>> from our studios in new york city, this is "charlie rose." >> 2013 was a big year in foreign and domestic policy. joining me now is tom friedman, friend of this program and a

best-selling author. his book "from beirut to jerusalem" was updated to reflect changes in the region. he travels around the world. he most recently visited saudi arabia. the united arab china, and singapore. i am especially pleased to have him back at this table. at where we are, where we are going, and where we have been in the past year. welcome. i apologize for my voice. >> that's ok. today -- i a column don't know whether secretary of state john kerry will succeed in his chosen priorities trying to , forge an israeli-palestinian peace and a detente with iran that deprives it of a nuclear weapon. but i admire his restlessness, i admire the way he dares to fail. i admire his strategy trying to construct a diplomacy that makes impossible for israel,

palestinians, and iran to continue avoiding their big existential choices. continuing, tell me what the choices are and what you think john kerry's doing and what his is his strategy for doing it. >> my gut feeling is that it is just great to see a guy break all the rules, go through all the red lights and just say, i know i shouldn't be doing this because you all think it is impossible and i was one of those who probably said it was impossible. but i will try and i will bring incredible energy to it. and by the way, when you tell me you are too busy today, that is ok. i will sit in the lobby and i will wait to see you tomorrow. there is real relentlessness to the sky. guy.is one -- thentelling the details every day. >> absolutely. he has really kept a tight ship and has done in a really smart

way. he is basically let's go for the iran deal first. it is a choice. new york to be a big north korea or a persian china? do you want to be a country that is powerful and feared because you are building a nuclear weapon, in which case you will be completely isolated, or do you want to get that no clear -- did that nuclear program to one where your neighbors are happier to live with and focus on empowering and unleashing your people to realize their full potential? we forget, because iran has been isolated for 30 years. this is a great civilization. we are talking persia here. and it has been completely suppressed. by saying to the iranians, we are ready to let you enrich up to your actual research and electrical needs, which are the minutes -- de minimus. ready to do that, but not ready

to allow you to become a nuclear weapons state. if you are ready to buy that deal, you can be a part of the global community again. that is a real choice. the israelis, you have three choices. you only get two. what a be a jewish state. you want to be democratic state. and you want a state with all the land of israel. you only get two out of you can three. be jewish and democratic they don't get all of the land of israel. you can be democratic and in all of the land of israel, but you can't be jewish. and you can be in all the land of israel and jewish, but you can't be democratic. you have to choose. which one do you want to be? what kerry's strategy is to go right at the security issue. basically saying, you have legitimate security concerns.

they have nonstate actors armed with missiles mixing among civilians on four borders, sinai, gaza, lebanon and syria. that is no joke. kerry is saying let's take on that security need you have. we know people who are good at security, our own pentagon. you have former commander john allen who says come with me and let's take on this project. what would be as full proof of a security plan as you can put in place? the most important thing in dealing with israelis, if you want to be taken seriously you have to answer one question. do you know what neighborhood i'm living in? i think john kerry is starting the conversation, saying, i know what neighborhood you are living with. i can designst as of a security plan. in order to say to you, if you go this way, i can change the balance between risk and

opportunities. it is going to be a balance, but doing nothing is also a real risk. we see mounting israeli- palestinian violence. we see groups like the american studies association joining the movement to delegitimize and isolate israel. doing nothing kerry is trying to , say i will put the straight before you and i think the balance of risk and opportunities are here. and where the opportunities are greater. >> do you believe those are the -- from those other places like , that theseamallah questions are finding some residents? >> definitely. you see them wrestling with them. i saw an interview the other day with the iranian foreign minister. there has been some issue where we went after some companies that were appearing to violate the boycott.

