>> good evening. i'm tom campbell, director of the metropolitan museum and i'd 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 a 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 developed, so too did articic output and patronage and our collections are largely reflective of that dynamic from the ivories of the neo-syrian empire dated as early as the ninth century bc to the egyptian temple created under the wealth of the roman empire 800 years

later. .. 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 oths. allowing the abundant exchange of ideas and resources be the beginning of the first century ad. merchants, diplomats and travelers could, with some difficulty, cross the ancient world from the met mediterranean to china and japan in the east.

such trade routes were the communication highways of the ancient world, allowing the flow of beliefs, languages, social customs and artistic styles. you just have to visit our asian galleries, for example, to see how a sculpture was influenced by the styles of the romans. i we briefly visit the conditions of this museum's founding and evolution, you will also find an inex-struckable link to dib inextricable link to post civil war new york. the idea of private citizens cio create this public art museum, and the fortunes build from railroads and industry that allowed it to happen there would have been no egyptian excavations without the likes of j.p. morgan, and certainly much

thinner collections here without the likes of jacob rodgers, a bins moan who made locomotives andin' 1992 unexpectedly left the metropolitan $5 million. when the met was founded in 1870,ed did not own a single work of art. and its growth during the late 19th and 20th century is a reflex of america some new york's economic prosperity across that period. today, the met 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 web site. we have the largest acquisition program of any western museum, spending 40 too 50 million-dollar actually with many times that coming in the form of gifts, and we maintain the largest exhibition program in the world, with 38 exhibitions a year, and the largest publication program of any museum. in this year alone, we will produce 22 scholarly art history books. all of this,some not by the government but provide philanthropy, benefiting from northwestern philanthropic tradition and tax incentivees introduced in 1917. today nearly 90% of our annual operating budget is privately funded; in the past 17 years, over $1 billion have 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 am going to 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 sort of global dialogue outlined for tonight's program. a large part of what the met offers our national and international audience is that it lends to envision the future within the context of history. i think tonight's program is very much integrated with that part of our mission, and i'm delighted to welcome the editor of the new york review of books, robert silver, to moderate this critical discussion. so, gentlemen, it's over to you.

thank you. [applause] >> thank you, john, and thanks also to the members of the met staff. so helpful in arranging this evening. we couldn't imagine more congenial place for this forum than the metropolitan museum. a symposium on world economic problems which is brought to you not only by the new york review of books and the met, but also by our friends at the very generous fritz foundation, in oslo, which is often collaborate width the review in supporting meetings such as this one. i want to thank george soros for donating copies of his just published book which you have seen on the tables outside. and finally, i want to thank simon head of oxford, who has

been the major organizer of this evening, and i should 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 the continuing problems of the euro and the tightrope being walked in greece as we speak. and the question of how the euro itself will fare as a common currency without a european treasury or a stronger constitution. we thought, secondly, of the shaky situation of the united states since the recession, and how its problems of high unemployment and stagnant income bill affected by our political situation here as well as the crisis in the eurozone. third, we raise the question of

the chinese economy, which has functioned as an engine of global economic growth in recent years. how will it responsibility if its chief export markets in europe and the u.s. remain weak? finally, covering over all these issues, is a question of global warming. and how measures to deal with it could possibly be integrated with the other economic concerns i've mentioned. now, to deal with these questions we have here, i think, remarkable panel of economic experts and commentators, in alphabettal order we have paul krugman, whose work we read in the "new york times." he has been a skeptical commentator, both about the direction of european austerity, and american fiscal policy.

he has won the nobel prize. and is current lay 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. he is the author of the book "rewarding work. how to restore participation and self-support to free enterprise." jeffrey sachs on my left is director of the earth institute at columbia, which deals with such problems as climate and environmental degradation and poverty and disease and sustainable use of resources. he has adviseed many

governments. is the awe or of the book "the price of civilization." finally to 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. "o'he is chairman of the open society institute and of the sore rose management fund. by now he has bin away over $8 billion to advance human rights and public health and education. [applause] >> now to all the very distinguished participants we made it clear that we're leaving

it to them to arrive at their own synthesis of the issues i mentioned and to 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 to me by simon, and i will wave it as each speaker approaches done two minutes before each speaker approaches 15 minutes. we'll then have some talk among ourselves, and for about 15 minutes or so and then we'll have questions from the audience. and now, our first speaker, paul krugman. [applause] >> thanks. couldn't rezest here. when you said, talk about greece walking a tightrope. i see them walking the plank.

