[applause] >> good evening. i'm tom campbell, director of the metropolitan museum, and i

like to welcome our distinguished guests and our audience to the met this evening for this important discussion. at first glance, an art museum might seem like an unlikely forum for conversation like this. but, in fact, we are an institution devoted to objects deeply connected to history's economic forces. throughout history, artistic production has been linked to economic prosperity. as societies develop, so, too, to artistic output and patronage, and our collections are largely reflective of that dynamic. from the ivories of the neo-assyrian empire dating as early as the ninth century b.c., to the egyptian temple created under the wealth of the roman empire, 800 years later. from the gold threads found in ancient chinese tapestries, to

the portraits in our renaissance portrait of sir the strength and humanist ideals of 15th century italy. indeed, i would together, the rise and fall of civilizations throughout history. the exchange and sale of artistic objects have also been a crucial component in the development of the trade groups around the world. critical ports of venice and many others. allowing the abundant exchange of ideas and resources. by the beginning of the first century a.d., merchants, diplomats and travelers, with some difficulty, cross the ancient world from the mediterranean to china and japan in the east. such trade routes for the communication highways of the ancient world allowing for the

flow of rich beliefs, languages, social customs, and artistic styles. you just have to visit our asian galleries, for example, to see how the sculpture was influenced by the hellenistic style popularized by the romans. if we briefly visited the conditions of this museums founding and evolution, you will also find an inextricable link to the economic circumstances of post-civil war new york. it was the idea of private citizens to create this public art museum, and it was the fortunes built from railroads and industry that allowed it to happen. there would've been no egyptian excavations without the likes of j.p. morgan. and certainly much been a collections here without the late likes of jacob rogers, a businessman, who made the

motives in paterson, new jersey, and in 1900 to unexpectedly that's the metropolitan $59 the equivalent of hundreds of minutes of dollars in today's art buying terms. when the met was founded in 1817, it did not own a single work of art. it's growth during the late 19th and 20th century is a reflection of america in new york's economic prosperity across that period. today, the transfer is the largest truly encyclopedic museum in the world with an annual gross operating budget of $300 million. we have the highest attendance of any museum in the united states, just under 5.8 million people last year, with an audience that is 40% international, and an additional 50 million visitors on our website. we have the largest acquisition

program of any western museum, spending 40 to $50 million annually, with many times that coming in the form of gifts. we maintain the largest exhibition program in the world with about 30 exhibitions a year, and the largest publication program of any museum. and this year alone we will produce 22 scholarly artistry books. all of this funded not by the government but by the private philanthropy, benefiting from a long-standing american philanthropic tradition, and critical tax incentives introduced in 1917. today, nearly 90% of our annual operating budget is privately funded. in the past 17 years, over $1 billion has been raised from private sources to support our capital projects and endowment. so as i look to the future, we

have quite a vested interest in the continuing prosperity of the american economy, and i hope i can hear good news from our panelists. let me end by suggesting that the met is uniquely positioned to engage in this sort of global dialogue, and the global dialogue outlined by tonight's program. a large part of what the met offers our national and international audience is that is a lens to condition the future in the context of history. i see tonight's program is very much part integrated with that part of our mission, and i'm delighted to welcome the editor of the new review of books, robert silver, to our stage to moderate this critical discussion. so with no further ado, gentlemen, i turned over to you. thank you. [applause]

>> thank you, trendy. and thanks also to the members of the met staff, and so helpful and a raging this evening. we couldn't imagine a more congenial place for this forum and the metropolitan museum. the symposium on world economic problems is brought to not only by the new york review of books and the met, but also by our friends at the very generous for its foundation. in oslo which is often collaborate with review and supporting meetings such as this one. i want to thank george soros for donating copies of his just published book which you will have seen on the tables outside. and, finally, i want to thank simon of oxford who has been the major organizer of this evening. and i shall remind you that books by other panelists will be

available following tonight's event. now, for this evening we raised several issues with our participants. we thought of the continuing problems of the euro, and the tightrope being walked in greece, as we speak. and the question of how the euro itself welfare as a common currency, without a european treasury or a stronger constitution. we thought, secondly, of a shaky situation of the united states since the recession. and how it's problems of high unemployment and tightening income will be affected by our political situation here, as well as the crisis in the eurozone. third, we raised the question of the chinese economy, which has functioned as an engine of

global economic growth in recent years. how would it respond if its chief export markets in europe and the u.s. remain weak? finally, hovering over all these issues is a question of global warming, and how measures to do with it are possibly, be integrated with the other economic concerns i've mentioned. now, to deal with these questions we have here, i think, a remarkable panel of economic experts and commentators. in alphabetical order we have paul krugman, whose work we all read in "the new york times." he's been a skeptical commentator, both about the direction of european austerity and american fiscal policy. he's won the nobel prize. is currently a professor at princeton. his most recent book is the

return of depression economics and the crisis of 2008. now here we have next to me edmund phelps, professor at columbia, won the nobel prize also in 2006 for his work on the relation between short run and long run effects on economic policy. is the author of the book "rewarding work." jeffrey sachs, on my left them is the correct of the earth institute at columbia, which deals with such problems as crime and environmental degradation and poverty. and disease, and sustainable use of resources. he's advised many governments. he's the author of the book "the price of civilization." finally, my far left, george

soros has written nine books on globalization. and the political economy of the united states, and the workings of domestic and global financial markets. i've already mentioned his new book, financial turmoil in the united states. he's chairman of the soros management fun and by now he's given away over $8 billion to advance human rights and public health and education. [applause] now, to all these very distinct participants we have made it clear that we are leaving it to them to arrive at their own synthesis of the issues i've

mentioned, and select and give the emphasis they want to the questions they would single out. each of them will speak from 12 to 15 minutes. i have here a yellow card given me by simon head, and i will waive it is each speaker approach is two minutes before each speaker -- approaches 15 minutes. we will then have some talk among ourselves, for about 15 minutes or so, and then we will have questions from the audience. and now our first speaker, paul krugman. [applause] >> thanks, bob. couldn't resist when you said, talked about greece walking a tightrope. that's not how i see. i guess i see them walking the plank. >> falling off. >> will they fall off.

