amazing images i have seen in the history of modern royalty. ♪ >> a choir on the deck in the pouring rain, one of the great choirs. >> one of the great orchestras singing "royal britannia." let's listen to this. ♪

[ horning horns honking ]

you are watching live pictures of the culmination of a remarkable 90 minutes, the queen's diamond jubilee here in london t is pouring with rain it has been horrendously cold, but nothing has dampened the spirits of the occasion. it has really been something incredibly special and you see her majesty, the queen there a fitting image with a large umbrella, leaving the royal barge, followed by her long-supportive husband, prince philip, other senior members of the royal family. they have had an incredible afternoon, pretty well incident-free and i think everyone has had a cracking time and there will be people all over the world watching this thinking you brits are completely mad. and you know what, we are. so, we are proud of it and we are particularly proud of our wonderful queen. your majesty, thank you for 60 great years, you have been a remarkable inspiration, i think

to all of us and to everyone around the world, as part of your commonwealth and part of the empire. we are very proud to have you as our queen. and we have been very proud, i think all of us here, dickey, vassi, richard, to see -- to see our royals at their very best on this remarkable day. richard? >> nobody does it quite like the british and if there was ever any proof needed in these conditions, right the way down to the umbrella her majesty is using, it is the famous umbrella so that the public can still see her, the domed umbrella. >> and you got to hand it to the duchess of came bridge, even a matching glamorous red umbrella. >> absolutely. actually, i don't know if you know that the queen's um brel lark the rim, matches the color of her outfit. >> dickey arbiter, sum up the day for me. >> a unique experience, a grand experience, one that only the brits can do, some were rain or shane and it rain and it was

cold, you summed it up very well, your majesty, we salute you. >> we thank you. come rain or shine, it rained but it showned. thank you all very much. it has been a really specs day. i feel very proud, very honored to have been part of the cnn team today. i hope you have enjoyed it around the world. the rain didn't have a moment answers effect on any of us, to these hearty soul behind us in their rain-soaked cagools, people prepared to come out in these conditions and say thank you to her majesty, queen elizabeth ii, her diamond joubly you congratulations, ma'am, long may you rain. we will leave you with -- we will leave you on behalf of me and brook balanced bdwin and th with the london philharmonic orchestra, the band, the choir, the orchestra, they have played on.

♪

this is "gps, the global public square." welcome to all of you in the united states and around the world. i'm fareed zakaria. we have a great show for you today. we'll start with mitt romney's plans for the american economy. i have an exclusive interview with his senior economic advisor, glen hubbard. then, syria. what's next after that massacre of civilians, almost 50 children killed? i will ask farwas gergis, the noted expert. up next, the harvard business school's michael porter. he is the most cited on author on business and economics in the world. he has a new study to talk about.

first, here's my take. kofi annan's mission in syria, which appears to hope that syria's president assad will negotiate his own departure, seems utterly doomed. instead, america, the western world, indeed, the civilized world should attempt to dislodge the assad regime. but is there a smart way to do it? for a number of reasons, military intervention is unlikely to work well in syria. unlike in, say, libya, syria is not a vast country with huge tracts of land where rebels can retreat, hide, and be resupplied. syria is roughly one-tenth the size of libya, but with three times as many people. perhaps for this reason, the syrian rebels have not been able to take control of any significant part of that country. the geopolitics of military intervention are also unattractive. in egypt, and even in libya, all major regional powers, world powers, were on the side of dislodging the regime or at least passively accepting that it would happen. in syria that's not the case. iran and russia have both maintained strong ties to the assad regime, so were the western powers to intervene, it would quickly become a proxy

struggle with great power-funded militias on both sides. that would result in a long, protracted civil war with civilian casualties that would dwarf the current numbers. think of the lebanese civil war of the 1980s that lasted a decade, killed over 150,000 people and displaced over a million. the syrian regime has stayed intact. there have been no major defections from the army, intelligence service, or business community. why? well, the regime is alawite, the shiite sect that represents about 10% of syrians, and the key military and intelligence posts belong to alawites. they stick with the regime because they know that in a post-assad syria they would likely be massacred.