>> falling off. >> okay. and on the topics that bop mentioned, obviously climate change trumps everything else and if we don't do anything about that, nothing else matters so i'm not going to talk about it at all because it's beyond me here. i thought in this intro duke trimarks i would talk about -- we are suffering from -- this is the worst global slump since the great depression, and it's not as much less bad than the great depression for a number of countries as you might think. here it's not as bad by a long shot but that's partly because we had a really terrible great depression, but it's still plenty bad. and in a number of other countries it actually 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 with -- to last month's employment reports, which was better than expected, as if, okay, then that's solved. it's not. it's going to take -- reasonable estimate itch each month is as good as jab was we might get full employment by 2019. so we're very, very deep in a hole. a very slow decline, and europe is almost certainly in recession again. so, this is a very, very bad situation. i often think the most important thing to say about is it that although it's uniquely bad, for the past 70 years, it's not unprecedented and it's not basically mysterious. this is a very -- if you like, mega version of a quite standard economic crisis that actually -- said in one meeting, we're

experiencing a garden variety severe financial crisis, and is something only acknowledge economist could say. it's not mysterious. there are many details. people didn't foresee it but it's not of if it's some mysterious, unprecedented event. so wrote a very good book -- i disagree with some of it but a book with a title "this time is different" meant to be -- this time it's not different. we're facing a standard severe economic slump in which the basic problem is that the people are not spending enough to make use of the economic capacity we have. the workers are not -- may not have the ideal mix of skill but they're not lacking in skills. we have production capacity but don't have enough spending.

reasons behind that are clear. we had a binge of private sector debt. monstrous housing bubbles and debt bubbles on both sides of the atlantic partly because of financial deregulation, partly because it had been a long time since the last really severe economic crisis and people get complacent. economic crises breed caution, which leads to a long period of calm, which leads to come place sense si and then the cries, which is the cycle we may have been baited to go through. but there's no inherent reason 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 monetary expansion and fiscal expansion, and provide enough demand because no good is done by

allowing 13 million workers to be unemployed. we have a debt overhang that needs to worked off, some defaulted on, some possibly inflated away but it doesn't help anybody to have the economy producing a trillion dollar a year less than it should be producing to have that number of workers who could be doing productive things sitting idle instead. so the idea should be, through government spending and aggressive policies on the federal re serve to minimize the economic damage as we work through the consequenceses of past misjudgments. unfortunately we haven't been doing that. we have been doing a certain amount of it automatically. if you ask why, how is the biggest reason is we have a much larger government than we used to, and when the economy collapsed, the social security checks keep going out and the medicare bells keep on being made and that's a great

stabilizer on the economy but in terms of actual effective policy, we had a woefully underpowered stimulus in this country which has now essentially fade out. we have had austerity programs, both in a number of countries and in this donety at the state and local governments, forced on them. so we have actually in ways exacerbated the downtrend. why are we doing this? for me at least the most disheartening thing is that we have a lot of analysis. we have 80 years of economic thinking, trying to understand these things. a basic understanding that is not too bad and when push came to shove, policymakers chucked the text books out the window and made up stories, how government could improve the economy by slashing spending. of course it would lead to an increasing confidence which i

think my contribution to the literature of this is the phrase, leading on the confidence theory. and we have had political constraints as well, but those come apart from intellectual confusion. so it's disheartening. the only thing i can do in this country is clean on plugging and hope to turn it around. the europeans have special problem overlaid on this, which is that they have set up an institutional structure. they may have single currency without a single government. that makes things worse. they do not have a single government that can -- that automatically, in our case, predistributes resources to the most hard-hit regions. i think of a comparison between nevada and ireland which look almost exactly alike if you just look at statistics and don't look out the window. terrible housing bust, terrible

