tv Public Affairs Events CSPAN December 28, 2016 1:45pm-3:46pm EST
and whatever that finally looks like, we know that the threat is growing and the capability that we're going to need in the future is more than we have now. that much we agree on. the nuances of where the trade space is and what the final fvl cap set three looks like and system looks like, i don't want to say those are small details, they are not. but we all know that we need to advance our capabilities. that we agree on. so i don't know if that was out of the park. >> i can't resist making one other point that really came up from what you were saying, we had an event here yesterday focused on invasion. and the doctor from darpa was one of the panelists. she made the point that really sort of game-changing innovation, a lot of times it is not about changing a specific technology
or a specific system, it is about a new architecture that enables an entirely new set of capabilities, new concepts. and so one of the things that strikes me about future vertical lift is it is very explicitly to create entirely new architecture. it is too early to speak to the success of that and what it will enable but that is not to say you couldn't take aspects of it and pull it forward and buy them sooner, but unless you envision and try to reach to that new architecture, you aren't going to make as much of a game changing shift as you set out to do. that was a point made yesterday that i wanted to raise. >> good morning. kevin christenson with lockheed martin. question for the army and relates to armed variant cap set three. will that be in play for aoa. if the army does not pursue an attack variant, do you think that capability set one or some other type of mitigating
capability will be envisioned to cover air assault security that the army will need when it feels -- fields a much faster assault platform that the legacy security platforms will be able to keep up with. >> thanks, kevin. that is a good question. and probably one of the more interesting topics. right now the army's focus for capability set three is the utility mission. and so once again, focused on the air assault medevac capability. we see that as the greatest, once again, joint need. we have some additional study to do and work on where we see the next platform coming from or the next attack platform coming from. we definitely want to explore the marine approach to capability set three as an attack platform, and we definitely want to explore possibly a smaller air frame as
an attack platform. the army is maintaining a need for wide area security, a requirement there. obviously that could be answered by either a possible apache attack fvl replacement, or it could be answered by a smaller aircraft, more along the lines of the oh58kw. the short answer, though, is that we have a lot more work to do. whether that will be a possibly -- a marine approach to the attack aircraft, whether it could be a kidded solution to the utility aircraft in a cap set three variety, or we have not ruled out the possibility once again of the smaller aircraft in a more lighter reconnaissance attack role. we look forward to the work we have to do on that and also the
army's decision of how we're going to pursue that capability. >> hi, i'm david led, just consult independently. appreciate your comments and your mention of the early '30s time horizon and you mentioned an aoa and talking to the users and your aspiration for technology and netting. with that kind of a horizon, can you speak about how you're engaging industry in the labs and the university and infrastructure at this time of the programs progress to make sure you don't leave something on the table or don't overreach. and know you're investing in tech demos but could you go beyond what you invested in for your demonstrators to how or what your mechanism for that engagement to reform your requirements? >> well, to expand a little bit on the tech demo,
there is two major components of the jmr tech demo program. obviously we have the aircraft demonstration component, where we are looking at fvl technology and also, and we've already talked about the open and we'v talked about the open architecture. the second part is the open architecture. you know, underneath the flight demonstration we have four contracts with industry. to develop either flight models or models for wind tunnels. i think we -- i don't know the exact number under the architecture demonstration portion but i think there are eight or ten contracts there involving industry. industry's done a phenomenal job of enjajing the government through the vertical lift consortium, the vlc, the other approach that we've used is
through our request for information, rfi and receiving industry feed back there specifically on the fvl programs we have had two rfis on cape set three and i believe we had eight spents to kate set 3 rfi and we have the second cape set three rfi that is out to industry for comment. we have had a lot of engagement there. and through forums like this. and exchange. and we are also in contact with institutions as far as the colleges and other institutions for development of these capabilities. so i think we have a very broad net whether or not we'll be willing to capture everything i think that remains to be seen. >> so i can speak to some of the
venues that socom uses. we have our own snt that we leench. we have broad area announcements. we have a lot of ideas coming out of that snt community. but we have also established another venue off of mcdill solved soft works. it's another opportunity to collaborate with the city and government and operators can come together. we absolutely looked at our own architecture we have in the aircraft today recently. we invited academia, industry, operators and we said come in, let's collaborate and talk about this. just to determine even with the aircraft that we're sustaining, how should we sustain those with architectures and how could that inform what we do for future vertical lift.
>> all right. well we got to all the hands that i saw and we are at the end of our hour. i want to thank our audience coming and for asking great questions and being very attentive. keep your eyes peeled for future events on future vertical lift. we expect the series definitely continue into next year. and please join me in thanking our panel for a great prejudice. -- presentation.
while congress is on break this week we are showing american history tv programs normally seen only on the weekends. tonight a look at world war ii. it starts at 8:00 eastern followed by the fbi investigation into a nazi spy ring and world war ii veterans in the american resistance in paris and the start of what is now the cia. tonight here on c-span3. sunday, in depth will feature a live discussion on the presidency of barack obama.
april ryan will be a guest. eddie glaude, and journalist and editor at the "washington post," david maraniss, watch in depth live from nonto 3:00 p.m. eastern on sunday on book tv on c-span 2. ♪ ♪ >> the presidential inauguration of donald trump is friday january 20th. c-span will have live coverage of all the day's events and ceremonies. watch live on c-span and c-span.org and listen live on the free c-span radio app.
ceos from major companies joined engineering and science leaders from national laboratories for a forum on u.s. competitiveness. the u.s. council on competitiveness hosted this 1 hour 20 minute forum. >> ladies and gentlemen, please welcome the president and ceo of the u.s. council on competitiveness, the honorable debra wynn smith. [ applause ] >> good morning. welcome to the 2016 national competitiveness forum.