but assad has also been able to stop defections from the sunni and christian members of the ruling elite. presumably with a mix of threats and bribes. now, that's where the regime might be vulnerable. syria is not an oil state. the regime does not have unlimited resources with which to buy off elites. so we're truly crippling sanctions to be put in place, including an embargo yes on energy, it is likely that the regime would begin to crack. that might mean a brokered exit for the assad family or a full-scale collapse of the regime, but it seems unlikely that the regime can persist without cash. it would be morally far more satisfying to do something dramatic that would topple the assad regime tomorrow. but starving the regime might prove the more effective strategy. for more on this, you can read my column in this week's "time" magazine and on time.com. let's get started. my guest, glenn hubbard, is the senior economic advisor to governor romney.

in that role, he is the chief architect of governor romney's economic plan that will convince you either the governor is going to fix america's economic problems or not. he also has a day job. he is a dean of the columbia university business school. welcome. >> thank you. >> let's get right into it. governor romney has an ad in which he says the first thing he is going to do is a big tax cut. now, you have talked a lot about the debt and deficit. he has talked a lot about the debt and deficit. how can it possibly make sense, if you're worried about debt and deficit, that the first act you would have would be a massive tax cut, which will surely explode the deficit? >> well, not really the case, fareed. first of all, what governor romney said his first up is a spending reform that brings federal spending down to 20% of gdp by 2016. on the tax sid,e he is not proposing a net tax cut. he is proposing something that's

in the flavor of the bowles-simpson commission, to cut marginal rates, broaden the tax base. yes, marginal rates would be cut, but it's revenue neutral. >> the ad then is misleading. i mean, the ad says first thing he will do on day one is cut taxes. >> he is cutting marginal tax rates. he is doing so in the context of a tax reform, the kind of tax reform that economists on both sides of the political aisle have talked about for years, but what's very important is he is doing that also in the context of a plan, day one, that would refrain federal spending so we get the deficit back in order. >> let's talk about the specifics because that's where it becomes -- is often hard to figure out how it works. to cut marginal rates, would you have to do it, as you say, the way simpson-bowles does it. they get rid of a lot of the deductions or so-called loopholes, but the big money is in the very popular deductions. >> what governor romney has said is, look, first of all, we need

to cut marginal rates, and he would cut them essentially to exactly the same levels in the bowles-simpson so-called compromise plan. part of that revenue is made up in economic growth. most of that, though, has to come from base broadening, about which he said two things. one, everything should be on the table. there's nothing eliminated. put everything on the table. second, that the bulk of the adjustment be borne by upper-income households. remember, the bowles-simpson was trying to raise close to 2 percentage points of gdp in revenue. governor romney is trying to be revenue-neutral. his tax plan wouldn't have to raise as much revenue from base broadening as bowles-simpson. >> but i want to press you on this, because even if you're not trying to raise as much, it's very tough to get any significant revenue if you don't touch the big deductions. the big deductions are the interest on mortgages, the interest on -- the health care and federal and state taxes.

i am sorry, local and state taxes. those three collectively -- >> those are the big ones. >> is he willing to look at those? >> he has said so. he has said everything is on the table. he looks forward to working with the congress to do it. there are many ways to do it. we have dominici-rivlin, we have bowles-simpson and president bush's 2005 commission. there are lots of ways. everything has to be on the table, and again, the adjustment really has to focus on upper income households. >> when you look at the spending reduction, you said he is going to take spending down to 20% gdp. that is from about 23, 24. it's a very big drop. medical record to do that, what is he going to do specifically? what programs would get cut, particularly, again, the big

money, that's medicare and to a lesser extent, medicaid, social security? what would he do to medicine conveyor? >> well, he has two parts to the spending plan. the first is the near term, the 2016. getting spending down to 20% is not as radical as it sounds. spending was 20% of gdp, or a bit less before the financial crisis, so this isn't some radical rethink of the size of government. how to do that would be cuts in discretionary spend and block granting the medicaid program. he has been very specific about that. medicare and social security are longer term issues. he specifically said those are not short-term budget issues. how would he do that? for medicare, he said that he would support a move towards more of a premium support system, which would limit medicare support, particularly for more affluent seniors. for social security, he has talked about delaying the retirement age and slowing the rate of growth of benefits for upper-income people. the same kind of progressive solution he is proposing on the tax side there needs to be adjustment but has to have them for upper income households. >> you have worked with governor romney a lot now. >> yes. >> how would you characterize his economic philosophy?