rise in unemployment. lots of losses on loans. in nevada, the retirement program and come from washington. the bank deposits are guaranteed from washington. the loan losses are following on washington-based agencies. so there's a lot of automatic bufferrerring of nevada which ireland doesn't have. so ireland is in fiscal crisis, and nevada, it's not good but they don't have the same problems. the europeans are in a mess because they created the single currency with almost a withful disregard of the question of, what happens if something goes wrong? what i would have said is that, what do we do? the only way to make this work would be to actually do the kinds of things we should be doing in the u.s. but more so. the european central bank should be more aggressive than the fed and the european governments that can be doing fiscal system

shoes should be doing it. since the european central bank shifted, drogbe has been able to say, no, i will not buy sovereign debt. we can't do that. but we will lend up limited amounts of money the banks accepting sovereign debt as collateral. it's beautiful to see, say oning? do the opposite. it was the right thing to do. i don't think there's -- china. i want to just come back to the broader issue. right now, here's what someone wants to be wise says. well, this is a long-run problem. we can't expect short-term

solutions and a quick recovery. which sounds very wise and is totally, totally wrong, and extremely foolish. very nice. the reality is that we have -- we always have long, run problems. right now we have a short-run problem. which called magneto problem. electrical system. we have a $30,000 car with a bad battery, and six the damn battery. replace it. we could be back. we had a more or less full employment economy five years ago. we could do it again quickly if only we had the political will and the intellectual clarity. and every argument that you see people making right now about why we can't do that, about technology, skills, globalization, go back to the 1930s, find people make something version of the same argument. you can find article from 1935 about how even though there were increased demand the u.s. work force no longer has the skills

to deal with modern technology and we couldn't get back to full employment. then the approach of the war, the united states began spending to prepare for the war. between 1939 and 194 1, before pearl harbor, all of a sudden we had a 7% increase in employment. equivalent of 10 million job, and all of the arguments were disproved buff the japanese applicances dropped their bombs. we could do that again if only we had the political will and individual clarity. so that's up to us to provide the intellectual clarity. [applause] >> and now we have professor edmund phelps. [applause] >> 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 one. policymakers are fixated on tax rates, differing only on whether they ought to be raised -- that's the party of austerity -- or lowered. i think the low level of discourse is an indictment of economics departments in america. second, and more important, i think our country lacks a 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're mired in chic, and they're not really behind -- 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 talking up new violations. they do not grasp that taxes are warranted to finance justifiable subsidies and investments and to fund justifiable future commitments. those on the left see the economy as a productive and indestructible apple orchard.

we have to address the inequality in the distribution of the apples, which means ever more help for the middle class. more help with medicines, with housing, with college tuition, and everything else to which the middle class is naturally entitled. now, i know our organizer was keen that we talk about greece so inspired by his interest, i am starting with greece myself. people see the fix that greece is in as a moral parable, warning to the rest of the west. but the parable has flaws or mistakes in it. it's far too crude to lay the crisis in greece on an overlarge welfare state or on pandering after the votes of public

employees. germany, holland, and sweden, have the lowest unemployment rates in europe despite huge welfare programs and well-paid civil servants, too. they're saved by their horror of undertaxation. there is no such horror among the greeks. greece allowed its public debt and its public outlays to soar in relation to tax revenue. so the correct moral to 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

results -- or implied the crisis results from the unpreparedness of the country to determine how the costs ought to be shared and the benefits adjusted. tax increases or rollbacks of civil servant pay or some givebacks in pensions for a while? what? everybody is at loggerheads. so 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 size of the welfare state or pay for civil servants. both views lead us to believe that a country that indull onlies in deficit spending and the creation of unfunded entitlements -- those things that are claimed on future tax

revenues -- that after indulging in those fogs for a long time the country will be fine again once it gets its public debt entitlements under control. even if it suffers a short -- the suggestion of the public discussion, even if it suffers a short recession, resulting from the increases in tax rates or cutbacks 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 entitlement 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 flow. we'll grow out of the public debt. what if the productivity growth stops? as it did in italy in the 1990s. and i think also in france, but i forgot to look it up before i left. the problem is that increased wealth -- it's wealth create by the deficit on top on the wealth that already intissed. all this work finances nonwork uses of one's time and the traditional tacks levied to service that debt do not reduce this bloated wealth. they reduce wages and tax.