last night many of you were with us at the smithsonian's national museum of american history and we were so pleased and delighted to celebrate with so many friends and colleagues from around the country and the world. the council's 30th anniversary and to honor two great leaders of american competitiveness for their contributions. the secretary of energy and the president's long standing science adviser. today, we have a very full and engaging day of conversations, presentations and recommendations and we hope you all will participate in the conversation. allow me just to share a few thoughts about today's anniversary forum. in some ways when you think of 30 years back and where we are today it is a little bit of a back to the future story but not really. because when you look at the threats and the challenges 30 years ago, they were very, very different from today, although
we were living in times of turbulence and transition and many americans had tremendous anxiety about their future and it was really the vision and investigativity of our founder, john young who felt we needed to create a nonpartisan group of ceos from all sectors to develop a road map for american's prosperity and to work very closely with our government policymakers to implement that agenda. our anniversary courthouse is a time of celebration but very importantly today we're going to focus on the future. we have some outstanding, exciting innovators who are going to be with us and we're going to again look at what will be the path forward to enhanced growth, productivity and prosperity. we will shortly release the council's flagship clarion call
for competitive 234z with our recommendation which constitutes our strategy to the new president-elect of america and the new congress that will take office in january. we're going to hear, as i said from some top line innovators but we're also going to have some very important discussions on new thought leadership from the council on competitiveness. we're going to hear from jim clifton, the ceo of gallup of the new report that gallup an the council released this week, no recovery an analysis of the long term decline in u.s. productivity. we're going to have a fabulous luncheon talk from the founder and ceo of the fabulous applied minds center in los angeles if any of you have been there it's really a journey into the future and later in the day we're going to talk about entrepreneurship
and have a discussion with steve case i believe you have the book, the third wave he has given all of us today. i want to thank all the members of the council for their tremendous support and participation with us on our s thank and recognize our very generous sponsors who made last night and today possible. lockheed martin, pepsico, united association, deer and company, rockwell automation, deloitte, fed ex, snap-on, arizona state university, the bank of america, ucla, uc san diego, whirlpool, white cap investments. and i want to thank sarah eisen who will join us shortly and her great team at cnbc for being our media partner today for this forum and then finally thank the board and the executive committee of the council on competitiveness for all their time and stewardship and being
the host of this forum. so welcome and we look forward to a fabulous day. thank you. >> ladies and gentlemen, joining miss smith onstage to release the council's clarion call, competitiveness to the 45th president of the united states of america, please welcome the chairman and ceo of deere and company, chairman of the u.s. council on competitiveness, mr. samuel allen. the vice chairman and chief scientific officer for global research and development of pepsico and u.s. council on competitiveness vice chairman for industry, dr. mehmoud khan, the president on u.s. council of competitiveness vice chairman dr. michael m. crow and co-anchor of "squawk on the street" on cnbc, miss sara eisen. >> thank you to our
distinguished panel. i'm very pleased and honored to be here to kick off this exciting day and to introduce the council's clarion call which is really a great way to frame the day and the conversation and is going to be their mission that will be sent directly to president-elect donald trump so here to discuss what's going to go inside, sam, if you would, as the chairman, please kick it off as far as the key priorities that you would like to mention in this clarion call. >> i would start it off by saying the president-elect probably won't like his report card so there's a lot of fs and ds, not too many as on there. i think the important thing that we are trying to highlight in the clarion call, that there is a way forward, that 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 and that is how many workers are participating and what's the productivity that we're deriving out of that. a number of the areas we're looking at in the clarion call, whether it be education, which gets into really developing the work force of the future, whether it gets into assuring that we do start handling the debt which makes us sustainable, whether it's continuing to invest in basic r & d which is important to the innovation set of this which also drives the productivity piece. there are a number of areas there that we think are very very important that we set a direction going forward. you can prioritize which ones you work on first, but all these areas are important to assure that the 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. mahmoud, from your perspective, what are you looking to accomplish on behalf of the council and the clarion call? >> you know, as i'm sure you have seen it in the clarion call, when we think about opportunity for growth, there is still a lot of exciting opportunity out there. let me just take a sort of technology perspective for a second. let's start with the productivity we have had, when you think about what everybody talks about as the moore's law where the competitional power of microprocessors has gone to be doubling every two years or so, it's been an amazing few decades. that slowed down and one way of looking at it is growth has been done and yet, there's exciting technologies coming just around the corner that can jump-start again and give us another s curve. that's exciting because it's
another wave of growth and 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 the whole cluster capability is there. if we look beyond there in the more consumer industry engineering in general, we have 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 of communication between devices, we are living that only on the surface right now. it will change the way businesses operate, businesses use their labor force, the way
companies like mine, pepsico, engage with the consumer. we have an exciting wave of this coming, this link between individuals, machines and machines with other machines. now, another area that has generated from this is we now take internet of things, artificial intelligence and link that to robotics. look what's happening in manufacturing. we have seen a wave of that in manufacturing but driverless vehicles, just another example. not only cars and automotives that everybody is talking about, but even the potential around the corner of airplanes. having said that, i will touch on it at the end, we have to also be conscious that that means a change in our work force. we have a very large work force that is part of transportation. what are we going to do with that as that technology and that growth comes. the last piece i left to the 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's done, it took, what, 13 years and $3 billion to sequence the first human genome. now you can do it in 24 hours, literally for about $1,000. and it's going to get faster and cheaper. what's the implications of this? well, take a technology like crisper where scientists can go in very precisely edit a gene sequence in an organism i has profound implications when used for good. let's take an example. somebody born with an inherited disorder because of a genetic mutation. the ability to go into their bone marrow and change stem cells or the ability to go in and identify a plant variant that is more drought resistant, has a higher yield, is pest resista ant because we can sele certain genes, that is revolutionary. we have to feed 2.5 billion more
people in this planet in the next 25 years. closing on that part, i would say lots of things, these are just examples, but one thing we have to do when we talk about technology, we cannot leave large parts of the population behind. technology has to lift everybody. as multiple stake holders we have to engage people, talk, discuss, agree on what's good for society, then invest behind it. i'm very excited what the poe tn potential is for technology. >> it will be on you to train the generation on all of these technological advances. from your perspective, what are you hoping to accomplish this year? >> first thing to point out, this is a tremendous country. we have been tremendously competitive for decade after decade. we have done things that are unbelievable when you look at the annals of human history. but what we have come to as a
point where we are having difficulty right now managing the forces that are required to be as competitive as possible. there's really three things at work. one is the overwhelming force of creative destruction where every new idea replaces a previous idea. every new configuration, new system, replaces a previous configuration or system. in that, if the citizenry is not capable of making those adjustments, more and more of them will fall back. while we will have fantastic achievements in some sectors we will have generally a wakenning competitive position in our overall economy which is the case now versus the previous decades and we will have a very negative set of impacts in terms of people being left behind. what's happening now is that we haven't matured enough, our eye is not on the ball and what's happened is changes 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 is that we need to dramatically enhance our focus on the ball, the focus for competitiveness needs to be on the continued development of ideas. we are underfunding fundamental research, underfunding the basis from which these ideas can emerge. lots of other people are stepping up, other nation states, other parts of the world. we have sort of been stagnant and not moving at the speed we should be moving. i actually now place that as a secondary issue to the really principal issue of people and people development. we have a poorly articulated, poorly developed and very weak immigration policy on every front. the country's been built on the notion of driving ideas forward, driving the forces of creative destruction forward through immigration and the education and training of both new immigrants and citizens and so
that's something that needs to be worked on and our report gives a very poor grade for our policy in all of that. i think the thing that we are not doing that we haven't figured out is that we are arguing about super silly things right now. we are arguing about what's the role of the government in this or that. the government has always played a role in the preparation of the work force by investing in the next generation through schools and through universities and so forth. we literally, literally were so far off the mark right now, so far off having our eye on the ball not through the resources that are being allocated but through the mindset. we don't realize that everyone has to graduate from high school and if you're not graduating everyone, the entire system is a failure. because those people will not be employab employable. they will become wards of the state. they will be concentrated in nothing but income tax transfers to those individuals and so we need new schools, new high schools, new ways of thinking, new ways of moving forward, new ways of organizing the
universities, et cetera so that we can find a way to actually produce individuals who have the capability of being competitive themselves, competitiveness is not only a function of the national net competitive outcome. it is a function of the algorithm of the individual's competitiveness. 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 a couple weeks ago where a guy stood up from a major technology company in the united states and said what we are going to need to do is replace between three and 12 million jobs in the next 15 years of people that will be displaced by the latest changes of the integration of computational technology,
artificial intelligence and decision making systems. are we prepared 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 and advanced through life-long education who can continue to be competitive at higher and higher and faster and faster rates of change and that's the algorithm we need to figure out and we haven't figured it out. >> how do you tackle some of those challenges and goals and turn them into reality? >> i think one of the most important things about the council's clarion call, we have been issuing this for a number of years, is that we recognize it's not -- there's not one silver bullet. this is an integrative system and if we can really make progress in partnership with our public policy leaders, with congress, but really, with the leaders in this room from all these sectors, we can begin to tackle some of these. we really have to look at this
going forward on all fronts. yes, we can get our corporate tax rate down to a level comparable with our competitors. i think finally a recommendation that we have been calling for for many, many years is to move to a territorial tax and get the 2.6 trillion that's overseas back into the u.s. with 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 competitive advantages around the technology transformation and the people in america. >> i understand the improved
growth outlook that was referred 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 are talking about. >> i think it will certainly be an enabler of bringing people together. some of the stimulus that is being talked about, that does not create long term sustainable growth but what it certainly does is it 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 did we work together on this long term problem, one of the ones we have been talking about. i think the important thing for people to recognize, though, is you can change the tax rates, you can do all those things.
