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all eyes were on the april jobs report this week. welcome to "your $$$$$." fewer jobs than expected were created and the labor force participation rate dropped to its lowest level since 1981. hold organizati hold organization i'll tell you what that is. bottom line, this was not a good report. chris even romans is here to break it down for us. >> 115,000 jobs isn't enough to convince anyone there's robust hiring going on here. hiring actually slowing in 8.1% as you point out is a drop in the unemployment rate, but it's because so many people dropped sought of the workforce in the month. let's take a look at where there were jobs created. health care, we've seen that z consistently. health care, 19,000 jobs there. also saw jobs in leisure and hospitality. again, many of these are low wage jobs and that's a big question about the durability of the american dream with the kinds of jobs we're creating. retail jobs, 29,000 jobs created

there. reversal from last month when we didn't have quite that much professional and business services, he's tend to pay better. 62,000 jobs overall. let's look at the politics because that is of course the fun part or not so fun part in an election year. it this is the last year of the bush administration, you can see the job loss is really getting underway in earnest, the beginning of the obama administration, and the judgment on the campaign trail now will be how durable is this recovery. how many people are included in these jobs that are being created. and how sustainable is it. and that's where we go from here. >> let's bring the panel into discuss some of this stuff. we have to figure out what is going on from here. diane is the chief economist you can and ken economics professor at harvard. diane, let's start with you. 342,000 people are gone from the labor force. the labor participation rate, the number of people, percentage of the population available to work is at its lowest level

since 1981. we spoke to the labor department this morning, they said there are a number of factors. one is that baby boomers are aging and leaving the workforce. students are staying in school longer because the opportunities are not there. and the rate -- 9 pace chat women have been entering the workforce for the last couple of decades is now start to slow down. but there's also this idea of discouraged workers dropping out because there are no jobs. what's your analysis of this? >> well, the discouraged workers is the part that they're not being counted as discouraged yet. nine states in the month of april it actually saw the extensions to their unemployment insurance expire. and as we know, the longer people are on unemployment insurance, the less they look for a job. but they have to look if a job at some level or they don't get the insurance. when it expires, they stop looking for a job and then they won't be counted as unemployed, but it takes like tremonts for them to not look for a job to be calmed a discouraged worker. >> so are you concerned about the trend in the labor

participation rate? does that complicate the discussion about unemployment? >> it does complicate the discussion. there are demographic factors at work, but when you're talking about this high of an unemployment rate and people are staying in school we know 56% from a harvard study of people saying in school are not graduating within six years. that's a real problem. a four year degree within six years. so it's not just they're gaining more skills. they're staying in school and hiding and not getting more skills necessarily to get a better job later on. >> ken, this all starts to get so political. and the two talking points from the obama administration is, look, it's been 26 months in a row of private sector job creation, more than 4.25 million private sector jobs. from the romney camp, it's broken promises. 39 months in a row above 8%, that is a record. they're both right. but how well they resonate to people who frankly can feel like the labor market isn't really doing a lot for them right now. >> there are a lot of people

where the labor market isn't doing it for them right now. we're just growing enough as you said to take in new immigrants, new people leaving college and such. i worry that it will be like this for a long time, that we're healing. do think we are moving forward, i do think the president is right about that, but we're not moving forward very fast. i'm not sure how easied it would be with so much debt out there to get us moving a lot faster. >> consumer gdebt or national debt? >> i'm talking about consumer debt. the national debt is piling up, too, which will mean taxes. and between the two of them, it could drag somewhat. keep us down at this level, it's enough to get new entrance, but not enough to bring a lot of people in. it could be a very, very long time. >> diane, let me ask you this. we have elections in greece and france tomorrow, a special live show tomorrow at 3:00 p.m. eastern where we'll be covering