so you get a fall of net wages and a rise of wealth in the denominate record, -- denominatr and that's bad. all i have to say about unemployment, it's an important thing to focus on. italy and france have a big problem here. they have long been high favors, amazing -- amazing levels of private wealth. now all those budgetary deficits in times past, the taxes the italians italians and french decide now pay that would have offset the wages and benefits paid but our the state -- all the bucket tear def -- budgetary deficits added a lot of paper 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, the supply of labor

to the economy -- in other words, 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 i believe italy and france faced over the future? the bright side is that over the past ten years, americans' net wealth slowed in tandem with a slowing of productivity and wages. so, net wealth of households, as a race -- 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, where there's been an explosion of wealth and france, even worse. so that's good. by this tong we should be enjoying now the 2003 unemployment rates here and now in 2012. rather than 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. 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 like to call their social wealth, the wealth created by a stroke of the pen by the government. the calculation by mary meeker in new york financial economist, finds that americans' entitlements net of social security funding, which isn't much -- 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, and on top of that, we have $66 trillion of entitlement

wealth. so -- i'm sorry -- 515% of disposable income, so if disposable income is 12 billion, then 60. the private wealth is 60 trillion, and now with the stroke of a pen, or several strokes of several pens, the government has created $66 trillion worth of social wealth. and of course, it's common knowledge that entitlement spending has been exploding in recent years so that 500% of what social wealth as a percent of disposable income must have shown a huge increase compared the level 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're in for a slump of regulations. 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 philosophyer. i would aim to rehabilitate and reform the economy, its institutions and economic culture, reform it for the send racing -- generation of innovation, economic dinism is the elixir of economic life. the conception of crews keynesianism that by pushing buttons, we can do whatever we want, and construction projects

to employ strong-back labor. that's discredited by cross section studies of what explains high employment and low employment among nations. what this dynamism would require is efforts to incurrent more entrepreneurship and finance in startup companies and to encourage students and young graduates to devote themselves to imagining, creating, and exploring. to the extent that these efforts succeeded, these efforts would lift job satisfaction and employee engagement and races employment, too. now, while dynamism is kubel we want dynamism with economic justice, with what i call economic inclusion. that doesn't mean social inclusion, which is about

income. it means throwing people into the economy, which is the core hack test of society, previously into the business sector of the modern economy, where new ideas for new products are conceived, developed, and tested, and it means pulling up wages in the lower echelons of the labor force. the industry here must be a government program of subs differences for the employment of low-wageworkers. in my book, rewarding work, which robert silvers kindly mentioned, 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 2% in his ways but i think this is a terribly important way to use it.

this vision, as many of you know, is a fusion of the best part of cedric hayak and the best part of john walls. hayak understood and slowly made more and more clear that a modern economy is an organic thing. en escapable of imagination and creative. 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, and use of their mind and their emotions.

rolls understand that economic justice involves that just transfer payments to people that permits them to consume more, or to work less, or not work at all,. that's not what he meant by economic justice. for rolls, economic justice involves modifying the distribution of the rewards from work in the society's economy, to favor the less advantaged as much as possible. interestingly in his last decades, hayak a -- allied himself with rolls' perspective. i'm hoping the country will be per saidded this is the only way by which we can get back to an economy with the excitement and the sense of challenge and

progress that we once knew until a couple of decades ago. thanks a lot. [applause] >> now, jeff sachs. >> thanks very much, 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 a crisis in spain. we have a crisis in some of the other countries of southern europe. we have 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 prosperity. trade balance, surplus. if we look farther beyond the north atlantic, at the united states and western europe, then it's even less the case that there's a global crisis. after all, in asia, developing asia, meaning india, china, southeast asia -- economic growth rates are at unprecedentedly high levels by 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, a bit less. other countries in asia, varying around 6% and in some cases higher. the world economic growth is about 4 to 4-1/2% per 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 billion people and an average income worldwide of about $10,000 per capita. so, $70 trillion world economy, experiencing a doubling every generation or even less. i've been attending the g-20 meetings, each one, as part of

the delegation of the secretary general, and it's a very odd feeling because most of the g-20, from brazil to china to india, and elsewhere, look on and say, crisis? what global crisis exactly are you talking about? oh, you mean the eurozone crisis? the u.s. crisis? well, that's different. that's not a global economic crisis. so i think we need to gain some perspective why this peculiar divergence in perspective is happening, and the reason is a remarkable convergence in economics, and that is that the developing countries, which we now call the emerging markets, are achieving robust economic progress by leapfrogging technologies and high saving rates and making a tremendous