that will drive a spurt in the economy. but you got to change the productivity equation over the long term if you want long term sustainable growth and so it will be very important and that's where the council can help, i think, in making sure that everyone then 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 are going to have a worsening of where we are today. looking from a food industry perspective, there wiare about to 60 million of americans who live on 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 want to just be given a handout. i don't care if it's from government or the private sector, they want to be engaged in society, 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 actually pointing out these gaps and proposing real pathways forward of how multiple stake holders, everybody in this room working together to change that. i think that's an important point michael was raising and technology is an enabler. it's not a destination. >> so where do you find that countries are out front on this, globally, looking around the world, as we look to a loss of competitiveness as you described
it? who do you think are our chief competitors or rivals? >> there's lots of competitors. i think the nature of competition is good. competition produces better ideas, better products, better outcomes, economic growth, economic enhancement. we have got the rise of the asian tigers, we have fantastic competition coming from some of the countries in europe, stabilization going on in some of the markets in south america, a whole new conceptualization, i'm just back from a trip to africa and the middle east, things happening there, going on there that are just unbelievable. all positive, positive, positive. the problem we have got is that we are the rich family in the big house down at the end of the street everybody looks at and says what's going on in there. 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 others is that we have been coasting. we have been coasting on the investments of the past. we have been coasting on the systems of the past.
we were unbelievably competitive launching missions to the moon and doing the things that were going on in the 1960s and the moon shot mentality and projects and achievements and all kinds of things. we can do all of that. but what we haven't done, 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 are of european descent and are a woman and have only a high school education, your life span is going down. if you are 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 no positive indicators. life span is going down, educational attainment is going down, incomes are going down,
family stability is going down. there are no positive indicators. if we don't fix that, i'm not talking about fixing it from a social engineering perspective. i'm talking about fixing it from a competitiveness perspective, there won't be any competitiveness enhancements in the united states. you can't have a third of your population that's non-competitive and hope that your country will be competitive and that bottom third will at one point either destroy or kill everyone else. so it's something take needs to be fixed. it's not something that will lead to competitiveness. >> how do you do that and are you more hopeful as you describe a public-private partnership that at least we are coming out of some years of grid lock in washington, d.c. and theoretically shouldn't see it as intensely as it has been over the past few years? >> i think we are very optimistic at the council on competitiveness because of the people we have that are in our 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 have just seen a plethora of very new innovative public/private partnerships. when you think of the energy and manufacturing sectors and what we are doing there, to bring together the power of universities and national labs with our large scale investments on the federal side, no country in the world is doing that on the scale we are. we mentioned the potential with the next generation of electronics. i don't know if we will call it semi-tech 2.0 but this is an area where we really need to bring together everyone that has a role in this to ensure that we are developing and deploying the electronics and sensors that are going to drive all of this new
change in industry. i think in terms of our engagement with policy makers, this council is very proud that we are nonpartisan. we have worked across administrations. we are one of the founders of the senate competitiveness caucus and we are prepared to be very aggressive to work across the aisle to really move forward in implementing the clarion call for competitiveness. it will take everybody in this room and really, you know, the tremendous leadership we have in the council on competitiveness to do that. >> it sounds like the common theme is it all comes down to people, our people, training, education, preparing them for technology. as ceo of deere, what would be on your wish list as you try to hire the next generation of folks to work at john deere hopefully as long as you have, right? more than 40 years. >> when we look at it, our wish list, there's two sets of skill sets we are looking at.
we are looking at the technical skill sets that we need to have. that gets to a lot of what michael was talking about in terms of developing those individuals, but then we are looking at the human skill set that we want, the ability for people to relate to other people, to work because we are in a very global environment. we are 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 that we need to continue to move our company forward. >> if you, we are just about out of time but i wanted to hear from you on this as well. >> just quickly to build on that, we all have heard and talked about s.t.e.m.
s.t.e.m. isn't just people with ph.d.s and degrees in engineering or medicine. it's 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 doing very advanced technical training can get those skills through our educational system. there's a gap, a huge gap, yet we on the industry side have difficulty recruiting and filling jobs that require quantitative skills. >> can you leave us with a hopeful note? >> the hopeful note is that all of these things are solvable. they are all understandable and all doable. we deployed a math class last semester with 40,000 students in it from around the country and the world called college algebra. it's a fantastic class with intelligent tutors, personalized learning platforms, move at your own pace. if you stay with the class you will master college algebra. if do you that, there is little
else on a technical or quantitative side you can't comprehend and can't then actually master. so what we are 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 will take that class. i just sdidecided. >> i'm sorry we have gone over. i know the council and sam will work their very hardest. it sounds like there's a long to do list. thank you very much for our distinguished panel. thanks to all of you for being here. i know it will be a great day. thank you.
