wh when we are at 1.7%, we are slowly going broke. >> if you said what's the right amount of gdp to have? i don't know what the right number is. can you go up to 8? can you have 9%? what do we need? >> the biggest moment in human history, between 1850 and 1950, in the united states of america, we overwhelmed the world. now, we are 25% of all the money. here is' go a good question. what was gdp during that time series? you know what the answer is. 3.75. how do we boom? >> 3.75 over a time series of 10 years. how do you go broke? you have a time series of about
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1.5 or 1.7. you have to be somewhere above 2.5%. i didn't know that. the next thing i learned was that gdp is not the next method. if you take the population of economists, right lining, left leaning, whatever it is, they say the best measure is actually gdp per capita. i didn't know that. i started thinking maybe it would be gdp per worker would be good. you can't do that, because sometimes you have fewer people in the workforce. if too many drop out. you have to do gdp for the whole population. people at home, good for them. they use the economy too. so do babies. so the best number that you can use. that's the number that gallup and the council and my team of economists chose to use.
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we went back 50 years. we determined that was the single best metric to determine if we are in a recovery. now, remember, if we're in a recovery, i looked the word up. i was on a flight back from frankfort, deb brachltra. i was thinking about this. i had the financial times, "the wall street journal" and "the new york times." i found an article in every single paper on the front page that referred to america's recovery. that seems like a very important article to me. i looked up recovery. it means you have been sick and you are getting better. you wouldn't think i had to look that up but i did. going back to dr. gallup's point, if we are in a recovery,
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that suggests totally different activity than if we are not. if we are in a recovery, kind of get your hands off the wheel and tweak it a little bit and keep nudge teeing in the right direction. if we're in decline, you have to shake everything up. you need turn-around. you better get your premises right. if we are wrong, the more we lead, the more we ruin the country. so here is my deck. this is 50 years of gdp per capita in the united states.
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can you look at that and see a recovery? i wrote down three quotes. you can find them anywhere you want. this one is from "the wall street journal." the guy's name is eric. i won't say the rest of his name. i have read him before. here is what he said. the u.s. economy appears to be growing at its fastest pace in two years. i don't know what he sees? i guess you can say it. i think you can go through the radio salesman. you probably can find one little blip somewhere maybe between one quarter and another. i don't know. here is one from -- i won't say his name, raymond jones, the investment banking company in new york. growth is a lot stronger than it looks. i don't know what that means.
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where do you find growth is stronger than it looks on there? >> this one is interesting. have you ever heard of confirmation bias. the guy got a nobel prize for this. when you make a decision or come to a conclusion, only 30% is based on fact and 70% is based on emotion. he is a psychologist. the only psychologist to get a nobel prize in economics about six or seven years ago. confirmation bias is that you look for facts that confirm what you want to believe. if you wonder how often we get into that, whether you and i were talking about, most the media tried to find facts. not picking on me. i did it too. why only hillary can win. why brexit will never work. why the electorate in colombia
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will never vote for a ford trainee. no one saw arab spring coming. that 70% dominates our thinking. we are always in a fight with the 70%. this one is really important. we are seeing definite evidence my senior editors are here in the room. i don't think there is anything called definite evidence. you either have evidence or you don't. we are seeing definite evidence. this is the time i really mean it. the economy is expanding more strongly. who do you think said that one? that's janet yellen. she is work on my 70% too.
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we are not in a recovery. if we were a company and that was a shareholders meeting, i would be reporting our sales are $18 trillion. we have 100 million in full-time employees. we have 50 million part-time employees. we have debt of 20 trillion going to 30 trillion. we have revenue that's increasing at a decreasing rate our revenue is about 1.7. i can finish the line to where it is zero. do you want some of that stock? >> the next thing i would tell you. i've got some good news for you. the food iz cheaper than it has ever been before. so when i was a kid, it was almost twice as much. that's some good news. transportation and gas. we have three expense that is
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are totally out of control. 18 trillion in sales. 20 trillion in debt. we have three line items that are booming out of control. you know what they are? we need to know. education, health care. we all know housing. i think we know those pretty well. there are some real basics you need to know with shareholders. with health care, we spend twice what other comparable companies spend per person. we spend twice as much as england, can darks france, germany, two times as much. the next thing you need to know is that they all live longer than we do. great american health care
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system. >> it makes you wonder a little bit. so canadians live three years longer, french live three years longer. we spend twice as much. it makes me wonder if the more they spend on us, the faster they kill us. i was wondering how many people are killed in hospitals. we worry about soldiers. i know the generals and admirals here. you read the new england general of medicine. how many people were killed in hospitals last year? 100,000. you want to go to a place where you are really in danger, get in a hospital. they maimed 1 million.
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johns hopkins said 250,000. but you wonder if you have an expense item that's out of control and has that little success, do you really need sig sigma or total disruption. another one our analyst found was education. it is booming. it has many other implications to the amount of debt boomers have. boomers are going to be wonderful workers. they are really different. i saw a conversation on "squawk box" this morning and they were talking about are millennials different than any other generation? they said, no, they are no different at all. they are just younger. they came to a conclusion that fits, again, there us your
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confirmation bias. i am going to tell you. one thing is, they don't have babies. that seems to make them quite a bit different. this is the first year where the white man is going to be smaller. they are causing the white man to be extinct. that seems big. they also have the lowest marriage rate since the history of our company. when i was a kid, the great american dream was to own a house, not so much with them. home ownership is the lowest it has ever been. we have been wrong about that american dream. it changes almost everything. they don't buy diapers. they all have pets. so they buy expensive dog food. if you have stock in petfood, it is going extremely through the roof. the changes are extraordinary. yet, we are wrong about them. it kind of bothered me. i was watching squawk box. i wonder if everybody goes away with that confirmation boy ias
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concludes the wrong thing. the ratings, they have 100,000 people watching. i know it is about the same of a michigan home game. about a crowd about that big. they are very important people. if they go out and they have the wrong thing -- there is one real important thing in there that has to do with education. they are going to be very good workers. here is one big difference between my generation and the others. the baby boomers produced jill yuns of babies and started a whole bunch of new companies. the other thing meillennials don't do besides not having babies, they don't start companies. that needs to be fixed somehow. education is probably not doing that. what we have done, when we ask
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them where they are right now, they are in a whole different state of mind because of what? saddled with debt. if you ask me, do you think there is going to be money for your retirement? how about for your kids. some for my kids. how about for your grandkids? i know there won't be. if you take education, housing, health care, it may not be as simple. it is more complicated in how they make the decisions, the clarion call we make. all of them seem to be tied somehow to growth. i've been trying to stretch my thinking, debra, since we started this project. i keep getting surprised so much. if you said, what did you figure out and the report, i think, is maybe coming out noumt have you can read yourself. i am trying to make some reckless remarks here.
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so we know we need more growth. i can say this to this group. my business is selling innovation. when we say, how do you fix our gdp and this problem. we know we need to get the pie growing. what are you going to do to get the pie growing? we have all concluded the same thing. we did it with our own confirmation bias and we are wrong. we think it is just innovation. so we just keep building up innovation and spend hundreds of billions on innovation. read "the wall street journal," either yesterday or the day before. we have a record number of patents. since 2000, it's just boomed. innovation, we are blowing it through the roof. so how are we doing with new companies? it's the lowest it has ever been. so we just keep booming, because
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somebody told us innovation creates companies and we don't consider it. we don't consider the other side of it. maybe it doesn't. of course, it's a big part of it. i will just flow it out to you. what if innovation has no value whatsoever unless it is in the presence of a customer. we don't think about that. what if innovation has no value at all until it has a business model that works. are do you all know who vince turf us? >> he and bob khan got the packets and they invented the internet. he was doing his job. he had already built that thing at dartmouth so we could send signals. a guy came over from the u.s.
