be very high by postwar standards so far after the end of a recession. personally, i'm not sure that the upper-level estimate is a very good one, but something to remember is all of the improvements in our social protection since the slump began have been explicitly temporary. many of them have already come to an end, and i'm pretty certain that the extensions in unemployment benefits up to 99 weeks are going to be scaled back over the next year or two, and they're likely to go back to where we were before the recession began within two or three years. my reading is that the unemployment rate is high, and it has remained stubbornly high because the unwinding of the house price boom had direct and indirect consequences that has removed a lot of buying power from the nation's households, and can that in turn has -- and that in turn has made businesses very unwilling to expand or to make investments that are going

to increase the scope of what they produce here in the united states. .. >> let me turn next to klaus kleinfeld, who runs alcoa, absolutely huge industrial company, global company that i think employs about 60,000 workers here and in many other

places. you've been dealing with this very difficult situation around the world with a volatile markets and rapid change and lots of dimensions. and you have dealt with a four lot of your career. you came from another big global german company in siemens. so could you tell us in a few minutes how you see the current situation, both the economic situation, but especially the future of the labor market in the united states? and if you would just comment on the skills mismatch hypothesis your casket effective alcoa, and how do you see a generally? >> why don't i go straight into the aspect you described the environment and let me throw a few thoughts out on what opportunities do we have here to

create jobs, because i'm with you, there are a lot of opportunities here. some of those can actually be put out on a short-term basis. i see basically three what i would call levers. the one thing you already talked about is i would call it the workforce of the future, and that has two aspects. one is the read skilling. the second one is immigration and i think we cannot leave that part out. so the second thing i see is this, innovation. growth through innovation. we had a lot of good ideas around the. we should not forget about it. again, but also in my view has two big sub aspect. one is entrepreneurship. america is the country where entrepreneurs are growing thousands of stories. the american dream i believe is still alive and will be kept alive i believe. and the second thing is large-scale innovation where you need government. on first when i think the best the government can do is just set the conditions and that's it.

the third aspect, the third big aspect is the question of countries are competing around the world for a share in the globalization markets, so to say. there's a lot of things going on. you saw at the detroit auto show this week, and, more politicians have been walking, going there. why did they go over the? because a lot of the automobile companies, foreign auto country see the us market growing. and the that they want to have a bigger share. what did they do? the interest. so the whole competition on foreign direct investment, get more over here. and one very simple, bringing some things have been outsourced the last year to bring those things back, opportunity, work and violence have changed in many places. not to the better, whether these things have been outsourced, i mean, mixed. and also your the environment has changed. the third thing on that and is

giving again with the same issue that immigration is dealing with with the question of, when you travel around the world, the middle-classes growing all around the world. once they have their refrigerator and their car they want to travel, they want to see the world your otherwise only comes to them on tv. tourism is booming. the interesting thing is last year france saw more chinese visitors than the u.s. did. and i think that is not a question of the preference of the chinese but more a question of how we deal with it. i've seen estimates from experts that say through tourism alone which is already -- tourism alone we could create pretty short-term two to 3 million jobs. when you talk to people around the world, they all would like to come and visit. on the re-skilling, because you as, are we affected by? absolutely are we affected by. and we talked a lot about, i

mean k-12 education. leave that aside. we know that's an issue. but let's talk about the occupational skills. the way they are changing drastically, i'm in the workplace today requires that people are knowledgeable about handling typical equipment. we see that there is a shortage here in the u.s. that almost all places. we have started and a lot of our sites in u.s. we started programs together with the community colleges so that we can do an evening hour on the weekend that went to a re-skilling trading. what do we offer? we offer industrial machinist jobs, training, so to see. we offer maintenance, industrial maintenance training. we offer welding. we need welders, we need welders. it's not difficult. you don't need that to be the biggest genius on this planet, for all of those three jobs in

the girls could do it. >> absolutely, absolutely. and i would encourage girls to do it. and we are doing that with great success. we will continue to do that for alcoa only. very, very successful. but again, i don't want to leave the immigration side of things because i believe that when you look at the statistics year i think 25% of all started firms in the high-tech space, engineering space have been founded by immigrants. i recently mentioned that statistics to vladimir putin, and got a very interesting response that america is really great in doing these things. we don't want the president of russia, you know, basically acknowledging it. i think we have to come back. so that are my thoughts on this

subject spent let me pick up on can you said about entrepreneurship because i was thinking, a lot, entrepreneurship is something that struck in somebody's garage and is inherently a small business thing. do you want to talk a little bit about from the point of view from the company's? >> sure. the small company part is important because you need to instill this mindset. i only briefly touched it. the mindset of entrepreneurship is truly a unique feature here in the u.s. right? it's one of the things that kids away from the rest of the world. there's other aspects also. when you look at almost 40% of venture capital money worldwide is here, the table here in the u.s. and you talk to kids at other places around with the want to start a firm, they have much more difficult time finding the investor. so the fabric that we been able to build here generally is extremely favorable.

the mindset, the cultural aspect that we have here is unique. and we should be mindful of that and should continue to build on that, and basic nurture discourse structure. we have partial silicon valleys that exists in boston are just displayed on what over i saw assistance at that new york now has received more venture capitalist funding first time, you know, this year which is great. this is really not a competition i think this is something where things come together. and build an ecosystem which fuels and to sell. the other thing, when you see some of the large-scale changes, and i see the energy sector as the biggest one, there is so much going on in the energy sector. it's almost too big for even two the company's. because the only fragment, if you want to put this together, they're so many fragments that together, unique kind of an

intelligent coordinating hand in that. and i give you, for instance, on that a good friend of mine just recently told me that he had been invited by the chinese, he's on one of those advisory boards, during the spare time, comes an energy field field, spare time they drove outside beijing to a test field. about two-hour drive from beijing biggest test field is literally, i haven't been there, i only describe it second hand. he said it's basically every windmill operator in china has, couple of different windows there, so imagine this is a field that has three areas. one is a wind farm, but different types of wind turbines. in the medley of different type of storage devices. energy storage devices so you can test those ones. and on the right hand side you have solar, different types of

solar. the cool thing without was the combination of that you actually mimic something, because during the day many areas where you have wind, the wind dies down to the daytime and when the sun comes out, so when you combine this you get rid of problems that you have. with these type of renewable energies that you only have tee time. so you combine these things, and if you put in the middle some type of very effective storage device, you can literally make large-scale what we otherwise only got through ton of nuclear power plants but you get it all renewable all from a noble. to do this right you need a lot of companies, including the grid, including the grid to handle this with elements of a smart grid. that's the type of things that i think we need on large-scale innovation where companies can be brought in, but you need some intelligence and around is to say well, let's take a look at that but in this case i think it is handled by some universities that have come together. almost let's go to the moon

project. i think it would be worthwhile, absolutely we're 12 to do it if we don't want to lose -- i saw yesterday, i saw we are praising now that more investment has been going into renewable in the u.s. and in china. that actually is a pretty late systems take because if you look at, very late statistic because if you like what's happening in this industry, this industry has been highly subsidized in the past year trying to get it started like that, right, but the reason why currently a lot of the solar and the wind around the world having trouble is because governments are withdrawing subsidies and not telling them to have to stand on your. what you think is the right thing to do. they can't stand under a because the the model doesn't it work. so that shows a dilemma here, right? that's my thought on that. >> thank you very much. one of the things brookings does try to distinguish between linksys this is an statistics. 94 that. let's get and are into this

because you also run dow which is a big chemical company involved in all sorts of different kind of product. i was on the board of a different chemical company some years ago, and the one thing i learned is it's a very recyclable business and it's very intertwined with consumer products at every level. so, andrew, can you tell us a bit about how you see the current jobs picture, and how you react to some of the things that gary and clouds have said? >> one of, being lost in the panel is editing is been said that not everyone has said it. so i do want to make sure i kind of highlight some of the key points that i violently agree with that is already been said by klaus and carry them by others. we are indeed global 160 countries, 50,000 product families, not these cyclical as

you think these days. science-based agenda to require a lot of touch points with two-thirds of the company outside the united states, huge wingspan and employ basic i tell you the united states and the forces of globalization on capital, labor and consumption, i think we are not having the right debate and i think this forum, this panel, and what brookings is doing all day today is what i consider the beginning of a very large debate that the united states needs to have. and at the widest end of the final it's really that short term fixes in the short term political cycles are vastly inadequate now for what's going on in this globalized world of ours. and really what we do need is very thoughtful strategies, if you like five year, 10 year plan approaches. and so it's not business as usual. and how do we integrate great thinking that occurs in think tanks like this one with will

global enterprises like klaus' and mine are now expensing and sing and how we make decisions. and the myths, the myths of we're going overseas for cheap labor and the myths associate with protectionism elsewhere, and you know, what is fair trade versus free trade, and what does that really mean. in energy policy and how those all factor into our decision-making. it's no longer polling, putting a nail in the market just for the sake of that market because it safety of you. will have 300 consumers here, i'll be up until 2008 very good consumers. they are 6.7 main outside, and so this world of ours is a massive opportunity that needs to deny states the integrate, not as a center of gravity, alone anymore, and certainly the break-in housing bubble that gary so well described him as put a new pressure point on the word consumption. so putting mil as a new

dimension and the globalization of skills and to want to get down to that one because that's where think the panel is honing in on in a minute but i want to stay wide if i can for a while because we are following skills. other countries and klaus other two are putting in place five, 10 year strategy. and i talk about free market acomment on the talk about direct economies like china who could have a five year plan any 10 year plan. i'm talking about countries like germany and others that a free market economies but there are more directed, a little more thoughtful about where we are going as countries where countries are going in this globalized world where capital is flowing and markets are fairly open and in terms of labor and skill decision. these are being made based on where you can find the skills. i would tell you that the short term fixes whether it be the stimuli, monetary and/or fiscal, whether they be exports which is a phenomenal store here in the states in the last year or so, i think that the focus on exports has been much-needed.

berkeley those are short-term, and what is required and i think our leaders and government, leaders and business need to come together and figure out how to do this in a very thoughtful ways how do we in fact create new japan. kerry referred to it. where is this new demand? clearly i would hone in on the three that have already been talked about. i think the country is a huge need of directed to measurement infrastructure, directed to mentor and energy policy including all focus on renewables, solar or wind, and as klaus has indicated this is a holistic approach. it is in a piecemeal approach. natural gas and now shale gas boom and how it can play into revitalization of the united states economy, it's a once-in-a-lifetime opportunity in my view for low carbon into many of our fossil fuel burning issues. and then, of course, the whole discussion on exports and what a disgrace, we've only had three free trade agreements and the last 10 years. that was not a political statement. at the end of the day how do we

put energy, infrastructure and exports central to the agenda in a five or 10 year look. and i would tell you that policy impediments that are out there, tax kind or whether they be of the regulatory time, whether they be in the the fact that we are very uneducated, american workers will understand attending jobs in the united states, of course exports. a lot of structural impediments but for me the big structural fixes are in front of us and i think the debates of today are going going to help us get to -- klaus has are it other to one come immigration but i think that's a big one for the nazis that it needs to stay in place. we need to keep open mind of how to keep bringing people from all over the world to help this country become its next entry of entrepreneurship because that's what people come here. people come here because of the freedom model and jafa german exit here and a big australian one. we are here because of your

freedom model. just be very clear about that. so bring in the best skills around the world from where ever they come. education and clearly address steam. that's a big structural thing and i want -- i won't dwell on it. i want to segue from that point into the best and manufacturing partnership i co-chair with mit. i think secretary bryson will refer to in his remarks when he gets year after this panel, but we are for the first time in my many, many, many trips to washington finally bring together universities, big corporations, small companies and government departments to take taxpayer dollars that are already being spent and focus a. and focus it with the input on the private sector and our institutions, research institutions. and honing in on the pillars that matter, just repeat, secretary bryson will go into some type i'm sure.