they went nuts. we are going to walk out, we are going to leave, this is a violation of the interim agreement. we have the same objectives. i always say about the iranians that you had to back. context is everything. so why are the iranians at the table? they had an election a couple of months ago in which six men ran. six men were allowed to run, only men of course. and these were their names. black,ck, mr. black, mr. mr. black, mr. black, mr. light black. one guy was just a little more moderate than the others. 50.4% of iranians voted for mr. light black. i am told the actual number was 54%. the regime was so freaked out they allowed him to just squeaked by. but they know what the real result was. down below, there is a huge quest. all these iranians, half the

country is under the age of 30, some huge number who never heard of the shah. but they have heard of twitter and facebook and the european union and america, so the iranians are not at the table by accident. history works this way. in fairness to secretary clinton, she deserves a lot of credit for printing sanctions in place. it really got russia and china on board and president obama as well, that really turned. >> john kerry has had a different iran to work with. >> absolutely. and, by the way, a different israel. conditioned in different -- i'm not criticizing her, but i in april in beirut 1982. israel invaded six weeks later. there is dumb luck and serendipity in all these things. kerry came in with the right energy at the right time. >> and willing to take the risk.

because he is not thinking about running for some political office anywhere. >> this is his swan song. he really acts like a guy. you see the frenetic way he has traveled with a purpose. he acts like a guy who is saying i only have so much time. i'm not going to waste a day. god bless him. >> where does syria fit in all this? >> let's go back. thought. maybe syria is at the point of exhaustion where the parties will be ready to come to the table. i lived through five to 10 years of the lebanese civil war. it lasted 14 years in total. in the end, how did the lebanese civil war end? in 1989, on one principle -- no victor, no vanquished. and the minorities needed to be overrepresented.

to assure them. i said in the beginning syria , will only end with no victor, no vanquished. willdea that the alawites defeat the islamist fundamentalists, that the fundamentalists will be the alawites, that is a fiction. to me, the question is when do all the parties basically say we are ready to step back. , formercrocker ambassador to iraq and syria, now says to reengage with assad. even though we said he should leave. you don't necessarily have to withdraw that. you have to reengage because the circumstances are different and the nature the opposition are different. >> i think it is very good advice. and it goes back to no victor no vanquished. what assad has done is not just bad but despicable. the people he has killed, his own country, the way he has -- yeah in this neighborhood, it is hama rules.

as i wrote a long time ago. they are -- >> tommy what hama rules are. >> goes back to the city of hama in 1982 in beirut. he faced a challenge than from the islamic fundamentalists. who tried to launch a revolve out of the town of hama, third or fourth-largest in syria. and he crushed them by leveling the town. i am not speaking metaphorically. i mean blowing up the buildings and steamrolling them. and those are the local rules. hama rules are no rules at all. that is the way the regime plays. but it's not like the other side are somehow representatives of virtue and madisonian principles. there are some decent people who really are democrats but they are not right now an empowered majority. and somehow, we have to get somebody to the table

negotiating. my friend was sharing with me an idea that everyone should have to agree on three principles. cease-fire, number one. number two, you agree to a majority election. you have to agree to that. but you have to agree that everybody gets to come to the table. if you tried to construct a deal where you don't get to come but i get to come, it won't happen. >> everybody that wants to come -- does everybody want to come to the table? >> it is not clear. this is where we have to have the russians involved, we need them to lean on assad. we need the saudis to lean on , andunni militias obviously we need to lean on everybody. i don't think they will come by themselves. but i think we are getting to that state of exhaustion. i hope so. >> and the russians can play a

positive role. >> i am a huge believer to there -- ever since we talked about nato expansion, that there is no big problem in the world that we can solve without the help of russia. >> but look at russia and the ukraine. >> i would tell you that part of that goes to the nato expansion. that was the gift that kept on giving. what nato expansion basically said to the russians, we broke a promise to them, we push and nato right up to your borders. this is before prudent -- putin. it was humiliating to them. it was done under yeltsin. and putin represents the the backlash. he is addicted to this. he has discovered, running against america is like being in the tea party. it is as good as it gets. he has discovered such great domestic politics to run against america and the west, they want to keep us down, encroach on our