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senate that loved technology, let me see that thing. vince went, oh, my god, it is the greatest thing i have ever seen. can i go back to the senate and pass a bill and throw it out to commerce and see what they can do with it? what a conversation. >> you know what vince said back to him? fine with me. i don't see what value it will have to business. do you know who the senator was? yes, it was al gore. i'm the only guy in the world that tells a nice story about al gore. think if al gore hadn't come over. maybe he knew that innovation had no value. what about another $100 billion for the dartmouth piece. maybe when we build institutions of innovation, somebody better raise their hand and say, it is not making the pie any bigger. it is not fixing that right
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there. what fixes it is when somebody actually starts a business. there has been about 26 million companies, of the 6 million, 4 million have only 1.4 employees. there are only 2 million business. that's getting smaller. we keep working on innovation. the part that fires and creates customers, that's getting smaller. we keep working on this one. that fits our confirmation bias. i think i'm going to weend with this point. i think this will make sense. here is where you have hope. if you're an engineer, you look for solutions where you find
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variation. so these terrible numbers aren't consistent across the country. so you have some states that are probably never turning themselves around. i don't know what you do with illinois or california. they are so under water. then, you have other states that mack a profit. florida is killing it. i was out in wyoming. they are printing water out there. i don't know what's going on. you see the variation. i get a kick out tennessee. that's a good one for researchers. obviously, the same country, same laws, same state, same governor. all the legislation and all that. you have two cities in there with very different outcomes. one is memphis. one is nashville. memphis is really struggling. nashville is killing it. what it does is it gives you hope. leaders of these communities,
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specially by cities, even more by states, can change the outcome of america. i noticed, debra, that somebody turned our story into obama's failure or something like that. if you look at that line, do you know what conclusion you can have that's way outside of confirmation bias. you could ask yourself, how much does the president really change the country? >> obama's line is bad. so is bushes. you go clear back to where there was a big lift. reagan had a big lift, went down a little bit. s clinton came back a little bit. i throw this out to you. when we say things aren't going well, we say, we need a new president. that one is no good. bush is no good. let's go clear out and try this one. i'm just wondering if there might be more solutions from the leadership of america. maybe 10,000 of us, maybe
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100,000 of us than there is with the president. thank you, again, debra, for all that you do. congratulations on the 30 years and thank you very much. presenting his views on u.s. leadership in the open economy and how an improved tax policy will help keep the u.s. competitive and create opportunity at home and abroad. please welcome the chairman and ceo of fedex, mr. fred smith. good morning, everyone. thank you for having me here today. that was an important presentation by jim clifton, a minute ago with a lot of very sobering information.
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before i get started, let me first congratulate president-elect trump and vice-president pence. i think the caliber of the presidential cabinet candidates is quite reassuring given the many economic challenges the united states faces today. our economy has been growing too slowly as the presentation just before us certainly underscored. our national debt has increased from 63% to 105% of gdp just since 2007. the u.s. now owes, again, as jim mentioned a moment ago, almost 20 trillion dollars and this is projected to grow. federal investment is at the lowest level since the late 1940s as a percentage of gdp. net business investment is
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subdued. infrastructure is deteriorating. protectionist tendencies are increasing here and abroad. the election results certainly show that too many people feel they are being left behind. some blame these problems on trade. but the facts indicate otherwise. history shows people have always wanted to travel and trade. today, it is stronger than ever. with our constantly growing dinl ta digital economy, anyone with a mobile phone can reach digital markets p with a higher standard of living. fedex is at the nexus of global trade. we move shipments every day.
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we see the value. in fact, although jim said we are not up to par with our friends in nashville, the largest clearance port of entry in the united states of america is the memphis airport where our fedex superhub is located. we at fedex are passionate about supporting trade. we consider all fedex jobs to be trade jobs. we have over 450,000 team members around the world who help enable the supply chains of company frs the united states to uganda, from singapore to south africa. we know that trade means more market and greater opportunities for u.s. companies, specially small and medium businesses, which comprise about 97% of u.s. exports. based on what we've seen over the past 40 years at fedex and beyond that from 20th century history, we know several things
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to be true. centrally planned government directed economies simply don't work. they can't sustain growth. they can't respond quickly to changing market conditions. they innovate more slowly and they don't attract much foreign investment. look at what's happened in socialist venezuela. when the price of oil was at an all-time high, the government used its revenue toss fund massive social programs without investing to diversify the economy. when oil prices dropped, the country had to discontinue most of those social programs and could not even afford to import basics such as milk and eggs. grocery stores, shelves stood empty and citizens stand in lines to get basic food rations. protectionism doesn't work
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either. november 25th "wall street journal" article examined the impact of brazil and argentina's professionist policies based on high tariffs and promotion of domestic production over imparts. such policies have, indeed, created factory jobs but they have come at great cost to consumers who pay higher prices for goods and to tax payers who foot the bill for the subsidies. the article notes taken together, these measures essentially transfer wealth from society at-large to a smaller group of workers. a december 2nd article in the "new york times" did an excellent job describing global supply chains and u.s. manufacturing dependence on imported content. it discussed the reduced competitiveness u.s. manufacturing firms would experience if the prices of their inputs were to rise because of new tariffs. we have the best example of protectionism from our own
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history. the devastating smoot/holly act of 1960 raised tariffs of more than 20,000 items. this contributed to a 66% decline in world trade from 1929 to 1934. this misguided act of congress ignited the great depression. in 1934, with the leadership of secretary of state cordell hull, a good tennessee an. franklin roosevelt overturned the smoot hawley act and established the trade policy the united states has pursued ever since, one of competitive, open markets. history has shown repeatedly that free market economies create human opportunity. the post war general agreement on trade and tariffs or gap, which sought to reduce tariffs,
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was a decisive factor in the post-war growth of the united states, which became the richest country in the world. u.s. trade policy was a major factor in the recovery of japan, germany and other countries. trade got its fair share of attention in the recent presidential campaign. much of what was said is inaccurate. first, trade is good for and absolutely essential to american prosperity. trade is a two-way street in which both imports and exports are vital. the u.s. exports goods and services. in 2015, the united states exported more than 750 billion in services. we also import products for other countries, imports secure materials created for american products and give our families more choices and lower prices.
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from 1960 to 2015, trade rose as a percentage of u.s. economic activity according to the world bank from 9% to 28%. even though we are the world's largest economy, 80% of the world's purchasing power and 95% of its consumers lie outside the united states. our farmers have allowed foreign markets to remain financially strong. in fact, one-third of all american farmland is planneded for exports. american manufacturers depend on foreign markets with about 25% of all manufacturing jobs in this country being supported by exports. overall, trade supports over 40 million u.s. jobs or more than 1 in 5 in our nation. tens of thousands of those jobs are at fedex.
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trade-related jobs pay an average of about 18% more than nontrade-related jobs. in general, trade has added more than $13,000 a year in purchasing power for the average american household. the second fact about trade, market access and e-commerce are changing the nature of trade. thanks to the internet and global logistic services, e-commerce is booming. worldwide retail e-commerce sales are approaching $2 trillion and are projected to succeed $4 trill by 2020. cross border growth will unlock more potential for companies of all sizes. let me give you one.