advance since income advancement through design, information technologies come and then man oh, man affection technology. we have addressed shared infrastructure, how to get the synergy of the whole versus, manufacturing innovation, one idea is coming up as a proposal. third, education workforce development. taking from the german model and taking the high school diploma and retooling of high school diploma for modern age manufacturing and last but not least policy issues that i've already touched on. this is a little more direct market economy than many in the free market model are ready to accept. and i really say and i want to close with that statement that i opened with, this country has to realize that countries are competing like companies. and they are bringing in manufacturers of the advanced

times to their economies. because they recognize the two major drivers. one, new job creation. not just inside the plant but around the plant and. 15. all high skilled. so it's not, number two, innovation. this is not low-tech manufacturing. it's high-tech which means the research universities that are attached to it grow around it, and then have a proliferation of entrepreneurial action, the company, small company can. that is directed. that's how competition as a country and if they went to really realize that if we don't bring the debate to that level we're going to not only have a jobless issue for longtime that we will actually lose out with the suppression of new industry or whatever it may be. so that's my thought on the. >> terrific. i think it's very interesting that these two immigrants have

brought our attention to the contributions that immigration can and has made. i wonder if either of you think more could be done by the business community to educate the public about the benefits of immigration, that, you know, we have this backlash which is largely directed towards people proceeding that they are losing their job to immigrants. to the business community been doing more to turn the tables here? >> yes, it's an all of the above. i mean, business leaders. i think klaus is a great example of this, and many of us who are out there today, ceos becoming much more active than ever before. i think the era of hiding and is

honing in on one aspect of running a global business is over. and i think we touched so many areas, not the least of them being how to get a workforce of the future designed. and immigration is therefore a post that matters with to educate our workers and with got to be doing more in concert with government and local community people. i think we're almost beyond the information point, because here, darrell has written a book about, wasn't last year, about immigration? i said publicly without you being present that i think this is one of the best books that i've read on it because it provides a solution. i have come to put private business leaders should also be crystal clear to both sides that we are not willing to accept, not willing to discuss with anybody here who is supposed to be an elected official representing the good of this country was not willing to have

an open mind on the immigration issue. and basically you see on one side people say well, yeah, we only accept, really except the h-1b one visa thing if you also find a solution for bring it illegal immigration on and as such is what we will never talk about illegal immigration but what the h-1b one. so this cannot be, i really believe it cannot be and i think there are solutions to solve it in my way because 11, 12 and people i've seen, how can you really work in an apartment with that? i think that is ludicrous to believe that. there are good answers, and we have to take it on and i think the business, the business has to actually be much clear that we are now willing to accept it because it brings our competitiveness in the u.s. down. >> let me raise another question before we throw it open to the audience.

gary touched on infrastructure, but you talked mostly about it as a way of creating additional, rather as a way of productivity. and it would have the business leaders look at the u.s. infrastructure at the moment, which many of us see as crumbling, as how it affects you. >> well, i mean, i think we've all had these stories where you land at airports in u.s. and you feel like you're in the third world compared to lead an invasion. so that's the consumer view. but road, rail, ports, pipelines, we have gridlock, in the approval process. we have over 60 agencies involved in permit issuing fixes only a couple states in the nation better each of the net. the ability to get anything done in this country is almost beyond

belief. so we are trying to break through. i joke often when i go overseas i get red carpet. when i go inside the u.s. i feel like it's a red tape. [laughter] it's just gridlock in terms of, you know, even getting solutions for our enterprise. if you explode that up to the national level and say well how do we cordon is between federal, state and local, i think the answer is very evident. it's not only a productivity issue is actually determined from an investment issue. we go to states that are more friendly in the permitting process because time is money. i think you all know which state they are, not many. >> it is a big issue but a bigger issue than ever thought. the interesting thing is on the local level people are very understanding, because they understand what needs to be done

to keep the competitiveness of. but their voices are not getting through, or take a long time. and, unfortunately, what people don't see is how heavy the competition is on investment. i mean, what andrew says is literally too. when they go to some places, i mean, you really have a welcome bus they're basically waiting and people saying you want to invest? we give you this, we do that for you, right? and that's a very fast environment. they are competing for our investment. and if you compare that to investing at a place where, i need that permit, i have this thing still hanging there were i have unclarity, and how do i get that resolved, i can't get resolve any gets pushed out, you know, and gets pushed out okay, for another four weeks, now it's another three months. and by the way, i'm a, i was willing to present to my boards in three months and a forged i

don't get an answer so not going to present to my board, you know? and this is stuff, i could give you a whole list of things in the u.s. very unfortunate. and i think the better dialogue and better understanding with regard to unleash some of the investment sitting there on the side might not be sitting there for a long time anymore. >> we've got a lot to digest here, but let me take the last few minutes to invite the audience to raise questions. identify yourself. somebody will bring you a microphone, i believe. and since we have c-span audience, it's good if you wait and do you get the microphone before you start speaking. but direct your question to any member of the panel, but keep it short, please. >> yes, back here.

>> my name is jack leibowitz, i'm special volunteer at nih, retired from nih, special volunteer status. would it be possible through fiscal policy to lower the dollar, you know, it's a high dollar now, which we are increasing exports enormously? >> gary, do you want to tackle that one? >> that wouldn't be the main objective of running more stimulative fiscal policy, i don't think. it's certainly true that a lower value of the dollar would help the united states find more customers in other countries for the things it produces. but at the moment we have to face up to the fact that the united states is still regarded outside of this country, at any

rate, as a place where money is recently safe and our currency is an excellent store of value against the risks in a dangerous world. we derive benefit from that back, it's cheaper for us to visit overseas. we get foreign products more cheaply, but there is a price for the people who produce goods and services in this country that either compete with things that are imported, or produce things that could be exported. i do think in the long run part of our long-term solution to our problem is having a weaker u.s. dollar. >> yes? >> i had a question for klaus and for both of you on influence. i am also an immigrant. you mentioned the fact that

regulation and delays are essentially strangling improvements, both of you mentioned it, improvement in infrastructure, which is in itself needed for innovation. but at the local level you often found welcome. and so can you go into this into a little more depth to make us understand where this strangling effect really comes from? and whether you ideas on how to change that. >> i think, i think it comes from, i mean, i have an old saying when intelligent people look at the same facts, they come to same conclusion. so let's assume most decision makers are intelligent, which would be actually would be my experience. said in said in the only answer is they have very different information and they don't talk about it enough. but the people who are on the ground usually understand the situation and how it's going to hurt or help them much better than those ones that are in higher echelons.

so very often the ones higher up don't take the time to get this type of information, and also don't get a strong enough sense of urgency how important it is to get this matter resolved. so they kind of follow their usual procedure, which is you know what? with a backlog, when it comes, you know, just heat it up. were on the local level people understand this is something that in half a year, two years would have damaged us and the window of opportunity would have gone by. that's what i've seen at different type of facets. >> i would just elaborate that regulatory environments have begun to be addressed to address this. but i would tell you that what happens is consultative processes with the private sector are firstly, whether they may be environmental or permit issuing in terms of citing a factor, et cetera it's a.

fairly well understood at the local levels, but at the federal level the amount of paperwork required for locals to get approvals is horrendous. and look forward has gotten worse. there's over 287 new epa regulations coming down the pike already that can basically said look, i do even though what my regulations are going to be. so the locals may be getting with the current, but the ones coming stifles complete insane, just a second ago not take a risk. when you get down to the local level, you know, in mid-management level have no power. so we have disabled, government has incredibly inefficient in this country, sorry to say. and that's where we've got to get ourselves much more efficient. and consultative processes at the local level with local officials and the private sector is one way to begin that. >> it's a lot but not just environmental. but a lot of environmental.

in our industry i think. >> the keystone pipeline decision is a good example. stopping something vital for the nation. >> we have time for just one more question. >> i'm john wilhelm. a trustee of brookings. i was very hard to you will both be said about immigration but i don't see how we solve our economic problems with that fixing the immigration mess which i was especially happy to hear you say, mr. kline filled. you don't think we should artificially divide of the segments of that issue. having said that i will admit considerable frustration that the business community says the right things, at least from my point of view, says the right things about immigration, puts zero political muscle behind that. 2007 kennedy, mccain, while not a perfect piece of legislative i've got a long way towards addressing these issues. and those of us who worked hard

on that deal with those two bipartisan senators discovered that there was zero muscle from this community around the issue. and trees as to whether you believe we can do better in that regard the next few years, considering that, if this is not a political statement, this is a factual statement. considering that the presidential candidate who i would suspect is the most likely to get substantial business support has jumped over the right law, that is the wrong wall on this particular issue. so to me, we won't solve it in less the business committee put muscle behind what you all have said here today, and i'm curious as to whether you think that's realistic? >> yeah, well i said what i said because i've seen the same picture that you just described. and that has altered my public statement to a more non-moderate public statement because i believe something, somebody just recently said change has never

come from washington. change usually gets brought to washington. i think that's one thing that we have to be mindful of. where to take in our hands and make clear to our representatives here how important just the competitiveness of this country. i believe we can make the case. i believe we have to make the case. on your point of how realistic is it in the current environment where the candidates you are talking about, i mean, my friends tell me that i should not take a situation where you want to be come the candid with a situation of which are policy will be done if you get elected. so that is the thing that gives me hope on that but i could not agree more, we have to take a more aggressive you two are in there and with that approach is think this is what we want that we're not compromising on and we have a solution i've got immigration site. that was an intellectual breakthrough from your study which ended up in the book by simply don't offer immigration aspect for free. and there's this aspect of you have to learn english because it

also changes your chances in a job market they kept have some type of test on our constitutional system works. not a one comes an environment where you have learned that. and a 13 effort called the craft was you have to compensate for, if you haven't paid taxes here and you've lifted for a while, we will build some type of financial model by which you have to pay and compensate for it. and i think that these three things make a lot of sense to me, and i have really not in the people privately have said to me that it's a very good approach, and i agree. but we don't want to touch it. did not understand country and -- >> the business committee i think is going to a severe wakeup call on the skills mismatch point that we just had a discussion on. therefore, immigration and what ever its forms, look, there were three research institutions and foreign owners in china in 1999. today there are 1200.

why are we going to china? because we get the skills. but equally we can't bring the skills here anymore. it so difficult to get people into this country. let's face it, and i have three children, none of them have done science so i can state with -- our children are not studying science engineering anymore as we moved up the world curve, we have got enamored with other professions. that's a generalization, but our immigrants laugh going into the science engineering profession of need to make sure we keep that pipeline coming because of the big skills mismatch with and signs base area in this country. >> well, thank you very much. i think this has been a good start. [applause] thank you all.