those. but we have 10, 11 countries in europe in recession now, not a surprise. we knew they were getting there. at 115,000 jobs created, is this something that worries you about recovery or is it just not as robust as you would like to be? >> certainly some of it is reflecting the earlier gains we saw in the year. there were unseasonably warm winter weather and some of that borrowed from gains now actually things like lawn mowing companies hired up in february instead of in march and april. so we have to even it sought over the first four quarters of the year. but i agree whether are a lot of head winds to growth and the elections that we see in europe are more head winds because they may further dismantle what has been at least some kind of a political consensus in europe to save the euro. there's talk about rewriting how they go about doing that. and changing the rules over there. there's a lot of uncertainty going forward and those are all head wind, political head winds both in the u.s. and abroad that could cause speed bumps for an

economy that's not rolling along at even the speed limit right now. >> but anybody who is up for office doesn't seem to have the stomach to deal with the budget, doesn't have the stomach to deal with some tough decisions that we have to make and whether or not there should be greater stimulus now and greater austerity in the united states down the road. >> they can't even decide on $6 billion for student loan subsidies. $6 billion for student loan subsidy lows washington if to a complete uproar and just the shear size of all of the problems to come, it's a little scary. >> i'm with you on this. ken, you made the point when you talked about debt and christine said do you mean consumer debt or government debt and you said consumer debt. this may be the big problem that needs to be solved. it also may be a problem that we can start taking into our own hands between government doesn't help us solve it. we'll talk about that when we come back. this is truly a nation of haves and have knots. and we'll look at the growing debt divide. how much debt is good for you

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government debt has been a big concern, with you how about personal at the time? household debt currently above $13 trillion in the united states. this is what ken and christine were talking about. take a look at this chart. 2007, 2008, right before the recession. you saw how much it grew. since about the beginning of 2008, though,s's been coming down, coming down, take a look at this, though. the last three months of 2011,

started edging back up. ken rogoff is the former chief economist of the international monetary fund and professor at harvard university. ken, what do these debt levels mean for the economy? for people who don't look at these charts a lot, is it bad, it good, is it the right trend? >> the debt levels are a problem. anyone who doubts that economists have looks state by state and county by county and the states where the debt really ran up during the early 2000s, lots of subprime mortgages, those are the ones that are hardest hit. job losses, sales down, grocery purchases down. it's weighing it our economy. we'll continue to see foreclosures. people struggling to reduce their debt. i think it's the number one problem which needs to be addressed to really get this recovery on firmer footing. >> let me ask you this as a guy who spent time as a policy maker, when you say the number one problem that needs to be

addressed, who addresses this? is this a government thing, is it the kind of thing we talk about on tv, is it a public service education campaign, is it just people? >> no, it is something the government needs to address. sort of happening, burning on its own through foreclosures, through all kinds of the epicenter where the problem is. i think the government needs to find ways to accelerate the rate that we get banks and borrowers to negotiate down the loans. the obama administration has reduced d the interest rates, b he's had to do this on his own and i think could you do a much more powerful comprehensive measure if done stog together with congress. >> we generally like to differentiate between good debt and bad debt.

p if you need to take a loan sometimes to go to school. when we look at this piled on consumer debt, are we making it look worse than it is? >> actually i think ken brings up really good points. one is the issue is the mortgage issue. we now have the subprime people who took advantage of the system, they've been flushed out, they've gone into foreclosure. the foreclosures we're see dag are the guy who put 20% down, locked in to a 30 year mortgage, hair house has fallen 30% in value and they now lost their job and they can't make the mortgage payments anymore. that's someone who did everything right and is now having to deleverage and it's causing problems throughout the system. and this therecould be principal share, all kinds of issues that we could restructure the loans in ways that we could keep them in the home and keep them as they regain confidence and get back into the job market. the other issue is student loans have more than quadrupled and they're now the fastest growing cat better of loan growth. so they account for almost all the loan growth that we've seen in recent quarters.