borders. i am not a defender of putin. but at the same time, we can't do anything without him. >> he has a strategy from russia to play a role. people forget -- >> people forget the russian orthodox church plays a very important role in putin's russia and his psyche. the christians of syria are predominantly orthodox, so you have a church there whispering in his year that assad is the protector of the christians. that is a factor. that we have ignored. you don't see that. but it is part of their thinking. >> this whole possibility of the enlargement of the shia versus sunni warfare exploding outside of syria. >> i say a couple of things. one is that we hoped when the lid came off with the arab spring that what we saw is something you and i have talked

about, we saw people grabbing their freedom from the from the assad government, from the mid- m --ubarak government, from the gaddafi government. but they couldn't agree on freedom, too. this is in isaiah berlin idea. what do you want to be free to do? it turned out to be that some wanted to be free to be more islamist. some wanted to be free to be more sectarian. and some wanted to be free to be more democratic. that is the problem. there was no agreement. , that is why that we have seen all these revolutions sort of stall. there was no consensus about what they wanted to be free to. >> and the people who made the war were not very good or interesting government. especially in egypt. >> exactly. and we have learned that lesson time and again. it is very difficult in these modern revolutions now where everyone is kind of equal to

develop leadership. one of the teases i take away from this is how much leadership and the right kind of leadership in particular really matters. that is a nelson mandela point. that you need these popular movements to sweep away these regimes. but whether it is in business or politics, yes, the bottom is being empowered more. which is great and it is exciting, but you still need a leader. you need someone to edit what is coming up, all of this innovation. in politics, you need someone who will edit and direct, someone who has a little elevation and can see where we are going, over the crowd. that has been the real struggle for all of the movements, from occupy wall street to tahrir square. the leaders matter. they are able say, trust me, to the people. i'm going to take a chance. trust me, i understand your reservations in and believe me. but let's surprise them.

let's show what we are capable of surprising. we are not going to be predictable. or not even going to be like them. >> that is what is so missing in the israeli and palestinian politics, the element of surprise, that netanyahu would say, thene morning and palestinian president lives 45 minutes away. i'm going to drive around sunday morning to his house. or whatever. for the king of saudi arabia to say, i don't just have this peace plan, but come to riyadh. imagine the shock to see their president fly in a plane to riyadh. >> and imagine the night is -- president of the united states finds that israel and saudi arabia and the emirates are on the same page in saying to him, we are not sure we can trust you. we are not sure which -- what

you mean when you say the red line and if you will be there. >> a couple of things about that. that is telling us a big point, which was that, underneath the the sanctions, as long as they were in place, they were disguising a whole set of differences between the parties. america, israel, saudi arabia. for america, we actually are comfortable with an iran -- we are ready to tolerate an iran that can enrich nuclear material as long as we can prevent them from making a bomb. >> why is that? lord knows you and i talked about this. we tried for 10 years after 9/11 to control the middle east with our own boots on the ground. we have not been successful and we paid a huge price. stabilize the area without being there ourselves. how do you do that? balance the two biggest soon i and shiite -- sunny and shiite powers -- sunni and shiite powers. we need a relationship with

iran. when we went into afghanistan, the iranians made a vital role in helping us to feed the taliban, the sunni fundamentalist militia that the iranians opposed. if you want to get out of afghanistan and have some stability there, you need them as well. so we have a need for our own relationship with iran for both those reasons. and remember, this is a great civilization, a multicultural, a multiethnic society, not unlike ours in terms of its ethnographic composition. it has its own wacky limited democracy that empowers women. this is a country that is a lot like us. you know who senses that the most? the gulf arabs. they sense that these guys -- >> they are their mortal enemies. >> that's right. so we can live with a certain kind of iran. the israelis can live with a strong iran as long as it is not meddling around with hezbollah. for them, iran is persians and shiites. they don't want them to be strong at all. in saudi arabia, you get a cartoon image.