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[inaudible conversations] >> could i ask everybody pleased to take their seats? if everybody could please return to your seats. come on, everybody. mr. secretary, i'm sorry, this is a very undisciplined group but i will do the best i can. or at least they are particularly undisciplined when i'm trying to give instruction. let's get going, everybody. we have a terrific opportunity and we don't want to lose a single minute of the time the

secretary has been able to give us. okay. we are very grateful to secretary bryson for funding a little bit of time to be with us this morning. obviously, he is the cabinet officer who is most focused on the issues that are before us today come and we've already had some very good discussion of. there are two reasons why he is the ideal person for us to hear from and to interact with a little bit. one is because of his current job. that goes almost without saying. and also, the experience that he brings to that job. i think he will say a word or two about a report called america competes that was published just last week by the commerce department. by think as you all know, he comes to the very rich and

relevant set of experiences from the private sector. so we have hear somebody who embodies both what the u.s. government can do and what the private sector can do, and what can happen in partnership between the two. he has served for 18 years as a chair and ceo of edison international. you've been a director of boeing, disney. he was the director of some startup companies, including kota automotive if i'm not mistaken ceo of that company was with us a year ago for this forum. which is very much into innovation and use of new technologies, in particular electric vehicles, battery systems in which is just one indication of the extent to which secretary bryson has been part of the solution to one of the biggest problems of our time, one that andrew referred

to in his comments earlier which is the need to transition to a low carbon and ultimately no carbon economy. and he's been active not just in the for-profit area in that regard but in the ngo world as well. and a cofounder of the national resources defense council. now, his time with us today is very limited. we are going to have a little chance to hear him make some opening remarks, and then he has agreed to stick around for some questions. the way in which we're going to handle the questions is very simple, at least i hope it will work simply, and that is that we have cards distributed around the room. any of you who have a question, write down your question on a piece of paper, pass it to whoever is in the aisle who will collect those. bruce katz, director of are metropolitan policy program, will then pick from those the most in change and and work them

into a conversation with the secretary. in a personal note i just had to say, mr. secretary, that i remind you when you arrived if you missed ago that when i last saw you looking even more relaxed than you do now on a flight from sun valley to los angeles in august. that must seem like a galaxy far, far away and a time long, long ago. so welcome to the brookings institution. [applause] >> well, many thanks to strobe, and thanks to all of you who have invited me here, and i look around the room and i see so many friends and it feels like i'm right back at home. could even be right back at sun valley because you should see kathleen up there, for example. our paths crossed the it was a wild and wonderful time, and we do our family gatherings there.

i will try to go through my remarks, and i'm going to cover responsibilities of the commerce department took on a year ago, almost exactly a year ago, and do something that was striking, and i think quite important. and that is we authorization, so-called competes registration be collecting the commerce department was asked to do and others, but the commerce department had the responsibility was to assess the competitiveness of the u.s. economy. now, i'm told that when the legislation was passed without modest request there was a kind of sense on the part of the economists, statisticians and the various people respective roles at the commerce

department, how could we do that? and i think they did a spectacular job, and i'm going to go through and try to summarize that for you, and do it in something like 50 minutes. then i would be very pleased to have questions. the central question, how competitive are we, what are we doing that makes us competitive around the world? we have been an extraordinary economy, the leaders in the world for a very long time. but it's not unknown, it's relatively conventional observation to say we are losing that position. and we need to address that now. so, what the competes report says, we have the great benefit of spectacularly strong

businesses, business leaders, and we've had that for a long time. but the key thing is it was not alone, the responsibility was not alone consequence of having these strong businesses, that we have done as well as we don't all these years. and the reality further is that the federal government has made a decisive difference. they are, as all of you would recognize, their tendencies across businesses, across private sector, to underinvest in some areas, and those traditionally have been substantially invested, through the federal government, through the state governments come and three areas in particular i will touch on and are set out in some detail in the competes report, are in the field of education,

infrastructure, and in basic research. so i'm going to talk about those, and then i'm going to, and i know andrew liveris, i can almost say andrew liveris, you heard the manufacturing perspective, i agree. but i'll tell you a few words about that in advanced manufacturing in particular. but what i want to do is start on what i think is at least as fundamental a point, and that is what is happening, what has happened in federal policymaking that means we're doing less in support of those key areas, education, infrastructure, research, that was the case. and 15, 20 years more ago. and the focus there can be

pretty simply put. what we've seen over the years increasingly is the damage that is done by very short term thinking on the part of policymakers here in washington. so one way to get at this is if you run a business, you make a distinction between what economists call investment, and on the other hand consumption. there are long-term investments that have to be made to ensure the health of the company and its ability to grow into the future, to those immediate expenditures that have to be made to keep a business functioning day by day. electricity payments and payrolls, for example, and then there's the long-term investments that have to be made to ensure the health of the company and its ability to grow into the future.

and too often washington what we have are decision makers who simply do and have lumped those columns, those two columns on the spreadsheet together. in that model every expenditure, whether it is a short-term line item or a long-term investment is treated almost seems as if they were exactly the same. and they are not. in your federal policymakers made more consistently decisions that took those things into account. the simple fact is the private sector for practical reasons does underinvest in those areas, but when federal and state governments stepped in to fill that gap there's been a significant benefit to businesses. and a big return on investment for taxpayers in the form of new jobs, higher living standards,

and life-changing advances. but, unfortunately, the federal commitment to longer-term investments has pretty steadily declined now over some number of years. u.s. policymakers have too often rested on the laurels of our 20th century. at the same time as you all know over the past decade or more, many developed and were formerly thought of as developing countries have grown way more sophisticated. and they have become at the same time very disciplined in the execution of carefully developed plans for optimizing economic development in their respective countries where they have

advantages they carefully search out and then follow through on. so the results, even as american businesses become more efficient, more productive and increase in their global reach, underlying economic building blocks have eroded. and with that so has our quest for global economic leadership. so today, you know these things, today, u.s. ranks 14th in the world in terms of percentage of college graduates it produces. we used to be number one. the world economic forum now ranks our infrastructure 24th best. we used to be at or near the top. and the current share of federal research spending is now only one half of what was in the eisenhower administration.

50% then, only 25% now. in each of those declines is impact our ability to attract and create the jobs of tomorrow. encouraging news in the competes report does show that this administration over the past three years has been working to reverse the trend lines on each of the fronts i've mentioned. so let me get just to that. first basic research. while businesses and entrepreneurs are generally most innovative source of new ideas, the federal government plays a key role in supporting and developing those innovations. our country has been a very proud tradition, proud tradition of supporting the work of federal and university labs.

it's helped change our world, internet, satellite medication, semiconductors, among other job creating advances. would not have been possible without the use of wisely spent u.s. tax dollars. but that commitment has dropped off. 1980, the federal government funded more than 70% of basic research. since then the government share of government research funding has fallen to 57%. so then, education. all of us are very, very focus behind education and what we are not doing. that is the second pillar of the competes report. we know now that highly skilled workers boost innovation and economic competitiveness.

but ensuring that our children have the skills employers need for the jobs of tomorrow requires dedicated attention and resources at the state, local and the federal government levels. critical importance of science technology engineering and mathematical fields, the stanfield as they are called, this audience knows full well that the numbers are there, and i think they are worth mentioning. in 2009, about 12.8% of u.s. college graduates were in stanfield. 12.8%. significant economic competitors such as korea with 26 points we%. germany with 24.5%. are on the long list of countries producing a much higher percentage of graduates who are s.t.e.m. graduates. that simply has to change.

then quickly the third harry of investment is infrastructure. the infrastructure needed to support pam modern economy provides an must do more to grow out a truly modern electrical grid with broadband internet access in both urban and in rural areas. here in america, 68% of households adopted broadband. that is an almost eight fold increase since 2001. and yet when you think about it, 68% adoption rate means about a third of american homes are simply now cut off the digital economy. so education, innovation, infrastructure, these are the areas we cannot afford to cut the role of the federal

government. indeed, investment in these areas will lead to a more competitive economy and higher growth. so what can be done? the administration is committed to restoring the consensus that once existed through democratic and republican administrations, that there are long-term priorities in which the public sector must invest so that our businesses have in turn a better chance of success. and what are we doing? we are increasing and sustaining the levels of funding for basic research i the federal government. recovery act of course included a one time infusion of federal r&d of $21.5 billion. and federal funding for research increased from $56 billion in 2008, the $60 billion in this

past year. the president's budget for the past year called for more, but congress didn't concur. still, the enhancements we have seen have made a real difference. we are seeing that at the commerce department and elsewhere across the federal government. and the commerce department, for example, national, the administration has expanded the core research mission by about $50 million. president and his administration will also continue to push to make permanent the r&d tax credit to give companies appropriate incentives to innovate, and improve the way basic research is transferred from the lab promptly, directly, quickly into commercial products. ..

>> expanding the size and quality of s.t.e.m. teacher ranks. one such initiative is the aspen institute's skills for america's future effort which the administration helped launch. that program, maybe you know of it, that program works with businesses, community colleges, labor unions and other groups to encourage the growth of job training and job placement programs that really work. and then infrastructure.

this administration is committed to investing in 21st century networks including fostering access to high-speed internet for citizens and businesses no matter where they are located. the federal government must continue its strides toward a smart electricity grid and a robust network of broadband internet access, and the commerce department is deeply involved in both of those initiatives. and then let me bring this to manufacturing. so this really deserves very careful attention. a flowering -- a flourishing u.s. manufacturing sector is simply crucial to our competitive strength, and it will continue to be a key source both of economic growth and of

jobs. manufacturing pays higher-than-average wages, provides the bulk of u.s. exports and protects, also, national security. the manufacturing is sector is also the biggest source of innovation in our business economy. 67% of all the business r&d in america is done by manufacturing companies. that's why i've adopted one phrase as a central organizing principle for my priorities as commerce secretary. some of you have heard me say this before, i say it again and again, i want, we want at the commerce department, we want across the administration to build it here and sell it everywhere with. everywhere. build it here and sell it everywhere. if we do that, we can retain and

even enhance our u.s. economic preeminence. build it here and sell it everywhere means, of course, helping u.s. companies sell more of what they make to the 95% of the world's consumers who live outside our borders. through the national export initiative, we're doing just that, and we're now on track after two years, we're on track to meet the president's goal of doubling exports by the end of 2014. but i will underscore with you this is a nonstop challenge. we have to continue to intensify , so we have three more years. the first two years we've had increases 16% in export, then 17% in exports, this month's announced this morning results were not very good for the month

of november. that's, there will be ups and downs. this is a undertaking where we have to constantly focus, constantly find new means of taking this further. and i will say, of course, the free trade agreements, korean free trade agreement for example, very important in our ability to take that further. so building it here also means attracting and retaining more investment so that companies are building their factories here in america. and it means doing everything we can to strengthen u.s. manufacturing and particularly advanced manufacturing. because if american businesses stop building things here, it won't be long before the actual innovating happens somewhere else. so the president and i are determined to reverse the tide,

to revive manufacturing in america. last summer the president announced the advanced manufacturing partnership, and recently we created a national program office for that initiative at the commerce department. it brings together industry, universities and all the federal government. so we work across the entire federal government. i lead that to drive investments in emerging industries like i.t., biotech and man to technology -- nanotechnology. and in december the president named both gene sperling and me as co-chairs of his white house office of manufacturing policy. so that's the policy focus. strengthening american manufacturing, especially advanced manufacturing, where we should enjoy a comparative advantage, i will say, is an issue that is close to my heart.

with more than 25 years now in the business community including 6 years, for example -- 16 years, for example, serving on the board at boeing, i watched a broad decline in u.s. manufacturing and the erosion of the middle class jobs that came with that. i'm committed to working to stop that decline building on past administrations' successes like the ones happening right now at our economic development administration within the commerce department which in the last two years alones has invested in 68 competitive, job-creating projects nationwide to support advanced manufacturing. the promising news is that we're starting to see a rebound in the sector. manufacturing employment increased by 225,000 in 2011.

225,000 jobs. that's the fastest year-over-year growth since 1997. so i'll conclude with this, the administration does not believe at all that government has all the answers. but it does believe that the public sector has a role to play in creating the conditions that make inspiration, innovation and invention more likely to happen. ultimately, job growth is the metric that is most important. and long-term job growth will occur most powerfully in a world where entrepreneurs and researchers are supported in pursuing new ideas and taking at an accelerated pace the essential step of turning them into new products and businesses. the priorities set out in the competes report are building

blocks for fulfilling our country's truest potential. it is critically important that we translate these ideas and strategies into action. wherever possible this administration, and i personally want to be a partner of researchers and entrepreneurs and any and all of your businesses in that effort. so thank you very much. [applause] >> so, mr. secretary, um -- >> [inaudible] >> you know, well, you sit, i have to wire you up. first of all, i just, again, wanted to thank you for being here. um, and for that discussion of

why manufacturing matters. because it's been out of our dialogue in the united states for quite some time. so what i tried to do yesterday, we had a group of mayors and people from metropolitan business chambers, university presidents, the typical metro mix. they would love build it here, sell it anywhere or everywhere. because i think they believe fundamentally we do have a manufacturing moment in the united states, and we have an export moment. the advanced manufacturing partnership, you're like a rock star right now. [laughter] i mean, they are hearing the message about the fundamental policy change that we need to make around work force, around clean energy, around infrastructure, etc., etc. they raise some cultural issues yesterday, i just wanted to raise this and see what your response is, that we have cultural barriers to achieving our manufacturing moment and our export moment. on manufacturing it's a cultural

sense that we've diminished manufacturing as a, um, dignified work. we talk about the creative class, we talk about the consumption and the amenity economy, we talk about everyone getting a four-year degree. we don't really talk about the large portion of our work force moving into manufacturing, working with their hands and their minds. the second piece they mentioned was the u.s. is somewhat export-phobic. we're the most diverse country in the world, but we're the most insular country in the world. we don't get out much. only 28% of americans have a pass port. so i'm wondering as you think about really unleashing the dynamism of the manufacturing and export moment in the united states whether we need to think about and how you've thought about moving beyond a policy conversation to almost a cultural discussion in the

