providers create a context? >> thank you. on behalf of the three of us we are pleased and flattered and honored and glad to be here. it is a formidable topic. we were having dinner in new york. i said i have gone through a pretty methodical process. i would like to take it through a little of foliage if i may and start with the fact that in the area of content providers providing various platforms. clearly the sand is shifting between our feet. digital revolution as you all know, look at you in this room. glen is on his high pad. if we went through the room, i think -- i asked this question at st. petersburg last year that their version of the economic slump -- time is given these incredibly insulting remarks. everybody in the office was looking down at their laps.

.. another type elegy like the bloomberg terminal. it is, as we all now come at great time to be a consumer of news. the advanced by the new technologies have opened the door to a plethora of new news sources and distributing the news. the way regathered news has changed here.

they take a large equipment cannot be done done from a nice. as we look at the china men in china men in the backfield and are ahead of news within cayuga wendi aird springs broke and basically brought cast from hsieh found digital quality video that people put on the air. so they need to have a camera crew another things have changed quite dramatically. citizen journalism as we all know, the consumer is now basically in control. the expansion of the chasing media outlets available has led to consumer spending more time consuming media. they choose when and where to get content, how to share it. some even report themselves as we know. they choose -- they can get content on demand when ready to give our real-time through death tablets, phone or tv. in text, video, still images,

audio or infinite combination. data has become customizable. as they wish based on their particular interest, the results are tailored for them. but there are three all now crosscutting trends that are going through this. tv is on the phone, internet is on the tv. newspapers on the tablet. the world of converging media we see lines being blurred every single day. the implication to the change on content providers are the following. and that is the media today drives the message. consumers are able to demand that content providers deliver contacts to their preferred platform and device in various formats. audio, text and video. they are tailored for each

resources. we have to reconceive how we deliver the same message and figure out what works in each place. think of content today is software. it needs to be optimized for the device or platform for which it's being delivered. and this has changed the way media gathers and disseminate news. media and information technology companies who fail to do this as we all know will become obsolete. words and images and platforms are also intertwined to consider individual parts of public process and isolationist in this transformative connections between gathering, writing, delivering, consuming and sharing. few if any companies have to think through the ramifications of each new medium the way into the extent extent we do a bloomberg. we are at what -underscore totally agnostic. we don't care how you wantit, where you want it and when you want to come up a will deliver it appeared that make it a

couple examples. her terminal users commit 315,000 subscribers and 170 countries around the world sitting at their terminals in most cases between eight and 12 hours a day. they are busy. they're interested only in the facts. in the throes of future stories is not what they want to see when they are sitting there worrying about key decisions in the financial market. but our tablet reader, where we provide bloomberg business week, bloomberg markets magazine, bloomberg television and bloomberg radio are usually seated relaxed and prepared to spend time observing information. we have their full attention, which gives us an opportunity to tell a much deeper and longer story. and our web audience, bloomberg.com and bloomberg "businessweek".com believe it or not get most of our traffic from 11:00 a.m. to 2:00 p.m., a lunchtime audience. they want information quickly,

but they also want a diversion and are much more likely to watch a video. i'm mobile, people don't want to read a long story on a small device. so what does this mean in terms of the shift of our focus? in the past, the value of a providers is the most important factor. you always wanted to drive traffic back to your website in your home. today, if you the average news consumer goes through nine to 11 different sites every day looking for news. we have so many distribution channels we don't necessarily need to drive them back to the homepage. we're happy as long as they are redoing our content and don't care where they find it. homepage, search engine, facebook, twitter feed, et cetera appear once the content is on the web, others will share it and this enables providers to retreat that they would have no reason to interact.

our current model for online offering one third homepage, one third search engine and one social media. and keep in mind as we all know today, facebook reaches more people than any other u.s. media outlet combined come a creamy to distribute content. they do some of the work for all of us. he continues to be a very meritocratic world, where everybody is competing with everybody. the best story usually wins. this is good for us as a quality content provider and a new player. >> thank you, peter. you work in both technology and the entertainment business and you are very skilled in your personal use of social media and public outreach. for those of you don't know, ted has over 22,000 followers on twitter and anyone interested in following can sign up at ted

leonsis. i have to admit i suffer from twitter and the one i go on to ted's site. so let me ask you about social media. our social media transforming what she do in the sports and entertainment area? one of the things they think you do especially well with sycophants, but also listen to fans. also curious about how technology enables two-way communications and how that affects the way. >> it's an honor to be here. the brookings institute is kind of that epicenter of really the new economy. we forget we are living in this world where everyone lives their life on the net. and our government, we initiated and launched this birth of a new economy. we are living in a very sobering time right now, where we are not connecting the dots well enough between government and private

industry, especially to try to focus on the number one problem facing our country, which is how do we get america working again? so what i want to talk a little bit about is a little trip in late to a political discussion about what happened right before our eyes and how we know these facts and statistics have been, but we become known to let the big picture change really means for us. so today, there were 2.5 billion people around the world connect to the internet, two and a half billion. the united states has 300 million internet connections. so we are becoming a very small player in an overall connected world. the changes that will drive in terms of not only social adoption and change an ip and

educational materials that are available now really will have staggering impact for us. the good news is from a business standpoint, the u.s.-based companies that have been driving the innovation and frankly the business models and they've created great franchises. probably in autumn of 2012, facebook will get 1 billion users. google and all of its sites already has 1 billion users. that means their revenues will start to nearer their usage and where their customers are. and so all these great internet franchises, the amazon, cisco is, the googles, facebook's coming to croutons. more and more of their business is being generated outside of the u.s.

they are hiring more and more people outside of the u.s. that's where their growth is coming. and that his troublesome right now because their revenues get taxed on their sovereign country. and so one of the things that we have to look at politically incorrect tax system is how do we get it these great companies that were initially venture capitalized with risk capital, who then went out and hired lots of people and our hiring people outside of the u.s. and take those profit dollars that have been taxed and bring them back to the united states and maybe have some tax moratorium if they invest those dollars in private equity firms and venture capital firms that

continue the cycle to invest in young innovative companies. four years ago, a young entrepreneur said there were four people in this company. enter me send who actually be featured on 60 minutes this sunday. so tune in. and he had this idea about social shopping and the ability and a bad economy to be able to aggregate up the power of people seeking this talent. more importantly, it also was the way to get cash in the system to support small businesses that during was drying out. he started a company called group on peer group on became a sign-on on. "forbes" named it the fastest growing company.

the ipo we now play about a dozen people around the world and basically it has created a new local shopping commerce phenomenon. more than 50% of its business very quickly is outside of the united states. and so, i really do think we need to not lose sight of we were advantaged because we were the early adopter of the internet and the web and web 20 kinds of activities and technologies. but now that genie is out of the bottle on a worldwide basis and we had to drive lots and lots of new policy, new partnerships between government, between private industry, between the banking system to make sure that it doesn't get away from us and that we can continue to drive innovation and create jobs for our economy.

if i was running for reelection, that would be one of the major programs to start up america initiative that one of my friends and partner, steve case is running a think is vital for our country because it is small businesses that are venture capitalized, that are hiring people. so the more money and more support that we can offer that system, i think the better off our economy will become. in regards to what is happening in social media, i think that it is even more true mandate than people understand. i started to make some movies a couple years ago. and i was stunned at how the escape leaned dollars industry, an industry that defines what

our culture is like around the world, one of her biggest distribution products around the world, how antiquated it had become. in fact, you shoot its own in digital and then you turn it into an analog product, which amazed me. i'd spent my career taking analog product and turning it into digital. you can mail it to a movie theater and people buy a ticket and the industry is pretty archaic. i started a company called snagfilms and i'm very proud of what it's doing under the terms of what i call philanthropy. there's so many movies now that are being made to want to shine a light on a test subject and activate volunteers them.

they want to write a wrong. they want to raise money around the cause. and so, tran died in three years we have 3000 folding free movies. you can go to a snagfilms and watch a movie for free. some box c., julio, but very and alike. if you like the film, you can snag it and you can open a virtual movie theater. and you can show that movie to your friends on facebook or on your blog or your web nature editorial page. we now have posted 200,000 virtual movie theater soaked in. that compares to 30,000 physical screens in north america, were streaming letter late 20 to

30 million screens per month. we are supporting 550 charities and we embrace the filmmaker. we have created literally overnight a brand-new infrastructure through streaming and distribution of the good work films. and i think you're just going to see example after example of new technology she act to the main grade male applications and opportunities that really shake up the status quo of traditional media companies. >> thank you, ted. bill, the other panelists have focused on i.t. and movie. you think about the need for institutional reform. you're putting out a paper today. the title is political dysfunction and economic to climb. i wonder if you could explain both parts of that. the political dysfunction an impact on the economy of innovation.

>> well, i'll do my best, darrell. let me say that it's an honor to share this platform with two such private leaders and i hope that what i have to say will add a little bit of value to tremendously important things you put on the table. the most useful thing i could do was the last presenter before lunch would be to try to connect some of the dots from what has been said this morning and connect those dots up to the topic on which i'll be focusing. ted leonsis just that at the beginning of his remarks that we live in sobering times. indeed we do and i think that's a very good way of describing them. not only because of the great recession, which god willing will end someday, but also because i'm the more till and

secular as opposed to cyclical basis, the american economy and society are being outfitted by the twin forces of globalization and technological innovation. these forces are transforming our economy and our society and they are also posting a tremendous challenge or our political system. in the face of these dizzying changes, the question is, how are we doing? how effectively are we responding? my answer to that question is not well at all. and i didn't hear a lot of dissenting views this morning. i heard various amplifications of that judgment that were not responding very well. so what i would like to do is just to unpack that sense that

we are not doing very well in greece i mean to these challenges by making four points. .1, we are enduring a very highest level of political dysfunction in our national politics. it could portion of my paper is devoted to selling out some of the details. if anybody disagrees with that judgment, please raise your hand and i would happy to go into greater detail. i don't really think it's necessary. everybody remembers the debt ceiling fiasco. but it goes far beyond that. we heard references this morning to the atmosphere of political uncertainty, that is hindering long-term investment. we heard multiple references to the most serious challenges that

we are really not confronting with the scope and scale that they deserve. and it occurred to me that you know, when i was younger, political risk analysis for something american alice's data in foreign countries and out of something for an analyst about the united states. this is a seachange in a very and pokémon. my second point is this and it is foreshadowed in the title being released today. political dysfunction is the enemy of economic growth. these two prophecies cannot be decoupled. there is no way for the economy to go around politics. like hal, it is something you must go through. now i need just a list of all of the different linkages of people this morning attacked about.

it is a long list that includes immigration, education and training, infrastructure, trade, taxation, regulation. what a couple of panelists called directed public investment. well, i'd like to ask you the following question. how on earth are we going to mobilize resources for directed public investment if we are on an unsustainable fiscal course in seeing incapable of coming to grips with that simple, massive brute fact. it's not a rhetorical question. is struggling. here is my very point. and this is really the affirmative and forward-looking section of the paper that i am releasing today.