okay, now on the topics that bob mentioned, obviously climate change trumps everything else. if we don't everything about that, not as things were talking about matters. and, therefore, not going to talk about it at all because it sort of beyond -- i thought in these introductory marks i would talk about economics. we're suffering, it's, a tired such a, but it's the worst since the great depression but it's not as much less than the great depression for number of countries. as you might thing. here it's not as bad by a long shot but that's probably because we -- but it still plenty bad, and in a number of countries it is as bad. so this is a really terrible economic crisis. nowhere close to being over. so it was kind of almost disheartening to see people reacting to last month's

employment report, which was better than expected, as if okay, then that solves it. it's going to take reasonable estimate, if each month from now on is as good as january was, we might be at full implement by 2019. so we are very, very deep in the hole. we have maybe begun a very slow climb. and, of course, in europe not given a. europe is almost certain in recession began. this is a very, very bad situation. i often pick the most important thing to say about this is that although he's uniquely bad for the past 70 years, it's not unprecedented and it's not basically mysterious, that this is a very, if you like sort of a mega version of a quite standard economic crisis that actually -- we are experiencing a garden-variety and your financial crisis which is the kind of thing economies can say

but it's true. what we are going through is not mysterious. it's not something, there were many details people didn't foresee it. nobody foresaw it to its full extent but it's not as if this is a mysterious, unheard of, unprecedented event. and so kenneth rogoff wrote a very good book, i disagree with some of things but they were a very good book which has a wonderful title which was this time is different. because, in fact, very rarely is this time different. this time is not different. what we are facing is a standard severe economic slump in which the basic problem is that people are not spending enough to make use of the economic capacity we have. we have workers, workers are not, they may not have the ideal skill but they're not lacking in skills. we have productive capacity. what we don't have is enough spending. the reasons behind that are also at this point fairly clear. we had a binge of private sector and widespread private borrowing

both sides of the land. monsters housing bubbles and debt bubbles on both sides of the atlantic, partly because of financial deregulation. partly because of been a long time since last economic crisis and people get complacent, and that's the story. economic crises breeds caution which lead to a long period of calm, which leads to complacent which leads to the next crisis. and innocence this was a cycle, but there's no inherent reason why the adjustment, why the hangover has to be as bad as this. the job of the government when something like this happens is to step in with fiscal expansion and monetary expansion and provide enough demand, because no good is done by allowing 13 million workers to be unemployed. you have a debt problem, a debt overhang that needs to be worked

out. summary needs to be defaulted on. some of the possibly inflated away but it doesn't help anybody to have the economy producing a trillion dollars a year less than it should be producing, to have that for workers who could be doing what i do think, sitting idle instead. so the job should be to government spending, to aggressive policy on the part of the federal reserve as counterparts abroad to minimize economic damage as we work our way through the consequences of past this judgment. unfortunately, we haven't been doing it. we do a certain amount of it automatically. probably the biggest reason is simply with a much larger government than we used to. when the economy collapses, the social security checks keep going out and the medicare bills keep getting paid and that acts as a stabilizer on they come. in terms of effective policy, where they will fully undercard stimulus in this country which

has now essentially faded out. we have had austerity programs, both in number of countries, and in this country at the level government forced on them which have done nothing, so we have actually in some ways that's a bit of a downturn. why are we doing this? for me at least the most disheartening thing is that we have a lot of announce that the great 80 years of economic think, trying to understand these things. we have a basic understand that is not too bad, and when push came to shove, policymakers and if the number of economists, tossed textbooks write out the window and said maybe own rules. so they made up stories about how governments would improve the economy by slashing spending. this would lead to an increase in confidence which i think my contributions would be to the literature of this a phrase leading industry. so we went had serious

governments believing, basing their policy, and we've had political constraints as well but those -- so it's been very disheartening. the only thing i can do in this country is to keep on playing and hope to turn it around the europeans have a special problem. which is that they have set up an institutional structure, meaning a single currency without a single government that makes things a lot worse. they do not have a single government that's automatically, in our case, redistributes resources to the most hard hit regions. i think of a comparison between nevada and ireland which look almost exactly alike as long as you stay within this assistance and don't look out the window. [laughter] terrible housing bust, terrible rising unemployment, loss of losses on loans, but in nevada

the retirement programs and medical bills are paid for in washington. the banks deposits are guaranteed from washington. balloon losses are falling on washington-based agencies. so there's a lot of automatic buffering of nevada, which ireland doesn't have, so i event is in fiscal crisis on top of everything else where's nevada, it's not good but they don't have the same kind of problems. the europeans are in a terrible mess because they created this thing, the single currency, without, with also willful disregard to the question of what happens if something goes wrong? and they're really not prepared for it. what i would have said is what they do, the only way to make this work would be to actually do the kind of things that we should be doing in the u.s. but more so. the european central bank should be even more aggressive than the fed, and that the shipping governments that can be doing stimulus to the limit, which is germany and a few others. nothing seems to be having although i will say that since

the european central bank shifted, drug is doing more of what needs to be done. i've been very impressed by his subtlety. he's been able on the one since i know i will not buy sovereign debt. the ecb will not do it. we can do that. but we'll than unlimited amounts of money to the banks and acceptance of it as beautiful. they say one thing and do the opposite. it was the right thing to do. i don't think we should talk about china. i actually think i want to just come back to the broader issue. right now here's what they say. well, it's the long run problem. we need to work on the fundamentals and you can't expect a quick recovery from this. which all sounds very wise, and is totally totally wrong.

and extremely foolish. very naïve. the reality is that we have yes, we always have long run problem right now with a short run problem. we have a $30,000 car with a bad battery. and fix the damn battery. replace it. we could be back here we have more or less full of them, we could do that again. i can do quite quickly if only we had the political will and intellectual. and every argument as you see people making right now about why we can't do that, about technology, about skills come about globalization, come back to 19 there's and find people making some version of the same argument. we can find articles from 1935 about how even if it was a big increase in demand, the u.s. workforce no one has the skills to do with modern technology and couldn't ever get back to full employment. and then it wasn't even the war, just the approach of the work

when the united states began spending to prepare for the war. between 1939-1941 before pearl harbor, all of a sudden we have 7% increase. all of those arguments are disproved even before the japanese planes dropped their bombs. we could do that again. only if we have the political will and the intellectual clarity. we don't but it's the job of people like us to try to supply the influential dasher intellectual clarity. [applause] >> and so now we have professor edmund phelps. >> our country is suffering i think from two basic intellectual failures in the economic sphere.

first, the country has not learned how to combat "structural slumps." many economists have not learned how to recognize when. policymakers are fixated on tax rates, differing only on whether they ought to be raised, that's the party of austerity. or lowered, that's the party of process the. i think the low-level of discourse is an indictment of economics departments in america. second and more important, i think our country lacks the moral basis for renewal and reform of the economy, because it has failed so far to obtain a consensus on the good life, also known as the american dream, and on economic justice. and i think this is an indictment of universities. they are mired in chic, postmodern relativism.

they never got behind nietzsche, james and burks, and on the good life, and they're not really behind roles, either. on the first failure, the public discourse has been polluted by those on the right who say that the economy will be fine again if we would stop violating conservative precepts, and talked up new violations. they do not grasp that taxes are wanted to finance justifiable subsidies and investments, and to fund justifiable future commitments. those on the left see the economy as productive and indestructible apple orchard. it just has to be regulated more tightly to smooth out the top, and we have to address the inequality in addition vision of the apples.