united states, um, given where we've been for the past 25 years and how that's seeped into our zeitgeist, so to speak. >> well, i think you're right. there's been a sense, and in some ways it's been more pervasive, i think, in the federal government than at the level of mayors and local governments. but there's been this sense for a long time that manufacturing is about kind of highly untrained jobs, people that in a world in which we put such an emphasis on getting traditional college degrees, we put little weight of any kind on working with your hands, bringing things together, making a difference that way. and i think we've lost a lot. and as a consequence, very little has been invested in and very little call it public

support, public recognition of what manufacturing brings to us. 67% of the innovation in american business in the manufacturing sector, it's stunning. i mean, i was tuesday of this week in detroit, and there, of course, you see this in the automobile sector and what's being done is extraordinary. and it's not just the u.s. automobile companies, it's the overseas, u.s.-based automobile companies. and what they're about is manufacturing a really key product. cars, trucks. and, you know, once again so much of this is moving into advanced manufacturing. the old ways of thinking about manufacturing are mostly very, very outmoded, and the kinds of skills that are required -- and if you're at ford motor company and you have 30% of the value of

all the new fords, 30% of the cost of all those new fords in the manufacturing production are in advanced electronics. we have to have people that have the skills to bring those to the market. i mean, i could go on and on that way. but that's the traditional way. you know, i live in southern california, i'm going to be -- i'm going home for the first time since i became secretary of commerce tonight. to be in los angeles. and i'll be with antonio via ri goes saw, and we're going to go around the schools, and, you know, he's, he is a real leader. he's a guy -- labor union guy who was the labor representative fighting a lot of what was being done in the field of education and perhaps as you know he is so, he's totally changed his views and has taken the position

that, for example, the uaw in detroit has taken. and that is we've got to work together because the way to have jobs in this country is bringing business and labor representatives places where labor unions are part of the business sector and doing it together. >> it seems like we might, and we're going to follow this panel with a panel, with a representative from dupont. 40% of their work force is going to potentially retire in five years. 40% of their work force are eligible to retire. so in some respects what we have is almost an urgent moment to begin to reach out to the community colleges, reach out to the high schools, reach out to other intermediaries who work on skills. and as we sort of begin to change the image of manufacturing, really begin to train and upgrade the skills of

people who can move directly -- these are good jobs, as you said. >> fabulous jobs. germany's done that spectacularly, and i haven't -- i was a student twice in germany a long, long time ago, but there was just the we students to get a job between sessions, you could get one of these jobs that were about learning and applying yourself to making instruments happen. and then as we know, the german tradition was universities were for a certain academic elite. but parents had tremendous pride and continue to have tremendous pride on the training and skills that lead into manufacturing. and they do it brilliantly. >> so i've got a whole bunch of questions. we'll be here until around 2:00 in the morning -- [laughter] but i thought what i would try to do is at least enable you to give a little more detail about

some of what you just described. question, please share more details about the goals of the white house office of manufacturing policy and the value you expect its work to add to already existing federal efforts to advanced manufacturing in the u.s. i have a series of questions here, actually, about the president's, um, call for agency consolidation and agency restructuring. will that be under the remint of this office of manufacturing policy? because what you've described cuts across the federal government clearly. what are you thinking about timelines, the kind of both legislative proposals or administrative alaskas that you might -- actions that you might see occur over the course of the next three, six, nine months? >> the white house office that gene sperling and i chair is focused on bringing together effectively all the elements of

the federal government. so the defense department, i mean, it's hard to identify any one department of the federal government that doesn't have a manufacturing arm. some of these are ec tensive -- extensive, but they haven't been brought together in the past. and even in, let me say, the commerce department. substantially, every bureau in the commerce department has a manufacturing arm of one sort or another. but they've tended to be siloed. so the core policy point here is let's work effectively to make this more productive, more efficient where skills exist in one place. they don't have to be duplicated necessarily in another. let's make them really productive, and let's take the dollars that are available and can be enhanced in the manufacturing sector and not spend those dollars fruitlessly on duplicative things from one

department to the next. so that'll be a big focus. and then we have at the commerce department at nist now set up the national program. so that, it's going to be a spectacular program. and we from the outset under the leadership of pat gallagher who ph.d. physicist who career person at nist who was absolutely the right person to head nist. so this is the case of a career person who is our undersecretary. brilliant guy. and he is reaching and a team of him, and i'm spending a fair amount of time on this, reaching out to all the other departments to work together on this. and this, you know, this has got to go way beyond policy. anything that is pure policy at some level becomes a waste of time unless you're putting it into the reality of production, and that's the key thing. >> other question, same line, office of manufacturing policy.

your own thinking coming out of the energy sector, how much do you think this is about the large global companies, their challenges, their supply chains, many which are small and medium-sized enterprises or other small manufacturing firms, some which may be exporting, some which may not be? how do you think about size and scale? because that does have an enormous effect on a whole range of policies both delivery as well as design. >> well, it's a very good question, and the reality is that the largest part of manufacturing in the country actually is in the supply chains. >> right. >> so andrew would have here in the u.s. a very substantial supply chain. that's true the automobile companies. i mean, what ford, you know, ford didn't go into bankruptcy, but ford couldn't have gone forward without the other, without general motors finding a path through and out of its

bankruptcy. because they had to have the support of a common supply chain that ford couldn't afford to do if they did it independently. so this is happening everywhere. and i'm, you know, andrew and i probably have gone over this four times. i bet the time i've been commerce secretary, i've done it widely with others. it goes on and on. what they value so much is the supply chains, and the supply chains often are, they're invariably not more than call it medium-sized business, and a lot of them are quite small but growing businesses. so, you know, there's a span here. and the people that want to work with their hands that are willing to have the education and develop the education are, heck, they are really competitive. because to be in your supply chain, you have to be awful good, right? and these small businesses, they're just competing like crazy. i mean, it's the instinct that business people have of getting out there and winning.

>> last question going back to your prior life if you remember your prior life. [laughter] deals with the potential of the clean economy and clean tech to be a driver of manufacturing. we did a report at brookings going back about six months where we said that the clean economy is disproportionally manufacturing oriented, disproportionally export oriented, so it hits all the right buttons, but it requires a stable and predictable and certain level of national policies and, obviously, it aligns with the state and local. um, do you agree with the assessment of the potential of the clean economy to be part of the manufacturing moment, and are there some short-term actions that the national government can do either to do no harm or to potentially provide more proactive support? >> well, i've been of the view that we would be better across

the country in dealing with clean energy steps were there at some level a common set of requirements and supports across the entire federal government. this is an area in which the states have really led. and the states, i think, have done it with innovation, with offering the advantage of our federal forum. that is, with different approaches, often very creative approaches. you know, where i've lived and where i've worked this for a long time, california has been an extraordinary leader, a special leader. everybody's facing the reality of a tough economy right now. we've had the great advantage in the ability in the world, for example, of utilities to have the natural gas prices come down so strikingly that allowed some room in many states the state

regulators and the utilities to continue to have something like current pricing in the market with some of their fuel costs down leaving some additional room for clean energy technology development and application. but that's, that's fragile. i mean, the reality is we're all dealing with both the advantages and the disadvantages of a very tough economy. the advantages, in my judgment, are make us think more fundamentally, in fresh or ways about -- fresher ways about how you get more out of every dollar that you have, for example, in the federal government. every dollar you have in the business. what is a disadvantage, clearly, is that some of the innovation and a lot of the financial support that was there to turn ideas into practical programs is diminishing. >> well, i know you have to go, um, though we'd obviously like you to stay.

it strikes me just listening to your talk and to these responses, um, that your view of competitiveness really is an agenda that's co-produced across sector and co-produced across all levels of government. and it strikes me that a lot of what the advanced manufacturing partnership is putting forward and what you've described here today can play out in the states and the cities and the metros irrespective of what happens at the national level. so you may find that your manufacturing moment and export moment really begins to bubble up as we sort through our political difficulties at the national scale. we really thank you for coming to brookings. >> thank you very much. [applause] >> everybody stay seated so we can get the secretary back to the white house for a meeting with the president. so thank you. >> thank you very much. [applause] [inaudible conversations]

[inaudible conversations] >> ladies and gentlemen, we're going to take a ten minute break, please, as soon as the secretary's left the building. please return to your seats in about ten minutes. [inaudible conversations]

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[inaudible conversations] [inaudible conversations] >> we'll return in just a few minutes to this all-day discussion on the economy, jobs and global competition from the brookings institution in washington d.c. they're taking about a ten minute break at the moment. from yesterday, here's some comments about jobs from the u.s. chamber of commerce president thomas donohue while we wait. >> thank you very much, margaret, and good morning, ladies and gentlemen. i would say parenthetically if

half of what margaret said was true, it would be true because of the extraordinary people that we have working at the chamber and the people that we've been able to attract to come here at this very challenging time for our country. so let me begin by saying good morning and by expressing my appreciation to margaret and the national chamber foundation for organizing this event and to each of you for being here today. you know, it's something of a tradition at the chamber to gather early in the new year and assess the state of american business. size up our economy, it would be, and to lay out our priorities, the things that we believe are really important for our country. this year is particularly special for us. we are observing the chamber's 100th anniversary.

a hundred years of representing the business community and standing up for american free enterprise. as we begin 2012, we can say that the state of american business is improving, but it is doing so weakly, slowly and insufficiently to put our nation back to work. we were all pleased to see the positive jobs report last week with unemployment inching down to 8.5%. but let's not forget that it was 5% in december of 2007 as the recession began, and we are still down six million jobs since the recession ended. and there are more than 23 million americans who are either unemployed, working part time or who have given up looking for a

job. our nation's highest priority then must be to put these americans back to work. to achieve this goal, our economy has to grow much faster than it is today. unfortunately, we think the economy will actually slow down in the early months of 2012. we expect growth to average 2.5% or lower in the first half and then, hopefully, depending on the actions of government to work its way up to about 3% at the end of this year. now, there are a long list of what the economists like to call downside and upside risks. these factors could cause the economy to perform either more poorly or much better than any of us might forecast.

our goal is to see the nation take advantage of our many opportunities on the upside while doing everything possible to address the risks on the downside. we are deeply concerned that our largest export market and the commercial partner that we most value, the european union, faces an unresolved financial crisis and a looming recession. there will be leadership transitions and elections in taiwan, in china, in north korea, in russia, in france, in venezuela, in mexico just to name a few. and in case you haven't noticed, there's an election going on right here in the united states that's giving everybody a lot to talk about. we are seeing continued turmoil and violence in the middle east

and more saber-rattling from iran including threats to choke off the flow of oil through the straits of hormuz. what happens to our economy if we have to pay $100 or more over the long term for crude oil throughout the year as some have predicted? here at home government policies and conflicts among our political leaders have added to these uncertainties, undermining business and consumer confidence and slowing the economy down. the federal government is expanding it powers, its cost and its debt at a record pace. we've made virtually no progress in reforming entitlement programs which could eat the federal budget and our economy alive. and in a new chamber survey of

small businesses, more than 80% of them are very concerned about the prospect of new regulations, new mandates and higher taxes, and these concerns have put the brakes on their investment and their hiring. for all of these reasons, the chamber is putting forward an american jobs and growth agenda. with specific ideas to put people back to work without raising taxes or adding to the deficit. we're calling on leaders in washington to work with business and with each other to build a stronger american economy. 2012 must not be wasted simply because it's an election year. there is no justifiable reason that it should be. the house of representatives, for example, have already passed

30 bills that its leaders say could accelerate growth and create jobs. so far these bills have gone nowhere in the senate. surely one or two or three of these must have some good ideas that would attract the attention of the majority of the senate. meanwhile, an administration spokesman said recently that there is just one item on the president's must-pass legislation program for this year. one item for the whole year. a further extension of social security payroll tax holiday. with all the challenges facing our economy and our country, it's inconceivable to me that the president would agree with that, and i trust that he doesn't. today i'd like to briefly outline a few of the highlights of the chamber's jobs and growth

agenda. so let's start with the big one, a new one; energy. our nation is on the cusp of an energy boom that is already creating hundreds of thousands of jobs, revitalizing entire communities and reinvigorating american manufacturing. unconventional oil and natural gas development is on a pace to create over 300,000 jobs in the next few years in ohio, new york, pennsylvania and west virginia alone. and there are a lot of other states involved in this business. and take a look at what's happening in north dakota. the state is booming. unemployment is 3.4%. oil production just surpassed that of ecuador, one of the members of the oecd. energy is a game changer if you

just stop a minute and think about it for the united states. it's an absolute game changer. it is, as the saying goes, the next big thing. with the right policies, the oil and natural gas industry could create more than one million jobs in the next few years. not only can we create jobs, but we can cut our dependence on overseas imports while adding hundreds of billions of dollars to the government coffers at a time that they really need it. recent -- >> some comments from yesterday by chamber of commerce president tom donohue. the brookings institution all-day economic forum is resuming now with a discussion on new advances for manufacturing and increased exports. [inaudible conversations] >> well, everyone gave us more than enough questions for the rest of the day.