is he a supply sider? is he a classic republican-kind of business type? is he sympathetic to the tea party? and don't tell me all of the above, because that's what people worry about about mitt romney. >> no, i think the way i would describe governor romney is he is a problem solver. and i think the issue for him is how do you raise economic growth in the country and how do you make it more inclusive? once you raise those questions, he is interested in practical solutions, not theoretical solutions. how practically can we do that? and if you look at what he is proposing on the budget, on taxes, on regulation, on financial reforms, there are with those two things in mind. i look at him as a practical problem solver that has elements of all of those that you suggested, but not literally all of the above. >> we'll talk more about glenn hubbard, mitt romney's chief economic advisor. we'll ask him about the fiscal cliff, about obamacare. more when we come back. [ male announcer ] citi turns 200 this year.

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[ male announcer ] when diarrhea hits, kaopectate stops it fast. powerful liquid relief speeds to the source. fast. [ male announcer ] stop the uh-oh fast with kaopectate. and we are back where glenn hubbard, senior economic advisor to governor romney. you've talked a lot, governor romney has, about the uncertainty, the climate of uncertainty that makes it difficult for businesses to invest. i can't imagine something that would be more uncertain than this issue of the debt ceiling. do you believe that john boehner and the house republicans should make it clear that the united states will not default on its debt?

>> well, first, the united states is not going to default on its debt. we have a witching hour where the budget ceiling, sequestration and the live and tax rates are all occurring, and that will be part of a political negotiation. as an economist, i would think that if we get to a situation where governor romney becomes the president, then the lame-duck congress ought to simply shift things down the road a few months to the enactment of governor romney's tax plan. if the president wins re-election, that's a different negotiation, but it should center quickly on the appropriate tax policy, but there's no question that the nation isn't going to default on its debt. >> but should we make that clear to prevent uncertainty? should john boehner make clear that the united states should not default? >> i can't give political advice to politicians.

all i can say is the real economic issue here is both addressing the size of spending and then how you want to deal with the fiscal cliff. >> obama care, this is a subject you know a lot about. you wrote a book about fixing health care. when i look at the problem, it does seem as though if you have an insurance based system and you don't include everyone, you end up in a kind of negative spiral for insurance companies where they're trying to kick people off with preexisting conditions because they don't want to just have sick people on. that is the reason that governor romney of massachusetts decided you had to have a mandate. doesn't it make sense then to preserve the individual mandate in obama care because that's what makes an insurance system work, that have you healthy and unhealthy people in it? >> no, i don't think so, fareed. first of all, have you to start with what's the goal of the reform? i think from an economic perspective, the goal of health care reform is to slow the rate

of growth of health care costs to make both health care and health insurance more affordable. that, in turn, increases coverage. you don't need an individual mandate to do that, but you do need to help markets work better, and you identified some of the problems. you really do have to go after preexisting conditions. you have to make sure that the chronically ill are taking care of it in a way that doesn't hurt the functioning of private insurance markets. you have to change insurance regulation and make it possible to buy cheaper policies. if you do those things and you fix the tax bias against many ways of purchasing health insurance and health care, you can go a very, very long way towards cost reductions. that's really what a market oriented health care reform is about, and you don't need the individual mandate to do any of that. >> was governor romney wrong to do it in massachusetts, because the philosophy behind it is exactly the philosophy behind obama care. >> no. what governor romney was doing in massachusetts was taking a particular set of state circumstances and a -- >> which is the same that you don't have -- the young healthy