iran was like the big brother who 34 years ago walked out of the house and slammed the door. he took his bicycle. you took his tennis shoes. he took his bed. iluted had an und relationship with uncle sam. last month, knock knock. he's back and they are just freaking out. he's back. he wants his bicycle, his bed, his shoes, and his own relationship with uncle sam. >> and they are talking to each other. >> what they really sense and fear is that they like each other. so that is freaking them out. so the israelis have some interest around the nuclear thing. but i argue that even that serves to separate. israelis would want nothing more if iran changes to have a natural relationship -- the relationship between jews in -- and persia is very deep and long.

we know that in our own dna. so these guys sense all of that. my message to them when i was there just talking to her friends in the gulf and saudi arabia is, to try to fight this you have to build your own relationship. do you want to spend the rest of your life replaying the shiite- sunni fight from the seventh century? how is that going to work out for you? >> do you think the iranians will be willing to do what do you asked them to do about hezbollah? if they let them go, it is all over for hezbollah. >> this is where the bazaar opens. i need your help in afghanistan. maybe i will give you help on economic -- you need some going -- some boeing spare parts that you thought 30 years ago? the cool thing is -- >> it all plays together.

>> that is was exciting. when you have a secretary of state ready to play. they had an interview with the senator who is from where this guy who is missing in iran is from. he said, so i called the iranian ambassador at the eu and said, -- u.n. and said, could you pass this message? roll that back. by the way, i called the iranian ambassador. you bet the iranian ambassador took his call. explained robert levinson. >> you know more than i do, i am afraid. >> my colleague john miller, former fbi, knows the family, has asked me when i interviewed iranian presidents, ahmadinejad said he knew of him, knew what

it was about. a lot of people in america did not know. that was a disclosure we just had. but they said, look, they suggested they had him. then you had zarif saying, if we had him we would deliver him. the poor families. we would give him if we knew where he was. >> i don't understand either. if they did have him and they turned him over now, let him go home, boy, that would unlock a lot of goodwill for them. the thing about iran is that there are fails in side veils inside veils. you never know which veil you're in. >> everybody is, should we trust them? in the same way that the israelis say why should we trust the palestinians. >> these are legitimate questions. and john kerry is trying to say i hear you. i will do as much as i can to -- build security and i will lay

out this opportunity on the other side because you so have the arab peace initiative. you will have relations with every arab country and every islamic country. he is not coming to them and saying, no risk, nothing to worry about. >> it's not that your point is a bad point. >> saying i understand. build up the opportunity side and put them in a balance place. smart strategy. ♪

>> you have been to china and you have been to singapore. >> here's my question about china. if you talk to a sinologist, they tell you the consensus is china went through a phase called peaceful rise. and has gotten so big. they don't need to rise so peacefully anymore. that is one theory.

>> or we can have global demand. >> exactly. i come in a little different. i think it is a frightened china more than a rising china. i think you are sitting where xi jinping is sitting, you are riding such a tiger. you now have 300,000 bloggers and you have these huge state- run industries that have to be downsized and privatized. the pollution is so thick i couldn't see you if we were sitting there on the street right now. the problems and challenges they face are so gargantuan that i think they are as frightened as they are feeling empowered. and we should keep that in mind. you look at the island's issue in the south china sea. they are making these claims. not like the japanese have been innocent, going out and buying the islands.

i am struck when i go to korea. in downtown seoul, you have all of these guys riding on horseback. and they are all generals in the wars against japan. and you remember these guys have their own history outside of us. so it is korea-china, china- japan, korea-japan. we talk about the middle east and these cultural and tribal wars. they have the same versions well. they have just been able to suppress them with economic growth a lot better. >> xi jinping, the problem of how any people he has to bring to urban areas from rural areas. when you bring them, they have to have a job. if they don't have a job, then they are part of the problem. >> i spoke at a university in shanghai last month and what was so striking was how many times i was asked from young people there that i get asked in america, which is will i have a job? and the big challenge for china right now is that they have to get rich before they get old.