institutional innovation is the key and i would say indispensable part of the response to political dysfunction. we can't sit around hoping that political leaders and political parties will join hands and sing by around a campfire. we are going to have to change institutions so that the incentives of that juries within these key political assist them said they will behave differently so they will produce better results for all of that. and my paper, a layout three key baskets of institutional innovation. one basket directed towards making congress work again. i can talk about the details of that if you're interested. but it deals with every game from coming in now, the

confirmation process, the filibuster reform, to the restoration of majority rule, to linking congressional pay, to the performance of basic congressional duties such as producing an annual budget on time. the second basket deals with the budget process itself. i lay out a number of options for reforming the process, which was put in place, let us recall, to the 1974 congressional budget that, which was almost 40 years old and works better at the beginning of this for decades than it is now. and finally reformed studio at tora process to begin the process of de-polarizing or hyper polar ice and gridlocked political system. .4 and finally, and this is a direct response to some of the things i heard this morning.

not only can we not decoupled politics and economic policy, we cannot decoupled governing politics from electoral politics. what is sad during political campaigns is a very good leading indicator of what you're going to get out of the political system and not get out of the political system. and to be blunt, if it is not discussed in the campaign and it's a matter of any significance, it extremely unlikely to happen during the governing process, during an administration. what people say matters. but the president says in the state of the union address matters. but appears in the platform of the opposition party later this summer matters. what is discussed in the general

election matters. and i have to say and this is my closing. there is an almost complete discontinuity between the very important topics that discuss in this room this morning and anything that has been discussed in national political discourse at a level of visibility during the past year are right now during the presidential nominating process. these are bad they deem indicators for the kind of discussion we are likely to get in the fall. bottom-line, very many people in this room who are capable of influence seeing what is discussed in our nation's politics. this is a very important election, very important moment. if you want the topics that you care most about to be on the public agenda, you have to act affirmatively to put them there. >> you know, i like bill's idea of actually producing federal benefits on time.

it might actually change the incentives in a significant way. i'd like to follow up on the exercise of connect to the.and throughout a couple of the questions to any panelists who want to jump in and i will open the floor to the audience after that. how well is government doing on innovation in particular in what should the government, if anything, be doing to promote innovation. any of our panelists. you can talk about either public sector, private sector. >> you know, i was asked earlier in 2011 as someone who i consider to be an incredibly thoughtful scientists, engaged in trying to combat a very important disease. he said, you know, who would you introduce me to in washington so we can try and get some of these programs moving. i'm ashamed to say in front of the script that i told it i

thought if he could avoid washington that is the best outcome for him. my sense is there's very little that would induce the private sector to reach out to government to figure out how to solve a problem and that may be incredibly parochial and naïve view, but we are to a certain degree on her own. ted was talking about before and we see everyday in our company a is incredible power of innovation that occurs regardless almost about the external environment is like. and so i'm ashamed to say that with the malaise that exists in the world politics and government but to the extent you can avoid that, i think you're better off and have a much shorter path between development and ultimately success.

>> can't measure it, can't management in it for serious about innovation, we have to create a national database and make it transparent to see how were doing. we could very quickly come up with some kind on train signposts and how much venture capital is floating into startups, how many patents have been filed, how many product launches have they been? how many plants have been open. make a list of how many jobs have been created. and i don't think we do that. and so, we leave it to the singular, heroic, romantic figures. it is why we were as a country in national mourning with steve jobs. walter isakson's hook.

i was on vacation and people were reading it like the bible. we are desperate sap told to capture what made the company grade. for a start up nation. we are at our heart entrepreneurs that country was based on innovation the founding fathers really were our first entrepreneurs. so i do think that washington, because of the political gridlock gets in the way more than adults. that's the big issue. one of the big intellectual phase is to you want government to create jobs? or do you want industry to create jobs? it's pretty binary. government creates jobs, how do we know we are getting our money's worth? because we as taxpayers in essence are becoming the venture

capitalists and will the government be able to manage those functions in those businesses and investments while? we know there is infrastructure and management and leadership on investing in trying to make these companies successful. and so, i am ashamed to say i read whenever i am asked, what is the best thing government can do to help entrepreneurial business? as they do not think. get out of the way because speed, innovation, fresh ways of looking at things is what differentiates this started from an institution and the government is going truly do you do in terms of not being able to move quickly on things and over regulating things, especially to have young companies to scale.

>> well, i hope everybody was listening very, very carefully to those last two remarks because they bear eloquent testimony to one of the perverse consequences of political dysfunction. and that is that important parts of the dear, if i are correct late are basically giving up on government. and it seems to me that if there is any key question that we face in this day of discussion and as a country, it is whether that represents an adequate response to the challenges we face. is it -- is it simply a matter of government hitting on a way to quote. that may work for some person says, but for others.

i believe ted your times story about the inability to tell who controls the traffic lights in washington d.c., which is a business issue. i have it here and on your customers. just to be contentious, i don't think it is binary. government creating jobs or business creating jobs because there is a third possibility, which i actually think is the truth. namely that the environment of opportunities and prohibitions and regulations that government creates carman either facilitates the growth of

business. that has certainly been the case throughout american history and code that to do century with the system canals it is built for the public that there the finest achievements other than perhaps within the civil war. in other words, the best thing a government can do is get out of the way it may be sad truth, but it is all said and done a big deep disease that i don't think we can live as a country. i'm putting a strictly as possible. if you don't agree, please say so. >> i think do what we are seeing

is forcing our business leaders to pursue double bottom-line initiatives that you are trying to run a business, the juror also starting to run these enterprises like they were government. they spoke is going to be china. and i have a billion people, with some centralized command. it can communicate to its citizens in a very efficient fashion. the two governments to? they have to defend their citizens. they spoke honestly is concerned about its citizens the chance to charity. it creates currency. facebook is creating its own conservancy. we are starting see organizations take a lot of what government should do into our own hands. entry virtually.

howard schultz on the board of crude palm crude palm crude palm he basically has. he basically has taken on we have to do the work. we have to be articulate and deliver the votes. we have to kamieniecki to government. but we have to deal with are people and customers as if we are our own governing hottie. and if we can be exemplars in the way we run our business is coming maybe that's a good proxy for what we should be asking for for government. i learned a lot about local government. and then when i was president, i

used to say i am running the fastest growing city in the world. we go from a million they are focusing on the vital few. there is so much noise in our system now that we have lost sight of what the good ipo, deliverables is. there should be a partnership in the simplifying of the best ways for the dear and government to work around goals that are measurable. that is something i keep coming back to. if you are a small bit miss of

the biggest industry in the world, you have shared goals and metrics. and it daily, we click on a monthly quarterly basis, you can review to see how you are doing. the company with the biggest budget of all time we don't do that. and i just don't get it. and so, if we could force that kind of accountability, where we all had a national scorecard around with the big deliverables are and how we were doing, it certainly would make your election vote easier. it would be based on rhetoric. it would be based on deliverables. that would be a way that we can start, and maybe something brocade can help. >> not only do not have metrics in some areas with actually

weakened our data analysis capacity. did you want to jump in? >> no, i just wanted to ask if everyone in the service sent you to this fact, for one of the thing the web has done for all of us would be instantaneous flow of information around the world. it is given a mess better understanding as to what is going on in other parts of the world. being lucky enough to be in a position to run a company that is very global in scope, the one thing that i come back when i come home after a trip, whether it's asia or south america or middle east or africa is a lack of sense of urgent need that exists here in dealing with some of these issues. in dealing with these issues in a much more highly can prejudice world than we have ever operated in. and this week, which i hope we never do, give up the role that we play in the global economy, we are at risk today is feeding that response ability to others

and i think a large extent extent some of that would be our fault. i think that adds further complication to what both pat and bill were saying. and that is, the world is flat, mali and just a lot different than it was when many of his industry were growing up and we have to set up at him and think about competitive implications in the private sector or public sector. >> why not bring the audience into this. with the question identified. microphones coming around. jim. >> jim levin said. but they make that observation because today is in stark contrast with yesterday. we are here to focus on mayors and governors and the feeling that it's a brookings moment because we are generating matrices. we are having significant

examples of public private initiatives, leadership by governors, mayors to make a difference because they realize just what we are seeing here. the federal government has gotten themselves to the point where they are rather thin, best irrelevant. uppers, which is what is happening, they are in the way. so how do you deal with this. i'm? it's got to happen at the local level. and it is happening and i am optimistic about that as much as i am pessimistic about the thought that we somehow are going to change and break that dynamic between the political process is due with economic development and job creation. that's just an observation, but i wanted to make it because yesterday was quite a piece in that regard.

>> and their reactions? >> i have lived in virginia for a long time. i just moved to maryland. jimmy kind of has that right. to manage the state year after year after year. it has great business part says anything there is a direct correlation between this governor can only run anything there is a direct correlation between this governor can only run been so when they could end, they have to work as hard and as fast as they can. almost unlimited giving me find interesting. i thought the detachment. but we've had a series of good governors. the state groundswell and it's kind of hurt and appeared you got your 100 days to articulate your plan. you sprint to the fourth year and your god. the next guy comes in. so i agree with you.

i think a centralized version of running things per se is a decentralized high-tech, high touch i can understand why yesterday was for a week than today. >> i can assure you this natural bias will be seen by everyone very quickly. but if you look at what the mayor of new york has done is the entrepreneurship among the most recent example of which many of you have seen is the cornell project, which obviously has spearheaded a night. but it does show if you have an ability to make decisions and have the order to execute decision, you really can have a significant impact. the biggest concern about the city of new york is on the mayor stepped down and goes back into much more of a political process. unfortunately, some of the games and fortunately unraveled.

>> well, just a brief reflection on the dichotomy you are observing, which is absolutely right, under our constitution system, there are certain large policy questions that only the federal government is in power to address. and many of those questioned have been in that on economic growth and innovation. and i was listening this morning, as i'm sure everybody else is. a number of people, for, talked about immigration policy, particularly in areas that can you stream of high skilled people, especially in the science is an engineering and despite the best efforts of a few of our state, immigration policy is still the province of the federal government. and the last time i checked,

states and localities did not have the power to negotiate trade treaty in the absence of which can have a very important debilitating effect on export opportunities, et cetera. and you know, in the same way that i don't thing the other has the luxury of retreating from the public dirt, so too i don't think our concern with governance has the luxury of retreating from national dysfunction to state and local function because there's too much that is vital that is left languishing in the state of gridlock, which i don't think it's a country and economy and society we can really have fired. and that is why i spend my time as a brookings scholar, beating my head against what most people in this room probably regard as

a wall, a very hard stonewalled because we don't get through that wall. if we don't have a national government that can function which again, then our future is one of economic decline and that class tradition. i think that's one anyone would like see. >> if we say innovation, job creation for the deliver voice and you say well, we need math majors. we need to graduate more than 20 is a mathematica phd's per year. algorithmic work is the basic building block of everything we are building in the new economy from financial systems to media. it doesn't matter. we graduate 20, 30 to students per year.

so if we set that is important, we would embrace bringing in more students who are not nontax, phd's and getting them to stay here and work for companies. let's not forget sir jay brin has cofounder google had a lot of people that felt a lot of value. his father was a russian émigre's and the university struck her at the university of maryland. he was a waiter. but i just think that the discussion becomes politicized and gets away around the basic, what are we trying to accomplish and right now, the economy and unemployment are the two biggest drivers of the malay the country is under.