[laughter] i've got a stack. so this is going to be, i think, a very informative panel. this panel is -- oh, it's not working? okay. [inaudible conversations] >> okay. we're going to try it one more time. how does that -- perfect, great. um, this panel has the arena to focus on advanced manufacturing and exports. and both to understand why we need to make a case for that. we've already begun that conversation in the first two panels. but also to understand what the national government can do, um, suspend disbelief, to set a platform for productive,

innovative growth. and then in the absence of national action, what states, localities in partnership with universities, firms, business associations, community colleges and others can do to take up the slack. we've got two wonderful panelists here. dominic barton is the major doe mow of -- domo of mckinsey, the global managing director. obviously, based in london but also on the board, as has been mentioned, of the brookings institution. and tom connolly is senior executive with dupont and, um, your boss was supposed to be here, but she was involved in a skiing accident. this is the problem with the winter holidays, right? but we really appreciate your taking the time. um, and i, you know, frankly, i think secretary bryson set this up very well. i think he marched us through why manufacturing matters, why

it's such an innovative sector, why it has such a dramatic impact on wages and incomes critical to growing the middle class, why it's important to the trade deficit, broader fiscal balance of the united states, why it interplays with environmental sustainability the potential for clean tech. i think he really set this up well, and i think the, um, competes report coming out of the department of commerce does that, um, in the same vein. um, what i'd like to do is sort of really from your particular areas of expertise and focus sort of drill down further. and, dominic, i thought i'd start with you because i think one of the most interesting piece of work coming out of mckinsey, um, daniel patchow is here, michael park, other of your colleagues is this focus on advanced industry and the need for the united states to, um, as

glenn said with a clear laser-like focus to engage on or to understand that there are certain sectors of the american economy -- aeropace, automotive -- aerospace, automotive, medical devices. i mean, we could run through the list, i think we probably would have the same kind of conclusions. they're absolutely fundamental for us to stay at the cutting edge of innovation, at the vanguard of global competition. but that requires us to rethink, um, what we do and this sort of co-production between business/university. and the public sector. i thought it might be helpful just as sort of a platform setter for you to describe why the mckinsey interest in advanced industry and why we need, perhaps, even to refrain the conversation about manufacturing in this way.

>> well, thanks, bruce, and it's an honor to be here and also work with brookings. mckinsey and brookings are working in a sort of close collaboration on this topic because we also think it's vital. um, you already mentioned, i think just as a bit of background, i mean, the factor and the various companies or businesses that are in it, a couple of more facts maybe on why we think it's important and then maybe some of the things we've done and what we see as being some of the imperatives. it's roughly those industries that you talked about, the automotive assembly, national -- the defense, medical devices and so forth, it is about 10% of the u.s. u.s. gdp, that's the size of it, but it's about 45% of our exports. and it accounts for about four million of what i would argue very, very high-skilled jobs. we talk about knowledge workers and you think about the whole chain, this is at the far, far end. so it's, we think while it's

10%, it punches way above its weight. if you -- the secretary talked about the amount of r&d that's actually being done by these players. most of that 67% is actually done by the advanced industries players in manufacturing. that's where the bulk of it, this is where the engine is. and, actually, while we would argue that all of the trends are heading south, we heard about education, we've heard about the lack of long-term thinking, the trends are heading south, and we think south quite quickly. we actually do have quite a strong base, and we shouldn't forget that. i think we invest more than the next four countries combined. that's changing. we heard what china's doing and so forth. but we believe we're in kind of a case now of a use it or lose it type of thing where we've got to make some big shifts to drive it. and one of the reasons why, actually, it was about 18 months ago we decided to set up a sector or called advanced industries to get the r&d, to be able to get the capabilities to

serve these types of institutions. if you look at the big forces at work in the world moving ahead, we've all heard about the rebalancing of the world towards asia and brazil and africa and so forth. we're talking about the technology grid, the speed of information, the amount of information that's moving, this repricing of the planet that's going on, um, the demographic challenges with an aging population. we're going to move from having, basically, you know, three retirees for every worker, we're going to end up moving to a situation which doubles that by 2050. so there's all sorts of productivity issues that are coming, major shifts going on. if you look at, for example, food which we think will be one of the biggest industries of tomorrow, ag food, the way we're going to get the ability to feed the three billion people and move it is actually through a lot of the advanced industries technology, it's going to be vital. and if you look at what israel

is doing right now in advanced industries and food, it's phenomenal. making, helping cows produce from 5,000 liters of milk to 11,000 liters of milk a year. this is, by the way, a big deal for china, right? they're looking at this and saying how can we buy these professors and get them over here. and i could go through countless examples of what's happening just in food which you might think is low tech? it's high-tech. and the u.s. is in a wonderful place to drive that all a i cross the value chain, and dupont is doing that. you look at energy which is going to be a big sector. you've talked about this, bruce, the secretary talked ability clean tech and so forth. that's a massive shift. health care. i mean,-fortunately or unfortunately is going to be one of the biggest buzzes of tomorrow given the demographics. a lot of the advanced industries is what's going to be there to make it productive, and we're seeing a lot happening on that side. and then logistics and transportation. and this is the country that

invented airline travel and travel, you know, the moon shots, all of this sort of thing. that whole sector itself is moving forward. so with these forces at work that we see there, the amount of business opportunity which is going to be created and driven through this factor in particular is mammoth. and it's a multiplier effect, a different type of multiplier effect than we think. i don't want to bore you of the old stories of the tang from the moon mission, that sort of thing, but we're going to see multiples of that. we can't predict what those are, we just know they're big. and we think it's important that we own that. >> right. >> so that's why we're very passionate about this area, and we think there are a lot of things that can actually be done, and we think it's -- while we have the sort of the scale to be able to do it, all the forces are going in the wrong direction. and so we think a jolt, a pretty massive jolt is needed to be able to shift --

>> just one follow-up question, and then i want to talk to tom. this is a conceptual narrative really about what drives what in the economy. >> yeah. >> what's absolutely, critically important. and, obviously, when mckinsey quarterly comes out, the germans read it, the french read it, the japanese read it, the british read it, the chinese read it. >> yep. >> do you get a sense that our competitors in the mature and developing economies have this clear sense about advance industries and their strength and, therefore, moving to policy the platform they need to set? are we alone in the world for, by basically not understanding that sort of core insight? >> i think we're quite far behind in the understanding and actually the drive for doing it. and if i compare -- i just look at recent travel. andrew liveris talked about this with germany and others.

and china, i know we always talk about china. i actually was asked to go and -- they have a special initiative with seven strategic industries. their all advanced industries. and the amount of money that they are going to put into that, and they're on to immigration, they're talking about -- one of the big discussion points was how come all of the -- we don't have any nobel prize winners, zero, in terms of the sciences except for those that go to the u.s. what's going on, how do we shift that, how do we move it. so you have china, you have a, i'd say, a massive focus on that side with the resources and the planning and the time frame that goes on. the germans, the french, the amount of effort the french are putting into foreign direct investment in advanced industries is incredible. there's a lot of push. the english with what's going on with cambridge. so it's, i'd say that the focus on it and the time frame and the resources and the desire to kind

of cut through the blockage to move it, i think, is at a faster pace. and i think we're slow. and, again, we have an advantage, but over time that will, that will disappear. >> that's a great context for the conversation with tom. and, tom, you know, just for the audience and for everyone watching this on the websphere and twittersphere and all the rest of it, just something about dupont. i mean, sixth largest exporter in the united states. um, over two-thirds of your manufacturing base is in this country. um, over half of your work force is in the united states, and 50% of them are in traditional manufacturing jobs. it's a large company in an advanced sector, um, that has an enormous impact on people's lives and, obviously, some of the broader economic indicators that we care about. what's your perspective and the

company's perspective about the dialogue you've heard so far about do we have a manufacturing moment, is there potential for industrial revival, can we not just double exports within a certain period of time, but really have this focus on global engagement become more part of our dna in the u.s.? what's the perspective from a large company? >> okay. that's a lot of questions, bruce, so let me wade into it. yes, we are the sixth largest exporter. we run a balanced trade surplus from a u.s. perspective. we like the u.s. in our manufacturing base here, and we feel that we're able to compete with people anywhere in the world from a u.s. base. i kind of push back, though, on the notion of traditional manufacturing jobs. traditional manufacturing jobs are changing so quickly. i -- there are no low-tech manufacturing industries left. there may be some low-tech producers, but they're not going

to be around for long. so if you're in the manufacturing business, either the product you produce has a distinct advantage, or the process by which you produce it, your logistics have an advantage. but if you don't have a high-tech advantage to your operation, you're not going to be in the manufacturing business for very long. >> yep. >> i think we can do that from a u.s. base, but we need to change some things. we've talked about many of them already this morning. we see more and more consumers around the world, the u.s. is still the largest and most attractive consumer market in the world, but we've seen over the last few years and really post-financial crisis -- >> right. >> -- the emergence of china not just as a producing nation, but as a significant consuming nation. we're seeing the same thing in india. these are vast markets for u.s. products that really didn't exist a decade ago. now, what do we need to do to be ready for that? certainly, in the new world the next economy, if you will,

trade, open trade and fair trade agreements are critically important. if we're going to have an innovation-based economy, ip protection takes on enormous -- we innovate, we need to protect it whether it's a product or a process, whether it's by a patent, and the u.s. patent office is the gold standard for intellectual property around the world. we need to protect and enhance that. it's about the quality of the examinations. we're the gold standard, we've got to maintain it. i think it's, also, about removing some barriers. we heard earlier from andrew and klaus about that. there is some things about the regulatory approvals and how long it takes. i know dominic and i were both in asia. i come back here, and i talk about asia clock speed. things move faster there. we will be at a disadvantage if we allow our processes to take so long. so a few things need to change,

but we definitely have a strong future, and there is a bit of a moment right now given exchange rates, etc. >> let me stay with you about the issue of workers. at various levels. because what you described to me the other day was a very large portion of your work force eligible for retirement in a very short period of time. so my sense is that you need workers with certain skills, um, much more substantial than quote-unquote traditional manufacturing. do you have the sense that our high schools, community colleges, intermediaries, labor or others are able to produce these workers, and secondly, at the management scale someone came up to me during the break and said a critical question and, actually, there were about three or four of them in here is for topnotch management talent coming out of the best business schools here and around the

world still an attraction to the financial sector. manufacturing sector not as attractive because of compensation issues and other issues. so how do you think about the work force challenge really at these multiple scales from your respect? >> so let's talk at a plant, at the production level. and, clearly, and again, we heard a bit about in this this morning. there is a need for skilled crafts workers, people who are really good at being able to build and maintain plants. they are in short supply. we've been able to meet our needs, but as you say, our needs will be increasing in the next several years, and they need to be met locally because most of our production workers are recruited in the area. at the plant operator level, it used to be the plants were 20 years ago manually controlled. it's now all computer based, distributed control systems. the quantitative skills and the computer skills required of a plant operator in a chemical