>> well, deborah, congratulations and thank you for having gallup be a part of this important 30th anniversary and congratulations on the great contribution that you have made not only to business and industry but also to our country. so we were asked to make a report. the mic works, doesn't it? to make a report to talk a little bit about productivity and more specifically about growth. and we are going to hand the report out in just a minute. i don't want to go through the report because you can read it yourself. as a matter of fact, we have a slide deck with one slide. i have never done a slide presentation before but i got one slide so i do refer to it as my deck.
but i want to take a little bit of a different angle on it, kind of a leadership angle on what we have done. the guy that founded our company was a guy named dr. george gallup, who was an academic more than he was i'm going to say an entrepreneur. he usually makes that list of 100 most influential, the real good list, not the "time" magazine list that has chefs but the one with washington and franklin and that kind of thing. but he had a thing where he loved democracy so much, he said if democracy is about the will of the people somebody should go find out what that will is. he would always report that to washington not unlike what deborah and the council and to make a clarion call because what he said was if you are wrong, this is what he worried about, if you're wrong about the will of the people, when you make policies and you lead and you're wrong about that premise, the more you lead the worse you make
things. but what a wonderful mission. i was thinking about how that applied to right now and about growth. because let me just ask you, are we in a recovery? because it's a debate. i don't think i should say this in front of this group but i didn't actually know what productivity was. i know what gdp is. i have some opinions about that. i know that 2.5% is a lot better than where we are now at 1.5 or 1.7. i know we need 2.5% to break even with the amount of costs we have and when you are at 1.7 you are slowly going broke. i also looked into did you know between -- if you said what's the right amount of gdp to have, i don't think this -- i don't know what the right number is.
can you go up to 8%? can you have 9%? would there be something, what do we need? the biggest moment in the history of human development over the last couple thousand years is between 1850 and 1950 in the united states of america. we just kind of overwhelmed the world and now we are 25% of all the money. here's a good question. what was gdp during that time series? know what the answer is? 3.75. think how small those differences are. so 3.75, if you said how do we dominate the world again economically, the answer is 3.75 over a time series of ten years or something like that. how do you go broke? you have a time series of about like we do now, 1.5 or 1.7 but you have to be somewhere above 2.5% which i didn't know that. but the next thing i learned was that gdp is not the best method
and if you take a population of economists both right-leaning moderate, 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 you have fewer people in the work force so if you get too many drop out, you have -- you have to do gdp for the whole population because people at home, good for them, there's a lot of people that should be at home, but they use the economy, too. so do babies. so the best number you can use, so that's the number that gallup and the council and then my team of economists chose to use. we went back 50 years. we determined that was the single best metric to determine if we are in a recovery.
but now remember, if we're in a recovery, i looked the word up. i was on a flight back from frankfurt. i was thinking about this. you know the way they bring you the news papers. i had the financial times, the "wall street journal," the international "new york times." i found an article on the front page of every paper that referred to america's recovery. that seems like a very important article to me. so i looked up recovery. it means if you have been sick and you're getting better, you're recovering, that's what it means. you wouldn't think i would have to look that up, but i did. going back to dr. gallup's point, if we are in a recovery, that suggests totally different activities than if we are not in a recovery. if we are in a recovery, it suggests everything is going well and it kind of gets your hands off the wheel and tweak it a little bit and keep nudging it
in that right direction. if we are in decline, that means you got to shake everything up. that means you need a turn-around. you see the difference? but harkens back to you better get your premises right because if we're wrong about that, the more we lead, the more we ruin the country. so here's my deck. my one slide deck. this is 50 years of gdp per capita in the united states. can you look at that and see a recovery? i wrote down three quotes that i just -- you can find them anywhere you want.
this one's from the "wall street journal." the guy's name is eric. i won't say his name but i read him before. the u.s. economy appears to be growing at its fastest pace in two years. i don't know what he sees but i guess you can say it. i think you can go through like the radio salesman, you probably can find one little blip between one quarter and another. i don't know. here's one from i wouldn't say his name, from raymond jones, the investment banking company in new york. growth is a lot stronger than it looks. i don't know what that means. but where do you find growth that's stronger than it looks on there? this one's interesting. this is my last one. have you ever heard of confirmation bias? guy got a nobel prize for this.
when you make a decision or come to a conclusion, what he figured out was only 30% is based on fact and 70% is based on emotion. he's actually a psychologist. only psychologist to get a nobel prize in economics about six or seven years ago. confirmation bias is that you only -- you look for facts that confirm what you want to believe. but you wonder how often we get into that, whether it's, mario, you and i were talking about the media tried to find facts, not picking on the media, all of us did it, i did it, too, why only hillary can win, why brexit will never work, why the electrorate in colombia will never vote for the treaty. that kind of thought dominates our thinking. we are always in a fight with that 70%. this one is really an important one. this was we are seeing definite
evidence, i don't know if my senior editor's here in the room but i don't think there is anything called definite evidence. you either have evidence or you don't have evidence. anyway, we are seeing definite evidence like convince me, this is the time i really mean it, it's evidence, the economy is expanding more strongly. definite evidence. who do you think said that one? do you know? that's janet yellen. she's working on my 70%, too. we are not in a recovery. it helps me when i can reduce things to kind of their simplest form but if we were a company and this was a shareholders meeting i would be reporting to you that our sales or $18 trillion, we have 100 million
full-time employees, 50 million part-time employees and debt of $20 trillion going to $30 trillion, and we have revenue that's increasing at a decreasing rate and our revenue is down to about $1.7 and i can finish the line to where it's zero. you want some of that stock? the next thing i would tell you is that i got some good news for you. that is that food's cheaper than it's ever been before so when i was a kid, it was almost twice as much. that's some good news. transportation and gas. but we have three expenses that are totally out of control. $18 trillion in sales, $20 trillion in debt. we have three line items that are booming out of control. know what they are? we need to know.
education, we all know health care, we all know housing. i see in the clarion call that i think we know those pretty well. remember, there are some real basics you need to know as shareholders, too. one of them is with health care, we spend twice what other comparable countries spend on health care per person. we spend twice as much as england, canada, france, germany. two times as much. next thing you need to know is that they all live longer than we do. you don't like to hear that. that doesn't work well into the confirmation bias. that one doesn't fit neatly in there. the great american health care 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 you -- makes me wonder if the more they spend on us, the faster they kill us.
