-- let me go on the other hand. where are we looking. the obvious concern is the u.s. through changing its business climates, regulation labor market regulations in some fashion so that we've seen a gradual decline and we are working night and i think we find evidence of it. trying to think about the question is useful to think about the cross-country studies that have been done. on one hand we have increasing evidence that countries that are successful are precisely those countries which have the successful productivity enhancing reallocation. so the country is not doing well are countries in which they have lots of dispersion product to be and they're just not able to get resources to the most productive businesses. it's actually been harder. no countries differ in business climate and labor market

regulation and all the rest. financial markets and so on. so we are pretty convinced that this matters a lot in whether we are successful or not. we struggled toward cost entry evidence citing exactly what are the causes associated with why the country seems to have a bad environment relative to the other. one view is a macro development community is to think of this as a death by a thousand cuts. lots of little things. i don't think there's any evidence the big smoking gun that says the u.s. suddenly did something around 2000 so we are seeing the decline. we are beginning to look at smaller things. what are two smaller things that look like they might matter. we need to push harder on it. this is not a complete x nation.

we've done work like this and we took it and applied it particularly to our more recent data and also applied it to the more comprehensive data. a lot of nice contributions and there has been an erosion in the united states through precedence in the u.s. court system that made its way gradually through the nature in some states before other states that it is that variation that allow you to identify these effects. we followed up. that actually looks like it associated. i say the whole story. it is a -- it is just saying here's one we are looking at. the second one is inspired by rick by cougar diner.

the licensing requirements have risen dramatically in the united state. those are the regulations we could easily imagine a way to second, that's the kind of thing that again could stifle. we heard this on the first panel on occupational licensing and permits side. the question is has the u.s. become more sporadic. because the accumulation of problem in the way things are working. i'm not going to argue that we know this for sure now. but i am going to come back and say we seen a decline in dynamism and wanted to give productivity statistics we ought to see an increase in dynamism, not a decrease. that almost can't be good news. >> let me follow up here.

looking across the country historically speaking for a long time, the u.s. is the most entrepreneurial come most innovative most fluid. our gap of excellence has climbed. >> i think it is more the latter. i don't think it is necessarily become much more dynamic and entre nous real. eric tried to push this. remember, things are not that tired in the united states on the aggregate to slow down. though we are not in a crisis. the point that came up -- i think that is connected to this. my concern about the decline in dynamism and flexibility at the top in the bottom. at the top are reported to take

advantage of the technological changes or is that going to happen elsewhere or are we going to fall behind and not be as successful as we were in the 1990s. i am even more concerned at the bottom end because the lack of fluidity and dynamism means we know there's disruption and it doesn't seem like we are accommodating and the workers who get caught up what he has to happen because we are such a dynamic company other opportunities were rising. so i think they are just not participating in the labor market. >> i guess i would like to say another of the many pieces of the work which is actually the issue -- there is the issue of demand in the fact we were running a low-level demand so we had an employment problem across the spell spectrum is increasing

employment problems that existed before which is deeply the problem of high school dropouts that in fact that issue and you run a high demand, high intensity economy shows up in poor job numbers. it's not the percentage of people employed. if you think about it, someone said on the last panel we have to worry about the fact that the technology itself may be leading to the disruption of jobs better quality jobs and then you have caregiving education, janitorial services, all of the things that harry was lucky not it was one of the reason the unemployment rates in the u.s. have done so far because low-wage jobs, low quality jobs

many of them part-time increased and people took them. but if you relate to the technology thing. the technology is taken up the middle. he may be a day of its more recent work taken out the top and taking out those jobs. more and more people have to be employed in low-end jobs, which brings me back to arati to talk about when you think about these technological breakthroughs and they are very very exciting. think about this in terms of distributional issues. maybe it's a little unfair. every time i hear about these prosthetics, i say who do we as a society say who gets this done quiet does everybody get it if so, how do we generate the revenue stream for the societal promise that everybody gets to live in their brain outside of their body or everybody gets an arm when their original are no

longer can be a baseball player level hitter. >> those are huge issues. before we boil that entire row should, we do have a little bit of time before it hits us. we need to be thinking those things through. i want to think about what this new areas will do. my hope and i don't think we know, but my hope is they will create a plethora of different opportunities because of the information technology world is the only answer to the challenges everyone needs to go back and learn that will be really good for some people, but it will not get everyone in a 3 million person society. but think about tying it back. if you think about synthetic biology, i was talking to a small company start up and wants to tackle some better biology pathways to new specialty

chemicals into enhancing the production of specialty chemicals that people currently go through more conventional means. that company is 30 people today. they are going to look more like a traditional chemical manufacturing company. it is very phd happy. it will be a place for lots of smart people with education can get employed. when they scale up they will need technicians and people at all different skill levels with different kinds of skills as well. i think we are really going to need that diversity of different technological opportunities that lead to this all range of kinds is tails. one of the interesting things about for r&d investment happens is very much twice as much of the nation's r&d investment is made on the private sectors.