operations product seed where we were a while -- far exceed where we were a while back, and i think at this level the community colleges can play a very significant role. and it's not about a general curriculum at the community college level, it's really about curricula designed for the local industry to provide skilled workers that we'll need. and we'll say we have had great partnerships in areas where we manufacture the communities, the counties, the states really do want to work with us in terms of developing those skilled work forces. at the professional level, i would say we recruit mostly scientists and engineers, over 70% of our professional staff have engineering degrees. we are concerned about the numbers of u.s. students, u.s.-born students who are interested in careers in science and technology. at the research level, we hire research scientists that are trained by u.s. research universities, the leading

research universities if you look in their chemistry department, their physics or biology departments, you'll find that half of their graduate students were born, again, outside the u.s. so immigration policy to allow us to attract and retain talent from around the world is important. at the management level, i'm an engineer by training, and i'm in a management role now. i am concerned that management talent may find the financial sector more attractive perhaps, but at this point we're a leading company in our field, and we're able to pull in the talent that we need. >> dominic, what do you think about this work force challenge at all levels, um, and whether we are able to essentially deal with it not just with our sort of institutional range, but with sort of our cultural norms in many respects? >> well, yeah, i think that's a broad area, and just maybe a couple of angles on it. we've talked about the immigration issue before, and i would just completely echo what

klaus and andrew said too. i think if you look at the statistics and you look at where the source of the talent's coming from, a big chunk of that is from foreign talent. if you see what's happening right now at the mits and so forth, people who are graduating and, for example, we try and hire them, and be they probably should be going to -- [laughter] i should be careful what i say, but we'll bring them in, and they can't get a job with us. they can't work in the u.s. so we send them to canada, we send them to germany. and guess what, guess where we start putting some of our centers of competence for advanced -- you, it's just ridiculous this thing, and i think we have to blow that cap. i don't know how much screaming, i don't know whether we should camp out in tents. maybe that's what business -- [laughter] we should camp out in tents until something happens. it is seriously a big issue just on that dimension. i think a second one is what i

call around the polytechnics. there is kind of an image, this is maybe where you get into the cultural. there's no cultural image if you go to a polytechnic you haven't quite made it, or why do people -- i think that's just a very wrong-headed view of how things are. and we have some very good polytechnics in the u.s., and i think we've got to put more resources behind them and the community colleges. because, you know, in doing some of the work on the unemployment gap, what's going on, there are several million jobs that are not filled because there aren't the skills. it's the welders and so forth that are there. so i think we have to, we have to change the image that this is a very good thing to do, and it creates terrific jobs and opportunities for people as they move forward and so forth. and i think there is a cultural image very different from germany, very different from other parts of korea and so fort. interestingly enough, china hasn't figured this part out.

the effort is on high-end universities. they're creating not only hundreds of thousands of engineers, they're creating hundreds of thousands of people that also can't get jobs. and i think they're going to finally get it, too, that it's the polytechnics that matter. so i think we have to really from a cultural side move that. ..

>> from young high-powered talent, if you want to make a career and move ahead come you probably don't want to take that risky project because there's a chance of the base grew up and you will know about it. mentioned boeing, it's kind of like we've got a youtube version of actually what's happening. i'm not saying we shouldn't have transparency. i'm just saying how can we make that exciting again? because we have made many mistakes in the past to be able to build the things. there's something about a risk culture we just picked up with. management, top talent, deferring to the big established business units as opposed to doing new things. that's more of a micro think about something on on the cultural side i think we have to look at. i think this relates to something again was mentioned in the previous panel. we are way too short term and are thinking. i think we're driven by quarterly reports. i think the quarterly report

focus has seeped into our r&d and so forth, and encompass. it's a cultural point of you i think we have to shift. >> both of what you're saying, particularly with regard to international comparison, because i think the cartoon version of international comparison is they get stomped on. regulatory approvals, expedited, public sector needs what does around infrastructure, et cetera, et cetera. what you're describing, to with regard to the german model come is that there's a kind of ecosystem where large firms, supply chains interact with the research institutions and the scaling institutions. almost like a seamless way. am i right? i mean, aren't we reading too much into what other countries are doing, or are they really

are affecting this am and we tend to be more compartmentalized or stagnated business separate? you described some helpful appliances with the community colleges. is that the norm, is it the exception? >> from my standpoint it's something that is developing here. they need is becoming more acute because of hiring needs, also because of the increased skills associated with those new manufacturing jobs, if you will. let me say, looking at models around the world, we mentioned germany. i've had experience in switzerland. take a look at japan but all these countries have vibrant manufacturing sectors, and they all have very good skilling. i like the term. the skilling piece of the. at the research and it's hard to argue with the u.s. research establishment, but at that skilling, the craft, the community college, polytechnique as you refer to them, that piece of the puzzle i think has done

better in certain manufacturing oriented economies like germany, like switzerland, like korea, like japan. >> the thing i would say on execution, i would say many other countries beat us. i was mentioning in the break an example from beijing. this was not to do with advanced industries. it was about startups of new businesses. meeting the mayor of beijing, he wanted benchmarks. we are saying it takes six days in singapore. a given idea in order to get approval, it can vary if you're doing some complex medical product versus setting up a kentucky fried chicken, but basically six days is what is the measure. and for beijing, the equipment was 36 days, shanghai was 35 days. three months later, going to visit the mayor up on the wall, chinese letters, i couldn't understand but there were five numbers that were out there, 36, 35, 14, i can member the other

one. i said is that some new slogan? he says no, that's how long it takes to start a new business. someone had told, i wish he would have remembered it was me, but -- [laughter] i want people to come into my, if you go into his office this weekend and he turned that way, that's what you saw. i'm sure is a different thing there. but that's the kind of execution, what is not there. and i completely agree is the cultural dimension. the number of countries that have tried to develop the silicon valley. there is a long list, malaysia, the super corridor, russia is doing this right now, trying to build this. i think that's very difficult to try and replicate. that's the magic, if you will, that we have. and that's where i go why aren't we doing more of that? the institute of medical which i think is a wonderful one, but even there, wicca to all sorts of stories of the complexity of

getting in my tea and harvard to collaborate, which they do apparently if you read the mit, something, harvard, the other way round. but the point is they're working together with business. you have researchers, business, and is a very vibrant place but i think we have offered many opportunities like that here. we talked about this before with cybersecurity. cybersecurity is a very important and i think fortunately, or unfortunately, huge growth business, or area. and i think that's something where we could, how do we put that together? we have talked about rocking, thinking about shale gas. there are ways to build those centers. by the way, we can get, we can get other people's money, not only can we get talent, this may seem strange, china, for example, has a lot the morning. they need to develop this for

their own development. it's not just a pride or a control. they have to do it energy efficient investment to be able to grow without melting the place. it's an imperative. what we've been suggesting is why don't you spend some of that money in the u.s.? spend the money in the u.s. to get the technology invented. so i think if we could build those sorts of areas we could not only attract the talent, but also the money. but we need to get moving on it. >> i want to switch the policy, because i think between the two panels that we have already had and in looking up with the advanced manufacturing partnership has put out, there really is sort of a common suite, a policy, that we need to undertake year. we've already mentioned on this panel, you know, trade, ip, immigration, skilling. we can easily add infrastructu

infrastructure, tax, energy. there seems to be the common seven to 10 areas of policy in the last year, and, what have we gotten done in this town? we finally got the three trade deals done. you know, some advances on patenting modernization, the competes act. but relatively speaking not the kind of seachange that we seem to need, you know, to really set a platform akin to what we have and are building on it. so question i guess is, if you had it -- if you had to prioritize and is presumed this is even a semi-rational system, but if there was a prioritization of we've got to get these two or three things done because of how you see the competitive threats, what would those be at the national scale? and the second issue sorted building on the less

conversation with secretary bryson. if the national government goes on a frolic detour for a good time, can we imagine the states, cities, metros advanced research universities, the major corporations, doing what they can do to set the platform for advanced industry and advanced manufacturing? and how would you prioritize that? that may be the world we are in politically. so first question, national scale because we need national solutions. how do you prioritize near-term, and then assuming we still are in this period of partisan gridlock, can we push this out in some structured way to our laboratories of democracy? anyone want to start? >> okay. i'll have a crack at it. first of all, at the national level, and again, most of the key issues have come up today, i

would think the education, whether k-12 or university, community college is, that's one where the international comparisons are unfavorable in becoming worse. when i talk to some of the times i've been in the place, the question i ask is which horse to bet on in the race? the one that's out in front or the one that is running the fastest? and, of course, the answer depends on how long the race is. but if we're in this for the long run we can't afford of other people out there running faster than the u.s. economy. so one of things that is holding us back is education. let's get after the education peace. the next thing, i put together a number of things that create uncertainty. nothing is worse for business or investment in manufacturing and uncertainty, and with elements of uncertainty that can be addressed. hiring is i do it as a long-term commitment. you don't want to take that on

if you don't know what your future is going to be like. manufacturing requires investment sticking you to make a return on that investment over perhaps a 10 year period. if you don't know what the future is going to look like, you keep your money in your pocket or invest in another jurisdiction where you understand or where you since less uncertain. uncertainty around r&d policies, uncertainty around energy and climate policy. all of these uncertainties cumulatively result in a reluctance to invest. so i think what this town can do is really drain the uncertainty for the manufacturing investment. >> i think a similar. i would probably have three i would do. one is around the immigration issue, because what i feel is we need to jolt, we need to jolt the system. and i think it would get this is a lot of confidence if they move was made that way and they were saying we are serious now about trying to build this. so i think i would be bottleneck

that. the second one is around the r&d, getting a tax credit on r&d. there's the uncertainty issue because it's for your and then, how, is that really like how people think about r&d? you do r&d not for a year. you do it for longer. and we have a trillion dollars, manufacturing conference have a trillion dollars in cash outside the country. you know, by the way turning zero. we heard about that before. not only do we need for r&d we also need for the loss -- the velocity of getting things moving pics i would try to do something on the r&d front, tax holiday on r&d. i would want it though as i think someone mentioned earlier, it's not just the white lab coats. i would want the actual manufacturing to go with it. because we could get all sorts of tax loopholes. but i think something on that. so i would do the immigration, the r&d site.

on the uncertainty site, i would think that setting up somebody's like a fast-track mechanism where people, they can go somewhere to deal with all the convoluted processes. because part of the challenge him we have seen this with some of our clients that want to invest. it was one chinese client basically said we would like to invest from a particular, in the semiconductor area actually. and said it's like chicken stock into ducks. that must be some chinese phrase. because we don't know, we just don't even know where to go or what to do. i remember larry summers was there if you think they can. he said you should talk to mckinsey. we said we don't know. we are a giraffe. [laughter] >> so some sort a fast-track mechanism to be able to work with issues can pop up and people, we can hear what dupont is dealing with our what toyota is given with an people can say okay, here's how

we're going to try to move it. so those be some things pick some ways you're arguing for a level of transparency about these regulatory barriers that obviously just don't make any sense whatsoever. i'm going to of in the second. i already have a question here. just one last question about states and localities and university and all the rest of it. and jim robinson is sitting here their key was on president reagan's advisory council and federalism. we are a federal republic. washington doesn't really act like it's responsible for galvanizing the talents and energies of the whole nation. it sounds like it's inward focused on the national government. should we be thinking about a race to the top on advanced interest-ratindustry? across advanced r&d, across

skill, across infrastructure, across export policy, across fbi since they mostly do the foreign direct investment, not the national government. we wanted challenge you to basically come forward to us with your own strategy. more likely than states levy strategy, frankly, with their cities and metro spend a national government will have a strategy. is that what we should be thinking about? given this moment political, economic, fiscal and otherwise, any initial response to that? >> i'm not just saying this because you're up here. but i actually think that is fire and that's where we should be heading to state. and actually the city level. first of all, you would have a better perspective on who is more open-minded. but we've just seen, we've seen three or four places where there is a huge appetite to actually do this. when we think about it, it comes back to the world in many ways, a conglomeration of many cities.