so we put people on them in. we've been put out within manhattan projects. mayors have proven that they can organize and turn major economies around. we can do it. i just think you have to hold people accountable for what it is that we want done and hold the seat to the fire to get this vital few things built. >> we have time for one more question right here. >> in palo alto when we went there with the board and today, there was anything quite striking to hear that many of the panelists said washington had become an anachronism. and so, my question as, what specific metrics uncle could

washington have to kind of regain its relevance? what would be your view? >> gdp? knocking down unemployment, having a quality of life index. bhutan has a happiness index. the 13th police nation in the world. and now, i do think that we can rally around some very, very important things. we have done it locally. in a time of college education. downing 40% of you see high school students don't go to college. so that is a metric that people are rallying around locally because we know the biggest indicator of poverty is not

getting a college education. so i do think there are some glaring good things that we can metric to measure and maybe that is some thing that the board of brookings can construct to work on adding national in-depth that we cannot dialogue. it probably would be more instructive than hopefuls to politicians who basically listen to the loudest minority voices have been at the side via the web. the downside of what we've created in social media in this plethora of new distribution is that if you haven't been in, you cannot deliver it on twitter and facebook and video and youtube. and said it has been one vote one voice, it looks like a majority of the voices.

and so, i do think there has been an overhang, and negative overhang from this plethora of communications, political system. >> okay. we're out of time, but i want to thank peter trant three, ted leonsis and ill trained to. [applause] will have a buffet lunch available out in the hallway. feel free to grab the food and bring it back in. we will reconvene at 2:00 p.m. today. thank you very much. [inaudible conversations] [inaudible conversations] >> we continue our look now at the future of the u.s. economy and job creation with a panel on

new trade agreements and trading programs and still industry. this panel is 50 minutes. [inaudible conversations] [inaudible conversations] >> -- studies program and i am very pleased to be here with this very distinguished panel to talk about some of the aspects of manufacturing and technology. and we also are going to talk about germany and what does happen in the german labor

market over the past few years and how that may be different from what we've had in the u.s. so we've got a terrific panel. leo gerard to my rate is international president of the united steelworkers. [inaudible] baby. i don't think when i was in the government i was necessarily the afl-cio's favorite economist. those days are past. relative to the current political spectrum. anyway, next to him is john sermon, ceo of u.s. deal. and next to him as elizabeth jacobs who is a fellow here at brookings and government studies and i already previewed as what a paper, which is out side and has attracted a lot of attention. it's a very good paper on what has happened in germany and some of the differences with germany.

now, kerry has told us in the first panel of the morning that the biggest problem for employment that we have is lack of demand. so this is still a business cycle. it is not a recession because recession are defined as falling. we're not still fine. we are rising, just not fast enough. but we are still essentially in what feels like a recession, given the high unemployment. the biggest reason is because of caution spending by business, by consumers than by government also. so we are not towing capacity and arafat jury factories and offices and we don't have anything close to full employment. but this cannot come as some of other discussions have really turning about the role of the u.s. economy and global economy and its ability to be

competitive globally and sell its products and services overseas. and i think we are going to have a great example, both to hear about what is happening in the steel industry and also what some of the implications for that for the rest of any fracturing. two of our panelists got pretty warmed up at lunch, so i think they'll be able to hit the ground running on some of these issues. i will say for the record, and a little more skeptical than some folks that u.s. manufacturing can be a big source of jobs going over. i think it may be -- be making some stress. we've had in 2001 and someone said -- secretary bryson said we've had a couple hundred thousand and we may be able to repeat better do a little bit better as the economy recovers.

i don't encode the next 10 years we will likely forget much additional employment for manufacturing. i am one of those people who thinks the main reason for that is because of technology that it takes only two people to make a ton of steel, where it used to take 10 people to make a ton of steel. but whether that's true or not, the importance of manufacturing and certainly competitiveness of the u.s. economy is terribly important. we cannot go back to that. , mo 6% of gdp trade deficits that we have before we ran into this recession. i think i would be a significant drag on growth and make it difficult for us to get back to full employment. i think it would also create a new imbalance and capital flows and trade of the kind that we have before. so i do believe manufacturing is tremendously important. and the future of u.s. can edit

ms is heavily tied to manufacturing. so what that sort of guided preamble i guess covering that passed in different directions, let me turn to our panelists. i will start on my rate, at least physically on my rate, with leo. i you have some fairly strong views. i'm listening to you of comments he made a little earlier. i change my question to you slightly in the sense that you believe that policy and the reason that manufacturing employment has declined so much is because the policy. policy and the collapse, that's really been hostile towards manufacturing. so that mask u.s.a. first question, what do you think policymakers should do in order to create the kind of

manufactured sector that he would like to see you? and to the extent you can point to examples within the steel industry, that would be helpful, too. >> let me answer the answer i wanted to ask as opposed to the question you wanted to ask. and i'll try to say a bunch of things that sort of bullet point form so i can cover a lot. first of all, the only creator of real wealth in any economy is when you take things and make things. manipulating financial instruments doesn't create real wealth. it creates illusionary wealth. we have gone far in excess of 30 years in this country and in countries that adopted this philosophy as saying that it was a service that they appeared it was the financial sector that is going to matter. it was this. it was bad. we set about even saying that

manufacturing doesn't matter in that period of time we felt for manufacturing been about 22% to 23% of gross domestic product depending which economists he listened to, somewhere between 9% and 11%. if that premise is right there for a while is taken when you take raw material and mix it together and create some eggs and that something is put in something else, you assemble that was something and after a while you've got a wind turbine or a car or something. that's how you create real wealth. and it's my belief is right, we are trained to say for the infecting the way it is, less than 10% of the population is expected to create real wealth for the other 38% and that can't be sustained. ..

results are cheating but china doesn't and don't want to just refer to china because the asian economy that we are going to be competing against which is going to be our biggest competitor, a factually and got a job strategy and what america doesn't have is a job strategy. we want it to grow to that

renewable energy we couldn't get to the renewable energy standard so people couldn't make wind turbines because there's no market because there's no standard. so at that point in time i think that unless america decides that it wants manufacturing, there is a saying that people tell me is an old chinese saying -- i don't know if it is or not it goes something like this: unless you change direction, you will continue the direction in which you are heading. [laughter] so we can't continue heading the direction of a losing manufacturing if it is the real good which i believe it is. manufacturing pays a higher wage, union or nonunion. simultaneously, that we have had 30 years of attacks on collective bargaining and a tax across the board by both governments and large employers from small employers, the chamber of commerce, which has led to the falling in a declining standard of living for many people which has led to the income ecology that we have

which has led to the demand crisis in america. we've got a deficit issue. i'm not sure it's a deficit crisis but we've got a crisis in manufacturing, we've got a crisis in jobs, and we have a crisis in inequality and the only way to deal with those is to have a sit down and decide the we want to make manufacturing over the next five, ten, 15, 20, 25 years and grow its way back to 22, 23% of the gdp and that way we can go back to work. >> coming out what would be the top three things. you say you want to change manufacturing city want to change the way that union bargaining so the conditions for organized bargaining. >> the first thing i joke, blow up the trade agreements that led to the record-breaking deficit. i would negotiate new ones.

i believe we have to trade. there isn't such a thing as free trade. it has to be regulated for. america has to be a trading nation. we need to ask for -- let's put back it up. the germans have a trade balance with china. the japanese have a trade balance with china. why don't we -- everybody but us does, right. >> and the chinese trade surplus is greater with the u.s. than what is in total. that means a net deficit with everyone else except the balance. >> so my point is that is a policy decision. >> the one transparency. >> transparency of what. some of transparency in all of our agreements and relationships on the trade with all the other countries we have. we want to know what we are doing. we want to make sure we are bargaining apples for apples and oranges for oranges. i would want to make sure we are talking of -- i don't know if we

will get it -- but want to pontificate on getting ill level playing field. we can't go into -- i mean, john maine want to make a point on this. i believe we can make a kind of steel. in pittsburgh geber than they could make a ton of steel in beijing because we have the raw material, the time, energy, all that stuff. but we can't get a ton of steel in there. >> so the problem of manufacturing is basically trade and unfair trade. >> let me ask a question is their anything that you as a union could do in terms of skills, training, program practices. >> we've been doing that for 20 years with the employers on u.s. steel. we negotiated the development 20 years ago. we continuously train people. we have training programs in the plant. john as the ceo of u.s. steel i

have the president of the steelworkers in the areas where we can have influence we talk about community college vocational training. we need to go back to talking about high schools during vocational training. you can't expect everyone is going to graduate with a four year degree and get a job if there aren't the jobs there. so the other thing that we can only be angry at so many things and still get some sleep at night. [laughter] that's -- i've put on the life support of the occupied wall street, the occupied movement. you know why? i saw a kid that interviewed about two weeks into it and they stuck a microphone in his face and said why are you here? he looked like he was 26, 27-years-old, about the age of my daughter. he said i'm here because i did what i was told. i went to school and got two master's degrees in college that i can't afford to pay the interest on and i can't find a job. when we are at that level and we

are carrying record-breaking deficit of $700 billion we keep telling people this is going to be the pathway to whenever and we don't get there, at some point people have to recognize that we have to change direction. there isn't one thing you can do. we didn't get this message and 08. 08 just aggravated this. we've been getting in this message the 1970's and so we need a plan to get us out of this mess. why don't we have an ancestor to drink? why don't we set up an infrastructure banks of the people can invest in that bank and modernize the infrastructure the way they do in europe? we can't put energy on the grid without losing 7%. we don't drink water out of the top because you're worried so we drink bottled water. look at all the things we could do. 50% of the schools in america -- >> i'm going to cut you off and give you another chance. [laughter]

>> you can see why the negotiations take long. [laughter] -- by the way that's the problem john i think as everybody has said earlier and i think that we would all agree the technology is a theory key part of being competitive. i you got some interesting things to tell us about new technologies are applications of technologies that are making big differences in your industry and to the extent that you can see outside your industry. tell us about that, too. >> first, think you for inviting us to this meeting. my distinguished colleague here. we are in a 110th year in the

united states will make things in the u.s. here. [applause] we operate in four countries so we do it in a variety of ways and compare it a little bit in the policy matters and a good place for manufacturing we have a lot of natural positives we can use to our benefit and manufacturing certainly will have some positive direct employment benefits moderated by the gains we are making with that and i think you're quite right about that. but there are some policy things that could be very positive that would encourage us to do things that are big investments. we need hundreds of millions of dollars in investments made for 30 years. so we have to be really positive about what we want to do and make sure we have a field we can play on. i think we need to have strict enforcement of trade laws. why should we maintain if we can piece straight up and my colleagues represented in the first plant still going strong and if we lose straight up

that's okay but i don't think they should have to compete with the country. that's perfectly fine with me. one of the things the most important thing that happened in our sector ten or 20 years probably the whole energy change natural-gas was the enormous technology benefits the natural gas industry have brought to our country. yesterday's trading for less than $4. in our business it takes about five to make 1 ton of steel. it's to say four or $20. mixed in europe you use the same five. north america a good place because of that. we have enormous opportunity to harness that energy that needs to be extracted in a proper way and be well regulated needs to be environmentally stringently regulated. the technology here isn't all that hard but it's a huge opportunity for the u.s. and manufacturing. we are one small industry, one small company we only have about