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great example up the road. fedex customer, oragine technologies. they develop rna, dna clones, antibodies and plasma used for research. starting with 8 employees in 1986. they now employ 80 in the united states and approximately 500 worldwide. their network of international distributors reaches more than 35 countries. fact number three, the u.s. wins when we enter free trade agreements. u.s. has free trade agreements in place with only 20 of our trading partners. contrary to public perception, the united states enjoys a surplus with those trading partners in manufacturing and has global surpluses in services in agriculture. according to the department of commerce, our 23 trade partners buy nearly half of all u.s. exports on a per capita basis,
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these 20 countries buy 13 times as many goods and services as other countries. that's because free trade agreements remove barriers to our goods and services and make our exports more competitive. these free trade agreements are the solution to trade deficits, not the problem. american workers and businesses need agreements like the trans-pacific partnership. it is an important step towards achieving free trade agreements between the u.s. and 11 other countries in the pacific rim. we are 100% behind tpp. this recently negotiated agreement will unlock more trade opportunities with these other fast-growing tpp countries. tpp represents more than 480 million potential customers for u.s. businesses. the agreement would eliminate 18,000 tariffs on u.s. made
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products, thus increasing global demands for american-made goods. it will spur greater investment in the united states, which correlates directly to new jobs here. our strong recommendation to the incoming trump administration is not to abandoned tpp but to improve it towards full free trade which president-elect trump supports with these countries. there was also a great deal of negative talk about nafta during the election campaign. but, in fact, nafta is the linchpin of our current economic competitiveness. here is what nafta does. it eases trade among 450 million people in the united states and our trading partners, canada and mexico. nafta trade more than quadrupled in 20 years, which boosted the economies of all three countries.
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na nafta has made the united states the center piece of a huge north american production platform. nearly 14 million u.s. jobs depend on trade with canada and mexico. economists, gary roughbauer, estimates that nafta makes the united states about $127 billion richer every year. u.s. private sector jobs have increased by more than 29 million. a 32% rise since nafta began. nafta was written in the 1990s. the nature of trade has changed substantially mostly due to the internet an the digital economy. modern trade agreements like tpp address 21st trade issues such as e-commerce and state-owned enterprises and small businesses and global supply chains. all these improvements, plus others in the areas of labor and environment are included in tpp.
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if president-elect trump wants to improve nafta, we recommend he start with these types of provisions, many of which have already been agreed to by mexico and canada as part of tpp the new administration may want to address the advantage that mexican exporters receive on all their exports to the united states. we don't have similar rebates on kofrpt taxes made on u.s. made goods. this puts our exports at a serious disadvantage. nafta could be updated and strengthened as noted. withdrawal is another matter entirely. there are a myriad of reasons why that would be catastrophic for the u.s. economy. the main one is the nature of american supply chains. few people understand how nafta has woven the productive x capacity of north america into
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one integrated platform. the united states, canada, and mexico make so many things together. 40% of the value of mexico's exports to the united states is u.s. content. the auto industry is a great example. it has been said that the average american car crosses the u.s. canadian border seven times during its production. november 10th "wall street journal" article cited an example of which a seat had parts from four u.s. states and four mexican locations. nafta makes the u.s. one of the most attractive nations in the world because of the value-added productivity because of canada and mexico in one integrated north american supply chain. if we could complete free trade agreements with asia and europe, the u.s. could, in fact, become the undisputed champion in manufacturing once again.
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withdrawal from nafta would have massive repercussions. thousands of chains would have to ship their supply chains at great cost and disruption of their business. americans should understand that pulling out of nafta does not ensure that production in mexico would come back to the united states. in fact, it is possible that many u.s. manufacturers would either find suppliers in other countries or use mexican production to export to other markets, because mexico has 40 plus free trade agreements, double our level. we talk about tpp and nafta. we haven't mentioned the huge economy that is part of neither of those agreements, china. >> the u.s./china relationship is the most consequential, global relationship of the 21st century. it comprises the two largest economies in the world. two economies na are highly int
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dependant. we have numerous common interests and challenges and many of the toughest global issues cannot be solved without china/u.s. cooperation. for years, the bedrock of our relationship has been based on three principles. first, that china's rise is good for the united states. second, that both countries must work together where we have common objectives and, third, we must manage our differences carefully so they don't spiral out of control. those three principles are still valid and should continue to govern our relationship going forward. both sides, however, have to acknowledge that attitudes in the united states are changing towards globalization. international trade and china, itself. let's look at these changing attitudes crystalizing in the minds of american business leaders, policymakers and the
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public. no one can reasonably deny that china joining the wto has brought about enormous benefits for china and overall the rest of the world. having china inside the global rules-based system will always be preferable to having them outside. china's wto membership has brought great benefits and opportunities for consumers and companies around the world including fedex. it has also propelled dramatic economic growth and change in china. let me note they strong pli advocated china's entry into the wto. it was the write call then and it still is today. it is important to note there are tradeoffs. many people here have bhn hurt by china's economic rise, specially in the manufacturing sector. when we talk about the manufacturing issue, it is important to note not all our problems can be blamed on china. much of the u.s. decline in manufacturing employment is due to automation and productivity
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improvements. even so, u.s. manufacturing output was more than $2 trillion in 2015. we make things today with fewer people. that will continue into the future. it is important to note our trade deficit with china is really a trade deaf sis wificita and the vast network of asian supply chain into china. even if we enforced massive tariffs on china, much of their production would shift to vietnam. tariffs on china will not bring back large numbers of low value added jobs. training our workforce for the future and reforming our tax code will grow high-paying manufacturing jobs here in a truly open trade regime. protectionism will reduce them. let me be xleclear, there are legitimate concerns about chinese merchantile policy that
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is promote domestic companies and their industries while restricting foreign competition. a list of troubling chinese economic and trade policies includes the indigenous innovation initiative, support of massive champions, massive investment in state-owned companies, intellectual property violations, including cyberespionage and forced technology transfer. fedex has experienced protectionist policies in asia firsthand. so i know of what i speak. both japan and then china tried to deny fedex our commercial rights. japan and china did this trying to protect domestic competitors. many other western companies have faced similar forms of protectionism. he prime minister o bay in japan and president xi in china are well aware of their economic
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challenges due to protectionism in their country. prime minister abe has taken a strong stance in favor of tpp against domestic opposition in japan. in the same vein, president xi has supported a more open and dynamic chinese economy with a more consumer driven gdp. unfortunately, progress has been slow as evidenced by recent decrease for state-owned enterprise. the growth in the last 20 years has been remarkable. china is now approaching the out ter limit of investment and export-led merc can tee-led growth. history shows that china will not be able to take the next more difficult step of chance significancing to a higher income company while still a state-run economy. china need only look at what's happened in japan.
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its merc can tee list for so many years gradually slowed its economic growth almost to a halt. that's why japan embraces tpp. it does not grow through that or support of foreign technologies, brands, and businesses while keeping one's own economy closed. instead, china needs to pull back from state ownership, reduce regulations and move towards becoming a true free market system. here are three recommendations regarding china for the incoming trump administration. one, make the u.s./china relationship a top priority to avoid a downward spiral in economic and commercial relations that would harm millions of people. this is critical. peterson institute has modeled the impact on the u.s. economy from a full blown trade war with
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china and mexico. the results are not pretty. it would throw the u.s. into a recession and cost us close to 5 million jobs. the president of both countries must president of both countrie must commit to maintaining the relationship as we work through our differences. second, we need to focus on increasing u.s. exports to china than restricting chinese imports. we need more trade not less. this requires the trump administration to address both chinese and u.s. policies that in exhibit u.s. exports. of course we must be prepared to address situation where china and other countries export to the u.s. in violation of trade rules. the trump administration has an extensive array of tools to apply in those situations. equally important the u.s. should not ignore the services sector. export services jobs pay wages
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that average 20% higher than the united states average. the u.s. enjoys a huge comparative advantage with the services trade surplus of over $250 billion. private services account for about 68% of our gdp but only about 50% in china since so many important service sectors are closed. opening these will help china with their own objective moving from consumption to gdp. bilateral investment treaty negotiating with china could give first opportunity to get a better bilateral agreement and help china achieve its internal market with foreign gold. third, we need to enforce our trade agreements and address policies that penalize u.s. economies and our workers.