600 cities accounted 60% of the world's growth but if i look at singapore, they were too small you could say to be drawing an analogy. they do this integration phenomenally well. they think about the forces at work. they think about the jobs of the future. they have a regular every six months they have the minister of finance, the minister of education, the polytechnic hits, three polytechnic heads, and this is late and they literally map out water for the big opportunity or we're talking about skilled manufacturing related our research and water. how many jobs will that create and, therefore, educational spots we have. that's something to do with. they teach history in singapore and they teach philosophy which is important, but the number of spaces are limited. there's more spaces to learn about water technology.

so i'm not saying we should go to singapore and model, but i'm saying there's a lot of examples like that. and i think have a lot of places like the in use when we can get a lot of things going. and i think when you mentioned this to extra players, investors or organizations, if they could actually see and meet people like that, these states and cities are like countries in and of themselves. so i think it's a very big push. and if we could provide some more transparency domestically and also globally to where are the people actually really want to make something happen, who can we communicate with, i think we could really get something moving. and your kind of race for the top idea i think it's a good one. if we could get other states and cities in that other people can do it, i think people will start to push. look at a task of in minneapolis and st. paul. look at how business, government

and the social sector have come together to do with big issues. the art places like that actually want to move. and i think we should really push on that there can. >> questions right over here. >> if you could identify yourself. >> my name is keith rogers, and my questions for tom connelly. if landis and correctly, dupont part of this place to advanced industry. part of it relates to lower tech grassroots industry in terms of both customers. so my question is, are those type of local grassroots industries actually having a tough time these days? because banks have gotten bigger, investment firms are big and internationalized, and at the local level, to get

financing for their peculiar local enterprises, you know, homebuilder, the bank can meet certain standardized underwriting criteria, however sound or not come at that mortgage can be sold on the secondary market. but if you have a local enterprise, some very localized specific characteristic, probably is not going to excite big venture capital firm, may not excite the big international bank. in your perception, are some of those types of enterprise being squeezed? >> i would certainly say that the lower tech industries, manufacturing situation, where they face competition from other parts of the world, yes, they will be squeezed. dupont itself in our portfolio don't have many of those type of product lines but we certainly sell to customer bases. for example, in the construction industry, to use your example, where they are local operators

with the lower technology mix. but i would suggest that for the future, even in the industry such as construction, there are opportunities to bring much more technology to the building industry in terms of energy efficiency, to name just one dimension. and for that producer who is feeling the pressure and is being squeezed, i think it's time to innovate. i was asked recently whether innovation costs us jobs. i said failure to if it costs us jobs, and i would be my advice to that lower tech producer who is feeling the pressure. >> questions? one writeback year. >> -- one right back here. get my name is marilyn pick my questions are, first of all, as we talk about the advanced industries and the need to put as much as we can back it both political will and also the necessary resources, my first

question is about quality control. i think we've seen lately in this rush to roll out products services, it seems we've seen more and increasing recalls of a lot of products and services. how do we marry quality control with making sure that we can get the best products out there, utilizing technology? and in the second question i have relates to a survey also recently about china's wealthiest class wanted to emigrate to countries like the u.s., canada and england, and that they raise the issue of health and education into two reasons apart from the one child policy. what are we missing that we are not seeing in terms of the opportunities they have at home, but the desire to leave their country? thanks. >> let me start simply with the first part of the question, which was around a rush to get new products to the marketplace,

and are we missing something. and let me say, first of all, that businesses always in a hurry. that's part of being in business. it's a part of being faster and be more efficient. but there are certain ground rules around product stewardship, and i think that is the peace what if there have been failures that are in the area of product stewardship, for manufacturing operation, product stewardship is about the product, first and foremost. how do we make the product, how do our plants perform, what nations do we have in connection with producing those products, how energy efficient. but product stewardship is also about how the product performs. it performs its intended use, how it performs when misused. how it performs at the end of the lifecycle. and those dimensions. and i think what you are saying is a lack of focus on the

product stewardship process, that leading manufacturing companies are becoming more and more rigorous around that. within dupont we have a chief sustainability officer, and that role is really all about understanding how our products perform in their intended use, how the products perform it in this use, and what happens at the end of the lifecycle. so that is my response. there are checks and balances that need to be in place to address that. may be dominant on the second part of the question. >> sure. i think your question was what are we missing, why is it, why is it that people want to move here when maybe we are complaining. it's not so good here. something, i don't know the gist of it. i think coming up, that's a whole long talk in itself but i think you have to come in china there are a lot of people moving into the middle class from the rural areas to the cities. it gets to 900,000 people a week. they are very happy with where they are.

if you look at actually, it's interesting, trust in business in china, surveys are coming out is one of the highest in the world, right above believe it or not, so there are a lot of people that don't want to leave that are happy with where things are moving into a very good about the future and where their children aren't and the focus. they put a lot of focus on education. i think it's more in the very high in was a good that actually wants to have places in different parts of the world and move, but i think there's an interesting question. i literally think there are millions of people that would like to buy houses in the u.s. i don't know whether we want to do that or not. i'm just saying there's a big demand for that because there's a lot, a large number of wealthy people. so that's kind of how i would look at it. i have to say just on that comment to come you look for education and that was one of

the points you were making. and that is i think an asian advantage. if you look at the amount of emphasis and focus on how important that is compared to how i think we see. i know i'm generalizing it. it's very big. i'm amazed for example, at korea, at the size of the private tutorial market for children between the ages of four to eight. there are a billion dollar plus copies of that market. australia is the third largest export in education primarily to asia. >> questions? right over your -- here. >> i'm with soi. we do a lot of work in regional economic and workforce development. there's a contradictory message that i detected which is here

and a lot of people have said the technical institutes, committee colleges are an important part of workforce and job growth. but we have a strong message in this nation about is what needs of a four year college degree, local governments use the percentage of population with a four year degree the metric for success. you see this as that of contradictory. how would you reconcile those two messages for policymakers? >> oil, i would agree with you. i me, i think we need to put much more emphasis on its higher education, and you know, it doesn't mean having a university degree. it means that's where you are, we need to broaden the aperture of where that is. and i think maybe we are simple fight too much when we say we want university, we want more education. i actually think we have to be, again, i would be emphasizing much more on the polytechnic site. it's also, the sense too, that it is not come you go there if you haven't made it. i think it's really a bad image to have there. because by the way, i think

there are a lot of cases of people have gone to the polytechnics, they do the work for a while and then there are a number of ceos that have come through that group, for all sorts of reasons, different reasons, skilling reasons and so forth. i think we are to get more of the story out about that and broaden it to do it. the other thing i would you say, too, aging population. you know, why is it, why is it that we think once summit is over the age of 55 they can't be productive anymore? why are universities focused on 20s, 30 euros. made will have to start think about educational institutions focused on 55 year olds for another wave come if you just look at the world and where that is going. so i think are kind of of education needs a reset fundamentally. >> just listening to this back and forth, how many folks in the room either have read the book money ball or seen the movie?

okay. brad pitt, right? and it just seemed, for those have not read a book or seen the movie, the whole premise is you've got to measure right essentially about baseball. the oakland athletics and billy beane who is the general manager who basically was inside, young statistician basically decided that there was a better way to measure baseball performance than just rbis and the traditional sort of batting average, on bass performance and it's almost like we should have a money ball for manufacturing or money ball fermenters. where we are measuring the right thing. it's a little bit more comprehensive. i may, we do these car to measure. ago is going to get a four year degree. we go off on that front for a couple years. and at this point we had a much more texture, nuanced view of

our economy. i which is the also in response to this question, it's not just postsecondary education. about six months ago i went out to see the austin polytech academy on the west side of chicago which used to be the big manufacturing base of chicago. still has many small and medium-size enterprise. they set up a public high school for what we used to call boca it. to small and medium-sized manufacturing firms are basically in charge of the creek and. right? of people are getting the normal education, but then for a portion of the education they're being trained and that the into ashley get the credential. they can literally leave high school and go on the factory floor in the west side of chicago. and when you look at the class coming into this high school, many people are coming in, third grade reading, fifth grade reading and math. by the time they leave, they could move directly into the workforce. so we can push this down further

into our system, probably begin a long the german model, some of the other model. there's a question back here. >> thank you. larry chekhov. we were told at the outset of this day that gdp in the country is pretty much back to what it was part to the recession. 6 million fewer workers. that's a very disturbing statistic. and is this a trend we're going to see? and how do we test that big hill, looks like a mountain to me. >> let's go at this for a bit. pic i think that's why we're here. part of the answer is more manufacturing in the country because manufacturing address is not the domestic market but it addresses all those emergency and -- emerging consumers. manufacturing goods represent a small fraction of the economy than they do of our exports.

they can create wealth for the country by sales, consumer sales. one level, the backward producing as much as we did before the recession with fewer workers has been an increase in productivity. that's never a bad thing, but what we need to do is take those additional resources, put them back to work in manufacturing is a great place to do that. that are emerging, developing markets is a great place to sell u.s. products. >> dominic, mckinsey came out with a study, i guess it was, you know, in conjunction with the president's jobs bill for your beloved over the course of a decade and were trying to sort out what are some difference in years of growth in one and was 11 million new jobs. i think gary did a great job today of saying, yeah, what's the joblessness hole we're in now and how to climb out of it and how long will it take? how big of a deal would manufacturing be in contributing

to this kind of job creation that has to occur, whether, you know, the factory jobs or this broader continuum of jobs that we are describing? >> well, again, i think it's a very large. it comes back to just what tom had said, that there are a lot of opportunities. our sense is that a lot of, we are very consumer driven economy. we heard it was great, how much we're going to spend depending on the value of our house and where things are. you know, innovation and technology create a wonderful new opportunities for jobs and also for consumption. it's its own virtuous cycle. so taking a site just the point about the number of jobs that can be created from many of these advanced sectors. health care again as we look at, when you look at it positively or negatively it will be one of the biggest industries in the world. just look at the demographics

that are going on. there are a huge jobs we think they can be created in that from the very basic level back to the point that we don't have enough nurses. we don't have enough radiologist. which is one level. but there's a lot with big data. if you think about what we can do now with data and our bodies and where things are and what's happened, i think this is just going to erupt into a big area. so it's not only certain basics of what we're doing now but i would say where it's going to be going. that's what i say food, so mentioned before about standards. there's actually very big businesses to be built on standards. i'll tell you, chinese consumer would buy that, if you had come if you what happened in milk and what's happened to drugs and where things, that is a very high value added area to develop just standards and how we do it. you know, our sense is we're sort of thing 2 million jobs

that we can see directly. that was one number that we accuse. we could break it out, on the whole big data area we think that's going to be half a million jobs year but again, it all depends on how much we do in each of these different sectors effect that's great, very helpful. questions, comments, criticisms? >> i don't know if that's a criticism but your hand went immediately up. [laughter] >> thank you. i am with vietnamese americans that were talked but jobs and create jobs for americans. would you say that we have a global level playing field, and how do we reach that? [inaudible] would that create problems for your products? the factory say we want it to create it here and exported around the world.

so with the idea, how are we supposed to compete with labor laws between here and over there? >> so, if i understand the question, can we permit a u.s. base compete with a competitor who is based in a different part of the world with different standards, et cetera, et cetera, is that the nature of the question? i would say it is an issue. no doubt about it. there are parts of the with lower cost of capital and lower units of labor rates and we have. so that's a statement of the problem but it's not a reason to give up. i think what we need to do then is to look at where we want to compete. there are some sectors will be cannot, through our product technology or a manufacturing technology, bringing up to that sector to make it a sustainable business out of the. we will exit, but what we've

found is there are enough places, thanks to intellectual property, where we can create a product that has value for the consumer. in those developing regions where they are willing to pay a price of a u.s. manufactured goods. part of it is the security question, and dominic is absolutely right, around food product, and food ingredients is a new and important business within dupont company. part of it is the quality of our products, the consistency of our product. part of it is specification driven to goods that are manufactured in southeast asia maybe markets in the west and materials will be specified at dupont international standards. so there are ways to compete. there are some markets where we cannot compete. and it's up to the business leader really to find out where and how his business or his business can be successful.