45,000 people. and there are others who are much larger in the business who see even better more enormous opportunities of the energy policy choices that have to be made on extremely critical and they should not be exclusive. they shouldn't be only this or that. we need a broad portfolio in the different benefits but enlightened energy policy that encourages natural gas usage in a big way i think would be a positive. the way we make our product we are in extractive industries so we actually extract from minnesota and michigan and we reduce that to allow telemental carvin and cole we make in-that we then make steel. it could be a little misty at times. it costs $600 million, 600. for the next 30 years, a big decision. instead we could take a natural-gas and use the sea

there to be on your net about two-thirds of the cost and about half of the capitol. it's a disruptive technology, several units are already being built. a huge change in technology that will give us great opportunity to compete in the world and it's all enabled by the progress that's been made in the traction so there's lots of motions made about that and i think we should give it a chance and i encourage policy makers to make that a piece of what we do to rejuvenate the american manufacturing. >> do you think again it's a little outside of your area, but do you think that you may see some of the petrochemical industry coming back to the united states? a few years ago you would say it's all going to go to the mideast or africa or somewhere where the rall material is to feed estimate it's going to go to where the lowest costs are that's where it goes to put it in chemical terms in pennsylvania where i live in large extraction is there, lots

of liquids, methane, butane and natural gasoline etc., more methane that can be easily consumed so there's probably enough there for a cracker which is an enormous investment going into the downstream that comes from that. i'm not in the chemical business but it was a huge opportunity and there are lots of plans which were shot down by other companies. was andrew here this morning with us? he had a natural gas more than he does now and it enabled his company i think to be much more competitive in the world now with investment, so the availability of low-cost c's and h's is a future opportunity not just for our company but all sorts of industries. >> i don't want to put you too much on the spot, but you do have a unionized work force, you have nonunion competition in the united states, a lot of steel

capacity has gone of its non-union to read you do have imports as well coming in. so what is your secret? how have you been able to be competitive and survive and remain as a union operation and i know you and the steelworkers have had your fights along the way but at this point you have a pretty good relationship. can you tell us about how that has been accomplished? >> a lot of credit to my distinguished colleague of the last decade has changed the way that we have viewed things in the early part of the 2000 sector the company was really in a tailspin and heading over the edge. about 35, 40 companies. we began to talk about how we tad to change that to deliver the it together and letting fed be agreed on a number of things. we agreed that our employees work hard under potentially

dangerous conditions and they should be rewarded on a competitive basis and they should do better when a company does better they should be safe and have a retirement that would allow them a dignified career and retirement and the company should be able to make money to invest so we agree on all those things and we can argue about the saturday premium should be. we can argue about that but i think the basic elements of save compensated employees in a productive and competitive profitable company we agree on that and the only way to get their we concluded was to be productive and our labor contracts through no fault of anybody except to get their not us but our predecessors in the up putting so many barnacles on the way that we were we were just denying the benefits of capital and productivity and it didn't work so we had a big change backend 03 and took out 5% of the work force may be and

we ended up with a much more productive work force with dignity and they receive an exit payment penchant. nobody complained i don't think and today we are a much more competitive company and our costs from the wage and social cost standpoint are not at a competitive disadvantage and 20 years ago or ten years ago we did in the social cost for the axis of competition we would complain about the europeans and with it before and the japanese pay for that is in the issue. we are we productive, more productive than the other countries in the world from the standpoint and by the way the most environmentally efficient and reduce carbon steel industry in the world as well, the highest per recycling list of all environmental missions in the world. >> let me say something for john. u.s. steel four years ago already exceeded the kyoto protocol for years ago. some or one-third below the carbon emissions from 1990, we beyond anything the keogh folks

talked about. they were really good business for us to make the same kind of steel. >> the story that i would give you is we spend enough things we could agree on, and when we meet regularly we try to focus on things that we agree on and not usually things we don't agree on. [laughter] >> thank you. elizabeth is here to spike the sickness of her daughter she may have created a few bugs in her, too. it's not the economic situation. >> it's not in the presentation. >> i'm sorry. i shouldn't say that. [laughter] you told me and i took advantage of it. okay. succumbing elizabeth has written a wonderful paper.

back some years ago i wrote a book with a colleague over across the street in europe and the model in those days of the european economy that had done well in its labor market was the danish flex security system. denmark is a jury small country it seemed would be hard to sort of transport the institutions, but they have bigger countries to the u.s. but germany is a big country. it's gone through some transformations. it's doing some things the same and some things different. elizabeth particularly is talked about the labor flexibility and some of the working time accounts they've been set up. can you tell me some of that and how you think it's affected how they've gone through this economic crisis. >> the starting point for this paper is the fact that despite the fact the contraction in germany gdp is larger than the contraction in u.s. gdp during

the great recession the labour market to a slight head and then it continued to improve doing well before the recession and it's really continued to do quite well. unemployment is down compared to u.s. unemployment is everyone in this room knows it's hurting and so the question that i can to this project with the question of what is germany doing the right and what can we learn in the u.s. potentially to borrow from abroad and it is a new perspective for me. i'm not a comparative just what i can of several years on the hill working on the stimulus health insurance reform and then looking more broadly at the slow recovery that we are in the middle of and feeling like it was stuck so that's how we ended up turning to this german comparison. and what i found instead was a top line explanation is the german public policy embraces this program that ends in devises the leaders of incentivizes the companies to hold onto their employees, reduce their hours but don't five-year them so that when the

economy improves you can run back and they're all policy places which this short time the compensation work sharing program which essentially lead employers collect money for the unemployment insurance system that is then passed on to workers whose hours are reduced so when the workers hours are reduced the salaries are not fully cut back equivalent lee. so the workers get security and employers get to hold on to their employees. there was my starting point. i knew that before restore the project. as a lot of people have heard the comparison they might have heard that particular point. in thinking about it a little bit more and starting to dig into some of the literature was very clear that it kind of wasn't enough. it's not like we can't just transplant. we should have short-term compensation here in the u.s.. we tried and it hasn't done very much. there are sort of bigger question is worth asking about how the german business, the german government and employees, how the german unions with a refer to as the social partner interact with how they think

about the private public building the economy how does that work in germany and really as people in this room probably know, it was quite different than in the u.s.. there is more of a commitment in the long view they have very public policies regarding job creation regarding a really advanced manufacturing economy and export oriented economy, and the government sort of provided a space i would say don't think the government has done the work it's really the social partners which are the employers and the unions which are far more powerful in germany than they are in the u.s. but i don't think that means they are not worth paying attention to. they got together in a room over the course of decades and have put together this i've called it a flexible working time toolkit, something along those lines with this idea that if you are thinking long viewed doesn't really make all that much sense to fire your workers during a recession because when the recovery comes along you have to rehire workers and retrain them in germany that's expensive because employers put so much time and energy into training

their workers. it's a different set up and we have in the u.s.. so in looking at all of this and digging into the kind of policy around labor markets it's clear the working time accounts martin mengin are part of what developed in the working time sensible toolkit with private employers working time accounts for the short and if you think about the time being to war in employee and working the union's conceded in the interest of the employment security to allow their employers to keep track of their time. they were allowed to be required to work overtime in good times and accumulated hours in these accounts. what happens then in the bad times is that rather than taking a cut they basically draw down those accounts. there are no immediate cost savings to let an individual drawdown the imaginary time it's not imaginary defeated work which is in the past and the issues the way that they were

designed the seventh negotiation on a union part if you want to fire a worker during a recession has the working time account you have to pay out a large severance so it is less expensive for employers to hold on to the workers in addition to the kind of long view of wanting to hold onto your worker because they will be valuable after the recession is over there is also a short-term cost because you have to pay out a bunch of money and that is at a time that you are probably cash portion would isn't just the public policy that many of you in the room have probably heard a bunch about it's also the devolution over time of these flexible working arrangements. i think going back to the big picture in terms of how labor works in germany germany for a long time was the sick man of europe its economy wasn't doing particularly well. it was quite high unemployment. they dealt with as they were saying in the lunch earlier he talked about the fact germany

had acquired a pile of rubble many people literature, the economic literature thought about what it meant for the economy to a door east germany and that meant that business and unions had to sit down and figure how they were going to survive in the long run and the unions look forward wanted to maintain the sort of productive and competitive economy and they've really made some concessions that would have allowed for a lot more labor flexibility. comparing that to the u.s. is now that germany looks exactly like the u.s.. that is an important point to make. germany didn't succeed because it started to make itself look just like the u.s.. germany as far more unionized than the u.s. employment projections. they are far stronger even after major overalls and the employment insurance and system is far more generous and focus on training individuals back to work effectively evaluation to have the wage insurance. all kind of policies that are still even for progressives in

the u.s. are all very much in place in germany. but they got rid of some of the labour market for jetties i think are dragging down the economy and the decades prior and the result has been i would argue there potentially are sweet spots that led them to the recession in a way that looks different than what the u.s. has been through. that is one of the quick summaries of the paper. i have some recommendations i think that the key for the u.s. is the lesson to take from germany is to incentivize the kind of behavior that germany has come up with for the admirable we have here is an exception to the rule but it's unusual for people like this to sit down and really have mutual respect and a view of the fact the workers and employers really do have a shared interest securing out ways the best in incentivize the kind of thinking for policy it's kind of the macrorecommendation and has some specific ones but i think that is a big picture project we haven't really put much time or

energy into and i include myself in that. just starting to think about ways that we might be more effective at incentivizing that kind of thinking and there is evidence that it has the potential to not just be good for the workers but also for the macroeconomy in the world does well. >> let me push back on you in a couple of ways. one, you sort of compare the u.s. recession and germany, and you say that the drop in gdp was about the same. but the question whether the recessions were that similar as i think gary identified we had this real estate bubble collapse from and it's that that is at the heart of the consistency of the recession that we are in now. we just don't seem to have the same coming out of the recession that we did in the previous recessions and 82 or 75 because the loss of wealth.

if you look back, germany had a housing bill will following the reunification and they had a pretty persistent period of weakness after that, so we think those -- i wonder if these recisions are quite as similar as one might think. then the second thing is there is a lot of problems in europe right now. what germany has done has been very successful at being very competitive. they are competitive in the global economy, but the way that they are really competitive is within europe, so they've been able to out compete all their neighbors in europe, and i was in a session the other day on a panel with some german folks and i said look, you are all in the same lifeboat and germany made is of super competitive and greece has fallen off the boat and italy is about to fall off the boat, so to what extent has

this -- number one is the recession really the same and number two, has germany been successful at the part of its neighbors? >> you're right germany didn't have the housing double and it's not missoulian apples to apples comparison. germany did have its own financial crisis and want to go into the intimate details of the recession it wasn't completely unlike as but i don't think there's a different it's worth saying it isn't worth looking at. and in some way to think it gets to the second point that in my mind i don't actually think the most interesting thing coming out of the work i've been doing is getting the answer to which germany does well. it's about thinking whether there are new ways of thinking about problems that we've been stuck in in the u.s. to go forward in a new direction.

that might be dodging your question in fact i think it is. that is how i would go with it. i can give my 2 cents on whether germany is succeeding. it does actually seem like homeland of brookings was in the government studies and from the government perspective it seems to be a very easy to case to make. they are succeeding at the expense of europe and that is a separate conversation and not necessarily what i was aiming to get on the paper but one that is certainly worth having. >> thank you. i mean, germany is really amazing. it's economics, to manufacturing at least, not so much services but the manufacture and performance. the high wages, they don't work that many hours come and get the are still able to be very competitive not only in europe but outside, so there's something that they are doing right and i think that you have followed some interesting things about germany petraeus taking out of this discussion we need

to focus on manufacturing. there is a view here that we are being treated unfairly in the trade and if we can somehow change that we would get a lot more jobs. we've obviously got to use technology effectively to make ourselves competitive. and maybe we should think about the way that we operate our economy and not so much short term is some thinking about how to use the human-resources effectively and not just get rid of them as soon as there is a downturn. it seems to be more like germany. okay. so let me throw now all the discussion open to the audience. i would be interested in comments, pro,, or little divergence. yes.