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but of course we must act consistent with u.s. law and wto rules. after all, the u.s. has been primary architect of rules-based system since franklin roosevelt's administration. it's important to recognize blanket tariffs imposed across the board are not the right response. such a tariffs will erode rules-paced system and undoubtedly release a wave of protectionist retaliation around the world. china should understand that under a trump administration, there will be stronger and more p ra i had consequences for closed door commercial practices. how china reacts will be critically important. all the while, we support president chi's stated commitment to a more open chinese economy. to these ends we hope trump administration will take another look at tpp and real estate not only its benefits to the united states but also the consequences
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if an kbrooft verse is not approved. tpp is the bull park against current chinese practices and china is aggressively moving forward with its own trade agreement in the region. the rcep, regional comprehensive partnership. many countries said without tpp, they will have no choice but to move closer to rcep. we your honor trump administration to put a stamp on revised tpp by addressing any concerns it sees and making any additional improvements to promote trade rather than redistribute it. we also hope that other existing trade negotiations can be picked up and strengthened under the trump administration. the two most important of these are trade and service agreement or transatlantic trade and investment partnership or ttip
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with eu. trade facilitation agreement. it has been ratified by countries and needs eight more to come in effect and reduce customs and administrative costs by 14%, which is significantly more than the average global tariff. and finally i would note that the trade promotion authority or tpa that congressly passed has a detailed list of all the areas where the u.s. has a comparative trade advantage. we need to lean into those opportunities rather than walk away from them. finally it's important to recognize that u.s. success in the world economy depends on three other changes. first, we have simply got to overhaul our corporate tax code. our 35% corporate tax rate is
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one of the highest in the world and is inconsistently applied across industries. in addition, the united states and chile are the only two -- the only two major economies with a worldwide tax system. this means we tax earnings of u.s. companies anywhere in the world making our goods more expensive overseas and our companies less competitive. we need a territorial system like every other advanced economy. this combined with lower corporate rate will resolve many of the disadvantages i've talked about today and that were so central to the recent presidential election. a lower corporate tax rate and territorial system will equal more investment and higher investment means more, better paying u.s. jobs for american workers. second, we must train our workers for innovative jobs of tomorrow. a mckenzie study noted employers
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worldwide could face a shortage of 85 million high and medium skilled workers. we should strengthen our trade adjustment and assistant programs to provide for retraining of workers impacted by a global trade and automation. a large number of those jobs will stay in the united states if we adopt the policies i mentioned today. and third, we must modernize our infrastructure. unless we make major improvement to our roads, ports, airports, and other facilities, we'll lack the capacity to handle a growing economy and the global supply chains that support it. our federal and state governments must urgently work towards modernizing our infrastructure for maximum competitiveness. trade has made america great. and expanding trade has been a bipartisan pursuit for over 80
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years. the failure to continue to do so would be a severe mistake with enormous consequences for america and for the world. thank you. [ applause ] >> announcer: ladies and gentlemen, please join us in the foyer for coffee and refreshments. programming will resume promptly at 10:20 a.m.
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coming up here, the competitiveness council day long forum on growing u.s. businesses, recommendations for the trump administration. leaders of key past initiatives talk about agenda for future growth. all day saturday american history tv on c-span3 is featuring programs about this week's 75th anniversary of the japanese attacks on pearl harbor beginning at 8:00 a.m. eastern national archives christopher carter reads from u.s. navy logs describing events on ships that were under attack on pearl
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harbor followed by pearl harbor burial at arlington cemetery, one of the 19 casualties aboard "uss oklahoma," his remains were recently identified. at 9:00 pearl harbor attack suits and memorials on the island of oahu with site historian daniel martinez. at 9:30, president franklin d. roosevelt, 1941 speech to congress asking for declaration of war followed by pearl harbor 57th anniversary at pearl harbor co-hosted by national park service and u.s. navy. and from 11:00 to 1:00 p.m. we're taking your calls and tweets live. ian toll author of "pacific crucible" discussing the pacific war from the attack on pearl harbor through u.s. victory over japanese at the battle of midway. at noon eastern paul traverse, "eyewitness to infamy, an oral
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history." giving a behind the scenes attack from his more than 200 interviews with pearl harbor veterans. at 1:00, pearl harbor 75th anniversary in washington, d.c., with keynote remarks by arizona senator john mccain. saturday on american history tv on c-span3. earlier this morning, the council on competitiveness released a report on the progress of trade in u.s. businesses. during this break in the live program, we're going to show you as much of that discussion as possible. >> i had started off by staying president-elect probably won't like his report card, so there's a lot of fs and ds and not too many as on there. i think the important thing that we're trying to highlight in the clarion call, that there is a way forward.
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when you look at where the economy has been, and this is really about accelerating gdp growth, and that really gets down into two components. that is how many workers are participating and what's the productivity that we're deriving out of that. a number of the areas that we're looking at in the clarion call, whether it be education, which gets into really developing the workforce of the future, whether it gets into assuring that we do start handling the debt, which makes it sustainable. whether it's continuing to invest in basic r&d, which is important to the innovation set of this, which also drives productivity, there are a number of areas there that we think are very, very important that we set a direction going forward. can you prioritize which ones you work on first. but all these areas are important to assure that the
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country is growing at a sustainable rate over a long period of time. >> what i love about the council in general and this panel is we have so many different backgrounds and industries and academia represented. mahmo mahmoud, from your perspective, what are you looking to accomplish on behalf of the council and clarion call? >> as i'm sure you've seen in the clarion call, when we think about opportunity for growth, there's still a lot of exciting opportunity out there. let me just take it from a technology perspective for a second. let's start with productivity we've had. we think about what everybody talks about, the confrontational power of microprocesses has gone to be doubling every two years or so. it's been an amazing few decades. that slowed down. one way of looking at it, the growth has been done. yet exciting technologies coming just around the corner that can
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jump-start again and give us another s curve. that's exciting because it's another wave of growth. it's not just exciting from an economic point of view but also it's important from a defense point of view. as many people in this room know, our military needs secure state-of-the-art microelectronics. in fact, the last defense bill required the secretary of defense to make that available by 2020. so a whole cluster of capabilities there. if we look beyond there in the more consumer industry engineering in general, we've got the internet of things. everybody is talking about it. everybody is starting to experience it. if you think of the capability of sensors, big data analytics and the ability for communications between devices, we are living that only the surface right now. it's going to change the way
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which businesses operate, businesses use their labor force. the way companies like mine at pepsico engage with the future, we have an exciting wave of this coming, this link between individuals and machines with machines -- other machines. another area that is generated from this as you now take internet of thing, artificial intelligence, and now link that to robotics, look what's happening in manufacturing. we've seen a wave of that in manufacturing but driverless vehicles just another example. not only cars and automotives everyone is talking about but even around the potential of airplanes. i'll touch on that and in the end we have to be conscious that means a change in our workforce. we have a very large workforce that is part of transportation. what are we going to do with that as that technology and growth comes? and the last piece i left at the
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end because that's my background and i have a lot of passion for it is the opportunities coming in biotechnology. if you really think about what biotechnology has done, a human genome, can do it 24 hours for about $1,000 bucks. it's going to get faster and chooef cheaper. what's the implications. take a technology like chris per, where science can go in, very precisely edit a gene sequence in an organism. it has profound implications when used for good. let's take an example. somebody born with inherited disorder because of inherited mutation, the ability to go into their bone marrow and change their stem cells or go in and identify a plant variant more drought resist ability, higher
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yield, pest resistant because we can select certain genes. that is revolutionary. remember, we have to feed 2.5 billion more people in this planet in the next 25 years. in closing on that part, i would say, look, lots of these -- these are just examples. one thing we have to do when talking about technology we cannot leave large parts of technology behind. technology has to lift everybody. as multiple stakeholders we've got to engage people, talk, discuss, agree on what's good for society and invest behind it. i'm very excited for technology and that's where our clarion call is coming up. >> it's going to be up to you to train all these advances. from your perspective, what do you hope to accomplish this year? >> the first thing to point out, this is a tremendous country. we've been tremendously competitive decade after decade.