>> follow-up? >> we are talking about a diet at the highest level of products. do you have any possible idea? >> i.t. >> i.t. production. because the minute we have some products coming out, shortly after they imitate it. >> absolutely. and i mentioned ip earlier. it requires constant vigilance, right? and don't think that just because you have a patent that's sufficient again need to construct an ip of protection strategy and i would like to think of it as i shall. the patent is the outer shell but you need to build layers of ip protection that go well beyond simply holding a patent in one part of the world. we study the applications. we have proprietary ingredient. where proprietary obsesses that we use. we worry about cybersecurity and penetration of our intellectual property and it requires

constant vigilance everything it does require government, private cooperation to build that ip fortress around our ability to manufacture in the u.s. and succeed in the global market. >> thank you. my name is peter but it strikes me that there's been no discussion of what i can see as a contradiction between the need for national investment infrastructure education and so on. and the dominant political climate in the united states where nobody wants to spend anything on anything in the congress. and, in fact, they want to spend less on everything. and it may be worse after the 2012 congressional elections. so what is the appropriate role of the private sector in publicly advocating for these kinds of greater expenditures in areas like education infrastructure? i recall the program here about a year or two ago where the case

was made for infrastructure board, and the argument was made there that even republicans support that come but i don't think anything has happened. >> nothing has happened yet. it's happening in the state but not at the national level. in the eye just jump -- i don't know if et cetera someone mentioned, we have confused investment with expenditure and we treated the same. i think that's wrongheaded. i think we have got to get back to the basics about accounting. and we look at things. gives the infrastructure, this is an area i'm very passionate about. we feel we know that if you were to invest 250-$300 billion a year in u.s. infrastructure, and we know sort of precisely what area, roads and creates and so forth, you would create 2 million jobs. by the way, that 250 billion, 300 billion will come from

outside. china investment corporation, john talk about when you see. and the canada pension fund that there are people who want to invest in infrastructure. it's not even our money. they would rather actually buy that than bonds, to be honest. and so evidence is that's great. with people who want to put the money down. we have needs that are in the areas that we've got a market that doesn't work. i think that is a shame when we have that unemployed people like that. that's where i feel we need some time you mention it, bruce. i don't know if it's a transparency thing to say by not doing things or taking i think klaus or and/or, they will take six months. your costing people jobs that are out there and i just wonder if there's some other mechanism that we could put. why is it we look at the stock market every 25 minutes on television about what is moving, why aren't we watching with the

progress is on infrastructure project and, therefore, jobs, and then get people? why are we putting tens of around the? i feel very passionate about it because the money is there to put it in, the people are behind it. the needs are there and again, the good news is there some local leaders that actually want to do something. we just have to get the transparency there's so that people see it. >> maybe one question after this just to get everyone started. >> dominic, i think you raised an absolutely fundamental question here, and that is the way the government does account for expenditures versus investment. it's idiotic. now, why is there not an outcry in the business community? this is something that could bring two innings of the political spectrum together.

because it is so totally obvious that we need the infrastructure to remain competitive. and so totally obvious that we have a big budget deficit. and so, it is also totally obvious that with some financial ingenuity we could develop the instruments to do this. this is where i think, i personally think, mckinsey and dupont and everybody, should push. and brookings should push. >> amen. [laughter] >> i agree. >> this is going to take us back to the cultural conversation. so, you watch the stock market. i'm on twitter all day long. and it's very interesting because if we are up here about biking in cities, with a celebrity, let's say, there would be thousands of tweets

right now. if we were focusing on transit, you know, urban building, right? maybe hundreds of tweets. the bikers by the way tweet more than anyone else but i'm trying to get some tweets. but there's not a lot of twitter traffic on this, and i'm wondering, is that a sign that when we talk about, you know, the real commanding heights of the economy, so to speak, right? innovation, exports, foreign direct investment. we're talking about a simple cohort of individuals and -- but we are not really plugged in to social media. they are not spending most of their day engaged in this way. the end of this conversation, this question is really, or comment, you know, to use a

margaret thatcher phrase, we might have to sex this up a little to really get the culture change we need around labor, around skills, around seeing this as a career path and a professional path, and the life path. you know, because when you think about the american -- there is a path that we have a people tinkering, you know, these makers faire's the happened around the country. china, they are well attended, right? we have to think, the cultural level, there needs to be a different thought process, outreach go along with what and one is a struggle with what the key policy things we need to act to get done. i don't know. any thoughts? are you guys on twitter? >> i can barely handle e-mail. but, you know, once forever just say on the, if we could get

twitter going on investment versus expenditure, that would be -- i agree with your speed is fast trac investment. >> i think that said, we could leverage it. is one story i will give. i met the film basically did chariots of fire, i can when his name. the house of lords now. he changed his life, focus on education. cut a long story short, he basically was doing advertising awards, and they give it to a social media house. the company that won, it was for lifeboats savors in the u.k. the people who are provided the money their average age, 65, change the democratic. with a small advertising agency it was they found 25 bloggers, average age was 15 years old, and these bloggers had a following on the order of 150,000 people. and then they sent a jacket from

the rs ill. they sit of video about people volunteered and so forth. got a long story short i ended up signing up 100,000 people within age actually of 21. not a single dollar spent on advertising. so again, i think that there's a lot that could happen to people to a, i deny what the problem is. i think people just don't know necessarily what the problem is. and make it understand tangible to people. and then i think it's a matter of, they're so maybe it goes, whether it goes back to education and schooling system, do we talk about this? i think in media we talk about a lot of it is on compensation. but where are the stories of these heroes that are inventing amazing things are going on right now. so i just wondered in the media if we couldn't glorify he rose

or prizes, or i don't know, something more on the invention side. that's a great thing to be able to go to but the last thing, the germans, a group of german business leaders decided to focus on this whole stinking. the way they did is they went to kindergartens and they develop a little box to get people to look at how you can do little experiments are to get to their views. get people excited about science in kindergarten. that's what business leaders did it is probably not social media or twitter. >> any thoughts about this, about unleashing the hidden tinkering talent? >> no, i think there is a culture change. and i would agree with dominic, it's got to start early, k-12 is the key to getting more interest in science them more interest in innovation at higher levels. i served on the national academies committee on a

saturday morning sitting around a room with a table full of research professors from leading research universities. we said what do we all have in common, why did we think we were here that saturday morning? two things, one thing was gilbert chemistry set and we were lamenting the fact that it's out of because of legitimate safety reason to buy the other factor will have in common was a preschool teacher that made science. and if we can put the excitement in the classroom, we will get the kids and s.t.e.m. majors and universities. >> we had mayor daley at a dinner last night, former mayor of chicago, and he made a point, which he has made many times before, just so crystal clear and lucid, that we are not teaching, you know, invention, manufacturing, i mean, any number, from the early stage of. we sort of lost that. we had this sort of post

industrial nirvana where we were marching through, postindustrial means you don't have industry. major problem. you don't need to teach it. i really am struck with a lot of, sort of what's been added to the conversation here on both the policy front and on the contest will front. last question, you know, since i have the floor, i can ask one. we have been working with a group, and really build on this question about and some of the southeastern economies. we've been working with a set of u.s. metropolitan areas on trying to develop enhanced manufacturing services but also begin to engage with international markets. and our next panel is here so this will be short.

in the same way and the gradual and some comes up to dustin hoffman and says plastics. unit, we have a gazillion names now for all the emerging markets, and developing economies. and deny states, unlike many other countries, we have many immigrants here who were relayed back to this country i if you think about the interplay of prototyping, production and exports, you've probably come dance will be welcome to understand what america is and what their sectors are before we end up talking but which country trading partners they should really engage with. but out of all those acronyms, are we sort of missing sort of the next group of emerging markets? are we focus too much on the big ones and, therefore, missing so many opportunities in the next tier? what's your view on that?

>> well, i think again, so it's a before 95% of the consumers are outside and so forth. one plug i would like to make is africa. this is a place that is moving. nigeria will have more babies born in all of europe combined this year. so africa and food effect that's great. thatcher graduate moment. good. >> i would say for us brick has been more big than brick. but i was going to go except where dominic went and that was africa. we sent a team after last year to go to the markets to understand them. still early days, they are so not in the bric category yet, but it's time to lay the groundwork for what's going to happen there economically over the next 20 years. as the british say, we're going to have a market of makers in the united states. and this panel and the prior two

panels i think really helped illuminate how to do that. and now, i'm going to turn it over seamlessly, maybe, to my colleague, darrell west. thank you very much. [applause] [inaudible conversations] [inaudible conversations] >> and other short break in this economic forum from the brookings institution in

washington, d.c. we will return in just a few minutes. the forum discussing what business needs to create jobs. in the past hour, ap are supporting president obama is asking congress for the power to shrink the federal government. and merge federal agencies and effort to make government more efficient and consumer-friendly. the president is calling it a big idea. the president is trying to rout republicans in congress to get behind the plan which could save $3 billion over 10 years. [inaudible conversations]

[inaudible conversations] >> okay, thank you very much. i am darrell west, director of our center for policy innovation here at brookings. and i have to say that neighbors of the panel occupied one has to be the most dangerous position over the day, because we are the last session between and lunch. but we will keep this interesting for you, just

consider us your intellectual appetizer for the meal that is coming up. one of the themes today has been innovation. and we are pleased of three individuals with tremendous expertise in this area. peter grauer to might immediate right who is the chairman of bloomberg lp. he joined the bloomberg board in 1996 and was named chairman of the board in 2001, succeeding michael bloomberg. he joined the firm as a full-time executive in 2002. since then he has led the company's growth as one of the most influential sources of business the government and financial news. prior to his bloomberg position he was managing director of donaldson, and managing director and senior partner at credit suisse first boston. next to him is ted leonsis, the founder, chairman and ceo of monumental sports and entertainment. he is the major owner of the washington capitals hockey team, and the washington wizards

basketball team. and believe me, when we're discussing innovation in our nation's capital we could use a few more wizards. he also operates the brighton center in downtown d.c. prior to his foray in professional sports he was vice chairman at america online. he is active in many different areas. he is the founder and chairman of stag film which produces and distributes documentary films and he has had some huge successes in that area. he also serves as vice chairman of group on and of directors of american express and a number of other companies. he is a well-known blog called ted's take which always has lots of interesting material on it. i was looking at it yesterday in it featured a quote from winston churchill which i believe one of the season ticket holders attempt and the closer when you're going through hell, keep going. [laughter] and that sounded like good advice to me.

[laughter] bill galston holds the chair in governance studies at brookings. he is the author of numerous books and articles on institutional reform, government performance, and various types of public policymaking. he is putting out a paper today entitled political dysfunction and economic decline. will spend a little bit of time talking about it. the paper looks at the growing political polarization between our parties and the diminished capacity of congress to address important issues. bill is very honest and direct about many things in part because in his early life he served as a sergeant in the u.s. marine corps which i always felt was an important part of his biography. what i'd like to do is start with peter. i mean, you lead one of the major media outlets in the country and so you have seen the virtual revolution that has taken place in the media industry. how has the proliferation of new media changed the way in which

providers create content? >> thank you, darrell. i think of half of the three of us we are pleased, flattered, honored and glad to be here. but it's a formidable topic. in fact, dominic and i were having dinner last night in new york and i say to him that i wrote have gone through a pretty methodical process, so i'd like to take you to a little voyage, if i may. and start with the facts, and serving in the area of shifting be and how content providers provide disgrace platforms. clearly the same is shifting between our feet. the digital revolution as you all know, just look at you in this room, glenn is on his ipad, strobe is on his blackberry. i make him if we went through the room, you know, -- [laughter] i know you are. but ask this question at st. petersburg last year, their version of the world economic forum. because i was getting an incredible he tvf of remarks.

literally everybody in the office come in the audience was looking down at their laps. and i said come on, give us a break. come on, i'm kidding. but the digital revolution has clearly transformed how information is created, distributed, shared and displayed it in the past as we all know, and particularly those of us in the older generation, we received our new some off-line traditional standalone media, radio, television, print source, newspapers, magazines. today everyone, all of you in this room basically assembled your own media mix, integrating traditional sources with e-mail alerts, websites, social networking feeds from facebook and twitter, and other technology like bloomberg terminal. it is as we all know a great time to be a consumer of news. the advent of these new technologies have opened the door to a plethora of new news -- >> the u.s. senate is about to gavel into session.