>> must be an american made microphone. [laughter] - keith rogers and i have a question that is a little bit of a segue but it does seem to be all over the world we are seeing a huge problem in the collapse of terribly built concrete buildings and earthquakes and other natural disasters. is there any economical way the steel industry could meet those needs? is this the reenforcing or the steel components to stockpole fees'? >> is we think the best construction material and we had that debate over whether it could be steel oriented or specialties concrete. i think in other regions there's not nearly the application of the reinforcement that you would see in the u.s. or other developed areas. we are members of something called the world association.

we do evangelical work in all sorts of undeveloped regions to try to promote these local applications because when you think about the basic elements of life, shelter and warmth and water and mobility, all these things, and construction broadly defines and consumes about 50% of steel in the world and the biggest breakthrough for the markets is steel in housing applications, usually multiple willing applications in that part of the world and the question of expediency over something that's going to last. if you are in the gulf coast in the u.s. today or in fire prone areas in the west coast you will lose the frame if you are in the steel framing so it is essentially the take care of that but in the developing world there isn't nearly the kind of progress on that so we are trying to work on a because it is a wonderful market. i'm not sure if that helps.

>> let me jump in because not all steel is the same. i'm not very good at the social media stuff, but if you go and do google the bay bridge in san francisco you will find there is a bridge that has almost $2.5 billion over budget somebody decided that it would be better if they made it chinese steel. the chinese still won't hold the weld. so when you talk about what can you do, there are not many applications we could have that's made in america or in north america for that matter. it's been against the steel capacity which is installed is the reproduction. that is the initial investment traditionally and the way that it is in most of the world. >> yes, question here.

>> i was wondering listening to you about europe clearly there are some jury serious reasons to be concerned about what is happening in the bureau's own -- your autozone. my sense is that we are overlooking something. what we are overlooking is that there is a difference between what we broadly call northern europe and southern europe i for one don't believe for a minute that germany has become competitive only delicious to the rest of europe. it has become competitive in comparison to the rest of the world. they export things in competition with everybody else in the world. >> i don't necessarily disagree with a bat. but they have a very firm policy holding wages down and there's a lot of resentment in germany about that. >> but is actually the point i

was trying to make is that europe has been facing northern europe i'm talking about now has been facing some of the same issues that we are facing a moment and it has taken action which we have not yet fully done. as a result of which things have changed not just in germany but paul lynndie and norway and sweden, all over northern europe. and they have brought about -- we pride ourselves on the labour mobility. labor mobility according to some of the things i've seen in northern europe now is higher than in the united states. that is for the reason and they took some action. i think that is what is being overlooked in this discussion. i would like your comment on that. >> i agree and if i said something to disagree with that i take that back. let me give elisabeth the chance

to respond or do you not want to go outside of germany? what is your reaction to that? >> brought to the point -- and i can bring it back to germany, they got where it did because they took action particularly referred to put a lot of cards on the table in terms of making real progress for overhauling the way that germany balanced the opportunity and security is the framework used for thinking about my work and i think it applies to germany because schroeder put everything on the table. he arguably lost his government because of it but accomplish reforms if he hadn't. while some of the evolution of what was happening in the private sector outside of the reform which mostly had to do with permanent reform but brought in the same policy state of the labor relations all fit within the same idea that germany cannot solve that there was a problem and realized that it wasn't sustainable and

eventually for a variety of reasons they actually did something about it. and we are not doing that in the u.s.. often the paper gives a lot of good reasons as to why not in terms of the political dysfunction and the ways that we were really stock in light of congress and again that is a whole day of work of the conference is to talk about the political in the u.s. but it's having entered on the economy and not just in the context of this particular recession and this particular labor market recovery but also more broadly as our competitiveness and what it means to be an american worker and an american business for that matter for the long run. so that's why attempt to the answer and i hope it gets to the answer. >> questions? yes, one in the back. >> my name is rosemary

[inaudible] job creation. think you for your presentation. you talked about the strategy of manufacturing and also [inaudible] how do you look at the indication now that china is going on africa if you are now china is going on the strategy to africa. how do you look at this from the raw material in the future and for how long? thank you. >> that's an interesting question. i think the premise for the context of the world makes it about 1.4 billion tons of steel every year roughly. china about 700 million. about half of the world steel capacity is in china and a majority of that now has two-thirds of it is not imported

material. so on the strap and carbuncle and that kind of thing. the chinese companies have been aggressive in buying in resource positions around the world ninian africa and latin america as well and places the ball so some in canada on the energy side the u.s. and north america are still making a raw material is very well-positioned. north america as a net exporter in coal. so there are few things that are imported from china were still making in the u.s. that we are concerned about and in fact, china was taking steps to limit exports and the u.s. br along with some other countries very courageously and felt fully brought about a strong case that i think we have had at least one positive step so far. there's more to those we need to make sure that there is an ebb and flow with the big value, u.s. north america is under a good shape so largely from

australia, brazil, western canada, u.s., probably have other concerns but it's a resource competition in the world right now and jerry important and the companies in china have been very aggressive. if you look at the bill and you go somewhere in africa, latin america, asia, china, companies have already been there. it's very expensive. >> we've only got about a minute or so left. if we look at the development strategy that was followed in asia by a number of countries, it was really very heavy investment and industry and china has been down that road. are they already or are they going to end up with a lot of excess capacity as a result of that? can you tell either from steel or other sectors? >> i don't think anybody knows for sure but i think the policy that understand in the 40's china has espoused this is in the 12th five-year plan i forget which it is. i think the view is that the

capacity should be roughly equal to bunt to their needs and that seems to be a sensible policy. there be nothing in it either economically or environmentally for china to build a big export machine like the japanese and koreans. materials that don't know from western brazil, coal, and you can imagine in china is balanced by the coal from west virginia. people in china didn't know there was a west virginia and now that's where the coal comes from. it's economically a good move using energy and allocation on a mission because of the lack of control and so they don't want to be a large net exporter of tend to believe them but if there are small blips in their economy and 10% of the capacity becomes export capacity that's 7 million tons about 100 million. it could be very traumatic if something went on. but the policy i tend to believe this is a sensible policy.

>> we are about of time but if you have a last comment to try to -- >> i want to just make a comment about something you said when you started this forum that you didn't think there was much room for manufacturing growth. >> employment. >> manufacturing employment. u.s. steel as we work to get more productive my understanding is over time unless we can expand a market we are going to have less people. we are going to take good care of the people when they leave. if you ever work in the steel mill for 30 or 35 years a will work so we are going to take care of those because i want the companies we work with to be successful so people can live well but one of the things we need to understand, and come back to we can't continue to fool ourselves and swallow these ongoing trade deficit in manufacturing. right now you have people attacking even today about the future of the products and all

this. we're running a multi-billion dollar trade deficit with china and the technology projects. in the last four years since the recession started we lost 2.9 million manufacturing jobs in america and created 2.7 million manufacturing jobs in china with companies that left here to go there. we can't just continue to say that's okay. the industry with the solution is because i don't know the solution i just know we can't do that by moving to get in the room with other smart people and figure out how can we have a policy over the next 25 years we take an affecting back to 22 or 23% of gdp so my grand kids who maybe can't get a master's degree can work in a plant and make 35 or $40,000 a year not be able to take care of his family. >> thank you very much. i appreciate everyone on the panel and in the audience. [applause]

the next will also be about some of these labor issues. this event took place, last week at the brookings institution. now another event sponsored by the organization is author and activist david grossman discussed his latest novel about occupation and terrorism. he also talked about the future of his home country and the middle east peace process. this is a little over an hour. >> to shift in the perspective and to set aside for a moment the ancient disputes and the forces of history the u.n. resolutions and the summit and the deals that have been brokered and a broken and focus

instead on the human essence of the most intimate and personal level of what israelis often call with more understatement the situation. one way to do that is to listen to a novelist, poet and a qualification that is more pertinent to the subject of them might immediately be apparent a writer of stories for children. david grossman as all of those things and he is much more. his latest book available in english to the end of the land has little to do at least explicitly with the heavy policy issues that dominate the headlines and for that matter dominate the agenda of the conference like this one. david's novel has a great deal to say that is both profound but

poignant about individual human beings. and in particular, a mother, her husband, her lover, her son's and how they cope with the situation. and the effects of the endless conflict and the end of this danger that they live with throughout their lives and the effect in particular on their own humanity and on the soul of the nation so we welcome david and his wife to we think is right over there and we thank their friend and our friend leon the literary editor of the republic for leading us in a conversation that i can absolutely guarantee you will greatly enrich the u.s. israel dialogue that is something that the forum has done so much to promote over these past eight

years with about our last david and leon to come on up and talk a bit to each other and with us. [applause] >> good evening. strobe it is right. there sits before you two men who are not strategists were generalist's or spymasters or politicians are policy analysts. but as you can tell from the fact we are not wearing ties we are too humanist. and there are many people who can't imagine that there is a literary perspective for that literature can cast light upon some of the hardest and most excruciating decisions that policy makers have to make

especially in this context. but we are going to promise our conversation tonight on the assumption that in fact there is some light that of the literary standpoint or the imaginative standpoint can cast on the subject that we've been talking about all day. one way to think about making peace is to think of it on an active imagination. nobody makes peace unless they have the imagination to understand the predicament of people who are not themselves and not only their predicament nobody would make peace unless they could imagine a mistake to think beyond their circumstances and spiritually imaginatively by means of the resources not of political resources but in our resources but to imagine a different reality and accept that reality has a direction to move towards. so the first question i'm going to ask my beloved friend is to

talk a little bit about your about your society come you don't read overtly political novels but you write about your society and you are deeply engaged in its internal conflicts and to talk a little bit about how you see your role as a writer and what might you think a writer can cast upon the subjects that extremely aliterate people have been talking about. >> good evening. i'm very glad to be here and thank the forum for their generosity and the very enhancing initiative. first of all i disagree. i do not think that there is a role of the right and they have only one role to write the story and there are many good writers

and israel who absolutely do not -- that is the reality directly because of the various reasons. i belong to quite a small group of fighters who actually write about the situation and i think it is something very personal. i take reality very personally and i want to understand why we live in the circumstances that we live and what are the effects of such realities on our lives and how they manifest themselves in all ways of life. in my last novel that was published in english to the end of the land, i try to show how the situation the strobe mentioned before when we say situation in hebrew by saying so

we actually put together so many things in the endless war machen occupation and ticker to the tutor and existential fear and there's also a kind of deceit within the past were we've chosen because in hebrew when you know hebrew it indicates something stable. almost as if something without any variation, static, yes. why on actually there's the constant bleeding there's nothing stable and there's another thing. it is the divine decree that if no one had actually situated here it would limit, yes?