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we've done things unbelievable in the an al-- anals of human history. there are three things that work. one is the overwhelming force of creative destruction where every new idea replaces a new idea, every configuration replaces a new configuration. in that if the industry isn't capable of making adjustments, more and more will fall back. while we'll have fantastic achievements in some sectors, we'll have weakening in the overall economy which is the case now versus previous decades and very negative set of impacts in terms of people being left behind. so what's happening now we haven't matured enough. our eye is not on the ball.
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these rates of change, as we just heard, are so fast that rather than taking three generations for a change to be implemented, there's five major changes in a single person's life. five transformative things that would affect a single individual. what that means then we need to dramatically enhance focus on the ball. focus needs to be on the continued development of ideas. underfunding the basis of from which these ideas can emerge. lots of other people stepping up, other nation states, other parts of the world. we have been stagnant and not moving at the speed we should be moving. i place that as secondary issue to principle issue of people and people develop. we have a poorly articulated, poorly developed and very weak immigration policy on every front. the country built on the nation
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of driving forward, driving creative destruction forward through immigration. education and training of new immigrants and citizens, so that's something that needs to be worked on in our report. that gives a poor grade for our policy and all that i think the i think we're not doing we're arguing about super silly things, what's the role of government in this, what's the role of government in that. the government has always played a role in the preparation of the workforce by investing in the next generation through schools and through universities and so forth. we've literally, literally -- we're so far off the mark, so far off having our eye on the ball, not through the resources allocated but through the mind-set. we don't realize that everyone has to graduate from high school. if you're not graduating everyone, the entire system is a failure. because those people will not be employable. they will become wards of the state. they will be concentrated in
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nothing but income tax transfers. we need new schools, new ways of thinking. new ways of moving forward, new ways of organizing universities, et cetera, so that we can find a way to actually produce. individuals have the capability of being competitive themselves. competitiveness is not only a function of the national net competitive outcome, it is function of the algorithm of derivative of the individual's competitiveness. so we have far too little focus on the individual and preparing the individual to be competitive. i passed an uber test vehicle in phoenix the other day. there was no one in the front seat. it was driving. there were people in the car no one was in the front seat. i was at a meeting in morocco where someone stood up from a major technology company in the united states and said, what we need to do is replace 3 and 12
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million job of people in the next 10 years by people displaced latest changes of computational technology, artificial intelligence and decision making systems. are we pred to do that? he said, no, we just need a tax system to give them money so they have something to eat. well, that's nuts. we need competitive individuals clustered together, advanced through lifelong education, who can continue to be competitive at higher and higher and faster rates of change and that's the algorithm we need to figure out and we haven't figured out. >> debra, how do you tackle some of those challenges and goals and turn them into reality? >> well, i think one of the most important things about the council's clarion call, we've been issuing this for a number of years is we recognize there's not one silver bullet. this is an integrated system. and if we can really make progress in partnership with
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public policy leaders, congress, leaders in this room with sectors, we can tackle some of these." we really have to look at this going forward all front. yes, we can get corporate tax rate down to a level comparable to competitors. finally a recommendation we've been calling for many, many years is move to territorial tax and get $2.6 trillion that's overseas back into the u.s. at an appropriate tax level. we can make progress also on some of the issues around our regulatory burdens. but the things my colleagues have been talking about, these are our competitive advantages. so i think the message i really want to convey is let's get our house in order on the things we can do that put us right now at a disadvantage to our global competitors around tax and the debt and regulation and just turbo charge on these
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competitive advantages around the technology transformation and the people in america. >> i wonder if improved growth outlook referring to and some of the pro growth policies that are set to come in action, the stock market at a record high helps tackle some of these more structural issues. in other words, if the growth is the medicine that's been missing over the last few years, which has made it so hard to prioritize some of the issues you're talking about. >> i think it certainly will be an enabler of bringing people together. i think some of the stimulus that's b being talked about, that does not create long-term sustainable growth. what it certainly does is turbo charges in the short-term. and when growth is stimulated in the short-term, that makes it a little easier for everybody to come together and say, okay, how do we work together on this long-term problem, ones we've been talking about. i think the important thing for people to recognize, though, is,
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i mean, you can change the tax rates, do all those things, that will drive a spurt in the economy but you have to change productivity equation long-term if you want loan-term sustainable growth. so it will be very important, and that's where the council can help, i think, in making sure everyone is focused, okay, how do we tackle the big problems, things like what michael has talked about while we are experiencing this near term stimulus that's brought about by the changes that are sure to come with the next administration. >> i was just going to emphasize, look, i touched and talked about the exciting opportunities of technology. i want to come back to what i ended with. if we don't deploy all of this exciting opportunity in a manner that lifts everybody, then we're going to have a worsening of where we are today. looking at it purely from food industry perspective, 50 to 60
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million americans today that live on subsidized food, food stamps one way or the other. that's about one in five americans today. if that part of the population is not given -- not just financial means and subsidies but meaningful work, people don't just want to be given a hand out. i don't care if it's government or private sector they want to be engaged participating in society, having a voice but also contributing. that's part of what we are as human beings in any society. i don't care where you are. that needs to be focused on. it can't be done by any one sector alone. what the council is doing is pointing out gaps and proposing real pathways forward of how multiple stakeholders, everyone in the room working together. i think that's an important point michael is raising. technology is an enabler, it's not a destination. >> where do you find that countries are outfront on this, michael, globally looking around
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the world as we look to a loss of competitiveness as you described it? who do you think our chief competitors or rivals we need to follow? >> there's lots of competitors and i think the nature of competition is good. competition produces better ideas, better products, better outcomings, economic growth, economic enhancement. we've got rise of asian tigers, fantastic competition coming from some of the countries in europe. stabilization going on in some of the markets in south america. a whole new conceptualizations. back from the middle east, thing going on there, all positive, positive, positive. the problem we've got is we're the rich family in the big house down at the end of the street that everybody now looks at and says, what's going on in there? meaning there's a lot of arguing going on in that house, a lot of stuff going on. so the thing we have lost, i think, perhaps compared to
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others is we've baseball coasting. we've been coasting on the investments of the past. we've been coasting on the steps of the past. we are unbelievably competitive launching missions to the moon and doing things that were going on in the 1960s and moonshot mentality and projects and achievements and all kinds of things. we can do all of that. what we haven't done is we haven't figured out yet how to help every individual to be competitive. if you live in the united states today, and you have only a high school education or less, there are nearly 25% fewer jobs for you than existed just prior to the recession. if you live in the united states today, and you're of european descent and you're a woman and you have only a high school education, your life span is going down. if you're in the bottom third of the american economy from an income perspective, 110 million people, something on that order, in that bottom third, you have