which means ever more help for the middle-class, more more help with medicine, with housing, with college tuition. and everything else to which the middle class is naturally entitled. now, i know our organizer was keen we talk about greece, so inspired by his interests, i'm starting with greece myself. people see the fix that greece is in as a moral parable that is a warning to the rest of the west. but the parable has flaws or mistakes in it. it's far too crude to play the crisis in greece on an overlarge welfare state, or on pandering after the votes of public employees. germany, holland, sweden have the lowest unemployment rates in

europe, despite huge welfare programs and well-paid civil servants, too. they are saved by their horror of under taxation. there is no such horror among the greeks. [laughter] greece allowed its public debt and its public outlays to soar in relation to tax revenue. so the correct moral should be drawn here is, spend what you like but pay your bills on time. now, press reports tell us that ordinary citizens in greece did not know of the now scandalous underreporting of the undertaxation. the reports say that the crisis result or the implies that the crisis results from the unpreparedness of the country to

determine how the costs ought to be shared, and the benefits adjusted your tax increases or rollbacks of civil service pay, or some givebacks intentions for a while. what, everybody longer has. but i think the correct moral of this story is, do not keep the truth from the public. we need openness, transparency. because nothing you do with the signs for the welfare state or pay for civil servants. both views lead us to believe that a country that indulges relying -- for a long time and unfunded entitlement, you know, those things that are claims on future tax revenues, that after indulging in those things where

longtime, the country will be fine again. once against its public debt, entitlements, under control. even if it suffers a short, this is the suggestion i think of public discussion, even if it suffers a short recession resulting from the increase in tax rates were cut backs in government purchases that have to take place, the way will then be open to a full and fast recovery. a hollywood happy ending. even high debt, high-income countries such as italy and france, will be okay. i think this is precisely the economic thinking from ronald reagan to george bush and barack obama, when employment sags, whatever the cause, cut taxes and let the deficit slow, we

will grow out of the public debt. but what if the productivity growth stops, and it did in italy in the 1990s? and i think also in france. i forgot to look it up before i left. the problem is that increased wealth, all this wealth that is created by the deficits, on top of the wealth that already existed, all this wealth finances nonwork uses of one's time. added additional taxes levied to service that debt do not reduce this bloated wealth. they reduce wages net of tax. so you did both the fall of net wages in the enumerator and the rise in the denominator, and

that's bad. it's not all had to say but unemployment but it's an important thing to focus on. italy and france have a big problem here. they have long been a sabres, amassing levels of private wealth that are huge, relevant to their wages. now, all those budgetary deficits in times past, the taxes that the italians and the french did not have to pay that would've offset the wages and benefits paid out by the state, all those budgetary deficits have added a lot of paper wealth to the true wealth, to the true private wealth of the italians and the french. as measured by what they could consume over the future. as a result of the supply of labor to the economy, the labor

force participation rates, are going to remain depressed for years as nationals work off their wealth, or productivity growth gradually does the job, pulling up wages very strongly. the question here in america is whether the country faces the long same slog that it would italy and france faces, over the future. the bright side is that over the past 10 years, americans net wealth slowed in tandem with a slowing of productivity and wages. so net wealth of households, net of liabilities, net wealth of households as a ratio to their disposable income stood at the

same 515% in 2010 that it was at in 2002. not a dime's worth of change. nothing like italy what has been an explosion of wealth, and france even worse. so that's good. by this token we should be enjoying now the 2003 unemployment rate here and now in 2012. rather than what the unemployment rate we actually have, which is 8.5%. of course, we know that lots of other things have intervened, but that's where the analysis is going at the moment. but then comes some bad news. we have to reckon with people's entitlements. people's wealth consists not only of their private wealth but what i'd like to call their

social wealth, the wealth created by a stroke of the pen by the government. a calculation by mary meeker, a new york financial economist, finds that the americans entitlement, net of social security funding, added up to $66 trillion at the end of 2010. that's the present discounted value of all the entitlements. that's more than 500% of disposable income. so now we have the $515 trillion of private wealth cama and on top of that we have $66 trillion of entitlement well.

sorry, 550% of disposable income, so that would be disposable income is around 12 billion, then 60, so the private wealth is about 60 trillion, and now with a stroke of a pen, or several strokes of several pins, the government has created $66 trillion worth of social wealth. and, of course, knowledge of entitlement spending has been explaining his recent years, so that 500% of social wealth as a percent of disposable income must have shown a huge increase compared to the level back in 2002. so when you come down to it, wealth considerations do not point to getting back to the unemployment rate we had in 2002. it's much worse than that. we are in for a slump of regulation reinhardt rogoff

link. a dozen years or so. and budgetary deficits in the present decade will add another trillion dollars to this wealth. what are americans to do? very briefly, i have ideas about what i would do if i were a philosopher. i would aim to rehabilitate and reform the economy. its institutions and its economic culture. reform it for the generation of innovation. economic diamond isn't is the elixir of economic life. the conception of crude keynesianism that by pushing the right buttons, we can david employment level we want and increased consumer demand, and if that doesn't work, construction projects to employ strong back labor. that's discredited by

cross-section studies of what explains high employment and low employment among nation. what this dynamism would require, our efforts on a broad front to encourage more entrepreneurship and finance in startup companies, and to encourage students and young graduates to develop themselves to imagining creating and exploring. to the extent that these efforts have succeeded, these efforts would lift job satisfaction and employee engagement, and raise employment, too. now, while dynamism is crucial, we want dynamism with economic justice, with what i call economic inclusion. that doesn't mean social inclusion, which is about income. it means drawing people into the economy, which is the core activity of society.

preferably in the business sector of the modern economy where new ideas for new products are conceived and developed and tested. and it means pulling up wages in the lower echelon of the labor force. it means instrument care must be a government program of graduated subsidies to companies where their employment of low-wage workers. in my book, "rewarding work," was robert kindly mention, i estimated that the cost of a plan big enough to make a big difference was close to 2% of the gross domestic product. i know jeff sachs wants to use that to% in his ways, but i think this is a terribly important way to use it. this vision, as many of you know, i just laid out, is a

fusion of the best part of friedrich hayek and the best part of john roles. hayek understood, and slowly made more and more clear that a modern economy is an organic thing. and is capable of imagination and creativity. not the mechanical thing of crude keynesianism. i argue in my recent work that to be a part of that system is, for most people, the only way by which they can expect to have a good life, a life of exploration and discovery and engagement. use of their mind and their emotions. roles understood and economic

justice involves, not just transfer of payments to people to permit them to consume more, or to work less, or not work at all. that was at all what he meant by economic justice. for rolles, economic justice, justice involves modifying the distribution of their rewards from work in a society economy to favor the less advantaged as much as possible. interestingly in his last decade, hayek the allied himself with rolles' perspectives on hoping with time the country will become persuaded that this is the way to go, but this is the only way by which we can get back to the and economy with the excitement and the sense of challenge and progress that we once knew until a couple decades

ago. thanks a lot. [applause] >> analogy of. >> thanks a lot, bob. let me add another thought to the discussion. we do not have a global economic crisis. not even close. we, of course, have a mess in the united states. we have a mess in greece. we have the crisis in spain. we have a crisis in some of the other countries of southern europe. we have a crisis in ireland. but even within europe there is no crisis in germany now. unemployment is at very low levels, compared to the last couple of decades.