think about china. 20 years ago, china was the story of two maternal grandparents and two paternal grandparents and two parents all saving for the mac laptop for one kid. one job policy. now that one kid will be paying the nursing home those of maybe two grandparents, one set of parents. for that kid to be able to do that, he needs a job that isn't just stamping out the glass for iphones. he needs a job that is knowledge-based, the has real value add. because the assembled jones are moving to vietnam and cambodia. to have a knowledge economy, you have to loosen up a little. you want to have a knowledge economy, but you can use bloomberg. you can use google. and you can't use "the new york times." let me know how that works for you. >> the people you are competing with are all doing that. >> and you have your chinese versions, baidu and whatnot. and i think that is the challenge they face. i think it's terrifying. and by the way, i wish them

well. when i talk to people sometimes, i don't use the word china. prefer so use the term one-sixth of humanity. we are talking about 1/6 of humanity. transition make the between where they are now to a more open and consensual society will affect everything, from the quality of the air we breathe to the value of the currency in our pockets to the cost of the shoes on her feet. so i wish them well. >> how do you incorporate terms of freedom of expression and equal rights and drawing redlines? that gets tricky if you look and say, how do you apply that policy here and there? >> we tried to dictate and that failed. the president used to go with a list of political prisoners. it's not going to happen. so we have to come to terms with the fact that it will happen at their own pace.

the point i try to make in writing about the trust issue is that something that china's leadership has realized -- the world went from connected to hyper connected. and it did, three things are happening at the same time. wealth is concentrated at the top in this hyper-connected world. if you have global skills now, you can really -- were talking about china, if you can access the china market, whether you are a ballerina, a tv interviewer, a journalist, an author or an athlete. wealth gets concentrated out the top. but power gets distributed at the bottom and transparency gets injected everywhere. so in a world where wealth is concentrated at the tom, you see -- at the top in china, we see the ruling families amassing huge fortunes. but power is distributed at the bottom. .00 million chinese on weibo

i can see your ferrari. and i just tweeted it to your neighbor. you may cut it off, but we will find a way. transparency gets injected everywhere. in that world, you better govern in a way that people will be able to tolerate. it doesn't have to be democratic per se, but it does need to be legitimate because you will lose your legitimacy. so what is the scariest thing for xi jinping today? why did they threaten to throw us out? the chinese economy over the last 10 years have developed a shareholding culture, markets. they have to apply to comply with global standards. that means that everyone's ownership has to be registered in a public way. so what did bloomberg and "the new york times" do? no one came to us and said wen jiabao's mother is worth $100 billion.

and his whole family, kids, nephews, aunts and uncles are worth $2.7 billion. no one whispered in her ear. no one slipped an envelope under the door of our shanghai bureau. >> you went and looked in the records. >> we hired lawyers and accountants and we just looked it up. imagine how scary that was to the chinese leadership. they think it is all conspiracy and that somebody did whisper all of this. maybe somebody tipped off somebody in the very beginning. but the whole roger was done -- project was done with lawyers and accountants and public records. so in that kind of world come in a kind of transparent world, they will have to govern in a if -- different way. if they don't take this as a warning heart attack, what bloomberg and "the new york times" did, the number one cause of death in chinese regimes in history is corruption at the

top. their idea of cleanup was at the local level. press report on corruption. at the provincial and state level, report on corruption. but thou shalt not report on corruption at the highest levels of the government. so they feel we broke a bargain, and we feel they broke a bargain with their own people. again, state-level. ilai at the provincial level had gone nuts, so people reacted. it is a very important transition. drawing redlines were necessary and build ridges were possible. -- bridges where possible. don't feed the nationalist. the regime could take it against us by saying the americans, the west, they want to keep us behind. >> is there an obama doctrine? or is there some