nearly more than quadrupled since 2007. and we have record numbers of people enrolling in school, but also record numbers of dropouts and return to just a four year education is not the same as it is to a licensing degree or something with a certificate. sometimes you can make more money getting less education. so the whole system needs to be rebalanced and certainly the public/private sector partnerships in community colleges where they do a short term training program and you get a job, that might be better and less money than a four year degree. >> this is an issue, christine, you spend a lot of time on. >> and i was talking to community college people doing aviation mechanics degrees, $100,000 after a few years or mid career, two years, a certificate program. and there are a lot of other things like that that are in good demand. but what you hear from a lot of people is the mismatch between the skills they need and the kind of workers that are available. meantime, kids are running out and taking on loads of dead. you almost need to be a money manager by the time you graduate

to handle all of the debt you've got. and they're taking out degrees that aren't necessarily going to fit in this this economy. we don't do a really good job i think, diane, and ken, of really telling kids where to focus that debt so it's a good investment and not something that will hurt them. ken, you teach at an elite university, so clearly those people know how to handle their loans. >> we're having a good discussion explaining did you tell. i just want to take it over to the wall and have a different discussion with you. and this is debt to income ratio. bear with me for a second. the blue line represents the bomb 95% of income earners. the red line is the stop 5%. look at that blue line, it goes up basically all the way through to 2007 to the point in a it's at almost 150%.a it's at almost 150%.a it's at almost 150%.a it's at

almost 150%. now look at the red line. that is the top 5% of earners. it started actually higher in 1983, went down, went up, never got higher than the bottom 95% again and moved around to the point that it is substantially lower. so on the right side of your screen, you're looking at the gap. the blue 195% of the population have more debt than they make money. and the red shows that the biggest earners in society are carrying less debt. gasoline, diane, let me turn to for you an interpretation of that. is that good, bad, or does it matter? >> it does matter. and it gets to the heart of ken's point. and i think the issue on the 95% is those are also the people it that have been affected the most by stagnating wages or loss of job. so the income has not kept up with their debt accumulation and that may be why they're taking on more debt. but also both sides of that, all

that equation is not good going forward and we have to alleviate some of that. the top 5% aren't people taking student loans. those aren't the people taking on a lot who are debt. and their incomes have held up relatively well. >> ken, if you go back to the beginning of that chart, it showed that higher earners carried more debt than everyone else. how and why did that change, who how did we get in a society where lower income workers carried more debt than higher income workers? >> part of it is the high income worker, their income has been soaring. but there's also a case to be made that it was used as a palliative to let people consume more so they didn't think about the fact they weren't earning as much. but of course that runs out eventually. >> no kidding. what a great discussion. >> expansion of the subprime debt. you saw subprime debt expand quite dramatically in the 1990s

and debt was used as sort of buffer to deal with the fact that people just didn't have incomes. >> it's important that we recognize that this house hold debt is a bigger issue to most people than government debt is. thanks so much. diane swonk, ken rogoff, christine romans. coming up next, end this depression now. a call to arms from nobel prize winning economist paul krugman. sxwl a recovery is when things are going up, a recession is when things are going down. a depression is a time when you have wiggles, but you're basically down the whole time. that's what we've been in. >> a powerful message for anyone who has suffered over the past four years. . my interview with him is next. your finances can't manage themselves.

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you might be worried about the economy, but signs there are recovery is strong. the dow industrials are up, markets are up, the s&p 500,

your 401(k), they're up. corporate profits are strong. jobs, the economy has added jobs for 19 months in a row. but my next guest says none of this is enough. paul krugman is a nobel winning economist and a columnist for the "new york times." he's also the author of a new book, it's called "end this depression now! ." says the united states isn't in a recovery, it's in the fifth year of a depression.says the u a recovery, it's in the fifth year of a depression. >> americans have been out of work for more than a year. that hasn't happened since the '30s. and the usual medicine which is the fed cuts interest rates isn't available anymore. those are the defining features of a depression. >> for it our audience to understand this, when you say the usual tricks are not available anymore, they've gone down to 0% and why is that not working? why has that not done what you think it should have done?