amount of economic progress and narrowing the gaps with the richer countries. china was 1 or 2% of the world income when the walls were thrown open and now compared to the u.s. 18%, which is down from 24 or 25% generation ago, and at least applause plausible extrapolations of the imf say the two countries will meet in 2016 at 16% each of the world economy. so there's a kind of convergence going on, and we feel 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 -- college grads, while the labor market is soft compared to three or four years ago, the unemployment rate for those with a bachelors degree are higher, about 4%. it's up a little bit. but the income levels of people, probably most of us here, 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 a remarkable collapse. the neighborhood 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 quite serious crisis of the bottom 50%. now, let me add just a couple of other quick elements of that and then turn to consequences. the overall global economic development is bringing a perilous environmental crisis with it. the rise of 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 to. we also have continuing upheaval, not only because globalization has shifted worldwide jobs and labor market competition in 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 profitable ventures. but our world is under unprecedented flux because of a true absolutely astounding revolution of information technology, which is changing the nate tower -- nature of jobs in almost every sector. it's the ultimate disruptive technology of our time. this leads me to the policy immix indications and i fine myself close to ned phelps on this observation. we need government activists to help steer us 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 it's, 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 a third of our kids finish a bachelor's degree and only 11% of hispanic young men have a b.a. 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 offish the various tropes we're in and 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, can and declared the fateful word that government is not the solution to our problems, government is the problem, we have been on more than a 30-year job of dismantling the very means to address the challenges we face as a society. [applause] >> and i'll close, ladies and gentlemen, with one piece of unfortunate reality for us, and this to my mind is the bottom line. at it literally the bottom line. if you want to find the bottom

line, go to omb.gov 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-6. and i say it because a little geeky but if you want to find out the ultimate deep trend that we're on, it is in that 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 invest in the future, does not match those fantastic speech with the funding to do that, and the line that is most important is 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 5 and 6% of national income in the 1970s. then came reagan and he took it down to 3%. for that combined vital function of government, for 30 years raganollics didn't rule. it didn't matter, democrats and republicans, 3% with small variations. no change, remember, so many -- i won't go into dish don't have time for the details. maybe in the discussion -- but where are we now? because of rising debt service payments, because of an aging population, because of higher

healthcare costs and because of this relentless tax cutting, even that our president is pushing still, that discretionary line 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 the reason no global because that's the way we can have a good -- no global

prices because that's the way to have a good discussion. 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 actually paralyzed by the degree of uncertainty, which is a measure of the crisis. but i think that the crisis is very deep-seated, and to understand its nature, i'd actually like to start off at the deep end. i contend that mankind's ability to understand and control nature is not greater than its ability to understand human affairs and

to govern itself. and that disparatey has been growing and has now reached disturbing proportions in recent years and that is actually at the core of the crisis. i contribute that desspirity to a fundamental difference between the natural and social sciences. the natural sciences view of the facts that unfold independently of the scientific statements made about them. the facts, therefore, serve as an independent criteria, and that's the truth of the statement can be judged and that allows science to produce such

amazing results. by contrast, the fact that social sciences are produced by thinking participants, and these agents think very differently from natural scientists. they don't have an independent cite -- cite tier you by which to -- they base their decisions not on knowledge but on an inherently imperfect understanding of the facts. and then imperfect understanding introduced the element of uncertainty into the course of events that is absent in the natural sciences, and interferes with the ability of the social

sciences to produce comparable results. economics, which became the most influence shall of the social sciences, sought to escape this inferior status by taking an axiomatic approach similar to geometry. but the axioms resembles reality very closely. the axioms of the official market forces, distorted reality quite substantially because they eliminated the uncertainty caused by imperfect understanding, and that uncertainty today is absolutely dominant our lives. this has far reaching consequences exactly because

economics became so influential. a full interpretation of financial markets led to the progressive dismantling of regulations and firewalls. this caused one financial crisis after another, and the use of this method, synthetic financial instruments like cdo and cbs, which were based on unrealistic assumptions, deeply aggravated the impact of these crisis. the bankruptcy of lehman brothers in october 2008, started a meltdown that was prevented only by putting markets on artificial life support, and they're not yet back to normal.