thought andof strategy? you have people like ehud barak talking about strategy, you have to have a plan. >> i would have a tough time if you had a rorschach test for obama, where is he going? for a couple reasons. healthcare.gov -- in saudi arabia, they ask what other presidents priority policies? that's easy. healthcare.gov, healthcare.gov, healthcare.gov. if that doesn't work, he is a failed president. and he will have no authority. so he clearly has to get that fixed. i think that sucked so much air and energy out of every other part of the agenda that i couldn't tell you -- again, rorschach test, what is his plan now for his second term, i couldn't tell you. second thing, because of how he reconstructed his team, if i wanted to be critical, i would

say he is surrounded by people -- everybody has his back and nobody has his front. there is nobody in his face. i ask myself who is the person who gets in his face and says that's a really stupid idea or we really screwed up here. we need to do x, y or z. or let's get crazy. let's try a carbon tax. forget what the pollsters tell you. forget what the political -- >> tell me who has performed that role in previous presidents. who got in bill clinton's face? who got in george w. bush's face? who got in bush 41's face? been jimcould have baker. >> different people. i think jim bakker got into -- i think hillary got into bill. among others. as far as george w. bush, i don't know. i don't know enough about the

inner dynamics of that administration. >> the question of going into syria and doing something more, the universal idea was everybody saying do it. we have to do it now and they didn't do it. on the other hand, he went into get osama bin laden. they were against that, too, but that decision turned out to be the right decision. very risky. >> i think the president has done a lot of good things that i would praise them for. i hope he finishes on health care. i hope it works. i don't know if it will, but i think it works. i do think it is the right avenue for the right plan. the things he has done on auto

mileage, there are things he has done i really like. but what has frustrated me most is that i voted him for one reason -- for him for one reason. i thought he would change the polls, not read the polls. he has done a lot more reading of the polls than changing the polls. peaces back to the kerry and the piece i wrote about nelson mandela. what was it they gave nelson mandela the moral authority? it's that at times he was unafraid to challenge his own base. i would say that obama has never really gotten in the face of his gave nelsonich mandela the moral authority to challenge the whites in a way that would give obama authority to challenge republicans in a different way. tohink obama, in fairness him, is dealing with the craziest version of the republican party that any modern

president has had to deal with. the comeback would be, i challenge my base, what i get the republicans coming to me? in fairness to him, i can't say that he would. we have a republican party led around by a tea party called or whatever it is. >> though the latest budget may suggest they are less powerful. >> i would hope so. but in fairness to him -- i would love for him to take these next three years and just say, i am going to put on the table all of the stuff that is off the table. >> part of income inequality is him putting it on the table. i believe this should be done. it may very well be that between the changing circumstances of what happens with the iranian election, the opportunity would not present itself before, and because he is obsessed by health care, as he should be, he basically says to john kerry, you do it. >> i really hope he does. >> i am giving you a lot of line, more than i have ever given every -- any other

secretary of state. >> what i am missing from the current discussion -- and this is not in any way all of obama's fault -- news that the -- current discussion is dominated by taxes or no taxes, income inequality, entitlement reform and they are all in port .- important and legitimate but nobody is talking about growth. all the things that actually make solving this easier. >> two things. i will come back to growth. number one, how you factor in today when you look at america's future, the fact that we now have energy independence on the horizon, what impact does that have on all the things we are talking about, including our own domestic economy? >> let's go back to the middle east for a second. i think the middle east come in the last four or five years, as we become more energy

independent, the middle east for america has gone from being a necessity to being a hobby. i like hobbies. i like to work on model airplanes. when i have hobbies, some days i work on them, some days i don't. and what they sense is that something has changed for us. the sense of urgency about the middle east is gone and they are right. one thing we know is we will never face 1973 gas lines ever again. how the middle east evolves, and should evolve in a stable way, is still a critical interest because our trading partners, china, india, and europe, are still dependent on middle east oil. we could say we don't care, let it go wherever it goes, but if trading partners are effected we will be affected. but the sense of urgency is gone. the critical thing is how do we use this bounty? do we use it to say we are energy independent, let's party? or do we use it to say, we just