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no positive indicators. life span going down, educational attainment going down, incomes going down. family stability going down. there are no positive indicators. if we don't fix that, i'm not talking about fixing it from social engineering perspective but from a competitiveness perspective. there won't be competitive enhancements in the united states. you can't have a third of your population that's noncompetitive and hope your country will be competitive and that bottom third at one point will destroy or kill everyone else. so it's something that needs to be fixed. it's not something that's going to lead to competitiveness. >> how do you do that, debra? are you more hopeful as you describe a public/private partnership that at least we're coming out of some years of gridlock in washington, d.c. theoretically we shouldn't see it as intensely as it has been over the last few years. >> well, i think we're very optimistic at the council on competitiveness because of the people we have that are in our
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organization and our extended partners to really begin to tackle these very deep structural problems, but also the opportunity. i think we have to always be looking at the opportunity before us. and certainly now when i look back at the beginning of the council and during my time, we've just seen a plethora of very new innovative public/private partnerships that are not only large scale. when you think of the energy in manufacturing sectors and what we're doing there, you know, to bring together the power of universities and national labs with our large scale investments on the federal side, you know, no country in the world is doing that on the scale we are. mahmoud mentioned the potential with the next generation of electronics. i don't know if we're going to call semtech 2.0 but this is an area where we really need to bring together everyone that has a role in this to ensure we're developing and deploying the
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electronics and the sensors that are going to drive all of this new change in industry. i think in terms of our engagement with policymakers, this council is very proud that we are nonpartisan. we've worked across administrations, one of the sounders of senate preparedness caucus. we're prepared to be very aggressive, to work across the aisle to really move forward on implementing the clarion call for competitiveness. it's going to take everybody in this room and really, you know, the tremendous leadership we have in the council on competitiveness to do that. >> the common theme, are people training for education, preparing them for technology. as ceo, what would be on your wish list as you try to hire the next generation of folks who work at john deere hopefully as long as you have, more than 40
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years. >> when we look at it, our wish list, there's two sets of skill sets we're looking at. we're looking at the technical skill sets that we need to have against a lot of what michael was talking about in terms of developing those individuals. but then we're looking at the human skill set that we want, the ability for people to relate to other people to work in -- because we are in a very global environment, we're looking for people that can be very inclusive, work across cultural lines, very effective in that environment. both of those are very challenging, and there's what we would say right now both areas we need to do a lot of work on, both in preparing people to work in this diverse environment as well as getting the right set of technical skill sets we need to continue to move our company forward. >> mahmoud, we're just about out of time. i wanted to just hear from you.
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>> just quickly to build on that, we've all heard and talk about s.t.e.m. s.t.e.m. isn't just people with phds in engineering, s.t.e.m. is about quantitative skills. if we're going to fill this gap, we have to create a system where young people who may not have the opportunity or aspire to doing advanced technical training can get quantitative skills through our education system. there's a huge gap yet we on the industry side have difficulty recruiting and filling jobs that require quantitative skills. >> michael, can you leave with us a hopeful note? >> the hopeful note is that all of these things are solvable, understandable, doable. we deployed a math class last semester that has 40,000 students from around the country and around the world. it's called college algebra. it's not about algebra. it's a fantastic class with intelligent tutors, personalized learning platforms, move at your
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own pace. if you stay with the class, you will master college algebra. if you master college algebra there's little else on a technical or quantitative side you can't comprehend and can't actually master. what we're doing is figuring out how to teach everyone how to move not some people forward, not just great athletes forward, but all athletes forward. >> i'm going to take that class, by the way. >> yes. >> i've just decided. >> in our spare time. i'm sorry that we've gone over. i know debra and the team here at the council and sam will work their very hardest. it sounds like there's a long to do list. thank you very much, our distinguished panel and thanks to awful you for being here. i know it's going to be a great day. >> here on c-span3, we return live to ronald reagan building in washington, d.c., for a day long discussion on competitiveness and the economy. corporate ceos are joining university and labor leaders,
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directors from national laboratories and select government leaders to discuss the u.s. ability to maintain its competitive edge. ♪ ♪ ♪ ♪
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ladies and gentlemen, please welcome back to the stage council president and ceo, the honorable debra smith. joining her to discuss impact of council's policy recommendations over the years and to help set the agenda for future insights will be the former chairman and ceo of intel corporation dr. craig barrett, president
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emeritus of georgia tech and secretary emeritus of smithsonian institution honorable wayne cluff. and dr. william goldstein. [ applause ] . thank you. i hope you recall liked our quick panoply of the council. we couldn't highlight everything but gives you a snapshot of where we've been and what we're doing for the country. we have a wonderful guest that arrived today. he's going to make a few remarks. senator jerry moran, republican senator from kansas, co-chair with senator chris coons from delaware democratic side of the bipartisan senate competitive ne ness. senator. >> debra, thank you very much. i just came from a squawk box interview in which i decided i
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must not have been saying the right things about competitiveness. a minute and a half in, breaking news, new ceo of coca-cola. i'm listening to news and thinking, surely they are bringing me back. having failed to have full time in front of the squawk box audience i decided to visit with you and tell you something i would have said had i had more air time this morning. senator coons and i are honored to serve in capacity trying to bring members of our congress and staff together for purpose of promoting an agenda that is about competitiveness. as i was explaining in that interview, competitiveness is a nice word for jobs, for better jobs, for higher paying jobs, for job stability, an opportunity to find policies that create the chance that more americans can achieve the american dream. and so while competitiveness might sound like something
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technical or policy oriented it's basic toward the economy. let's make the opportunity for every american real and let them have the chance to pursue it. so thank you for your efforts. we will continue to try to find ways to work together. i am hopeful. i look at elections as similar to must year's day. a hope good things happen in the future. senator coons and i are committed to helping our colleagues, whether republican or democrat, finding the sweet-spot in the agenda that increases the chances the united states will remain competitive in the global economy, that certainly means front and center for congress in the future, tax code, repatriation, regulatory environment, trade, access to world markets, technology advancements, education and training workforce that is
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highly motivated. those things matter greatly as we try to make certain good things happen in america today and in the future. coming to congress mostly related to work with the coffman foundation on entrepreneurship how do we restart opportunities for someone that has an idea they developed in their backyard or born, take it to market. become a country of startup businesses that our country historically has been. my pleasure to be with you today and thank you for efforts to make sure congress has an agenda that will achieve the things that are important for our country. again, thank you for the efforts. we look forward to working in 2017. >> thank you so much. >> well, i think many of you know that innovation and technological leadership and the nation's position in research and development has really been that the dna of the council on competitiveness since our inception 30 years ago.