there's no crisis in the netherlands, in denmark, in finland, sweden, norway. northern europe is doing rather well. low budget deficits, rather high employment, very high prosperi prosperity. trade balance or surplus. and if we look farther beyond the north atlantic of the united states in western europe, then it's even less the case that there is a global crisis. after all, in asia, developing asia, meaning india, china, southeast asia, economic growth rates are at unprecedentedly high levels of historical comparison. china has been growing, as you know, at a rate of about 10% per year, for more than three decades. that means a doubling every seven years.

and even through recent years, china's economic growth is, right now, around 8% per year. india is a bit less. other countries in asia their aim around 6%, and in some cases higher. the world economic growth is about four-4.5% a year, which means the whole world economy is doubling roughly every 18 to 20 years right now, which is astounding for a world of 7 million people, and an average income worldwide of about $10,000 per capita. so $70 trillion world economy, expensing a doubling every generation, or even less. i have been attending the g20 meetings, each one, as part of the delegation of the secretary-general. and it's a very odd feeling,

because most of the g20, from brazil to china to india, and elsewhere, look on and say crisis courts will global crisis exactly are you talking about? oh, you mean the eurozone crisis, or the u.s. crisis. well, that's different. that's not a global economic crisis. so i think we need to gain some perspective of why this peculiar divergence in perspective is happening, and the reason is they, remarkable convergence in economics. and that is that the developing countries, which we now call the emerging markets, our achieving robust economic progress by leapfrogging technologies and high saving rates, and making a tremendous amount of economic progress in narrowing the gap with the richer countries.

china was one or 2% of the world income when deng xiaoping through the countries borders open to globalization, and is now about 11% compared to the u.s., 18%, which is down from about 24 or 25% a generation ago. and at least a plausible extrapolation of the imf say that the two countries will meet somewhere around 2016 at about 60% each of the world economy. so that is a kind of convergence going on, and we field in geopolitics as well as in economics. now, my view is that this has had a profound effect on the u.s., and on part of the u.s. because it's also true, we don't have even a general economic crisis in the united states. we don't have a great depression, or even anything close to it. for college students, not

students, sorry, for college grads, while the labor market is soft compared to three or four years ago, the unemployment rate for those with a bachelor's degree or higher is about 4%. it's up a little bit, but the income levels of people, probably most of us here, and that are fortunate to have a good education and have had good support, has been very strong for the last 20 years. what's happened is that under the dynamics of globalization, it's really the bottom half of our society that has experienced the remarkable collapse, the neighborhood a factory is no longer there, the high school diploma followed by the manufacturing job no longer exists in this country. and so what used to be the pathway to the middle class, a high school diploma and a job in

the local manufacturing firm, that disappeared. and so we have also a divergence even within the u.s. of a remarkably successful top of the income distribution, the now fabled 1%, and a crisis of the bottom 50%. and a quite serious crisis of the bottom 50%. now, let me add just a couple of other quick elements to that, and then turn the implications as i see them. first, this remarkable overall global economic development is bringing a perilous environmental crisis with it, the rising china is certainly the most rapid, dramatic, astounding reduction of poverty in world history. but it is also the most astounding increase of greenhouse gas emissions, of

climate change inducing effects therefore of environmental catastrophe within china itself that is part of this. we have worldwide, a deepening and profound environmental crisis that is recognized everywhere, except the editorial page of "the wall street journal." [laughter] [applause] and it's getting worse, and it's getting, and it is unattended do. we also have continuing a people, not because of globalization has shifted worldwide jobs that labor market competition and absolutely unprecedented ways, hugely to the detriment of lower skilled workers and to the benefit of those with capital who can now invest all over the world, and even more profitably insures. but our world is under

unprecedented flocks because of a true absolutely astounding revelation of information technology. which is changing the nature of jobs everywhere in almost every sector. it is the ultimate disruptive technology of our time. this leads me, finally, to the policy implications as i see them, and i find myself close to edmund phelps on a lot of the activation. we need government help us steer through these challenges, because government is critical for infrastructure, for skills, for education, for support for science, for support for the upstream technologies of change in the future. and is of course vital to help those who otherwise will not be able to get a foothold, and that is a remarkable 50% of our society right now, living in low

income households. this is the collapse of the middle class in america, and we need government to help face this question so that children can get through school, can get a college education. but even today, only one-third of our kids is a bachelor's degree, and only 11% of hispanic young men, aged 25-29, have a ba. and this is the catastrophe of social inequality in this country. government needs to help, but is not helping right now. the societies that are working are the ones that tax themselves adequately so that the public goods can be provided, so that every child can get decent preschool public education, and then through higher education, if they need it. so that infrastructure can be modernized, so that energy systems can move to a low carbon economy, so that we can get out

of the various traps that we are in and that we can address the realities of the deep, profound challenges of globalization. america's fundamental problem, in my opinion, is that since ronald reagan came to office january 20, 1981, and declare the fateful words that government is not the solution to our problems, government is the problem, we have been on more than a thirty-year jag of dismantling the very means to address the challenges that we face as a society. [applause] and i will close, ladies and showman with one piece of unfortunate reality for us, and this to my mind is the bottom line. it's literally the bottom line. and if you want to find the bottom line, go to omb.gov. that's where you find the budget, and click on budget and

then click on summary tables at the bottom of the budget and then go to table s. dash six. and i say because a little geeky but if you want to find out the ultimate geek trend that we are on, it is in the table of the obama budget. since we do not tax ourselves, we are squeezing government to the breaking point, even president obama who gives wonderful speeches about the need to invest in the future does not match those fantastic speeches with the funding to actually do that. and a line that is most important is what's called the nonsecurity discretionary budget of the u.s. this is where you find education, job training, infrastructure, energy, science and technology, environmental

protection agency, small business administration, federal land management, everything except the military and the transfer payments. now, that used to be between five and 6% of national income in the 1970s. then came reagan, and he took it down to 3%. for that combined a vital function of government. for 30 years reaganomics has ruled. it didn't matter, democrats and republicans, 3% with small variations, no change. remember, so many -- i will, i don't have time for the detailed the navy in the discussion, but where are we now? because of rising debt service payments, because of an aging population, because of higher health care costs and because of this relentless taxcutting, even that our president is pushing

still, that discretionary line in the presence budget will fall from 3.1% of national income down to 1.8% of national income in the year 2020. we are dismantling the very means to address the needs of our society. thank you. [applause] >> so, george soros. >> i'm not in disagreement with your conclusions, but i should like to take issue with your premise, namely, that there is no global crisis. because that's the way we can have a good discussion. [laughter] i do think we are in a global

crisis, that our global financial system is not functioning the way it's supposed to, and that the financial markets are practically paralyzed by the degree of uncertainty, which is a measure of the crisis. but i think that it is very deep-seated, and to understand its nature i would actually like to start off at the deep end i contend that the ability to understand and to control nature is much greater than its ability to understand human affairs and to govern itself. and that disparity has been growing and it has now reached