>> it would have been much worse if they hasn't, but this was one hell of a shock to the economy. we had an enormous housing bubble and probably more important for the state of the economy, a huge increase in private debt. huge increase in household debt. which left us overleveraged, the private sector has pulled back, consumers can't spend because they're dealing with their debt problems. businesses won't spend because the consumer demand isn't there. and so even cutting interest rates to zero is not enough. it's not structure. what it is it is very severe problem of inadequate demand because the private sector got overleveraged. this is the time when the public sector has to step up and do the spending that the private sector for the time being can't. >> so if the answer isn't a lower fed interest rates anymore because we can't, the only solution then is to return to stimulus and more of it? >> well, yeah, although it's a funny thing. what we've done is not stimulus, but austerity. we've actually pulled back a lot. if you look it at the cut backs, they're huge. so we don't actually much need

new stimulus as simply to reverse those cut backs. which will riequire aid from th federal government. monetary policy can help. i beat up on bernanke saying he should be doing more, but the heart of it has to be that we need to reverse this really misguided austerity of the past couple years. >> what more can ben bernanke do, are you talking about a qe-3 on top of other -- >> of course. qe qe-3, but beyond napt fed needs to make it clear that it will hold off on ragz the short term rates longer than people now expect. it's willing to let inflation rise to something like 3% or 3.5% before it slams on the brakes nap wou brakes. that would have a big effect. it won't do the job itself, but that combined with getting the schoolteachers retired is what we need. >> you say in the book that the depressed stays of our economy isn't just causing a lot of short term pain, it's having a corrosive effect on our long run prospects. what do you mean?

>> a couple things. private investments is low because the economy is depressed, but when we recover, we will have less capacity than we should have had. workers who have been unemployed for a long period of time tend to lose hatheir attachment to t workforce. they become perceived as up employable. that reduces our future labor force. young people coming out of college can't find jobs to make use of their skills. they're working as baristas or they're unemployed. that goes on long enough, they're unemployable or employable that makes use of the skills that they got this college. all of those things excerpt a corrosive effect. we'll find that we're not able to get back to the previous trend because of the damage done during the depression. >> it's so much more serious in europe and this weekend, we have elections in france and greece, both of which are to some degree referendums on austerity versus

stimulus to provide growth. >> and the europeans, they have created a mess for themselves because they've create this had trap of the single currency without the institutions to support it. which means that their situation in a fundamental choice is more difficult than ours. they need -- >> open the tool box. >> they need to do something especially adventure was to make it work within the confines of the single currency. but they've given us an object lesson in the effects of austerity under depressie dee p sif conditions. there was a big debate two years ago, a lot of people in europe and here were saying cut government spending that will increase confidence, the economy will sx band. look at spain, look at greece, look at ireland. it doesn't work that way. >> paul krugman, thanks for being with us. great conversation. >> thank you. don't to get, will this monday, fortune releases its fortune 500 list. you can head over to cnnmoney.com to find out who made the cut and who comes out on top this year.

coming up next, mark zucker burpg and facebook have changed the game. but is it must have to win over potential buyers and do you think we have big economic problems? it's a whole lot worse across the atlantic. take a look at this map. every country highlighted is back in recession and in a new global economy, that could be bad news for us here. i'll explain why next on "your $$$$$." lear. clear, huh? my nutritional standards are high. i'm not juice or fancy water, i'm different. i've got nine grams of protein. twist my lid. that's three times more than me! twenty-one vitamins and minerals and zero fat! hmmm. you'll bring a lot to the party. [ all ] yay! [ female announcer ] new ensure clear. nine grams protein. zero fat. twenty-one vitamins and minerals. in blueberry/pomegranate and peach. refreshing nutrition in charge! splenda® essentials™ no calorie sweetener with b vitamins, the first and only one to help support a healthy metabolism. three smart ways to sweeten. same great taste. splenda® essentials™.

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tomorrow we're doing a live special at 3:00 p.m. eastern. it's about the elections that are happening decisions are being made tomorrow in france and in greece. and there is a real struggle about which way they want their countries to go. in fact 12 european countries are back in a recession. that's raising concerns that our sluggish recovery here in america could fizzle out. right now all eyes are on jobs both here in europe. christine is back with me. as usual, you have come armed with numbers. >> i certainly have. in the u.s., unemployment 8.1%. the situation in europe, though, par worse. these are the 17 countries that use the euro. take a look here. overall, unemployment the highest level since 1999. spain's jobless rate, 24%. italy is at a 12 year high, almost 10%.