now, there is a recognition that the official markets, however, have 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. and even in the present case, there is very little understanding how deep-seated the failure is. in my view, economic theory must abandon its pretense to be like a natural science, and come to terms with the uncertainty that

is in the subject matter, and that real will require a fundamental rethinking of the methods and criteria that govern it as a science. i have done some of the rethinking. i developed a conceptual framework based on the concepts of fallibility and reflex reflexsivivity but very little company, even among the fellow speakers, who are actually closer to my view than most other economists. insure... ... 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 casino probe. in the current situationro. and therefore, everyone has mentioned the lack of some kind ti stimulus.everyone h men 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 we listen and seem quite distinguishable. so it's like to ask paul about what it more specifically does,

he think is lacking in the way e of intervention? >> okay. so i am the keynesian on this panel. with j i agrefee with just very much or the savaging of our long-runong vote and we should- be doing mut more imac, but we also have an immediate problem, a very large unemployment. your large number of workers who should fbe employed in the e government should be playing a large role in pumping up demand right now. that caused this crude creamed s the end. i've been saying i'm going to th haul them out and punch them inl the. it is not. it's very -- a lot of it is to get into the kinds of things i'e saying. i try to put them in plain english, that there's people whe have very well thought across.ts

this happens to be the golden age for macroeconomic research. and there's wonderful work being done now assessing the effects of government spending and is becoming very keynesian. a lot of the work is the place as a phone that the government was spending more right now would be in much, much betterd d shape and it sounds very wise and judicious to say well, there's no short resolutions. totally wrong. we have an overwhelmingly short run problem that could be solved in two years if only we had the political will and intellectual clarity andi fortunately. both of those are shortly lacking. asi actually we held our factual -- i want to make a couple ofay factual points and say something about greece. dad says it is common knowledgef that we have an explosion of entitlements in recentrece year. i guess i don't share thatt

common knowledge.ledge. my knowledge is an expression of unemployment benefits, substantial growth of food stamps and considerable growth of medicaid in recent years.n and those are not policy an decisions. that is not expansion of the safety net. it's just there's more people falling into thecisiio net. this expansion you see in the last two years is entirely a consequence of this terrible economic slump, not the resulte of government suddenly decide he will try to love our benefits. ut tho he really don't see anything bit happening in recent years. so that is an important point to make.ff says s the just does the bottom half and ae highly educated are doing okay. according to my reagan doing some work what is happening to recent college graduates. and of course other things equal college graduates will be bettes off than someone who is sent,opt but it's terrible. it is a catastrophic full on in

the employment rates, not so much unemployment, but they have dropped sharply. wages of reaching college graduates have dropped very sharply, probably not because the wagesows college graduates fallen, but rather than large la numbers of recent college graduates are wreckinkg the poorest is or whatever. they cannot find jobs.have a and we have a fair value of fair research. if you want to ask, do someuaten undergraduate into this labor market does not initially get the job sheit or he should be he getting given that training, hod long doesoe it take to recover from not? the answer is forever. isf some people graduating fromg frm college right now will be scarred. their careers will be scarred for the rest of theirwi lives. so this is a crisis within thecs united states. sttes. there is no substantialal or edl occupational or educational group that has not been hard hit. it's not the case that it's only the bottom half of the population.in europe, within europe, it is true thats germany is floating along prett well, although i'm not sure that

we'll have the same story next year. some other countries are are floating along pretty well pret because it's running an enormous trade surplus.urp which is the flipside of the large trade deficit. and with the german study was hite can't everyonewh be like us. so we shouldt all rate trades n us talking from mass on ask whys will find a plan that will export to. xp so you really ought to thinko of europe as a single economy. it does have a single government. if you look at the european economy is doing somewhat worse than uniteded states. and that's a good thing because i've been protesting for quite a while about the colonization of our discourse here. one talks about greece and says m a t greece is a great example ofof s what is going wrong.ng. kris is pretty much in a class by itself. portugal a little bit, but nonec