disturbing proportions in recent years. and that is actually the core of the crisis. i have taken that disparity to a fundamental difference, between the natural and social sciences. the national sciences deal with facts that unfold independently of the scientific statements that are made up of them. the facts, therefore, serve as an independent criterium by which the truth of relativity of the statements can be judged. and that is what has enabled natural science to produce such amazing results. by contrast, the facts upon the subject matter of the social

sciences are produced by thinking participants, and these agents think very differently from natural scientists. they don't have an independent criterion for which they can judge the relativity of their views. therefore, they base their decisions not on knowledge, but on an imperfect understanding of the facts. and their imperfect understanding entities the element of uncertainty into the course of events that his accent and natural sciences and interferes with the ability of the social sciences to produce comparable results. economics, which became the most

influential of the social sciences sought to escape this inferior status by taking an approach similar to geometry. but they resemble them very closely. the axioms of the hypothesis distorted reality quite substantially. because they eliminated the uncertainty caused by imperfect understanding, and that uncertainty today is absolutely dominating our lives. this has far-reaching consequences, exactly because economics became so influential.

that led to the progressive dismantling of regulations and firewalls. this caused one financial crisis after another, and the widespread use of risk management methods in cdos and cds, which were based on unrealistic assumptions, greatly aggravated the impact of these crises. bankruptcy of lehman brothers in october 2008 started a meltdown that prevented only by putting markets on artificial life support, and they are not yet back to normal. now, there is recognition that

the efficient markets have others, failed. there have been many other instances in natural science when a prevailing paradigm was discarded, but none have had such profound practical consequences on our daily lives. plu..

there is little company, even among my cells, speakers who are actually closer to my view those other economies. so we should have plenty to talk about. [applause] >> i think we do have plenty to talk about because there is -- there seems, even if we ask for

the economics does have some factual systematic basis, dirt dicing the disagreement about the kinds and types and size of government action that same approach. in the current situation. and therefore, it all, everyone has mentioned the lack of some kind of stimulus. everyone has mentioned the lack of some kind of government investment. everyone has mentioned the need for some kind of intervention, but the different kinds of intervention, the more closely related than seemed quite distinguishable. so i would like to ask paul about but more specifically, did he think is lacking, and the way of intervention?

>> okay, so why did -- i agree with jeff very much on the savaging of our long-run dog that we should be doing much more than that, but we also have an immediate problem, which is a very large number of workers who could be employed, who should be employed and the government should be playing a large role in hunkering up demand right now. at close this a fairly common thing i've been saying the next guy who calls recruiter will pull them out and punch them in the. it's very a lot of intellectual work. statesmen are pretty -- i try to put them in plain english, but people who have very well thought out and there's actually this happens to be a golden age for your research.

and there's wonderful work being done now assessing the impact of government spending. there's a lot of new work that basically says if the government was spending more would be much much better shape. and it sounds very wise as i said at the beginning. it's totally the. we have an overwhelming problem that could be solved in two years. both of those are stored in ascii chad i want to say something about greece. men says it's common knowledge that we've had an explosion of entitlement in recent years. i guess i don't share that common knowledge. my knowledge is there potion of unemployment benefits,

substantial growth insouciance and considerable growth in medicaid. and those are not policy decisions. that is not an expansion of the safety net. it's just their more people falling into the net. the expansion you see in the last two years is an entire consequence, not the result of government suddenly decided not to up benefits. take out those and you really don't see anything happening. so i think that is an important point to make. schiff says that is the bottom half in the highly educated are doing okay. not according to my read. what is happening to resent graduates. other things say it is terrible. as a catastrophic thing in the fact that those outrageous of

colleges graduates now because the wages of college graduates who employ have fallen, but rather to large numbers of college graduates are working as the rest is or and we have a fair value. if you want to ask, if some graduate in this bad labor market does not initially get the shot this year he should be getting, given the training. how long does it take to recover from that? the answer is forever. young people graduating from college right now will be scarred. their careers will be scarred for the rest of their lives. this is a crisis within the united states. there is no substantial occupational or educational group that has not been hard hit. it's only the bottom half of the population. within europe, it is true that germany is floating along pretty well although i'm not sure we'll have the same story next year. some are floating along pretty well because it's running an

enormous trade surplus. which is the flipside of the large trade deficit in europe. with the germans tell you is why can't everyone be like us? so we should all run cheeky in a trade. i was talking to nasa this afternoon about where we'll find the plan will export to. so if you really want to think of europe, it is not a single government, but if you look about the european economy is doing somewhat worse than the united states. it's wrong to take it out. none of us said much about greece. i'm not addicted to them because i've been protesting for a while about the allocation of our discourse here. i'm a text about greece and says he's greece has a great example of what is going wrong. kris is pretty much in a class by itself. portugal a little bit, but even within the crisis countries in europe, none of the others have

a crisis or government irresponsibility was a large share of the crisis. look at spain nec up was a monstrous private tour, monstrous housing bubble. the government also my main surplus saving came in with low debt. italy for everything we say about it has a large debt which is the inheritance of irresponsible policies quite a while ago, but they were steadily reducing that relative to gdp. so this is not -- greece is a parable motivating example. unfortunate because of the underlying situation presuppose that which is extremely likely, it will probably have the effect. but do not think of greece as a role model for what is going on elsewhere. >> well, i note that negligence apply and i think we are still in search of quite specific kinds of invention.

>> can i say one thing? if you want to look at something right now, over the past four years, we have had a roughly 3% decline in state and local government deployment. and of course given population growth we should have had a 4% increase instead. so if you want something we should reverse it is provide money should the local government for the school districts that they can rehire other school districts they been laying off. [applause] >> i am not sure if that is what matt had in mind. >> i really welcome this opportunity to chat with paul. i haven't run into them in about two years. at best they would have the same, but it hasn't been the same since. well, i agree with everything

paul said about greece. i was making a very similar point increase is totally unrepresentative of what is going on in italy, france and america i am sorry to say. and i don't want to drone on excessively about -- is it the dword, zero the c. word, but let me say if we were having a textbook keynesian swamp, we would've seen maybe not the outbreak deflation falling price level, but we would've at least been a heckuva lot of disinflation, a big decline in the rate of inflation. we haven't seen that. we probably can argue the details on night, but i think roughly speaking it is fair to say that we have not had

anything like the mark of inflation that we would've had if our problems were msn coming to eyes grew monetary mechanisms in so-called effective or aggregate demand. second of all referrers to a ton of mr. word, which i haven't seen, which shows the importance of government expenditures for employment. i can't help but have the feeling that there is a bit of trading here on the obvious. sure, if someone the public sector, someone fires, somebody gets fired, the world is full of frictions and that person goes into the unemployment pool. it doesn't instantaneously get employed by the economy as a whole thinks tucson miraculous

auctioneer who somehow has been able to figure out who should go where thanks to some auctioneer. so of course there are short run effects when there is a contraction of government expenditures. the loss of us in the economic expection hot models, not every day, not exclusively, but lots of us to have models that don't have money and then. and you know what? 's government expenditure drops, there's at least momentarily an increase of unemployment. so the discussion establishes the validity of the whole keynesian apparatus just to say that there is some artifacts of shocks to government expenditure on claimant.