you read this? you can hardly believe it. you got to google it to believe it. i was wondering how many people were killed in hospitals. we worry about soldiers. n i don't know, i think the single digits in war over the last ten years. you read the new england journal of medicine how many people were killed in hospitals last year? put a number in your mind. google it. their answer is 100,000. it's dangerous to be in baghdad, afghanistan. you want to go a place you're really in danger? get into a hospital. they maimed a million. just saying. johns hopkins put their number out and said 250,000 but you wonder when you have an expense item that's that out of control and has that little success, do
you really need lean or do you need total disruption? another one that our analyst found was education. you know it's booming. it has many other implications to the amount of debt that boomers have. boomers are going to be wonderful workers. they are really different. i saw a conversation on squawkbox this morning and they were talking about are millenials different than any other generations. they said no, no different, just younger. they came to a conclusion but that fits again, there's your confirmation bias. it fits the line they needed. i'm going to tell you, tell me if this makes them different. 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 like a big one to me. 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's the ever been. we have just been wrong about that but it changes almost everything. they don't change diapers anymore. they have pets so they buy expensive dog food. if you have stock in pet food it's going through the roof. the changes are extraordinary. yet we are wrong about them. it kind of bothered me i was watching squawkbox, i said i wonder if everybody goes away with that confirmation bias and do their jobs wrong because they concluded the wrong thing, because they did. i looked up their ratings. they have 100,000 people watching. i don't know if that's a big or small number but i know it's about the same of a michigan home game. that would be a crowd about that
big. bingo. but they are very important people. that's the point. they are very important people. they go out, they have the wrong thing. but there's one real important thing in there that has to do with education. baby boomers will be very good workers. here's one big difference between my jn ratigeneration be. the generation before, baby boomers produced jillions of baby. the other thing they did is started a whole bunch of new companies. the other thing millenials don't do besides not having babies is they also don't start companies. that needs to be fixed somehow. but education is probably not doing that because what we have done is when we ask them where they are right now, they are in a whole different state of mind than my group because what, saddled with debt. the other thing is when you ask about you think there will be money, if you ask me do you think there will be money for retirement, i say yeah. how about for your kids. i think there will be some for my kids. how about your grandkids?
i know there won't be. now those kids will become aware of that. so if you take education, take housing, take health care, it may not be as simple. it's more complicated in how they fit into all the decisions we make, the clarion call we make, because all of them seem to be tied somehow to growth. i'm trying to -- i have been trying to stretch my thinking since we started this project because i keep getting surprised so much but if you said what did you figure out and the report i think will be, maybe it's coming out now. that's why i'm not doing the report. you can read yourself. i'm trying to make reckless remarks here. but so we know we need more growth and i can say this to this group because my business is selling innovation. but when we say how do you fix our gdp and this problem, we
know we need to get the pie growing. so you say when are you going to do to get the pie growing? know what our answer is? we have all concluded the same thing. we did it with our own confirmation bias and we're wrong. we think it's just innovation. so we just keep building up innovation. we spend hundreds of billions of dollars on innovation. read the "wall street journal" yesterday or the day before, and we have a record number of patents. i mean, since 2000, it's just boomed. innovation, we are blowing it through the roof. so how are we doing with new companies? the lowest it's ever been. we just keep booming because somebody told us innovation creates companies. 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 throw this out to you. what if innovation has no value whatsoever unless it's in the
presence of a customer? we don't think of that. what about innovation has no value at all until it has a business model that works? it's the story that's kind of unbelievable but you all know who vince cerf is? what a great guy. he and bob kahn got -- they were the wright brothers or something. he told me this story at dinner. it's got to be true because it's not complimentary to one of the most important americans ever. he already built that thing so we could send signals around and all that. a guy came over from the u.s. senate who loved technology and said to him let me see that thing. vince showed it to him. he said that's the great est thing i have seen in my life. can i go back to 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 but i don't see what value it will have to business. it's a lot bigger conversation than watson come here, i need your whatever. know who the senator was? huh? yeah. i'm the only guy in the world that tells a nice story about al gore, i think. think if al gore hadn't -- maybe he knew that. maybe he knew that that innovation had no value at all. what about $100 billion for that? until you have customers, boom, we got an explosion out of it. maybe when we build institutions of innovation, somebody better raise their hand, say it's not making the pie any bigger, not fixing that right there. what fixes it is when somebody actually starts a business. there's been about 26 million companies that actually only six million of the six million, four million of them have only 1.4 employees, only two million
businesses, that's getting smaller. see, we keep working on innovation while the part that actually fires it and creates customers and creates gdp and gdp per capita, that's getting smaller. yeah, we keep working on this because that fits our confirmation bias. i think i'm going to end it with this point. i think this will make sense. here's where you have hope. if you are an engineer, you look for solutions where you find 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 do you with
illinois or california. they are so under water. then you have states that make a profit. florida. see the variation? i get a kick out of tennessee because that's a good one for researchers. obviously in the same country so you got all the same laws, same state so you got the same governor, all the legislation and all that, but you got two cities in there with very different outcomes. one's memphis and one's nashville. memphis is really struggling. nashville's killing it. but what it does, it gives you hope but leaders of these communities, especially by cities i think even more by states, can change the outcome of america. i noticed that somebody turned our story into obama's failure or something like that. if you look at that line, you
know what conclusion you could have that's way outside of confirmation bias? you could ask yourself how much does the president really change the country. because obama's line is bad, so is bush's. you go clear back to where there's really a big lift, reagan had a big lift, went down a little bit. of course, you get the recession, then clinton came back a little bit. i just throw this out to you. because you know when we say things aren't going well we say we need a new president. that one's no good. bush is no good. that one didn't work either. now let's go clear out and try this one. i'm just wondering, there might be more solutions from the leadership of america. maybe 10,000 of us, maybe 100,000 of us, than there is with the president. but thank you again for all that you do. congratulations on the 30 years. thank you very much.
>> presenting his views on u.s. leadership in the global economy, and the ways open trade and an improved tax policy will help keep the u.s. competitive while creating opportunity at home and at home and abroad please welcome our morning keynote speaker, the care man and ceo of fedex, mr. fred smith. [ applause ] >> 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. before i get started on my remarks let me first congratulate president-elect trump and vice president elect pence. i think the caliber of the cabinet nominees to date is quite reassuring given the many
economic challenges that 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 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 subdued. infrastructure is deteriorating. protectionist tendencies are increasing here and abroad and the election results certainly show that too many people feel
they're being left behind. some blame these problems on trade, but the facts indicate otherwise. history shows clearly people have always wanted to travel and trade and today that desire is stronger than ever. with our constantly growing digital economy anyone with a mobile phone can reach new markets in nan know seconds, funneling digital connectivity into more buying power, more economic growth and a higher standard of living. >> fedex is at the nexus of global trade. we move 12 million shipments every day, serving 220 countries and territories so we see the value of trade every day. in fact, as 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 super hub is located. we at fedex are passionate about supporting trade and 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 companies from the united states to uganda, from singapore to south africa. we know that trade means more markets and greater opportunities for u.s. companies, especially small and medium businesses which comprise about 97% of u.s. exporters. based on what we've seen over the past 40 years at fedex and beyond that from 20th century history we know several things 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, venezuela's main export was at an all time high the government used revenues to fund massive social programs without investing to diversify its 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. protectism doesn't work, either. a "wall street journal" article examined the effect of brazil and argentina's protection iist over imports. such policies have indeed
created factory jobs, but they've come at great cost to consumers who pay higher prices for goods and to taxpayers 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's dependence on imported content. the article 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 history. the devastating smoot/hawley act of 1930 raised tariffs on 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 kordell hall, good tennesseean 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 postwar general agreement on trade and tariffs or gatt which sought to reduce tariffs and other trade barriers 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 also a major factor in the recovery of japan, germany and other devastated countries.