weren't buying insurance, and that was a kind of screwing up the insurance system. >> what he has said is that individual states may do all kinds of experimentations. that doesn't follow from that that a national mandate -- >> it only makes sense logically if you say that the massachusetts example then was a failure. was the massachusetts -- was romney care a failure? if it's a success the federal government should adopt it? >> i don't think you can say that. it goes back to the question that you are trying to answer is the goal lowering health care costs? is it increasing the number of insured individuals? i think all of those things that are in the mix. i don't think you can draw the link between massachusetts and the national system. i think what's on offer for the american people to decide is effectively obama care that would double down on all the flaws that i mentioned, all the flawed insurance markets, all the flawed tax system, or a more market-oriented health care system. that's really what's on offer. >> what is the central focus of the romney economic plan? how would you describe it very briefly? >> i would say it's really single-mindedly focused on two

things and an important byproduct. the two things are how do we get economic growth back to what this country is capable of, and, second, how do we make that growth inclusive so that all americans see the benefits of it? the key byproduct of that will be job creation. when people see that america is a country in which you should want to invest, whether you are an american saver and investor or a foreign saver and investor. it's really that simple. >> i had paul krugman, the economist, on recently, and i asked him what he thought of governor romney's plan. and he said governor romney's plan, as i understand it, is we need to cut government spending substantially to restore confidence in the markets. what he should look at is the experience of europe, where they have cut government spending. as a result, they are in a tailspin. the budget deficits are widening.

the debt is growing because by cutting spending, you are, in effect, reducing demand, destroying the economy in a weak economic climate. and that to him it's bizarre that given this evidence that europe provides, of countries from spain to britain, that they've cut spending, and it hasn't worked, why should you the united states? >> it is unfortunate, i think, in europe and to a lesser extent even in the united states that policymakers define austerity as being about this year's budget. the real problem, particularly in the american setting, is how do we get the budget on a glide path towards sustainability? so in the u.s. case, to be concrete, how do we change and slow the rate of growth of entitlements in the long run. how do we gradually reduce discretionary spending? all the things we were talking about before. if we do that right, we don't have to have such dramatic austerity this year. that's a valid point. it is not a valid point to say that the act of austerity is

growth diminishing. the question is whether it's forward looking, like getting government on the right path, or just budget cutting this year. that's really the question. >> but that suggests you would be comfortable with a much longer-term plan where you would tolerate large deficits for a while as long as there was this long plan. and i would suggest to you the tea party will not be happy to hear that. >> well, and that's not what governor romney has proposed. if we can get federal spending to 20% of gdp by 2016, the deficit will be very small. a healthy tax system and a healthy economy would produce 18%, 19% of gdp in revenue. those won't be large deficits. the very big deficits that the country should be very afraid of are the deficits that are coming in the next decade and the decade after that, and there we do have time for gradual adjustment. but, no, we shouldn't tolerate enormous deficits today. my point is we simply don't have to make huge changes in our entitlement programs today. we can do those gradually. we do have time. we don't have time if we wait four more years.

>> glenn hubbard, pleasure to have you on. >> pleasure. when we come back, why china has a problem with america's human rights record. i will explain. tdd# 1-800-345-2550 let's talk about fees. tdd# 1-800-345-2550 there are atm fees. tdd# 1-800-345-2550 account service fees. tdd# 1-800-345-2550 and the most dreaded fees of all, hidden fees. tdd# 1-800-345-2550 at charles schwab, you won't pay fees on top of fees. tdd# 1-800-345-2550 no monthly account service fees. tdd# 1-800-345-2550 no hidden fees. tdd# 1-800-345-2550 and we rebate every atm fee. tdd# 1-800-345-2550 so talk to chuck tdd# 1-800-345-2550 because when it comes to talking, there is no fee. and this is what inspires us to create new technology. ♪

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now for our what in the world segment. last week, the u.s. department of state released its annual report on human rights around the world. it covers nearly 200 countries from tunisia and egypt and the uprisings to north korea and cuba and the repression in those nations. the report is an annual state department tradition going back nearly four decades. and for the last 13 years, it has been followed immediately by another tradition, a rebuttal. china has released its own report on america. it says washington is full of overcritical remarks about the world, but it turns a blind eye to its own woeful human rights situation. so let's flip through the two reports.