and i guess i have made both points that i wanted to make you. so i will stop. >> fine, now i know that we have heard about this 50%. now paul has added to that 50%. the further decline not only among the manufacturer -- the people who would've not only had manufacturing jobs, but to a higher level of the economy and it seems to me that that is something you might want to respond to. >> i think that the gist of what i and suggest the next that we have a lot of investment to do whether it is in skills are to knowledge your infrastructure, but the idea that we can find

solutions to these instantaneously i think is wrong. we have what we are not doing in this country is thinking beyond a one-year or two-year time horizon. what passes for stimulus now his tax cuts. a one-year payroll tax cut for extending the bush era tax cut or half of the original stimulus was tax cuts. and not seeing in the government's actions for the last three years, sadly has been for the longer term. so what we have ended up with over this. is the next ocean of data, but there is little to show for it over the longer-term. and that is why we see the prospect of future years of

actual shrinkage in the core areas where we need to take better action. we are ending up with less government, nora. we end up with our tax base be of further and without the infrastructure. as president himself acknowledged that turned out there that no shuttle ready projects after all and there were because in modern society in the 21st century cannot build a national infrastructure and shovels. it is impossible. we need plans. we need decade-long investments. we need to think in the medium term. we need an expenditure password, which is viable. but instead, we take year-to-year improvisation that passes for some kind of stimulus

and the implications of this for us if it does any good, it is unclear. even in the short term. but it's not doing any problem-solving for the long-term. what shocks me and worries me about our country right now is airing an ability to longer term. our political system is relentless. there is no david is a campaign no matter when. there is no decisions that we've even come back to two-month policymaking. extend the tax cuts for two months or for six months. it is completely absurd and we face problems of a new energy system here. we have antiquated infrastructure that is more than 50 years old. and it is traveling abroad in a so-called developing countries sees the gleaming infrastructure and then comes back to jfk or

elsewhere and we know what we're really facing in this country right now. we are not doing anything, ladies and gentlemen, to solve this. there's no budget revenues, no longer term plans. so-called jobs that does wonders budget, fiscal 2013. that is a jobs plan. that is the jobs plan. that is an election-year platform. and we need something more. how are we going to gradually 40% to 50% of our kids. bachelors degree? who are we going to get the skills that when the manufacturing area saying that they can't even fill six or 700,000 jobs of skilled craftsmen, of technically trained workers they replying for visas to try to hire foreign workers because their kids are not getting through school and

not getting the training they need. they are going in fairly large numbers in the first year of college and then dropping out in very large numbers because they can't pay tuition. so i think the point i am emphasizing as we need to take the longer-term. we believe in the activist government, all of us. but she do have to pay for it and that means understanding we have to pay tax at and we have to have the revenues in order to be able to carry out the longer-term investments we need. we are not going to solve the problems except if we have been adequate time rising to think them through and to put a real public investment strategy in a serious areas. >> final thought. i want to just agree with george and say that i don't disagree with you on a broken financial system. and that points you emphasize

you have taught us then proved it also about the inherent nature of financial instability. it is all a reason to try to get our financial site are back under regulation because the biggest damage we did with the repeal of glass-steagall, the lack of -- [applause] and how is it that the author that seems possibly to be named the next world bank president. you tell me that puzzle of american accountability. larry summers, i don't get it. but this is so weird this country is. every day there's criminality on wall street, new signs, new evidence that the mis- behaviors that all this deregulation made

possible and encouraged in fact and there's just whatsoever for it. [applause] >> i'm very much for looking to george having some comments about the different ranges in government failure is a need for a regulation, i wonder which her own view is that government rule. >> probably all of us agree on big need for a nap to this government. but i think we have to vent at this point a minority in the country because i think the idea that government can't do anything right, that the government is wasteful, that

everything is the fault of government has gained the upper hand. it has been extremely well promoted for the wordsmiths and the manipulators who have done that is not only money. there's also a lot of talent and communication which seems to be lacking on the other side. but it has been very effective. and it's kind of a self-fulfilling prophecy because if you have a government devoted to proving how the government can't do everything right, then it invariably leads you to prove it. so this is what we are up again and while you are right just

about saying we have to take a longer view and then for shy four-year election cycle, that leads to further think and also the quarterly reporting of corporations like short-term thinking and the dirt. but it's not just short-term and long-term. there is a more fundamental division now and something that is significantly wrong and the political system when you have two parties more interested in defeating the other bad and following policies that benefit the country. [applause]

and right now, i think you have a republican or conservative message which is more interested in cutting government spending and maintaining the economy because by insisting on the ballot same budget and avoiding any new taxes, including the new taxpayers in eliminating the tax loopholes is considering new taxes. what that there is only one new way to go. and of course that is economic

activity so it is a fiscal constraint on the economy. >> while now, i think we have arrived at a rather difficult point because we have -- we have come down to the political core of economic analysis as their experts have been making. and i think we have time for some questions of the audience about this matter. no one person is here who is a contributor at the new york review and his analyses have been particularly acute. i would like to call on to oppose the first question. and that is just mastered. after he poses a question we can have other questions. i want to make two nodes. please keep any questions brief. please avoid explanatory

statements and please make sure that everything is put in the form of a clear question because if it is not, we will pass on to someone who does have a question. and now, i hope just magic is here and i hope you ask a question. >> iv, thank you of that expectation i should sit down. thank you for an excellent presentation and one that wasn't entirely sparks three. i probably speak for almost everyone in this audience of my own at this years of republican best mate to the extent of writing about it for a long time. that the issue is, how do we get from where we are today, which i do think is a precarious position to public investment down the road? i'd like to bring us to the here and and ask you this question. can the u.s. government survive but it's going to be -- what is

at best a modest economic stimulus and cannot survive a crisis in europe? we haven't talked about that. what lead to serious recession in europe in what will be the consequences for the u.s. economy? as if we slide into another recession, we are not going to get to the public investments that jeffrey sachs is talking about. what are the odds of recession and crisis in europe having serious fallout in the u.s.? >> i think that is a good question and i think there may be some response and talking about the possibility of another recession. >> probability of the european recession i would say about 50% as already started. the question about how clear his last cleared. if it doesn't turn to a

full-blown financial, the impact is a lot less than you can imagine. the direct trace languages, we only export about 2.5% to europe. so we've been a series curious export is not all that it. it's possible the government recession in europe is continuing with modest recovery in the united states. if it turns into a living cell about, all bets are lost. i think there's a lot of reasons to be very, very upset about what happened in europe. europe is not just economics. if the european project, which is democracy impeached over the world is a much worse place. but i'm actually a lot less scared about the economic impact than a lot of people are, which probably -- [inaudible]