greece, ireland, portugal, all about 14% unemployment for those countries. the three largest economies in the eu, though, are fairing a little bit better. france has unemployment 10%. germany, 5.6% unemployment. well below the u.s., by the way. britain which still is using the pound, not a member of the eurozone, 8.3% overall. clearly tough times in europe, the concern is that it could spill over here, all of this political fighting about austerity versus growth. >> it's the same fight we're having here, just seems a little more stark the way plays out in europe. european leaders were betting on this idea of fiscal austerity to fix their economies. clearly that has not happened. when we look at those dire unemployment numbers that you're telling us about, that has a number of prominent u.s. economists questioning whether fiscal austerity, will idea of pulling back government spending is the right policy for europe. pulling back government spending

is the right policy for europe. christina romar doesn't think so, she headed the top body that advises the president on economic policy in the united states. she's an economic professor at the university of california at berkeley. >> what we're seeing in europe now is it's a uniquely painful time to be trying to do us a tear tip. we have two things going wrong, one is a lot of these countries are part of a currency union so they don't have one of the main tools that a country usually has to try to mitigate some of the impact of fiscal austerity which slowering exchange rate. >> for viewers that are having difficulty with this and that's understandable, what is the danger here? h trying on get their economic houses in order by cutting government spending, cutting public spending and in exchange for that, people should be more willing to lend them money at

more reasonable rates so they can keep their operations going. >> so that is certainly how it's supposed to work. and i think as i mentioned, there's a problem with that right now. one is that sort of they started this whole process, a lot of these countries like spain, like ireland, like greece, started this process already in a recession, so that again sort of makes it even that much more painful. and then i think there is also the part that the bond markets are also very worried about what's going on with growth. i think the important point here is you're not going to get me to say, no, you shouldn't do austerity. certainly you'll never get me to say you shouldn't do austerity eventually. exactly what i've been pushing for is a reasonable alternative. and i think the alternative is to take all that effort, all of that passion that's currently going into immediate austerity and say use it to legislate the best plan possible for getting spending down, getting tax

revenues up if you need to, over time, get those legislated, but just don't do the cuts immediately when the economies really can't take it. phase them in gradually, say what your time table is, tie those actual measures to when the economies are ehealthier. >> in a recent "new york times" op-ed, one of the things you wrote was that when you do these plan, you should be specific. so in layperson's terms, and whether you're talking about europe or the united states facing a debt problem, what are the specific things that you would phase in? you mentioned tax increases over a period of years like ten years. what other things can you do to gradually implement austerity in the long run but keep stimulus in the short run? >> that's exactly the right question to ask. so something like think about what perhaps did along these lines a couple of years ago. they legislated an increase in

their early retirement age. and that's something that phases in gradually. so it's not something that immediately takes money out of people's pockets, but it is something that for the long run fiscal health of france is a very sensible measure. so that's exactly the kinds of things i'm talking about. so you are going to have to see a change in entitlement programs in europe, you are going to have to see again probably a change in tax revenues. but those are the kinds of things that you absolutely can do gradually. in the united states, we all know that probably what you want to do are get rid of some of the tax expenditure, some of the loopholes. again, you don't have to do that in one year. >> great discussion. thanks so much for joining us. always a pleasure to talk to you.

chris t christina romer. remember this screen from the film "the social network"? >> a million dollars isn't cool. do you know what's cool? >> you? >> a billion dollars. >> you know what's even cool sner $13 billion. that's how much mark zuckerberg's company could raise when it goes public. we'll tell you whether should you buy in next. plus he's a knight, an inventor and billionaire. but perhaps the title he most embraces is failure. >> the extraordinary thing is b. failures is is that you learn from them, you're curious as to why it failed and you use your brain and build a prototype to overcome that problem. you know nothing from success. but you learn everything from failing. >> sir james dyson on why we need to make things in america once again. you're watching "your $$$$$." for three hours a week, i'm a coach.