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we did some of the first critical technology lists. we had a great report that our first distinguished fellow eric glock who just sadly passed away did on reinventing r&d. and the list continues. i wanted to start this conversation about with three tremendous leaders at the forefront of technology throughout their careers, about what really was the genesis for some of the work that you all did with the council. i might start with you, wayne. as our vice chair for industry and even before, when you were president of georgia tech, you were really doing some very innovative things on the regional front and then ended up leading one of our major projects on regional innovation clusters. tell us a little about that story and the impact of it for the country. >> thank you, debra. again, congratulations on the 30th. i think when i was president of georgia tech, i knew i had a lot
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of things to do. one of the things i felt lacking was connection between what we're doing in the context, national context. so i talked to some people who i felt were friends and mentors and they all thought council for competitiveness was where things really happened and you brought together industry, government, labor, and private industry to do things together. so i had that myself. it was a real positive experience. a lot of time invested in the council and every bit of that came back to me, more than i invested in it, then had the wonderful opportunity to work with debra and be vice chair of the council. it's been continual, all these great leaders that continued to add to our national fabric on competitiveness. we had the great honor to coach here, national innovation
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initiative in early 2000. i think what people forget about led up to that, the lead up to that is a very important part of the work on the council. michael, who we saw last night on the video, worked on the cluster study. we did cluster study in atlanta, it was a seminal study. it helped atlanta understand the economy and redirect it to get the desired result. the council has been important to me personally. it's been important to my institution, which is obviously actively involved in these issues, and very important to atlanta and all of georgia and that region about making it successful and anticipating what's coming down the road. >> i think in that study also, you really saw a lot of leadership atlanta has across many sectors of the economy,
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from logistics moving into biotech and health and nano and so many others. did you think at the time we had a vision into the future that your city was going to be the dynamic global city it is today in these critical sectors of the economy that were just beginning? >> not really. i don't think anybody can anticipate these changes. atlanta had good fortune to have good political leadership as well, good civic leadership. we described this. the council works on national policy. national policy set the framework that allows you to succeed. that's where the federal government's role is. but innovation is local. innovation is regional. we were very fortunate to be rebuilding something called technology square, which we thought would be a great way to get corporations and government and industry working closely with the institution and with the city. with the help of a lot of people it worked. my successor, bud peterson, has
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done a terrific job with that. today that area is full of not only startup companies but major companies with research components locating their health care, retail, doesn't matter. logistics, they are all there. it really has been a core of the development of atlanta and the technology innovation sector as it's kauchld the council was -- you were there many times. you know, i think this idea we work together was not really understood until the council got involved. >> of course we were so fortunate to have great leadership dwayne ackerman khairul of the council when he was chairman and ceo of bellsouth, he was your partner in all that. craig, you've been in technology your whole life having coming coming out of stanford and leading one of our highest tech companies in the world, intel. but you've also been passionate about the investments and bake
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research and people and s.t.e.m. and everything. we were so honored when you and bill brody, when he was at john hopkins took on leadership to move national agenda on innovation forward. just share with us a little about the history and why do you think back in 2004 or 2006 we had a moment where we could jump-start and lead to america competes capacity. >> i think two things came together in that timeframe, debra. again, congratulations on 30 years. the beauty of the council is it's a continuingentity. a lot of these programs and national reports rising above gathering storm, we talk about three appear. there's not a lot of follow-up. the council gives follow-up. innovation in my mind has always been driven by a couple of key things. some of them are in your report
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card. it's really driving basic r&d budget, federal r&d budget, you know, just i'll paraphrase my assessment of where we are in each of these as we go along. federal r&d budget we've been trying to double that forever. it doesn't score very highly on your report card. put that in perspective, the company i worked for intel has a way bigger r&d budget than the national science foundation and probably the department of energy combined. one company. so it's critically important we've been pushing that. the other one is education. you heard people talk earlier today, michael, very eloquently about education. i have a very simple model there, which is the earning power per capita gdp in the u.s. is going to depend on the average level of education of
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the workforce. these are the results of our k-12 education came out this week. we are mediocre to bad in all three categories. even though we have the best research universities in the world, the fraction of our folks with postgraduate -- post secondary schooling, we're now something like 15th in the world and we used to be number one. and then the government environment set up to promote innovation. you heard today talking about tax rates and things. sometimes i think it's important to look at the big picture on all of these, which is what we try to do in the council. don't get excited about little line items where you have success where if you're failing overall mission you have to admit you're failing. maybe we'll get a corporate tax
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simplification incentive to do things out of the administration. we've had disincentives. give you an example of a disincentive. intel builds these massive manufacturing plants to make silicon chips. at present value one of those plants in the united states or in a low tax environment is well in excess of a billion dollars different. doesn't have anything to do with labor rates, has everything to do with u.s. tax code. it's very difficult to explain to shareholders you're going to take a billion dollars away from them just to put the plant in the united states. we haven't succeeded in that area at all. education, we're not succeeding, folks. building federal r&d we're not succeeding. the current incentives structure in the united states, we're not
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succeeding. a good message to give the president. >> i want to talk about infrastructure and advanced manufacturing. on the education front, in your post ceo life at intel, you've done some amazing things. doing some innovative pilots around the education in the state of arizona, do you think that some of these new ideas and opportunities that you're incubating can scale up, or do we really need to be thinking more at the local, state level to get a handle on some of these education challenges? >> well, i mean, you look at this whole issue of raising standards in common core, backlash of the federal government associated with that. education has to go on at the local level, driven at the local level, but there's some very key aspects of that. take washington, d.c., good example. we're in the middle of it. it's historically had worst k-12 system in the united states, maybe in the world. it is now the fastest improving
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educational system in the united states. the reason is that half of the kids are now in alternative situations, charter schools, not public schools. charter schools are competitive, innovative, got to raise level of public schools up. without that competition, d.c. would be zero in education. i'm a big fan of competition wherever you might be. it makes the whole system better. we've had great results with charter schools and they are absolutely scalable as long as the local state government invites this alternative competition in and supports it. there's still eight or nine states in the united states that don't allow charter schools. >> we're seeing arizona an innovative state in terms of education. >> arizona early adopter of competition the public school
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system, roughly 16, 18% of the kids in arizona are now out of standard public schools and in public charter schools. the public charter schools are kind of like the top 20 schools in the state. so competition works in that space. the entrenched beaurocracy doesn't like that concept but it works. >> so bill, you're a physicist. so i know if we were having a glass of wine, i wouldn't understand three-fourths of what's going on in your mind as an advanced physicist. i do know, of course, you are leading one of our great national laboratories in an unrivaled system of labs in the department of energy but also in other federal agencies. innovation and rapid technology development to solve big complex national missions is at the heart of what you're doing, but you're also leading the forefront in advanced computation and super computing.