♪ the china section of washington's publication begins by listing state-sponsored killings, political arrests, known cases of torture and disappearances. the state department's report says beijing does not respect civil liberties and it documents known restriction on freedom of speech, freedom of the press, and censorship. beijing's report, by contrast, talks about the occupy wall street movement, that its protesters were treated in a rude and violent way. okay. not sure how that's a human rights violation. beijing's report points to the homicide rate in the u.s. it goes into great length on how the u.s. is a world leader in gun violence. again, that's not really a violation of human rights. that's what human beings sometimes do with rights. it may be bad public policy, but

it's not tyranny. let's not simply dismiss beijing's report. on the contrary, i think it would make fascinating reading because a lot of the problems the chinese point out are, indeed, real problems. whether or not they are violations of human rights. the report points out, for example, that with 5% of the world's population, we own between 35% and 50% of civilian-owned guns. that's crazy, and it should make us all pause. the report says the united states has the largest prison population in the world per capita, and the highest rate of incarceration. one out of every 132 americans is behind bars. this is true, and it's a terrible indictment of our justice system. one we should fix. the chinese report criticizes us for high unemployment for a widening gap between the rich and the poor. again, not a human rights issue, but an important critique of american society.

the report goes on to criticize our health care system. it says 50 million americans lack insurance. it reports we've cut spending on education, school budgets in new york city have been cut an average of 14% a year for the last five years. the chinese say minorities suffer disproportionately in america. 11% of hispanics are unemployed. 16% of americans are jobless. the report cites inequalities between the sexes, saying women get paid 77 cents on average for every dollar paid for men. these are all issues worth examining, discussing, and when possible, improving. america has many problems it needs to fix. we've put up a link to the chinese report on our website so you can read what it has to say. of course, it would be equally important for the chinese public to read the state department report on china. now, could a chinese news network put it on its website maybe? no, of course not. the report is banned in china and any website that would dare to publish it would be censored

and punished. now, that's an abridgement of freedom of expression. and, this is a message to the chinese authors of that report on america, that is what a violation of human rights looks like. we'll be right back. >> we're going to see more and more violence in the next few weeks and next few months. my fear is that the armed, protracted armed conflict could easily plunge syria into all-out sectarian strife. warning.. you . introducing the all new cadillac xts, available with the patented safety alert seat. when there is danger you might not see, you're warned by a pulse in the seat. it's technology you won't find in a mercedes e-class. the all new cadillac xts has arrived. and it's bringing the future forward.

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it has been well over a year since syria's uprising began, but unlike with egypt, tunisia, or even libya, there is no clear end game. my next guest is the expert to talk about this. farwas gergas has been in and out of syria three times in the last year, and he says it looks and feels like a civil war. fawaz is a professor at the london school of economics, and he has a new book out "obama and the middle east, the end of america's moment." he joins me from paris. welcome, farwas. >> thank you, fareed.

>> what do you make of this most recent brutal massacre? does it tell us something about the regime? it feels like this is an attempt to really rule by a kind of terrible brutal example. they are sending a signal throughout syria that if any place tries something like this, you will be mowed down. >> well, i fear, fareed, that the massacre will not be the first and the last massacre. as you said, this is using fear as a tactics to terrorize the opposition and the population. my fear is that, in fact, the rock has set in. the significance of the slaughter in houla is that it increases sector intentions between the minority-led government, the alawite minority and the sunni-dominated majority. what we are witnessing now, fareed, is the syrian crisis, which was essentially political

crisis, basically has turned into a protracted crisis. it no longer controls many areas of syria. i believe that the writing is on the wall. we'll see more and more violence in the next few weeks and next few months. my fear is that the armed protracted armed conflict could easily plunge syria into all-out sectarian strike. this is the scenario in syria. >> now, for a year while many people you said that the regime did not seem likely to fall for a variety of reasons. you said that there were no defections among the military apparatus. do you think that with this new situation, the regime can hold on? >> there are so many unknown variables. i mean, the first unknown variable is the basically costs of the sanctions that have been imposed on syria in the last year or so. as you know, america is waging war by other means, and an economic war. a psychological war.