trade certainly got its fair share of attention in the recent presidential campaign, but much of what was said is inaccurate and i'd like to set the record straight. 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. keep in mind that 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 needed to create american products and imports give our families more choices and lower prices. 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 world's purchasing power and 95% of its consumers lie outside the united states. our farmers rely on foreign markets to remain financially strong. in fact, one-third of all american farmland is planted 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 one in five in our nation. tens of thousands of those jobs are at fedex. trade-related jobs pay an average of about 18% more than non-trade-related jobs and in general trade has added more than $13,000 a year in purchasing power for the average
american household. a second fact about trade, market access and e-commerce are changing the nature of trade. thanks to the internet and global logistics services offered by fedex and others, e-commerce is booming. worldwide retail e-commerce sales are approaching $2 trillion and are projected to exceed $4 trillion by 2020. while much of this is domestic trade cross-border e-commerce will unlock even more growth potential for companies of all sizes especially small and medium-size companies. let me just give you one great example of this just up the road. fedex customer ora jean technologies in rockville maryland, they develop dna clones used for research. starting with eight employees in
1996 they now employee 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 and agriculture. according to the department of commerce our 20 free trade partners buy nearly half of all u.s. exports. on a per capita basis 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's an important step toward achieving free trade agreements between the u.s. and 11 other countries in the pacific rim. we're 100% behind tpp. this recently negotiated agreement will unlock portrayed 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 products, thus increasing global demand for america -- 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 abandon 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. nafta has made the united states the centerpiece of a huge north american production platform. nearly 14 million u.s. jobs depend on trade with canada and mexico. economist gary huffbauer
estimates that nafta makes the united states about $127 billion richer every year and u.s. private sector jobs have increased by more than 29 million, a 32% rise since nafta began. of course nafta was written in the 1990s and the nature of trade has changed substantially, mostly due to the internet and the digital economy. modern trade agreements like tpp address 21st century trade issues such as e-commerce, cross border data flows, state owned enterprises, small businesses and global supply chains. all these improvements plus others in the areas of labor and environment are included in tpp. 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 also want to address the advantage that mexican exporters receive through the rebate of value-added taxes or vat on all their exports to the united states. we don't have similar rebates on corporate taxes paid on u.s.-made goods and this puts our exports at a serious disadvantage. while 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 but the main one is the nature of american supply chains. few people understand how nafta has woven the productive capacity of north america into 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's been said that the average american car crosses the u.s./canadian border seven times during it's production. a november 10th "wall street journal" article cited an example in which a seat had parts from four u.s. states and four mexican locations. nafta makes the u.s. one of the most attractive manufacturing locations in the world because of value-added productivity of both canada and mexico in one integrated north american supply chain. if we could complete freed trade agreements with asia and europe the u.s. could, in fact, become the undisputed champion in manufacturing once again. withdrawal from nafta would have massive repercussions, thousands of u.s. companies would have to ship their supply chains at great cost and disruption to their businesses. 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's 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've talked about tpp and nafta, but we haven't mentioned the huge economy that is part of neither of those agreements, china. 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 that are highly interdependent. we have numerous common interests and challenges and many of the toughest global issues cannot be solved without sign know u.s. cooperation. for years the bedroom of our relationship has been based on
three principals, 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 crystallizing in the minds of american business leaders, policymakers and the public who elect them. no one can reasonably deny that china's 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 it.
china's wto membership has brought great benefits and opportunities for consumers and companies around the world, including fedex. it's also propelled dramatic economic growth and change in china. let me know that fedex strongly advocated china's entry into the wto, it was the right call then and it still is today. but it's important to note there are tradeoffs and maybe people here have been hurt by china's economic rise, especially in the manufacturing sector. when we talk about the manufacturing issue it's important to note that not all our problems can be claimed on china. much of the u.s. decline in manufacturing employment is due to automation and productivity improvements. even so u.s. manufacturing output was more than $2 trillion in 2015. we make things today with fewer people and that will continue into the future. in addition it's important to note our trade deficit with
china is really a trade deficit with asia and the vast network of asian supply chains into china. even if we imposed massive tariffs on china much of their production would simply shift to other asian markets such as vietn vietnam. tariffs on china will not bring back large numbers of low value added manufacturing 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. but let me be clear, there are legitimate concerns about chinese mercantilist policies that promote dommist i can companies there and their industries while restricting foreign competition. a list of troubling chinese economic and trade policies includes the indigenous innovation initiative, support
of national champions, massive investment in state-owned companies, intellectual property violations including cyber espionage and forced technology transfer. fedex has experienced protectionist policies in asia firsthand so i know of what i speak. both gentleman panned and china tried to deny fedex our commercial rights. japan and china did this trying to protect potential domestic competitors. many other western companies have faced similar forms of protectionism. prime minister abe in japan and prime minister xi in china are well aware of their own economic challenges due to protectionism in their country. this is why prime minister abe has taken a strong stance in favor of tpp against significant domestic opposition in japan. in the same vain president xi
has strongly supported a more open and dynamic chinese economy with a more consumer driven gdp. unfortunately progress to those ends in china has been slow as evidenced by convenient increased support for state owned enterprises. while its growth in the last 20 years has been remarkable, china is now approaching the outer limit of investment and export-led mer cal tilist growth. china will not be able to take the next step to transitioning to a higher income country while still a state owned country. it's mar can tilist approach for so many years gradually slowed its economic growth almost to a halt. that's why japan now avidly embraces tpp. a sustainable culture of
innovation does not grow through government fiat nor does it grow through state supported acquisition 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. the petersen institute has modeled the impact on the u.s. economy from a full blown trade war with 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 commit to maintaining the
relationship as we work through our differences. second, we need to focus on an increasing u.s. exports to china than restricting chinese imports. we need portrayed, not less. this requires the trump administration to address both chinese and u.s. policies that inhibit u.s. exports. of course, we must be prepared to address situations where china or 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 that average 20% higher than the united states average. the u.s. enjoys a huge competitive advantage with the services trades 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 service markets will help china achieve its own economic objective of moving from an export-based economy to a more consumption-based gdp. the bilateral investment treaty that the u.s. is negotiating with china could give the trump administration its first opportunity to get a better bilateral agreement and help china achieve its internal market reform goals. third we need to enforce our trade agreements and address policies that penalize the u.s. economy and our workers. but of course we must always act consistently within u.s. law and wto rules. after all, as the u.s. has been the 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 tariffs will erode support for the global rules-based system and undoubtedly unleash a wave of protectionist retaliation around the world. china should understand that under a trump administration there will be stronger and more rapid consequences for closed-door commercial practices. how china reacts will be critically important. all the while we support president xi's stated commitment to a more open chinese economy. to these ends we hope the trump administration will take another look at tpp and realize not only its benefits to the united states, but also the consequences if an improved version is not approved. tpp is the bulwark against current chinese practices and china is aggressively moving forward with its own trade agreement in the region, the
rcep or regional comprehensive economic partnership. many tpp countries have said that without tpp they will have no choice but to move closer to rcep. we urge the trump administration to put a stamp on a revised tpp by addressing any concerns it sees and making any additional improvements to promote trade rather than restrict 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 the trade in services agreement or tisa or the transatlantic trade and investment partnership or t-tip with the eu. trade facilitation should be another priority. we've been promoting this for years. the with. to trade facilitation agreement has been ratified by 102 countries and needs only eight
more to come into effect and this will reduce customs and administrative costs by up to 14% which is significantly more than the average global tariff. finally i would note that the trade promotion authority or tpa that congress recently passed has a detailed list of all the areas where the u.s. has a competitive trade advantage. we need to lean into those opportunities rather than to 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 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 a 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 in a 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 the innovative jobs of tomorrow. a mckenzie study noted in a few years employers worldwide could face a shortage of 85 million high and medium skilled workers. so we should strengthen our trade adjustment and assisted programs to provide for retraining of workers impacted by global trade and automation.