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mark zucker purchasing isburg is betting that investors will like facebook. it's set with $28 and $35 a share when the company goes public on may 18th, it's the ipo, it goes public to raise capital. as if they need it. at the high end, facebook could raise as much as $13.6 billion, but that will value the company at more than $95 billion in total. compare that to google, the largest internet initial public offering so far, that raised just $1.9 billion in 2004. facebook is going to set its final price the night before it begins trading. so that's scheduled for may 18th. ult g you'll get the final price on may 17th. here's how it works. institutional investors, hedge funds get the first crack. they buy in at the offering price. that starts next week. regular investors like you and me have a shot the next day. may 18th.

when facebook starts trading on the nasdaq. the ticker symbol will be fb. should you buy in, can you buy in? matt mccullough is a good friend of the program. christine romans is back. do not answer the question should you. because we'll argue about that. this will be a smack down. but let's start with the can you. can a person who wishes to buy stock in facebook who is not part of a hedge fund or mutual fund buy the stock? >> today, no. may 18th, absolutely. it will probably be a frenzy of many individual investors buying a five series, 100 series, through their online account. so, yes, that will be the first day everybody can sit in front of the computer and be an owner of facebook. >> but they'll get whatever the market is paying for it. >> exactly. >> take you back to the days we used to do trading coverage. the mistake to make here is to get your brokerage account set up and then put in an order at a market price.

which a lot of people do. you have got to set a limit on what you are prepared to buy. otherwise this thing could shoot up and you could end up paying more than you wanted to. >> this this is why i think buying ip chlt os can be so per because you've caught into the fren zif the whole game of buying facebook and maybe you think it's a great long permanent investment and maybe it will be. but buying on that day when the big money has got their price before you and then you're the one who is going into so that up -- >> can i ask a question of whether you should buy or not? i specifically said don't answer that question. obviously you're buying it, make sure you're safe about buying that. practice safe buying. since you are dragging us into this conversation, let's talk about google for a second. it priced at $85. opened at $85. it closed on its first day at $100. a year later than that, it was more than double. $280 or something. and this week it was $611.

now let me show you a couple other things. let me show you pandora. its ipo on june 5th, 2011, that's when it had its ipo, it is down 54.5% since then. let's take a look at groupon. everybody wants to say this will end up like groupon or zynga or pandora. groupon is down 32.3% since then. and then there is linkedin, not anywhere near facebook scale, but probably most similar in its service offering, it ipoed on may 19 tth, 10 20 1 1rks i mean went wub, it's not a loser, it's up 34%. now i'll ask the question that you insist on answering. should someone get in and buy facebook and if so at what price? >> no, do not buy may 18th.

what will probably happen, it may start off at $35 a share the day before. moth likely my guess is it opens around 80 o$80 or $90 a share. you buying that day, you will not make money. the similarity on those charts is tippic will the next couple of week, you see it selloff. people day trade it and it loses its allure. see where it closed at the first day. take 20% off that, pick that price as your limit, put a limit order in, and if it hits the next couple weeks, then you own facebook. >> people seeing the road show, they'll get the good price. do they have limits on how much they can sell right away by getting the early price? they can't go out there and dump it, right? >> no they cannot. some private investors are dumping it. 180 million shares. another 157 million shares that people are dumping already that own facebook shares. so those people have to say-will- >> they're monetizing their

investment. okay. let me ask you this. if you're excited about the concept of social media, there's actually a safe way to do this. >> the safest way to do it is the global x social media etf. >> buy and sell it like a stock. >> exactly. one major difference is it's a capacity stock. so you have pandora, linked in oig, and what i love is there's a lot of foreign social networking companies in there. some of the biggest ones in japan, in china, russia has one. so you get exposure to all these different companies by booig buying into one etf. >> okay. we are going to spend a lot of time in the coming week talking about facebook on cnn. we'll also talk about it a lot on next week's show. but if you have a specific question about this or any other money topic, tweet us, my handle,@ali velshi, christine at

christine roman. we'll give you real answers to your questions every thursday at noon eastern during our brand new live twitter chat. your chance to interact with us and get answers about so that what do is send us questions anytime you want, watch your twitter feed on thursday mornings. we'll send and you link, the lingoes live at noon and we'll start answering your question.y lingoes live at noon and we'll start answering your question. we want to nls at questions you you want to know answers to. after a whopping 5,127 prototype, he invented a vacuum that really sucks, creating a company worth billions and now the man wants to manufacture a new economy. we're talking to sir james dyson next on "your $$$$$." s... a body at rest tends to stay at rest... while a body in motion tends to stay in motion. staying active can actually ease arthritis symptoms. but if you have arthritis, staying active can be difficult. prescription celebrex can help relieve arthritis pain so your body can stay in motion.