can syria survive the harsh winter in terms of syria's need gas, cooking oil, food. secondly, we don't know what's happening within the security apparatus. the extent of tensions between the military and the security apparatus. the react is the security forces in syria have proved to be much more resilient than many observers and many western governments have believed. that the syrian government, the assad regime, despite everything that you have heard retains a critical base of support. you have many syrians, millions of syrians, feel support this particular regime, and more importantly, fareed, the syrian crisis has been cut caught in a fierce struggle between the iranian camp on the one hand and the saudi camp on the other hand. syria is receiving tremendous support from both iraq, america's ally, and iran as

well. i think assad will be with us for a while, fareed, unfortunately for the syrian people. >> can i get you to expand one thing you said there, this turned into a sectarian struggle, the saudi ayab rah funding a sunni insurgency against the regime exassad being an alawite, a shia regime, supported by iran but also by iraq. so our al like the iraqi government, prime minister maliki is supporting the syrian regime. is that correct? >> it's absolutely correct. in fact, i would argue that the road has been the lifeline of the assad regime. syria is receiving tremendous support, material support,

political support, and even military support, and iraq sees itself as basically part of the alliance against the so-called turkish, saudi, sunni dominated alliance, but my fear is that what the houla massacre has done, it has poured gasoline on a raging fire, and my fear is that the essentially political conflict in syria could easily expand into a sectarian strike, destroying not only syria, but also neighboring countries like lebanon and jordan and spinning over into iraq as well. >> farwaz, do you know that there are people advocating military intervention? mitt romney is now saying the president should take a firmer stand, whatever that means. what do you think we should do? >> well, fareed, it's extremely difficult to watch the massacres like this and remain to be neutral. i feel sometimes being morally complicit in saying that military intervention in syria will most likely exacerbate an

already dangerous situation. in fact, i would argue that military intervention in syria will likely plunge syria faster into all-out sectarian strife. not to mention the fact that regional powers will come into hezbollah and iran. this will turn into a region-wide conflict. there is no security council resolution to intervene in syria. i think the obama administration is doing the right thing. that is, trying to economically strangle the assad regime. the only point here is that we know from the history of sanctions to what extent have the sanctions exacted a heavy toll on the assad regime? how long can the assad regime basically maintain its posture given the fact it's receiving support from its regional allies, iran and iraq, and also trade with lebanon and jordan and turkey? the reality is all options are back, fareed. the menu of choice is very limited. i don't think the obama administration has the luxury to basically decide, entertain military intervention in syria. this is really quite what i call

the nuclear option for the united states and syria and its neighbors as well. >> farwaz, pleasure to have you on. we'll talk to you again soon. >> we dropped the ball in america, frankly. we have not been strategic, we have not been working nearly as relentlessly to address our issues and weaknesses az so many other countries and i can tell you story after story about that.

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how do you make a small business, a conglomerate or even a country competitive? my next guest answers that questions for ceos and world leaders every day. michael porter is widely recognized at the world's most

influential thinker on management. he is a professor at harvard business school, the author of 18 books. he joins me now. michael, you have this new study out that strikes me as very important. describe to me what it is. >> well, fareed, the harvard business school has decided as an constitution to take on the issue of u.s. competitiveness. we feel there's something deeply troubling going on in the economy. about a year ago we started a substantial body of research on this question of what's happening in the u.s. economy? what's changed? how do we stack up against other countries? and a core part of the work was a survey of all of our alumni. we have many, many thousands of alumni around the world in very senior positions, sort of making those decisions that drive the global economy, and we wanted to see what they thought, and so the results of that survey are really part of this body of work. >> so the headline strikes me as