>> i am fond of making the point that when there is some weakening somewhere in the world, that has a bright side as well as a dark side for the rest of the world. and that comes from the fact that the weakness in some part of the world lowers world interest rates. and that is good for stock markets, businesses appetite for investment and so forth you remember i was in hong kong one day talking and the academic way about this interest rate channel from one country to another and the news came on -- the news came in that there was some weakening of the u.s. economy in a quarterly report, that the hong kong stock market took off. stockmarkets job way to.

so the president doesn't understand that the linkage is between say europe and america are very complex but we can't be all that sure how things will come out. >> just very quickly i think what paul mentioned is worth underscoring that when mario druggie came into the european central bank and varied vastly increased liquidity, it changed the way from what was unmitigated disaster and a self-fulfilling crisis over the cliffs to what is a very painful. for previous, but not a catastrophe even for the other countries of southern europe. so i think the european situation, while still very and predict the bowl, largely because of german -- german economic policymaking for the euro zone is so bad, that we

can't predict that germany will guide anything properly in the end. it is just ideologically driven, and manifestly not looking into reality right now. but mario druggie has the most important job by firing europe and that is the european central bank and he is doing what is necessary they are to stop the self-fulfilling collapse and has changed dramatically the sand over the last few weeks and that is why the mood is brighter. it is why spain and italy suddenly can sell again i think this is a reason for optimism. >> well, the u.s. economy is showing the spontaneous that is

basically manufacturing and the shale gas, now shale oil, which must find secret in the united states than elsewhere her shale gas is 250 cubic feet and america and $18 in japan. i won't go into the problems of promotion. everything i found out so far, the pollution problems are not necessarily contained, could be contained by recommendation. and so, so also ages which have

not risen now for several years. they have made the u.s. competitive. so exporters are interesting. now i think that there will be a fiscal drag on the recovery. i mentioned the attempt to try to put a brake on the recovery. and the effectiveness or his performance i think as far as europe's close son, but mario druggie did relieve the credit crunch, which was really beginning to hurt the european

economy. so that is a very important economy. so that is a very important release. now there's still providence of greece, et cetera, but the immediate downgrade pressure is relieved. and interestingly, you have a counter positive influence on the global economy from china because china is in the barrier of transition with a new group is taking over this year or next year. and they are determined to avoid and they are now stimulating. the interesting thing is actually china is facing a need

its growth model. it cannot maintain the current rate because it is all based on export and infrastructure investments. and only one third of the economy is not presumption. so even if you move over to stimulating consumption come to stimulating one third by the other two are passed to diminish, we will think about a slowdown, but that should only come next year. so this year, i think the stimulus.

>> i want to thank our panelists. now we have time for another question and we have one from that site and i think we should have one from the site. >> thank you. i worked for two years at a hedge fund actually with larry summers. i love to work and risk management. i did things like -- >> can you speak louder? >> erected a hedge fund with larry summers during the credit crisis. i left to do risk management and i did credit swap modeling. for example in 20,922,011. i thought i'd last disgusted with the whole thing. have heard this sort of, train hsinchu in everything he said, but what thinks i can't help think about the credit crisis and the financial crisis is that what is different about it from the previous, the great

depression is the complexity itself. for example we mentioned the glass-steagall was revoked but it was revoked when he was essentially already moot because of the shadow banking system had gone around the rules. we have a vocal role -- the voelker ruled has been written by lobbyists. the politicians and the fcc do not understand the financial assistance. >> i'm sorry, but i see you are making an exposition, but we haven't made a question. >> the question is how are you going to do with the complexity if we give money and it just goes to the people who are fixing systems, how about health? i want to understand how we'll deal with making it a simpler system? [laughter]

>> that was inspired by paul volcker to some extent in the earlier literature in arab banking and in recent times mark the day has taken up the case. and the position is too much complexity. so it got simplified. it simplifies the commercial banks. so they do want to. it takes up the retail and deposits the household and invest them in burstein familiar aspects. and then you have some hedge funds that do some more adventurous things, but they are small and simple. you get a division of function. you don't have behemoths to do 17 different things before breakfast. so at least you get greater clarity, greater transparency of what's going on it should be much easier to regulate such a

system. but you've got to restructure. you can't take the existing structure and say we are going to regulate it now. >> .frank is not an equal bill and it deals with the problem basically by giving financial stability oversight council a lot of ability to crack down on what things might be a dangerous institution set can designate some and that is strategically important institution. which i think my initial expletives that the early lead as inserting a chilling effect on this complex out of complex out of control institutions and people are afraid that this might work. the thing that worries me most is judgmental, which means it

might ban the quality and honesty of integrity of the people in the composition. so this might work under current management when presidents and fed chairman douglas -- [laughter] >> i think that you could constrain special interests on legislation. that complexity will be great he reduced. [applause] unfortunately -- unfortunately that citizens united we are going the opposite direction. the bad government has become a self-fulfilling prophecy. [applause] >> very quickly, i think the

airport things that i would also mention in addition to the simplification. when his corporate boards have legal responsibility and that are held accountable. fatcat, average we know is the ultimate elixir of this explosive risk. third, it was known at the end of the 1990s by regulation was needed to the derivatives market. lurie fought it, thought it very hard, but it was an industry that this was needed. and forth, not that we have seen relentless lawbreaking on wall street, relentless fraud during this financial crisis, there has been no accountability whatsoever yet. [applause] so this isn't just risk taking. this is absolute financial fraud

are your free marquee firm, knowingly gaming the system and we have one fine after another team paid by the shareholders, ceos remaining in place. there is no criminal investigation coming up president obama finally that maybe there ought to be. maybe, but not salivating at. so i think it is not beyond us. we had been through this kind of financial crisis before and twice our country was rest to buy roosevelt from the gilded age and from the great depression. so maybe a third roosevelt is a good idea. [applause] >> i would go out that far on this criminality because there is criminality that always has

been on wall street. but it is not endemic and it's not criminality is causing the problems. it's bad governance. you know, -- >> impunity though. >> it's easier to look for scapegoats if you can find some. but it doesn't explain it doesn't explain the evasiveness of the flaws in the system. it's systemic. not that that's an misbehavior. >> i think it is important and notable that goldman citigroup bank of america, others teamed up with hedge funds to sell knowing toxic assets to their

owners clients know if they are designed to fail and now they pay a fine son in the several hundred million dollars each, but these were decisions taken by senior bankers, many of whom are still in place, still receiving bonuses and compensation of ceos remaining. and this is financial fraud as far as i'm concerned and as far as the fcc is can you. [applause] >> i don't want to go overboard defending wall street because i am a critic, but i think this emphasis on individual wrongdoing is the wrong emphasis. it is systemic and even though you have those in a way of the

cbs that are designed to fail, the fact that you have cbo's and the way they were used as cbo's squared, that should not have been announced by the regulators. the regulators have failed by failing to regulate. >> of course, i agree. they're several lines of defense against this. when we arrive at a situation where this tiny little outfit, e.g. financial products is waiting unbelievable sums of cbs, credit default swaps with no backing whatsoever, hoping to bring the whole financial into a crash at the end and then larry summers says, weary country of law. we have to pay them their bonuses still.