got a huge windfall, let's use ok, as a bridge to a clean energy economy. if we take natural gas and use it to substitute for efficiency, solar and wind, we will be making a terrible mistake. if we take natural gas and substitute it for goal and dirty -- coal and dirty fuels, we will be doing the greatest thing we can. >> i forgot to mention snowden. what do you make of the snowdon revelations and what seems to be happening with both a clear recommendation that now the nsa has to change, and the president suggesting -- >> i read very little about it. i keep reading all the stories and i learn a little bit more all the time when i read them. but when you add up everything, what comes through to me is that snowden was a whistleblower and

that technology had had leapt -- technology's ability to vacuum up information has leapt ahead of our ability, not our ability, but almost paying attention to the regulatory allocations we need to preserve the kind of privacy we need. i don't know, as a country, do we grant him asylum? i would be perfectly willing to consider that, come back, give us everything you haven't disclosed. >> there is debate on that. >> i think that is really worthy of consideration. but in total, the more i read, the more i see some of the legal judgments. i know there is debate. i'm not an expert. i worry that we are doing this at a time when we think there will never be another 9/11 and we do need an nsa. we need an nsa that is compatible with our laws and privacy and who we are as a society. so i still believe that there are real enemies out there and i don't want to get carried away in that direction.

but on balance, snowden looks to me more and more like a whistleblower every day. and i think we should find a way to end this chapter. >> so he's a whistleblower that did not act like one. >> that is why he is a competition case. i don't have a recommendation but i think that is a discussion that we needs to do. what he needs to do and what we need to do to bring this to some closure. >> talking about the economy, we often talk about nationbuilding. what you do. it has to do with education and science and research and use of technology. it has to do with being competitive in the 21st century. and you see those who are ahead of us in education. we are now 18th and 20th. as a percentage, lots of other things. >> i just wrote about the pisa results. it was interesting.

with someonenghai from teach for america and the guy who runs pisa. we visited a school in shanghai. this was really interesting. the one thing you will read -- they cherry picked those kids. the school that was one of the leading schools in china, 41% of the schools came from migrant families from the countryside. that is the chinese equivalent of disadvantaged neighborhoods. so we went to the school. i go saying, what is the secret? what is the big deal? you can tell me . they stand on their heads for 30 minutes in the morning? they have double servings of milk? what is the secret? what is so cool when you're there is you realize there is no secret. the secret is this.

this school 10 years ago was a failing school. it is also very important. they were failing and they put something in place, and now their world-leading. so not like they were always there. what is the secret? they developed a system. this is one thing i learned covering energy. energy is a scale problem. if you don't have a scale solution, you have a hobby. that is not going to change the climate or anything else. education is another scale problem. the only way you get a scale solution is when you have a system. and about energy. a system that allows ordinary people to do extraordinary things. that is the only way you get a big change. in energy, how do ordinary people do externally change with the system? remember the last time he stayed in a european hotel. they gave you a plasticky card. when you got to the hotel room the power was off. when you put in your key card, all the power comes on. when you leave, all the power comes off. that was allowing you as an

ordinary person to do an extraordinary thing to stay in a hotel and save energy at the same time. you need the same thing for education. on gettingis based ordinary teachers to become extraordinary by in part allowing them to teach only 70% of the time and spend 30% of the time with -- on personal development with other teachers, constantly working on their craft. time on one-on-one sessions with students? >> no. >> 80% with other teachers. >> professional development. another thing they do with that 30% extra time, the teachers we talk to, they said come on average, i have three e-mail conversations or phone calls with every kids parents in my class every week. so they are basically leveraging the parents to be an extension of the school day and of the teacher and how is your kid doing? they bring parents in and tutor them on computer skills and math so they will be better able to