we found ourselves in this an impossible situation as if no one had decided deliberately just for a small example or big example to put settlements in to certain places but we may be prevent any future for political compromise. they want to show how this jury charged situation which affects the life of one family not less than in the situation even more i must say. i also think that the greatest moments of mankind they don't have the battlefields or the corridors of parliament or rather in teaching and

indifference and in rooms with children, and i try to show exactly what happens in these three rooms that are so heavily influenced by the situation. for many years i was unable to write such a story even though in the beginning of my career i like to say this word in american israel we say career of the work. then i wrote about the big issues of the occupation or you know, just to the huge heavy questions of our existence of jews and israelis and then they wrote to the kind of collection of representative pro -- about the authorization and felt unless i find the language to

describe association and the language that will be even for me would be a new one do we still maintain high but not really fiction about it. i cannot do it cannot compete with others have said or i have said. for several years i wrote other books and stories which is not as important. we are so deprived of this situation, so deprived they don't have the chance to write about the existential things that are be the major man and woman, all of those seven important questions that we don't have enough energy to deal with because so much of our

energy goes to those questions. i thought of that all of our energy even in the state we send to the borders of our being we are always becoming like a suit of armor we don't ignite a human being within and i wanted to write about the man or the woman within the suit of armor and then after like ten or 15 years i said that they found the idea of integrating the situation with very personal family stories and a store to with this idea that there would be a woman who after she has brought her son to the gathering point of the army she has a very strong intuition that something that might happen to him and then she

asks herself a question hell is it possible that i have brought my own son to the army, how can it be that i am more loyal to them to this case come to the army rather than to my mother or to my son and then she understands why waiting for the notify years to come and bring this to her she understands one is to the leader and one to the receiver and if she is not there to receive maybe the whole new machinery of the notification would be reversed. it is a lot and she runs away from home and starts to work in the gallery and keeps telling

these small stories of her son who is now being in the war and she does it because she has this feeling that when there is a danger covering about friends and family there's a feeling that all of the average that we have infused one being their parent or the zremski all of the love and caring and attention all of these -- nothing can protect them in front and she wants to be infused love and care and meaning to her son and she does it by telling the life story of her son from the very beginning. and she walks and talks.

it's a walkie-talkie bookend they bark and the beautiful landscape in israel and in a way she reformulates the whole situation by so doing. >> i wonder to what extent the extraordinary figure of the woman in some way isn't -- i don't mean again to turn the book in any way into a political book but a parable of a certain emotional situation in israel the book in hebrew is fleeing the news of the report and the irony of the story is that has she undertakes this huge exercise of avoidance in the face of mass it becomes the journey of self discovery in some ways and i wonder, you know, to what extent would you say this characterizes,

generalizing here, a certain attitude, in other words she has the feeling that there might be due in the future and she wishes to avoid the knowledge of this and so she is really eating something and yet as she is eating it she is exploring herself in some ways. do you feel that in some ways you're society also is also fleeting some tidings or report etc., etc., you know what i mean >> i try to describe a human being or a woman's flesh and blood is very mediating policy

and many other things, but you are absolutely right. there is a great deal of denial of turning the eyes to the other direction or even back on reality because it is unbearable we live our life in a reality that i regard as no less than tragic and i must say that after the two days that i have spent here listening to the interesting talks i am deeply impressed and depressed at the same time, and part of it has to do with the gap between what we hear from people here who are looking at us and seeing things we should have seen that we

cannot afford ourselves probably to see. i look at us as a society of intelligent, molecular as people who manage to create life that would be in a way parallel to the life that we could have had and should have had. when you come to israel or tel aviv or jerusalem, i'm sure if you come for the first time you came for thousands of times. those who come for the first time mark struck by the vitality and, you know, the israeli life, the immediacy of the relationship.

.. >> how do we allow ourselves to be misled and tempted by this appearance or illusion of good life that we have? how come we have to come here and to hear from secretary panetta or hillary clinton with her brilliant speech today to

hear the basic things that the change is needed for our interest, that we are acting constantly against our interest. >> i think it's complicated in this sense. on the -- i mean, i'm of two minds about what you describe. on the one hand, i think that you're right. there is a certain -- there is some evasiveness about the crisis that will sooner or later hit. i mean, we all know what it will be like. in fact, we've known what it will be like since approximately 1970. this is not news. on the other hand, i don't know that it's the appearance of a good life. the remarkable thing about israel when you visit it is -- i mean, it's too easy to describe it just as denial. for many people, it is -- when you go to tel-aviv, it is a good life. it's not just the appearance of a good life, and there's some wonderful way in which it's the flip side of the denial aspect that you're talking about in which the vitality is real, and

the ability to find a life in the present, a rich life, which you see actually in the literature of israel also. this is not a literature about the conflict. this is a literature about a life that is intrinsically lived, and the complexity of this relationship between ordinary people's lives and the conflict is very interesting. i mean, i'm with you. i know we both are pretty much in a state of dispair about the situation in the sense that the peace process is dead, the relations between the leaders seem bad. every knows what's coming. nobody seems to want it, ect., ect., and when one is in a state of dispair, the dispair is the great challenge because it's not enough just to live in dispair,

but you have to live with a sense of possibility, and i guess my next question to you is in the situation you describe, how do you recover? how do you recover a sense of possibility when it seems that there is, on the one hand, you have this brilliant life, family life, personal life, sensual life, and on the other hand, there's a growing fear of dread that no progress is being made against an inevitable disaster? i mean, how do you reconcile these two things? >> first, i think, there is this barrier between a system between the way we live and our actual situation, and maybe we live in such intensity and vitality because we are aware of this

that we live on the edge. what i do not find -- or what i lack more and more not only among israeli leadership, but the israelis is the feeling that something can be changed, that still, we can take our destiny in our hands. there's growing apathy which is used and abused by elements who have interests to fill this gap. there's a feeling that no matter what we do, even if we do nothing, nothing can change the fact we have no partner, and that our future is in existential danger, as if we're totally passive and have no way to influence the situation of change in any way. this is something that is really hard for me to accept.

i think, you know, israel was created so that we shall never be victims again, never victims of the bad will or good will of others. we came to a place that we should be able to generate its reality, and look at us today. having israel with all the achievements, which are amazing, no less than dead, there is something great about what we have achieved in israel starting with the democracy, yessing you -- yes, you know, most of the people polled in israel, the first years of israel, they came from countries like poland, romania, or iraq or i gent, or -- egypt, or russia. we created a stable democracy that only now starts to crack down and to be very vulnerable and maybe we should talk about it. we created culture and agriculture and revitalized the

hebrew language. it is mir rack -- miraclous, and yet look at us. the best air force in the world, and still we are parollized. we are victims. we are unable to reformulate ourselves, our enemies. we do not have the ability, and i think especially our prime minister, benjamin netanyahu, doesn't have the ability to distinguish between the real danger that we do face and the echoes of past tragedies and past tramas of us, and he thickens everything together, and he -- he in a way instead of suggesting vision to us, instead of using our creative and innovative energy as a people, as a society, which this was,

you know, it was in our spirit, what he does is to feed us with fears and with threats, as by the way, most israeli leaders, this is a kind of -- the narrative of the israeli leader, very rarely he will give us hope or vision, but usually he'll start to glue us together and to create a unity by feeding us with fear and resurrecting past fears. then these leaders are surprised that when they want to make a change, if they want to make a change, there's a great reluctance in their -- you know, people are afraid. people were brought up to be afraid. >> last night, you reminded me something that was said and in english it goes, last year we

lived on the edge of the abyss, and this year we're taking a step forward. [laughter] >> yeah. >> i share your sense, not just of passivity, but i think that there has been a total collapse of the diplomatic imagination in israel right now. in other words, that problems are -- there's a passivity and once things reach a place where a military solution can be considered then the analysis is militarized, and that seems to be the approach so that the security policy of israel in recent years seems to have consistented in a wall and war every two and a half or three years either in the north or west, and that's it as far as i can tell, and i think that -- i think that when i imagine, for example, i look at the arab spring, and i understand all the dangers that the arab spring pose, and when you emancipate people, you emancipate the actually existing people, and when the dictator falls, that doesn't free them. that is when they have to free

themselves so what they realliment to do is become who that he really want to do is become who they were and who they are, and it's not always friendly and positive, but i imagine what they do with the arab spring, the kind of activity, diplomatic activity, connection, secret connection, open connections, the kind of -- even in, you know, none of this at least publicly one doesn't see it taking place, and it is deeply troubling. it is deeply troubling. i want to ask you about -- you mentioned just now, you eluded to certain frabbing -- fractures or fishers in israeli democracy, and it is certainly true in recent years there's been disturbing developments regarding questions of tolerance in israel. i mean there has been violence against israeli-arabs, mosques, palestinians on the west bank,

legislative attempts to outlaw foreign contributions to ngos or to prevent certain kinds of civil rights cases from being brought to the supreme court. there was the infamous attempt to enact a loyalty oath and so on, and maybe you could talk a little bit about -- some has to do with the state of the israeli right, and i have to say as an american, i'm not in any position to give lectures to you about good right wings because we have our own programs with the right in the united states right now, which is also in many respects in a highly fevered and inflamed state, but is this just about developments on the israeli right, or is there something deeper that goes on here? >> i think it's something deeper. of course, the temptation of the right wing who suddenly finds himself in the position that there's almost nothing to block it, no really serious public

opinion, no other parties that can really block it, and it's irresistible temptation for the right wing, which is, of course, terrible mistake, and act that will underearth our democracy, but i think it reflects a deeper fear, you know, and it reflects the way these -- you being of israel, and we are still quite new as a state even though we look quite old by now because of all what has happened to us, but new, innovative, and daring state, you can see how gradually it's being absorbed into the jewish tragic wound, and how the way we regard the world becomes

more suspicious and in a way forcing life, and unable to move in order to change our own situation or to nationuate something. just think of the fact that right now, it almost happens in the world that is a source of concern. i cannot deny it. nobody knows where it's going to lead us to, not even the egyptians themselves, even though i met sometime ago i met some egyptian writers, and they were almost euphoric, and they said when i asked them about the danger of having the islamic brotherhood in power, and they said the people in egypt will never again allow dictatorship to be reinstated. i hope they are right. we don't know. we don't know if when they say "democracy" they mean what we in israel and you here mean when you say "democracy."