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how do you really see in your role as a lab director, you know, the value of your participation with all of us here in the council and what are some of the thoughts you want to share on this critical component of the national labs in america's innovation ecosystem? >> thank you, deb rachrdebra. first thing i'll share, you're doing better than me understanding what's going on in my mind. also, just note that looking at the distinguished members of the panel, i've seen the only one without former emeritus beside their names. from a historical perspective on this than others but i would like to add my congratulations on 30 years of exceptional service to the nation of the council on competitiveness. i think from the point of view
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of national laboratories, it's notable the council is the only forum that i'm aware of that brings together the system of national labs with industry, with labor, and academia, the only organization period. i can't think of another place where that happens. and in doing so, the council has been to common cause. the system of innovation in this country from knowledge creation to application to scale up to commercialization, again, a remarkable accomplishment. in fact, in some sense, the council is the bipartisan policy equivalent of silicon valley in that sense, if you will. national labs, i think, are a critical ingredient for this. in fact, earlier, there was talk about capitalizing on the
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nation's competitive advantages. i think that the system of national labs that exist in this country is without question one of the competitive advantages that exist here and that can be brought to bear. in fact, we find increasingly other nations looking to the national lab system here in the u.s. as an exemplar and looking for ways to reproduce it. i've seen that personally in places ranging from brazil where there's an initiative under the council that we've been participating in and also including china, which is looking very explicitly at the u.s. for how to adapt or how to develop the kind of national lab system that they see as so successful here. the mission of the national laboratories and not to mention the 25,000 scientists and
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engineers is to perform long-term research and development in the national interest, driven by applications, though, in energy, national security, environmental stewardship. it compliments and is fed by academia's more curiosity driven approach and can help to bridge a potential, in fact, often realized gap between basic research and commercializable innovation. as you, i think, have noted, national labs being government owned contractor operated entities also bring public sector explicitly into the mix and open the door to i think a much richer set of public/private partnerships than are possible otherwise. the capabilities that are offered by laboratories are publicly financed, publicly
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funded to serve enduring national science technology needs. my laboratory lawrence livermore has primary mission the nation's nuclear stockpile remains safe, secure, in the absence of testing. however, the facilities and not to mention the know how that's required to do that, which includes the most importantful lasers in the world, as you know, debra, the most powerful computers in the world are available for a range of national leads and national missions. explicitly among them is the mission of transitioning technology and know how from the national laboratories to the private sector in the service of actually enhancing national
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well-being and increasing national competitiveness. this role, by the way, is explicitly recognized by department of energy. it's one of the missions of the department. i'd say the council has had remarkable success over the years in leveraging opportunity represented by its recruitment of the national lab into its circle of examples include initiative on high performance computing, which was so fukushimaful. here an example, by the way, of where i think council and laboratories played an important role in moving things forward for the nation but also in its -- what that niche initiative did for laboratories and us. recently in the area of advanced manufacturing where a very productive, explicit partnership has been formed by council of department of energy and national laboratories to make available the most advanced new
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developments in advanced manufacturing. in particular, to the private sector, and entrepreneurial sector. so i think those are some examples, and general how the laboratories have enhanced, i believe, and played a role and will continue to do so in the future. >> thank you. i would just add that you know, one of the things i'm committed, going forward in the council, is to really deepen the relationship between our labs, our companies, and our universities, and i know there's some congressional barriers to some of those things, how money is appropriated and things, so that's something we want to work on, but you know, you've brought up manufacturing and of course at georgia tech and under your leadership, you were one of the early universities really having major infrastructure, and research on manufacturing, and nanotechnology and the frontiers and craig, i mean, intel has
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been the innovator in the electronics manufacturing, and continues to do so. so let's talk a little bit, you know, from your perspective, about the future of that, because just looking at our time, i want to talk a little bit about that advanced manufacturing enterprise and what it means for our competitiveness, given the automation and all the transformation under way, and then have you all be thinking about what we should be doing for the future, the next 30 years. so craig, you talked about the cost and the scale and scope of the infrastructure that intel has in each generation of fab. there's a concern right now that perhaps we don't have enough of the next generation in america, so tell us a little bit about how critical this manufacturing technology enterprise is to the nation's competitiveness. >> well, it's critical.
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i mean, ultimately i think if the u.s. wants to have a healthy economy and growing economy and growing jobs, you need manufacturing here in the u.s. i mean, the facebooks and the googles are great, but you don't employ that many people in those companies and you don't, google is making a few things but the companies are manufacturing and making things and creating jobs that are critical so the whole concept of advanced manufacturing, but i do want to turn the tables on you a little bit. i'd much rather see our national labs spend their monies on what i believe is the national labs m mandate which is big science. there's no place oerp tther tha livermores, berkeleys and argonw photo light sources and such
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things, that's a national resource that everybody can come and use, and quite frankly i'd like to see it grow dramatically. today, if you want to, i happened to be on the berkeley advisory board. if you want to upgrade their photon light source, which is critical for pharmaceutical development, chemical reaction, there's all sorts of things. it's a ten-year-plus process to say i want to do this, i want to get the approval of d.o.e., i want to get my $800 million, $100 million a year to do this. hell, i come from a background where i want to build a $5 billion manufacturing plant from green field to output in two years and i can't stand to see a $500 million project span ten years, it's not competitive.two see a $500 million project span
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ten years, it's not competitive years and i can't stand to see a $500 million project span ten years, it's not competitive. it's not the lab's fault. they're hamstrung by the bureaucracy that exists here in washington, d.c. so i'd love to see labs grow. i'd love to see them grow in what i think is their great capability, which is big science, big computing, big science, stuff that georgia tech can't afford, stanford can't afford, because you just can't put those facilities in individual universities. and these guys are a national resource from that standpoint. >> i think you just gave us a great topic for a senate competitiveness caucus session next year to look at that challenge of how to reduce the time to get these large scale big facilities going and implemented in the country. >> i think one of the examples -- >> you guys just jump in. >> -- relates to bill's work and others in this room, was a high performance computing initiative that was done in conjunction with d.o.e. and the council, and it was a hugely successful
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endeavor. it created an infrastructure which they can use relatively easily and access the capability. they can't afford to operate the cooling systems and all the things that are necessary, and it came back to me when i was at the smithsonian. the smithsonian has 500 ph.d. scientist, people forget about that. craig knows because he's active at the smithsonian. they do a lot of work in the gee joe gnomics. you only worry about one genome, scientists worry about the millions on earth. fortunately we signed an mou with oak ridge and the smithsonian has direct access to the computing capability and the talent at oak ridge to help the smithsonian get into and use the facilities that it needs to do this. you think well that's just pure science. it's not, because 70% of the
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diseases are coming from nature, zika and all these diseases, and so understanding the genomes of all of these other species is critical to the health of the human species. so there was an example where i think it was very insightful for the council and d.o.e. and the national labs to set up this system that works. i do think there say missing component in all of this, and that is coming back to the local idea, i grew up in a little town called douglas, georgia, and the very southern part of the state of georgia. they fortunately have a great public school system because they're committed to it. they win science competitions in the state of georgia, and i go back and speak to the students and we try to get as many as we can to come to georgia tech, but there's a gap. there's a gap between all the things that we can do here as these big organizations and i think universities have lapsed their responsibility to reach out, to help youngsters in these
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small communities get the education that they need. great opportunity with the digital capability and the maker systems and digital printing, for all this to happen back there in those schools. and i think that's, we're missing a link there and an exciting part to reach a part of the population we're not reaching. >> bill? >> so maybe it will disappoint you but you're not going to get an argument from me about anything you gentlemen have brought up. in fact, i would say one of the issues that stands in the way of better utilizing the rabb toirz and making them more of an engine for innovation and for growth, frankly, is, has to do with the regulatory environment that we all live in but the laboratories as an element of the federal system has to deal with, and i would be interested in the possibility of that kind of a dialogue going on.
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i did want to just pick up on something, you talked about this idea of reaching out more and bringing in schools and education, because i think education was a major theme earlier this morning. it was one that really struck a chord. it's something that i think actually the laboratories could do more of and play more of a role in with the council, with the other components of the council. we started over the last two years hosting under presidential initiative my brother's keepers events at the laboratory, where the first year we brought in 70 students, middle school students, and i think over 150 middle school students just last year from the surrounding school districts, from san joaquin valley reaching all the way to oakland, and san francisco, and watching these students, many of whom, well, almost all of whom had never experienced a kind of
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big science that we could show them, watching them react to that and i have to say the inspiration that just spending a single day at the laboratory watching that sort of thing and becoming aware of it gave me a tremendous feeling of hope and the idea that many of these junior high school students who maybe never would have thought about going, becoming quantitatively adept, and going into fields, s.t.e.m. fields, just doing that i thought could woo have tremendous impact. think how much more impact we could do coordinating this amongst the parts of the council and i think it would work tremendous things for the laboratories and for the missions here. >> deborah, from a retiree who raises cattle and bison in montana to come to the stage and talk about innovation is kind of
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interesting, but i would really like you guys to take one thing to heart, and that was, with michael crowe said this morning that you've got to bring everybody in the system along, and until the average education system in the u.s. is world class, you got a hell of a job in front of you, and we dance around that, you know, pisa sults showing mediocre results are in the headline for one day and disappear. nobody picks that up. nobody takes responsibility for it but it is the achilles heel of this country and we're not going to increase the nun of workers with post-secondary schooling until we fix the primary and secondary school system of the u.s., k-12. that's physically broken today on average.

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