a large number of those jobs will stay in the united states if we adopt the policies i've mentioned today. third, we must modernize our infrastructure. unless we make major improvement to our roads, ports, airports and other facilities we will lack of 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 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. >> while congress is on break this week during prime time we're showing american history tv programs normally seen only on the weekend. tonight a look at world war ii, it starts at 8:00 eastern with spies and code breakers, followed by the fbi investigation into a nazi spy ring. and world war ii veterans on american resistance in paris and the start of what is now the cia. american history tv prime time tonight here on c-span 3. this week on c-span in prime time, tonight at 8:00 eastern a review of house and senate hearings from 2016 on top picks including the flint, michigan,
water crisis and the wells fargo unauthorized account scandal. >> seriously? you found out that one of your divisions had created 2 million take accounts, had fired thousands of employees for improper behavior and had cheated thousands of your own customers and you didn't even once consider firing her ahead of her retirement? >> thursday at 8:00 p.m. eastern we remember some of the political figures that passed away in 2016 including former first lady nancy reagan and supreme court justice antonin scalia. friday night at 8:00 our in memoriam program continues with shimon perez, mohammed ali and former senator and astronaut john glenn, this week in prime time on c-span. joining us on tuesday for live coverage of the opening day of the new congress. watch the official swearing in of the new and reelected members of the house and senate and the
election of the speaker of the house. our all day live coverage of the day's events from capitol hill begins at 7:00 a.m. eastern on c-span and cspan.org or you can listen to it on the free c-span radio app. the u.s. council on competitiveness continues its look and new i believe ovations in the economy and workforce. this portion includes a series of panel discussions on such issues as artificial intelligence, partnerships among universities and technology companies and encouraging future innovations. this is just under an hour and a half. >> announcer: ladies and gentlemen, please welcome back to the stage council member and ceo the honorable deborah wince-smith. joining her to discuss the impact of the policy over the years will be the former chairman and ceo of intel
corporation dr. craig barrett, president emeritus of the smith conian institution the honorable wayne clough and dr. william goldste goldstein. [ applause ] >> thank you. i hope you all liked our quick panoply of the last year of the council and we couldn't highlight everything but it gives us a snapshot of where we've been. we have a wonderful guest who has arrived today and he is going to make a few remarks, it's senator jerry moran, republican senator from kansas, who is the co-chair with senator chris coons from delaware. senator moran. [ applause ] >> deborah, thank you very much. i just came from a sidewalk box interview in which i decided i
must not be saying the right things about competitiveness because a minute and a half into my interview breaking news. there is a new ceo at coca-cola and so i listened to the news and think surely they're bringing me back. having failed to have my full time in front of the squawk box audience i decided to come to visit with you this morning and tell you something that i would have said had i had more air time this morning. but senator coons and i are honored to serve in the capacity of trying to bring members of congress and our staffs together for the purposes of promoting an agenda that is about competitiveness and as i was explaining this morning in that interview, in my view competitiveness is really a nice word for jobs, for better jobs, for higher paying jobs, for job stability, an opportunity to find the policies that create the chance that more americans can achieve the american dream. and so while competitiveness might sound like something
technical or policy-oriented it's really something very basic to our country and its 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 new year's day in which we create our resolutions and it's a sense of opportunity and hope that good things can happen in the future and senator coons and i are committed to making certain that our colleagues, whether they are republican or democrat, find that sweet spot in an agenda that increases the chances that the united states of america and it's economy remain competitive. certainly things that are front and center to the congress and administration in the future, the tax code, repatriatiorepatr regulatory environment, trade, access to world markets, technology advancements, education and training, a
workforce that is highly motivated and innovative and those things matter greatly as we try to make certain that good things happen in america today and in the future. one of my agendas since i came to congress mostly related to work of the kaufman foundation in kansas city. the kaufman foundation on entrepreneurship, how do we restar restart the opportunities for someone who has an idea developed in their backyard or garage or barn and they can take it to market and we become the country again of startup businesses that our country historically has been. my pleasure to be with you today and thank you for your efforts to make certain that congress has an agenda that will achieve the things that are important for our country. again, thank you for the efforts and we look forward to working with you in 2017. deborah, thank you. >> thank you so much, senator. well, i think many of you know that innovation and technological leadership and the nation's position in research and development has really been in the dna of the council on
competitiveness since our inception 30 years ago. we did some of the first critical technology lists, we had a great report that our first distinguished fellow, eric block, who just sadly passed away did on reinventing r & d and the list continues. i wanted to start this conversation out 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. and i might start with you, wayne, because as our vice chair for industry and even before when you were president of the georgia tech you were really doing some very innovative things on the regional front and then ended up leading one of our major products on regional innovation clusters. tell us a little bit about that story and the impact of it for the country. >> thank you, deborah. again, congratulations on the 30th. i think when i was president of georgia tech i knew i had a lot
of things to do, but one of the things i felt that was lacking was a connection between what we were doing in a context, a national context and so i talked to some people who i felt were friends and mentors, chuck vest and eric block and they all said the council on competitiveness was the place where things really happen and where you brought together industry, government, labor and private industry to do things together. so i had to explore that myself and it was a real positive experience for me. so a lot of time invested into the council and every bit of that came back to me more than i invested in it. then i had the wonderful opportunity to work with deborah and to be vice chair of the council. but it's been a continuum of these great leaders to continue to add to our national fabric on competitiveness. i had the great honor to co-chair the national innovation
initiative in the early 2000s but i think people forget about what led up to that and the lead up to that i think was a very important part of the work of the council, michael porter who we saw last night on the video worked on the cluster study and we did a cluster study in atlanta and mike cassidy who is here, it was a seminole study, it helped atlanta for the first time understand its economy and how to redirect it so you would get the desired result. so the council has been important to me personally, it's been important to my institution which is obviously actively involved in these issues and also very important to atlanta and to all of georgia and that region about, you know, making it successful and anticipating what's coming down the road. >> and i think in that study also you really presaged a lot of the current leadership that
atlanta has across bio neck and health and nano and so many others. did you think at the time if 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 then? >> not really. i don't think anybody can anticipate these changes, but atlanta had the good fortunate to have good political leadership as well and good civic leadership. i think, you know, we describe those, the council works on national policy and national policy is the framework that allows you to succeed and that's where the federal government's role is, but innovation is local. innovation is regional. we were very fortunate at the time to be building 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 and with the help of a lot of people it worked.