democracy's to be caring for the rights of the minorities. this is the basic of democracy. it's not only the right of the majority to rule. i don't know if they are already able to grant total equality for women, for homo sexuals, for non-muslims. i don't know for sure. i guess their way towards democracy will be different, and their democracy will be a variation of what we describe as democracy. it will be effected by their culture, their heritage, the way they regard the family, in the society, in the state, all of that is very complicated, but there is something more appropriate, i think, to deal with people who express their feelings rather than to deal

with a dictator. i think of the situation now -- israel benefits the deep support of america with all what israelis think about president obama, they have deep commitment of the united states. u.k., france, germany, all the big powers are so supportive of israel. they criticize, but they are supportive, and we know they are at our side. they offer up the arab league that was put on the table, what? nine years ago? until now, there was not one hour that the israeli government had dealt with this suggestion. there are new interests now, and new collaborations, and new bonding within the middle east,

not because countries there love us. yes, i can want say that egypt or jordan that they like or love us. they are looking for love between human beings, but between nations, there's interests, and there's so many interests that we can use, that we can really change with them the situation. first and foremost, of course, is by ending the conflict between us and the palestinian, and i think we heard such strong and decisive, almost crying by the americans spokesman here and the secretary panetta said it in a very undiplomatic and maybe un-american way get back to the dasm table. what is there to be afraid of unless someone is interested in the deep freezing of the situation, hoping that the status quo is good, but we know that wherever people are

involved, there is no status quo. it will birth. it will explode in our faith if we do not take initiative. >> we'll get to the american-israeli question in a minute, but when i hear you talk about the arab spring and israel and the nature of the challenge, i remember years ago you gave a speech in which you proposed that since reconciliation between the leadership seemed impossible, it was time, as you put it, to go over the heads of the leaders and speak directly to the palestinian people, and when i look at the arab spring in its relation to the challenge it poses to israel, i'm actually reminded -- you know, students of the political history of the jews in exile, scholars make a distinction between vertical alliances and horizontal alliances. the jews in exile preferred king or prince or bishop or the arch bishop opposed to alliances with

the people because they never felt that they would find the security they needed in alliances with the people. as i say, this is the general pattern, and, of course, israel is not -- these are not jew, and to a certain extent, the israeli relationship with the various arab autocrats reproduced that pattern. it was still a vertical alliance. they had to have an understanding with mubarak and assad and the senior -- jordan king and that was the policy. now we'll suddenly see the opinion of millions of arabs are going to matter in the formulation of arab gochtal policy in a way it never did before so that israel may find itself in a position where it needs these millions of arabs not only to fear it but also to perhaps understand it and conversely, israel will then be in a position of having to understand arab populations in

ways that israeli policy and the stability of the security arrangements didn't require before, and this is a real challenge. this is -- again, it reminds me of what you once said in talking directly to populations. >> yeah. by the way, you don't have to be jewish or israeli to acquire this vertical approach. united states, also, dealt with the dictator, not with the people. >> absolutely, but you see, the israeli relationship with america because we are a democracy, the thing about the vertical alliance is that it was always premised on an authoritarian government. >> yeah. >> only works when there's an authoritarian government. when there's a democracy or open society, it can't work, and so the strength of the israeli relationship with the united states, even though it seems that the strength lies in the leadership, the bedrock of it has always been the extent to which israel can find popular support in the united states among millions of americans. >> is it the case still?

>> yeah. >> just ask it in other words. after two days of being here and listening to mainly american spokesmen, there's something i cannot understand, and maybe you can, you know, light my eyes as we say. how can it be that there is such even bitterness within american regime towards us in israel? how can it be that america finances us so heavily, and a man that financed all of our west bank allowing us to build the settlement, and yet except of some niceties of criticisms, no more than that, i do not see a real pressure taken by an american president regarding israel. i mean, i know -- i mean it is here where this phrase no taxation without

representation -- this was coined here, yes? how can it be that we are taxes you so heavily, and you have no representation in our policy? now, i'm not talking about imposing a solution on israel. we are not there yet maybe. i wonder how can it be that a president is unable to put enough pressure on israel's prime minister and on the palestinian prime minister to put them in one room and metaphorically knock their heads together until they sit and talk and do what i regard and i think i'm not the only one, as the inevitable solution. you know, reach a solution of the two states. how is it possible? >> that's a very complicated question, and i would say a few things. the first thing i would say is that sitting here or in america, not just in washington, one has to bear in mind that we see not

only israel's lost or wasted opportunities for peace, but we also see the extraordinary threats that israel truly does face. >> i do -- >> i know you agree with this, but what i'm trying to say is that the relationship -- it can't just -- the analysis cannot just be why doesn't obama force benjamin netanyahu to stop settlements and go make peace? in the first place, he tried, and one of the things that he discovered, and i have my own misgivings about the way he tried. i think terrible blunders were made, but, in fact, he discovered the limits of american power because, in fact, the -- i mean, i'm of the belief -- i think that the view that salvation will come from washington, which is a view occasionally held by the left and occasionally held by the right in israel at various time, but basically the solution is here, i think that that's an

expression of dispair about what's happening over there, and my own view is that, in fact, the only people who have the power, the capacity, to make peace are the israelis and palestinians themselves. now, i'm not happy with this conclusion. >> you know they cannot. >> well, this is why i'm not happy with the conclusion. >> well, okay. >> no, no, no, i understand that. [laughter] the fact that they can't doesn't mean the united states can. the united states can play all kinds of roles, and, again, i used to be myself much more or didn't in the view that if only the american president would finally -- but i have to tell you, you know, the american -- if you think obama's -- if the american frustration with israel looks extreme, i mean, i guess you should see how the americans feel about pakistan. i mean, pakistan makes israel look like a good as an ally as england. americans, i think it's an

illusion to believe although it's emotionally galling that the united states gives so much support and so much military support, and yet it's impossible to persuade the prime minister to freeze the damn settlements which is a non-gesture unless you're a prime minister who depends on a particular political base in which case it's apocalypse itself. it is gulling. it is frustrating. i do think that the idea that the solution will come from washington, it just, unfortunately, i don't believe it anymore. i don't believe it anymore. >> you know, by so saying, actually say that the united states abandons israel to -- i don't know what -- >> no, i think you'd have to -- >> because, you know, this phrase in hebrew, the prisoner can want set himself free -- cannot set himself free from

prison. we are the prisoners. we are trapped in this. we are trapping each other. we are unable to find within ourselves the energy and the daring that it takes in order to change the situation. you saw what happened when early sharone had 8,000 from gaza and what a national trauma if caused, partly in a very manipulative way to prevent further evacuation, but you can understand after what we have witnessed there that israel -- does not have by herself the power to do it to tens of thousands of settlers. more than that, the way we tell ourselves the story, the way i think prime minister benjamin netanyahu tells himself the story of the future, it does not include a fair settlement, not in the sense of settling there, but in the peace treaty between

us and the palestinians, it does not include the palestinian state. i do not see him going this direction. >> i agree with you. >> that means we doom ourselves to continue the situation, that means we doom ourselves for further birth of violence, and we don't know what will be the outcome of this. no one can guarantee that israel wins all the wars to come, so either way, as i said, by not intervening in an active way, the united states abandon us. >> i understand what you're saying, and i certainly share your gloomy analysis of benjamin netanyahu's intentions and of the possibility of any real breakthrough on the israeli side, though i'm not optimistic about the palestinian side either. right now, nobody's interested in progress. on the other hand, as i say, israel is a sovereign state, and when you say we're abandoning

you you could mean that the united states could actually withdrawal military aid using very blunt instruments. you could make that argument. i venture to say if the united states did that, it still might not work. not because -- just because of the idiosing cra sighs or failures of those who might be admired, but we're abandoning a sovereign state to its own devices, and i have to say it sounds harsh, but if we're talking about blame, the blame for the failure of the peace process must fall on the palestinians and the israelis. for example, you would ask me why the united states will -- cannot somehow get israel or both -- why they can't use their power, i ask you given that we agree about the likelihood or inevitable consequences of benjamin netanyahu's belief in

status -- and his strategy as far as i can tell con sippets of one quiet week after another until the end of time is what he'd like to have. given this, why is there no prospect of serious political change in israel? in other words, when i look at public opinion polls in israel, they seem to support a reasonable, sensible, moderate compromise there. the numbers are in the 50s and high 60s. yeah, the country -- public opinion polls do not show overwhelming support for irrational annexationist or policies, and i look at the situation and think how is it, therefore, that the political alternative to what exists now seems to weak? >> i guess the answer is -- the answer is, again, a fear. >> uh-huh. >> it's fear.

it's fear. it's lack of hope that as i said in the beginning, and i don't want to repeat it, but able to change something in this reality, but i -- what i'm concerned of is what happens to us in israel, and we are cornered in the worst corners of us as a society and as a nation, and, you know, i advocate peace for, i think, more than 30 years now, and i do it because i think that peace is important for both parties. it's very much essential for the palestinian, and i want to see the pal stippians building -- palestinians building up a nation, their nation. i want to see how they are able to use their talents and capacities and energies in creating something new, in raising their children without fear, without our shadow.

i don't want to be anybody's shadow. i want to see them getting used to normal life. .. every decade our borders have changed him. we are innovating others and withdrawing. it's not in the house with mobile. others are moving not to mention

the earth is shaking under our feet and put it in such a saturation you never know where it really ends and where the identity in the place of the other starts. it always creates the temptation of others to prevent you and your need to overreact because you are not sure what will. so peace will give us the borders that will be agreed upon by the international community and by arab countries, which is the most important thing. it will give us peace and a sense of future. you know, if you are reading the american paper that america plays a national project, 2031, it sounds with all the problems in america it sounds natural in the normal know is really will make plans for so much time in advance. when i think if israel in the

year 2031. yet i feel the kind of pain in my heart as if i had violated the taboo by allowing too much quantity of the future. under 64 years of existence still does not have a deep-rooted legitimacy to exist. it is the only country on earth that all the time of legitimacy is being tested. even when people relate to the most atrocious like north korea they do not suggest to dismantle the country total you know they say maybe we should change the regime or even in iraq of saddam hussein or the media only regarding israel. the notion that israel might not exist or there might be some change or as some people time and again suggest in interviews

and kind of talks say why are you there why don't you go back to your places, and it's amazing that we have not been able to root in the mind of the people in the absolute legitimacy to be there and by the way it is something that people from the arab countries speak deeply feel to understand the affinity of us to this country and the importance of this country to our life, to our history and culture, religion, everything. so, there is something that will be achieved only when we have peace and this is as i said borders. it can be a sense of having a future. we should be there and, we should see the sequence of generations. and this something of the sol

levity of the existence. we shall be routed there. we shall start to make our life from our material as a culture, as a nation, and i call it solidity of existence. we still do not know what it is even. we live life that from the beginning of our being as a nation was a larger-than-life story. we were a story in a way there is always a story that is connected to us. always for something else. always a parallel but the lesson should be drawn from. it's not something from the solidity of existence. we should have the only when we have peace. this is why we have to have peace. it's a question of who we will rule this or this what.

but to have this deep sense of belonging of having a future there of real liberating ourselves from this paradox we are trapped in throughout our history. we are throughout our history in people who survived to live our life and now we live to survive on it. and it cannot be like that. it cannot be that all of our aspirations will be to survive only not as a paymaster wants only to survive from one thing to the next this is not enough or is its people. it cannot be that with all of our abilities and capacities in the military power we should still hope only to survive from one to the other because somewhere down the road we should feel that if we shall live a full life with all of the leaders that full life can give all of the ability to explore our potential this is a totally different story, and we do not dare to go there.