[laughter] how are we ever going to get it under control if there isn't accountability? >> i think george would agree on accountability. i think we can have one question and it should come from the night. >> thank you, first of all for taking questions. it seems to the concern over lack of use, stimulus for spending -- >> speak louder, please. >> it seems stimulus concern over spending has come to the panelists tonight, but it also seems that some skip this is some of the efficiency of u.s. government spending is also reasonable, are there any policy changes that the panelists would recommend that might enhance the covenants of citizens and government spending as a means additionally companies and political will around the kind of spending? thank you. >> what is your question?

>> all right. i guess we'll go alphabetically. >> i would say that a lot of what we need to do is try to get across. politicians spend so much time trashing governments that people don't have an idea of the good things government does. so this morning and at times 44% of social security recipients say that they do not benefit from any government program. 40% of medicare recipients. when people talk about government workers as they imagine we are talking about drones and offices doing nothing, that you want to to think who is the typical government worker and a fact we've seen 500,000 government workers are 500,000 production

of the work on the same local level in 300,000 high school teachers. so i think a lot of it is not that we have a government of value, but people who trash it. and of course there could be bad investment, bad decisions in state government. that is not unique to government. does anyone read gilbert? so of course we want a true come at the problem is that what the government. it's with the rare political government portrays government. [applause] >> so, just because her time is short by one audience for the chance, we can have a question from either side. >> banks. at the listening and i've heard professors ask a vet the reason for lack of economic growth in the long-term is because we

don't pass a nice end in an earlier piece tax rates shouldn't just go to the bush -- to the clinton levels, but even higher. my question has to do with that the maximum and no taxes on investment and free trade. a stable regulatory environment. don't you attribute which have a higher per capita gdp than even the united states and just if you're 60 years ago. the regulatory policies, low taxes on investment and low taxes generally. so why do we have a flat tax? is that the kind of thing you're getting on a? >> my question is, don't you think there's any benefit to lower tax rate, free trade and a

regulatory environment? it seems like a general consensus on this panel is regulation, higher taxes at an even higher rate than in the case in the 90s. that is the main reason for a lack of economic growth or short-term recovery from a financial crisis. >> i think this is a good question on which to land to represent a very, i say quarter way of thinking. >> it would be worth having on the. >> singapore is not the kind of economy that the british economy was over much of the 19th century and the american economy was from or through the 1830s

right up through most of the 1960s. singapore is swelling in the slipstream of a lot of big players who have been doing the heavy lifting innovation for a long time. you cannot possibly say that the united states is not like singapore. it just doesn't make sense. it doesn't compute. of course, in some sort of stationary state when there is no -- when a no project is left to do and we have perfect knowledge that we are all kind of brain-dead, from lack of use, then we can have very low tax rates. but we are in a very changing world. lots of challenges and lots of opportunities for innovation. that is for sure.

with all of those minds now working in the commercial business sectors around the world, for sure we are going to have an immense amount of new ideas for new projects coming up. so we are going to want to have an economy in america that is able to play the game, that is the e-books take advantage of this new climate for innovation. that we don't have the financial dearth or the disturbing innovation. we do not have an education system that is providing young people with any kind of mathematics are languages that may be necessary at many fine diaphragms. we don't even have a rhetoric anymore of discovery or a challenge and change and exploration. now they talk about the american

dream as if it was having a house. preferably one you all. why is it that should be that the american dream is beyond me. it is to meet the american dream is to make a mark, to do something you would be proud of and to have the involvement and the challenge. that is what we have to get back to you. we don't want to be more like singapore. [applause] >> i want to say -- >> your something to say? >> i just want to say that picking some small faraway country which we know something and saying that as a role model is a common means the newest debate on which many of us know

so little. all of a sudden we have everyone talking about the wonders of the trillion retirement system. i'm sure the trillion payday,. the question you have to ask is how is the united states going to pay for the things he wants to do quite if you are going to say here but, we're going to abolish medicare social security and all of that memo had away the rate of taxes, fine, but no one is making that case. not really. i've got mitt romney responding on the budget by saying president obama is taking off entitlements and furthermore he's the first price in it to cut medicare. so we're talking about taxes because we need to pay for what it is we want. [applause] >> i want to link both of those questions and also follow up on that play. the government together with the

durand complex phase played a crucial role in dhs computers, of course an internet we started as a department of defense project in genomics, in space science, and many of the absolute crucial world changes that were crucial for our economy as well as for her well-being. none of this happened overnight. all all of the required sound foresight and some extended national effort. president kennedy in 1961 did not say would put a man on the world to bring him safely back to work every back to election. he said by the end of this decade. when is the lack time we take on a project that extends beyond

the stimulus, beyond the next year. we're not doing it anymore. so if you want affect his government, we have to think ahead. we have to actually put out numbers that extend over several years. we actually have to have -- and it's one of the most hated words in the american political economic lexicon, we have to have a plan once in a while. and what arab rail and road network and so forth. they don't do it anywhere in government right now. they are scared to death to work on any planning at all. because they i don't want to be held hostage because of the lobbying and publicity.

there are no plans being made on a crucial object is for our country right now that is why the government is not able to function adequately and that is why we are going around in circles, ladies and gentlemen. [applause] >> i wanted to say, we have reached an gone beyond 8:00 and i think we have had a faint palace. [applause] and i think we have had a use will come a useful discussion of the different phases of intervention and i'm very

grateful to our people and i can say is to be continued. thank you very much. [applause] >> nastily syndicated talk talkshow host mark levin talked about the idea of utopianism. hour. [applause] [cheers and applause] >> okay, so we thought rather than let mark give a boring

speech -- the last mac we would have a conversation and you are going to join in after i get my shout out. so mark, first, welcome to the radio library. >> in a babar books adhere? >> we sold out the rest. >> thank you very much. >> i will start with what you wrote liberty and journey sold over a million bucks here and i think 1.2 million counting. a huge number. it was just a huge success. and i've written a number. i no you haven't written another because you need the money. why the present -- >> how do you know that? last mac why another book? >> you know, you can put everything in one book. and liberty and tierney was really a restatement of conservatives on the nonconservative them and the

reintroduction of it. because honestly, i thought that the republican party had turned into kind of mush and i thought it was important but what the left was doing in this country to remind you to let conservatives then, why it is so magnificent, white embraces liberty and private property rights and the rule of law and/> individual sovereignty in all of these things that have made america so great. and yet on the other hand, the last, which is constantly trying to centralize and concentrate power and how much damage has been done in the last 100 years. so it is kind of tough to do that in 250 pages, which i did. other than i thought to myself later, i really haven't gotten to the nub of this thing. that is, what is this force that lures millions and millions of people to it? th