my successor, bud peterson has done a terrific job with that. today that area is full of start up companies and major companies with research components relocating their healthcare, retail, it doesn't matter, logistics, they are all there and it really has been the core of the development of atlanta and the technology, innovation sector as it's called. so the council was -- you were there many times and, you know, i think this idea that everyone could work together was just not really understood until the council got involved. >> and of course we were so fortunate to have great leadership with duane ackerman as the chairman of the council when he was the chairman and ceo of bell south who was your partner in all of that. craig, of course, you've been in technology through your whole life, having come out of stanford and then going on to lead one of our greatest high tech companies in the world, intel, but you've also been
passionate about the investments in basic research and people and stem and everything. we were so honored when you and bill brody when he was at johns hopkins took on the leadership to really move our national agenda on innovation forward. just share with us a little bit about the history and why do you think back in 2004 or 2006 we had a moment where we could really jump start and lead to the american competes legislation on innovation capacity. >> i think two things came together in that time frame, deborah -- and, again, congratulations on 30 years. i mean, the beauty of the council is it's a continuing entity. a lot of these programs and national reports like rising above the gathering storm we talk about, they appear but then there's not a whole lot of follow up. the council gives follow-up. innovation in my mind has always been driven by a couple of key
things and some of them are in your report card, but, i mean, it's really driving basic l & d budget, the federal r & d budget, you know, just i will paraphrase kind of my assessment of where we are on each of these as we go along but federal r & d budget we've been trying to double that forever and it doesn't score very highly on your report card. put that in perspective the company i used to work 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 and you've heard people talk earlier today, michael crow 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 the workforce. the results of our k 12 education came out this week, we're mediocre to bad in all three categories and even though we have the best research universities in the world, the fraction of our folks with postgraduate or post secondary schooling we are now something like 15th in the world, we used to be number 1. 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 on the council and that is, you know, don't get excited about little line items where you have success, but if you're failing at the overall mission you have to admit that you're failing and maybe we will
get a corporate tax simplification and incentive to do things in the united states under this administration. we've had dis incentives. i will give you a simple example of a disincentive. intel builds these massive manufacturing plants to make silicon chips and that present value of one of those plants in the united states or in a low tax environment is well in excess of a billion. it doesn't have anything to do with labor rates, it has everything to do with the u.s. tax code. it's difficult to explain to your chair sholders you will 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. so i look at those three categories, you know, education we are not succeeding, folks, building a federal r & d we are not succeeding and the current incentive structure to do things in the united states we are not
succeeding. it's a good message to give the next president. >> i want to come back a little bit in a minute and talk about the infrastructure and advanced manufacturing, but, you know, on the education front in your post ceo life at intel you've done some amazing things in doing some innovative pilots around the education and the state of arizona. do you think that, you know, 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 when the backlash of the federal government associated with that, education has to go on at the local level, has to be driven at the local level, but there's key aspects of that. take washington, d.c., good example, in the middle of it, it's historically had the worst k-12 education system in the united states, maybe in the
world. it is now the fastest improving educational system in the united states and the reason is half of the kids are now in alternative education, charter schools, and out of public schools and the charter schools have been competitive, they're innovative, they have raised the level of the public schools up. without that competition d.c. would still be zero in education. i'm a great fan of competition wherever you might be. it makes the whole system better. we've had some great results with our charter schools and they're absolutely scaleable as long as the local state government invites this alternative competition in and supports it. there are still eight or nine states in the u.s. that don't even allow charter schools. >> we're seeing arizona is an innovative state on many fronts in terms of innovation. >> arizona early adopter of
competition of the public school system. 16%, 18% of kids in arizona are in public charter schools and the public charter schools are the top 20 schools in the stat:. competition works in that state. the entrenched bureaucracy doesn't like that concept but it works. >> so, bill, you are a physicist so i knew if we were having a glass of wine i wouldn't understand three-fourths of what's going on in your mind but i do know you are leading one of our great national laboratories in an unrivaled system of labs in the department of energy but also other federal agencies. innovation and rapid technology development to solve national missions is at the heart of what you're doing but you're also leading the forefront in
advanced computation and super commuting. how do you see in your role as lab director the value of your participation with all of us on the council and what are some of your thoughts on the thoughts you want to share as the critical competition of the national labs in america's innovation ecosystem. >> first thing i will share is you're doing better than me understanding what's going on in my mind. also, you know, just note that looking at the distinguished members of the panel i see i'm the only one without a former or an emeritemeritus associated wi their name so i may have a more 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 of the national laboratories it's notable that 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 the -- there was
talk about capitalizing on the nation's competitive advantages and i think that the system of national labs that exists in this country is without question one of the competitive advantages that exists 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 came very explicitly at the u.s. on how to develop the national lab system that they see is so successful here. so the mission of the national laboratories and not to mention
the 25,000 scientists and engineers is to perform long-term research and development in the national interest, driven by applications, though, in energy and national security and 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 commercializeable innovation. as you, i think, have noted the national labs being government owned contractor operated entities also bring the 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 the laboratories are
publicly financed, publicly funded to serve enduring national science and technology needs. so, for example, my laboratory, lawrence livermore, has as its primary mission to provide the technical basis for ensuring that the nation's nuclear stockpile remains safe, secure and reliable in the absence of nuclear testing, however, the facilities not to mention the know-how that's required to do that, which includes the most powerful lasers in the world, as you noted, deborah, the most powerful computers in the world are available for a range of national leads and national missions and 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 well being and increasing national competitiveness. this role, by the way, is explicitly recognized by the department of energy, it's one of the missions of the department. and i'd say that the council has had remarkable success over the years in leveraging the opportunities represented by its recruitment of the national labs into its circle. examples include the initiative on high performance computing which was so successful and here an example by the way of where i think the council and the laboratories played an important role on moving things forward for the nation but also what that initiative did for the laboratories themselves and for us, and more recently in the area of advanced manufacturing where a very productive explicit partnership has been formed between the council of the department of energy and the
national laboratories to make available the most advanced new developments in advanced manufacturing and 3-d manufacturing in particular, to the private sector and in particular to the entrepreneurial sector. so i think those are some examples and in general how the laboratories have enhanced, i believe, and played a role and will continue to do so in the future. >> thank you. and 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'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 re