>> i think before we go to questions the things to be said about those extraordinary remarks i would say two things. the first is that there's a difference between legitimacy and somebody come and i think that israel even before the attainment of peace at least that is clear to me and others and you may discover that people who deny the legitimacy in the absence of peace may also some of them tonight from the legitimacy after peace because the legitimacy i think is based on something else. i always thought the most important zionist concept of all the greatest in the history of zionism has been the idea of although emancipation we talked about the need to emancipate the other and maybe one can to a certain extent demand to release

the other but i don't think peaceful, and then go to questions until both the israelis and palestinians from some ways emancipate themselves. you have been in the forefront of the struggle of what i would call the auto emancipation. but i agree with you that it isn't clear what the duration of the struggle will be, how hard it will be and so on. but again, i will stop there because there is so much to say. now we have time for questions. i.c.e. hands. the lights here are so bright eye kinsey hands but not phasis so this is completely neutral, whenever i do. >> university of maryland. the question is what you said about the mossad or how the

situation have built the sort of solution of how good the status quo is and what said mabey has some elements of truth to it that's the arguments about why you need to change all have to do if the future. it's going to get very bad if you don't get reach an agreement it will be the end of israel's democracy or jewishness missile threats of the future and how bad the status quo is it's been the promise of the arguments about the two of the future and in the past the public opinion polls aren't willing that we've done show that in fact that is the fear. what would happen if the two-stage solution and it no longer an option and the majority would say that there would be violence for years to come it is terrible, people put true in the arab world as well. what we find something really troubling far more than building the illusion about how good the status quo is.

that is in the package you have in your folders we just released from israel. what we find is now what happens at the 2-cd solution ennis they say the status quo continues and only the minority say they would be violence for years to come. my colleague when commented that he found that to be the most troubling element that the of possibly constructed this rationalization of it wouldn't be so bad if the holes to state solution collapses. i would really like to hear david comments on this observation at least the finding i'm sorry to disappoint you. the fact that such and such people say that this will be happening in the future doesn't really say that will happen. most of a real the is comprised of the possibilities of the past in every walk of life but i

deeply do not believe in the status quo i cannot believe in it because i see that what we described now is the status quo in israel is just the opposite. we see what happens to israel we speak now about what happens in palestine and in the gaza under hamas but in israel there is a deterioration of everything that is precious to me as an israeli our democracy, liberty and freedom of the supreme court of the israeli media, the things that happen with their attitude and believably the treasures from is this a constant process of deterioration and the more it grows from the more it will take into it more and more supporters

and agents. if there is nothing that can generate hope people become more oriented, despair oriented and the fatalism creates their agents and more and more start to believe that this is the only life that really does as prime minister said in the 80's they are the same jews and arabs are the same and the same. and this is among israelis it's not, there is not a process here and for our sake it must be stopped and this is what i kept saying here. peace is for us it is our major interest as a society as a nation this is the only thing that might come it can be very fragile, don't forget every case

involves heavy painful compromise from both sides and that means that there will be frustrated in a violent fundamentalists on both sides and they will do anything they can in order to assassinate these very frailties. it's hard even to imagine to a primm master on both sides who will be able to maintain and adhere to the peace process where there would be suicide bombs in the streets of jerusalem or others in the west bank and palestine ne degette if we do not start now believe we are doomed, we are doomed in israel would not exist because i don't want to go there but we are doomed in the sense that we shall live life without taste that we should live by the sword and die by the sword, and it will be the only landscape and

horizon we should be able to see. we shouldn't even remember to formulate an alternative. we shall not be able to remember that there is another option. we shall not be able to trace signs of hope within our enemies of today or partners. we should not people to read them. we should be illiterate to such science and in so doing to this repetition of blood. this is a real buddy - not wish for ourselves. i wish so much more that for israel and palestine. >> i would add an important point. even more important than the resumption of the peace process as the 2-cd solution, the loss of faith in the two state solution is the most dangerous development i can imagine. >> what is the alternative state. estimates greater perlstein.

it would require some invoices there is a place for a jewish state, a state for the jewish people come any other option is destructive for us and of course the other option is to continue with the occupation which again i do not really believe that the palestinians will comply obediently with the ongoing of the what we call status quo there will be a moment when we will explode again there would be much more destructive and dangerous for us and for them as well. >> i can't see you but i can see your hand. >> thank you. ms. mix before, david.

as a follow-up to what you said the palestinians will only be discussing the alternatives to the two-stage solution for example we are having such concepts as parallel statehood and i'm not going into it now. all forms of the arrangements discussed and it's a very much in the palestinian discourse. this is not one was going to say. and the offer a quote an illustrious palestinian diplomat. he says that after the prime minister has made his proposals and for the lesson of north mattocks and from there i'm going to inform you what david if the build an assumption and

the argument in the case of all of us people who support the tuesday solution what it is said were the assumption that the palestinians are off dirt is a little state within the '67 borders and no more what we discovered this is not with a rafter and i will finish according to you a very famous palestinian intellectual who was advising yasser arafat for many years and is devising now who's that don't read this wrong he says we are fighting for independence, that isn't a synonym for sovereignty. and my question to you because this is a question i'm asking myself is sticking to the slogan

of the two state solution but it has only become a better growth on the slogan and the political platform no longer the agenda of what do we do in that case? thank you. >> there have been enough negotiations and dialogue between the two people in the leadership of the two people and in the frames like that in which it became clear that on the ground every devotee we are not talking about dreams and wishful thinking most reasonable palestinians understand that this is what they can get for now. i emphasize for now we continue to dream as i've said but it's for now also for our extremists to write about of israel or this is what we can achieve after

leading so many years in this place i settle for what is achievable and i don't ask for more than that or terrific justice on absolute justice being very partial land disabled justice that bordered that we should be able to grow would be terrible very clumsy, hard to defend, but this is our reality. we shall have to live with that. okay. i'm supposed to say that we are going to break for a while and come back and i want to thank my extraordinary friend and say it's been a very fun conversation. [applause]

remove the federal oversight and let the states have the flexibility to deliver these programs. >> others have talked about it. they get in office but do nothing about that right now it is this movement which is seen

as a patriotic movement and individual liberty movement saying to the country and the world we've had enough of sending our kids and money in of the world to be the policeman of the world. it's the time to bring them home as candidates get the message of greeting voters. i was undecided until now. you have my vote. >> they are closing in on our campaign and its crew to be good for us not just in south carolina but as we go forward to the estimate find more from the campaign trail at earlier today president obama met with his counsel on jobs and competitiveness and said his team has been working hard to implement the recommendations to create more

american jobs. from the white house, this is ten minutes. >> happy new year. >> good to see you again. [inaudible conversations] >> please, have a seat everybody. for those of you who i have not seen since before the break,

happy new year. i am extraordinarily grateful for all the work that you have done. i want to start by thanking jeff for his continued outstanding leadership of his jobs council to really think the plan is may be to open up with a few remarks and then we have a whole bunch of presentations so i don't want to take too much time. one of the things that has been striking about this jobs council is how focused and how hard working everybody has been around this table. this has not been a show council, this has been a work council, and because of the external commitments that each and every one of you have made, we have generated i think as good a set of proposals as we've

seen coming out of the private sector to help to guide and steer our economic agenda and to our approach and jobs and growth over the next couple of years. in each of the earlier meetings we discussed the key will but we all play in accelerating growth and improving america's competitiveness and that the economic recovery has to be driven by the private sector. we have moved aggressively to implement your recommendations. as i think that you have heard of your 35 exhibit action recommendations, we've taken action on 33 of them. we've completed the implementation of 16 of them. and i will highlight a couple of six evils. building on some of the job council's national investment initiative recommendations last week the vice president and i hosted a forum on the increasing

trend in sourcing. companies choosing to invest in the united states and intel and dupont participated along with several dozen other companies. we discussed tangible ways that we could encourage domestic investment and i announced a number of new initiatives and tax proposals to provide further incentives for companies to increase investments in the united states including expanding select usa. one of the recommendations in the last report we actually had a company there that had benefited from the services of select usa and a confirmed the power and the capacity of one-stop shops and a coordinated approach from a federal government somebody that's interested in investment here in the united states. i've personally emphasized the white house team and to the cabinet the importance of aggressively implementing the recommendations of this job council. i have been tracking implementation recommendations

and we have seen substantial progress across the board. let me highlight a couple other areas where your ideas have had significant impact. first on permitting. this is something that i notemac and others emphasized. as we all agreed we need to make a big investment in this country and infrastructure to assure our competitiveness and we also cannot be bogged down by red tape bureaucracy if we are going to get everything for the buck. ken building on the administration's efforts to streamline permitting i issued an exhibit of order to expedite the review of job-creating infrastructure products and track their progress on the new public - corporate. most importantly we are using these projects to learn lessons we can scale across a range of projects through the federal government moving forward. and i want you to know that as a result of your input, we are

going to establish a permitting product manager effort overseen by a wendi to establish performance metrics, track progress against the goals and best practices across the agencies so you can check these off the list. a second example of the regulatory review we will have an opportunity for jeff to expand on what we've been doing in this area but a task of federal agencies to cut inefficient, excessively burdensome regulations and its issued in the exit of order to independent agencies to look back at their regulations for inefficiencies and excessive burdens. currently we are estimating savings of $10 billion over ten years by implementing just diffraction of the reforms that have already been proposed and identified. we're going to provide you a follow-up date in a moment, but the preliminary results are

exciting and this includes by the way the independent agency, for example the fcc prompted by our request, but also due to some excellent work by julius genachowski, they've already eliminated the 190 rules. 190, and that gives you a sense of the scale of the work that can be done as a consequence of some of your recommendations. on the announced last friday i'm going to ask congress to give authority to reorganize the government to make it work better for the american people while eliminating duplication and waste and inefficiencies much of this is embodied and much of the recommendations you have in particular areas by which a set of proposals agreed consolidation authority to vote for the first time require any organization proposal reduced the size of current and costs so this is not just a matter not moving boxes around the question

is can you actually achieve better integration, better streamlining, but efficiency and ultimately better consumer service and better pay off for taxpayers. the first proposal we identified as to consolidate the six agencies focusing primarily on business and trade and to a new department with a single mission to spur job creation and expand less economy. this department would consolidate the core business and trade functions of the six agencies and would be focused solely on helping on troubadours and businesses of all sizes to grow and compete and hire them while also cutting costs and provide better customer service. i need these to say not only have you guys exceeded all expectations in providing specific and thoughtful recommendations hopefully we have at least met your expectations and follow-through

in of the implementation. what we haven't seen as a bunch of white papers sitting on the shelf somewhere collecting dust. we have tried to victory seriously everything proposed and try to integrate and into law only legislative proposals but also the executive proposals of their. so i read the first year report. i was pleased to see that there's consistency and shared urgency about america playing to win. education for innovation, streamlining regulations, energy, manufacturing, all of these are critical issues and they're all interwoven and unpack each other. i recognize a lot of these issues are difficult. they've proven challenging for decades. the good news is on each of these for once we've made progress. i feel confident in being able to say evey