ef the others has a crisis for h governments to responsibility.oe look at spain nec was a monstrous private spec there il the government was runningai surpluses on the either the crisis. came in with low data. italy for everything we say about has lurched at which was irresponsible policies. it was quite a while ago, butwh, they are reducing the deficit t gdp until the crisis. so this is not -- greece is a parable. it is unfortunate because of thm underlying the essays, greeceose was up, which seems extremely l likely, then we'll probably have fect. contagion effects.but do but do not think of as a role model for whatrole his crime run elsewhere.where. >> well, i know that not once will try and make inc. we are

still in search for specific kinds ofin s intervention. inent >> can i say one thing?? tust talked about cutbacks, but 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 deployments, which is mostly school districts.and of and given population growth which have had io a 4% in growtn instead. something we should rebirth provides money to localis governments and says they can rehire all the schoolteachers they've been laying off. [applause] >> i am not sure that is whatnou matt had iren mind. >> i really welcome this opportunity to chat with paul. i haven't run into him in about two years. at that time they had the samehw diagram up in the black board,

but it hasn't been the same since.ce. well, i agree with everything er paul said about greece. i was making a very similar point, the kris is totally unrepresentative of what is ing going on in italy, france andy,f america, sorry to say. and i don't want to drone on excessively about -- is a 50the word? 50 word, but let me say, if we are having a textbook, keynesian slump, we would have seen maybe not outright deflation fallinglf price level, that we would've at least been a heck of a lot of be disinflation come a big declince in the rate of o inflation. we haven't seen that.n tt. we can probably argue thenk

details all night, but i think sroadly speaking, it is fair toi say that we have not had anything like the markedan disinflation that we would havee had if our problems were msnn m coming to us through monetary mechanisms and so-called so-c effective or aggregate demand.ra sack and, paul refers to econometric work, which i haven't, which is the importance of government expenditures fore. employment. i can't help but have this feeling that there is a set of treating here on the obvious. sure, someone the public start terry somebody fires -- somebody gets gets fired, the world is full os fiction from that person goes io

the unemployment pool. instantaneously get employed by the economy as a whole thanks to some miraculous auctioneer who somehow has been o figure out who should show where thanks to somee are r auctioneer. so of course there are short run effects when there is a contraction of government expenditures. for lots of us in the economicnt succession have models abouts, t every day, not exclusively, fors lots of us to have models that don't have any and then. t and you know what, if government expenditures drops, there is ato least momentarily an increase oi unemployment. st so this doesn't establish the validity of the whole keynesian apparatus, just to say thatay there is some effects of shackse to government expenditure on

employment. and i guess i have made both b points that i wanted to make here. so, i'll stop. >> signed, now i know thatthatw listening we had heard about this 50%. 50 but now has paul has added to%. the 50%, a further decline notly only among 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 .ave one from the i worked forrs at a hedge fund actually with larry two years 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 >> the idea that climate change, when the greens used to that phrase, what they would deign to subliminally, man-made climate change. and this is where we do dispute it, does says ban on my side of the argument. catastrophic man-made climate change, if you look at the intergovernmental panel on climate change is reap court

over the last 20 years, the ip cc has grown increasingly shrill as prognostications about man-made climate doom, but in that period, no convincing evidence has been produced to show that human influence on climate is so significant or dangerous that we are all going to fry. on the contrary, global warming actually.or flattened out, you know, over 10 years ago now. we are entering a period of cooling. and i think we need to remember that if you look at human history and blood man has done

intensive awareness goes to intensive warming, society, civilization flourishes in times of war and mean. we are designed for warm weather. it isn't that we can't cope in colder climates are very adaptable, you know. we've got igloos and stuff like that, do you know, i was telling you earlier is like to live in california. there's a reason i'd like to live in california. it's not the political climate. this the weather climate. it's nice and warm. we are drawn to warmer weather. warm weather solves two of her main problems. how teeter cells and how to feed ourselves. in periods of warm come you can grow things like wheat at higher latitudes based on how to see the world. so the first positive ibook, watermelons, covers the science of climate change. but i'm not a scientist.

and isn't the part that really, really interests me about this whole debate. it is where these ideas come from. it is the socio- politics of climate change, if you like. if the science is flawed, how come so many people believe in it? and i think one reason is that i think there is built into our dna this a neat catastrophism. i think every generation believes that somehow it will be the last comment that it will be the one that associates the world that it will destroy it through its own evil. and if you look at religion through the ages, what it is about, what they are all about in one or another is atoning descends ty