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489,000 of them have been added back just since january of 2010. on the campaign trail, there are promises to create even more manufacturing jobs. let's take a look at how the united states compares to the rest of the world when it comes to manufacturing. china has established itself as the world's factory. it they produce everything from clothes to computers. one-third of all of china's total economic output comes from manufacturing. take a look at germany. it stands at 21%. the country has found its neech in high end manufacturing. the united states is a distant third by the way at around 13%. and take a look at the united kingdom, behind the u.s. at 11.5%. manufacturing left the united states sand great britt pin largely because the things we needed to build other things moved overseas.great britt pin largely because the things we needed to build other things moved overseas. companies wanted to be closer to their supply chain. i'll take a light bulb.

to make a light bulb, it all starts with the raw materials. let's focus on the three involved in making a light bulb. sand, metal, and plastic. sand -- by the way these things all come from different parts of the world and they get process processed in different factories. sand is made in the glass and filament. the metal is made on to the base that holds the bulb and screws in to a fixture plus stuff inside. the plastic is uses for insulation that protects it against heat. these processes materials move from the various factories to an assembly line and then ultimately to the stores where you buy them. sir james dyson has experienced the frustrations of navigating a supply chain an ocean way. he moved to malaysia to close that distance and i got a chance to ask him about it this week.

>> they gave up on manufacturing. so we had to go there inned to buy the parts. so we'd tluf to move it back, but manufacturing isn't necessarily about assembly in your own backyard. if you develop the technology and have the intellectual property in your own country, all profit or most of the profit comes back to your own country and then you can export the goods from your own country virtually in money terms, the wealth, the know how, stays with america, stays with britain. so we're exporting all our exports in britain, that's bringing huge revenue and creating jobs. admittedly engineering type of job rather than assembly jobs. so it isn't all bad news. >> should we be looking at a policy of what some people call reindustrialization, turning countries like the u.s. and the uk from countries that do still manufacture into what you call

manufacturing economies? >> yes. the way to do it is to design products that develop technology that the rest of the world wants. and the reason britain has lost all its manufacturing capability is that it's stopped making products the world wants. it used to, b. >> they became service providers? >> certainly that. the service sector and banking sector seem more sexy. but they lost confidence in manufacturing and they for goat engineering and design is incredibly important. it's the product that's important not the business or banking. people in china and people around the world, europe and the united states, they buy products. like the iphone and hopefully the dyson vacuum clean, whatever it is. and world's biggest companies and manufacturing company, they're the not service companies like mircosoft. they make real things. >> smexplain this to me because you say the reason companies go to asia to manufacture things is not solely because of labor

costs, which are substantially lower than they are in the west. it's got more to do with explain chains so that you have to change a whole way of doing business in westernized nations to create manufacturing economies. what are the things required? >> two things. first of all, we have to encourage people to start businesses. and i wrote a wrote for david cameron and i suggested various ways you could increase manufacturing in britain. fortunately he's carried out one those things but one important thing is to increase the tax relief that you give to companies. >> we have to make it easier to get land and open factories. one of the catalysts to you moving out of the uk was the inability to get a permit to expand one of your factories. >> it's total madness. we were refused to expand our factory and that forced us out. >> you're at the forefront of education drives. you have a project going on in chicago. >> it's a wonderful thing, an

after school club and we give them vacuum cleaner, they rebuild them and then they design and build prototypes of their open projects and it's really work. there's a child who was desperate to become a lawyer and he asked us i want to be an engineer. i'm inspired. and that's what we've for tgot . you produce 12 times lawyers than we do engineers. we have to realize that because they're producing engineers and engineering will drive manufacturing and going to drive technology. so if we don't get our figure up, we'll be swamped by singapore and korean broke ducts. >> thanks so much. coming up next, why what's happening in europe matters to what's happening here at home.

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what a great show. sadly you won't be able to watch