help the kids to do their homework. then they take their best teachers -- now that they have made their average teachers better, they take their best teachers and apply them to the hardest kids. that is the system. the system is, we take average teachers and make them better, and we take the great teachers and apply them to the hardest problems. that is really the key. but there is also a culture of learning. kids come to school there prepared to learn, not to text. they come to school knowing -- >> how do you create a culture? >> one thing we know about culture is that culture is very powerful, but cultures can change. look at kipp. my wife is chairman of the board of a charter school foundation in washington, d.c. one of the schools in "waiting for superman." it creates a culture. what are the key elements? you are responsible. you have to have ownership over your own learning. you have to be responsible.

and a culture that says, you're learning, how will you do here, will be directly connected to how well you do in the world. in a job, as a citizen. young people have to make that connection, and when they don't have that sense of ownership, ownership is that key to life. when you own something, i can never ask you to do something more than you will do on your own. when you feel ownership as a country, as a student, as a boss, when you tell one of your producers you own the segment, that will work in total ways. the history in the world, no one has washed a rented car. i consider that like the them -- a 11th commandment. when people own things, it is amazing what they will do on their own. >> so we have to improve teaching so we don't end up as 18th and 19th. and have a culture where they want to learn. >> we have always had this problem. we have always lagged in tests. so what did we do?

we had big immigration so we cleaned up all the global talent that when here. we have a lot of walls to indianscompetition from or chinese or computers or all that. we have all that. we also had a generation who were really educated the old- fashioned way, real fundamentalists. that generation is dying off. we we are not letting the smart and students -- smartest students in the way they used to. by the way, they have great opportunities now at home and the walls have all come down. that is why to me, we talked about this before, the central social economic factor of my -- our time is average is officially over. that was a chapter in my book. average is over. every boss has access to more above average automation, software, cheap labor, and above-average cheap genius. grew upworld, you and i

in the cold war. what build the middle class? the high-wage middle-skilled jobs. with henry ford saying, i want to pay these people so they buy my cars. >> hi-wage, middle-skilled jobs. today there is no high-wage middle-skilled job. every middle-class job is getting pulled in three directions. pulled up where it requires more skill. pulled out where more people and congeners and software can do it. or pulled down, outsourced faster than ever. so the thing that got us through the 1950s, the 1970s, the 1980s and climbing in the 1990s and 2000's, it won't do it for the 21st century. everyone has got to be in the process of lifelong learning. >> the internet allows that. >> we will be able to do it more

cheaply. i wrote this book that i liked youhe time, "the startup of ." you have to own it now more. it applies to me. it averages over for me. before this thing with china started i became a columnist in , january 1995 for "the times." and i inherited the office the james reston used. in the washington bureau of "the new york times" what a thrill that i inherited this great editor and columnist used. i suspect when he was writing his column he would get up every morning and say to himself, i wonder what my seven competitors will write today. he personally knew all seven of them. i do the same thing. i come to the same office and i said to myself every morning, i wonder what my 70 million competitors will write today. i have 70 million competitors.

bloggers, writers, online magazine -- by the way, it is incredibly enriching for me because i can see what is going on out there and learning from people who weren't traditional journalists but full of insight. but it is a totally different environment. average is over for me, just like everybody else. >> thank you for coming. >> pleasure. >> when is the next book? >> just toying with it now. the idea in my head is something about all the transitions i have seen. it might be called the second draft of history. the second draft is the reporting columnist. might be about this or that. >> you begin to expand it. >> the third draft -- i'm thinking about a second draft history. >> thanks. ♪ >> live from pier 3 from san

francisco, welcome to late edition of "bloomberg west." we cover the global media and technology companies that are reshaping our world. i'm emily chang. our focus is on innovation, technology, and the future of business. let's get straight to the rundown. the value of the bitcoin is falling fast, now cut nearly in half from its recent $1200 high. we look at why, and where you can even use it.