71% think the u.s. is slipping badly in competitiveness compared with the key competitors. >> that's right. but i think before we -- i think we also have to be very clear about what we mean by competitiveness. and the way we think about competitiveness is the way we think america must think about competitiveness. competitiveness is manifested in two different things. number one, companies based here have to be able to compete successfully in international markets. that's part one. part two is in the process we have to have a high and rising standard of living for the average american. if our companies compete by cutting wages and a cheaper dollar, we're not really competitive. that's a sign that we're not competitive. and so the question is how can we -- >> so greece is coming competitive by cutting wages. you're saying that's not the path to prosperity. >> the path of prosperity comes through creating a business environment and a set of human skills in the workforce that allow you to operate very, very productively and justify a high

wage, given all these other workers in the world and all the other countries that are making so much progress. we can only maintain, much less improve our standard of living, if we can really drive productivity up. and we've dropped the ball in america, frankly. we haven't been strategic. we haven't been working nearly as relentlessly to address our issues and weaknesses as many other countries. >> you're alumni, in this survey, it sounds like they're saying we have to keep investing abroad. we're not just going to shift factories. we're going to shift r&d. research and development. we tend to think the smart guys will still be here. it will be made by cheap chinese labor. they're saying we're going to ship the research labs there. >> the findings of the survey, as you said earlier, 71% of the alumni felt the u.s. would face declining competitiveness or was

experiencing declining competitiveness. if you take the two parts of the definition, one part is companies, the other part is workers. i think many thought companies will muddle through. they can relocate. they can offshore. they can outsource. but the workers are going to face the real challenges. we see very great challenges in maintainingur standard of living. and we did also survey companies on who -- you know, are you considering moving something in or out of the u.s.? and we found about 2,000 alumni that were personally involved in such a decision. and we were very interested in how they were thinking about those decisions. and we found that overwhelmingly they were moving stuff out. there is starting to become a sort of trickle of activity moving back to the u.s. that's a hopeful sign. there are some things working in our favor. ultimately there's some fundamentals that we let get out of whack. >> when you ask those 2,000 people, what are the reasons you

are moving stuff out? what are the reasons you're investing more abroad? what do they say? >> well, the number one reason is that our workers were not productive enough to justify the higher wages. and so the lower wages abroad were a good deal. you would be perhaps surprised to hear that about 30 pblgt -- 30% said they were moving out because they couldn't find the skills they needed in america. and that's one of our challenges. we've let our skills slip. it's not that we don't have great talented americans. we have lots of them. but compared to other countries, we don't have enough. and we're not renewing that pool. the retiring workers in american day tend to have more skill than the new workers coming into the workforce, which is quite a striking statistic. >> what i was struck by finally is your -- when you asked -- when you looked in your survey and asked them, what do you really want? if you could only get one thing, what strike me is that it wasn't the tax code or regulation, what

they really ultimately wanted, what you call nonselfish thing, which is inpromprove the qualit the workforce. >> absolutely. the business community of america is starting to awaken to its role in where we are today. and i think that role has emerged partly because a many businesses globalize and put more and more of their activity outside of the u.s., which we want if it facilitates penetration of international markets, they stopped really thinking about america. and in our business school project, we like to talk about the concept of the commons. the commons is our workforce, our supplier base, or infrastructure. and businesses have really not been as aggressive as they once were in investing in the commons. there's, i think, an untapped opportunity and now considerable activity going onto start to

invest in the workforce and start to invest in nurturing local suppliers and deal with the skill problem. let's not wait for washington anymore. let's not wait for government. we in business through the trade associations and in our own companies can actually start tackling some of the issues. that said, if we could make five or six major public policy steps, that would be transformational as well. and so, i don't know. hopefully it looks like we're sort of stalled until the election. but hopefully, and this is a major purpose of our project -- hopefully we can start to talk about the problem openly and honestly. understand the real facts of how we're doing, what we're fall being behind on, and then the next president, whoever that is, can start to get some of the work done that we need. we believe this country has amazing core strengths. there's no reason to be pessimistic. but if we can't fix simple things that we can fix quite quickly, we're in for a tough time in terms of our standard of living. and thiss