but that was flipped when we were small children. it is overall healthy because it's good if we have a more innovation driven economy and a more private-sector investment. that investment companies make not thinking about the jobs in order to pursue their business plan and profit. the government part of the investment i make my share for national security object is the national institutes of health but with no particular focus or drive or ability to say how that turns into jobs. in a market economy, there are no formal drivers to shape the way that comes down. that is the richness of our approach. it makes it very hard to predict where any of this is going to go. >> i think one of the statistics

that is misleading maybe all the statistics are misleading and that is why we are struggling here. the statistics on r&d and large businesses. that is what the numbers show. that is enormously misleading especially if you look at the more high-tech sectors. you still don't find they are reporting as much r&d. the question are sort of gauge and specified. if you have an r&d lab then you will be able to report all the statistics. think about that kind of tech companies we hear about today. they are doing everything. so i think if those companies are spending 100% of their time that was the vision of coors is the businesses have no revenue that they spend an enormous amount of resources, it is all

r&d. i think the decline in notch partnership in the high-tech sector is struggling because we see less innovation and less r&d and we are not measuring it in the statistics. >> measuring issues aside and i think we are capturing a lot of that. measurement issues aside, what private companies invest in r&d and is almost exclusively product development for market and a small fraction is going to be the next generation. >> i would also say and this is not to be too critical of the nss survey on this. it is not a bug here to pick up applied innovation. it is more geared to pick up the core basic research. that is the second part. >> but at the top level we can agree the growing corporate share is much more product development driven and still remains government function to

fund basic research in the university core. >> i think that is hard to the many messages that if we go to the policy part of this discussion both on the first panel in this, we're all thinking thinking about a world in which the pace of technological change has picked up things we can't imagine are going to be very transformative. we need a policy debate that reflects reality. including the fact that so much of this has been driven at the beginning from support for basic science and universities. one thing that the large companies do and then we train people who have phd's. if there's not a lot of research support for them to do basic research they go and do applied research for the company. that is where the jobs are for them.

we actually need to have a policy debate that focuses if we think this will improve our lives dramatically how we finance this appropriately. i do worry a lot about that. so we have some questions here. one is the question i think we probably should address regarding the dynamism and fluidity that the problem businesses are focused on increasing shareholder wealth than investing in risky ventures. this is not directly related to launch partnership, but you are sort of thinking about what kind of business model out there. a shareholder value particularly driven by activist investors a good environment for promoting the technological change that you think we should have? what do you think like >> i gave a version of the topic to show some of these slides. you can see the great decoupling

have been in the 1980s. i is given a presentation to the open society foundation and he said you are misinterpreting the root cause. he said it is the rise of rocket fundamentalism, which he associates with the reagan thatcher revolution but the idea the job of the company is to return to shareholders and not think more broadly about stakeholders. it is that turbocharged sawfish version of capitalism causing a lot of a lot of what you are seeing here instead of been a surge in technology. that is a really intriguing idea. my career as someone who tries to understand the business world is on the order of 25 years old throughout the entire career i have been reading about the short-term american business and its overreliance on this quarter in the bottom line in keeping wall street have things have.

plus decades. i don't know how much weight to attach to that. i don't see that as a major factor here. among the tech companies the most ruthless, growth hungry are also the ones investing in postings on the technology is. >> so this is a hard set of questions like all the ones today, but again, there is evidence that historically the major innovations have come not to much of their comments, both from the newark essays. that is one concern. the second concern is whether -- what the incumbents are trying to do. they haven't installed asic products out there and so this is a concern in the economics literature is are they just trying to protect and grow their

market share. i think maybe the goal now is not to be the next google, but to be bought by google. what is google's goal is not? you to take advantage or actually to set down competition. those are the concerns that fit into the kind of question you are about. i don't know that we have overwhelming evidence that is what is going on, but it's not in his room at the evidence we've seen a decline in notch partnership and the increased share at the top end of businesses. >> i spent half of my professional life in washington and the other half in the private sector 15 years of which timeless and venture capital. i think you are right that perhaps the core market drivers of shareholder value or earning returns if you are a venture capitalist, nothing has changed.

on the other hand, those are actually huge drivers. they are fundamental core drivers of every business position i ever participated in. the fact that the unchanging market driven decision-making process i think howard is grappling with the changes in technology, maybe it is that max is and that is what's different. the premise that the question is really a core issue because we do rely on the market. whoever asked. we did rely the market and i think we are in the regime are some of the problems are not going to get solved. >> every venture capitalist i know encourages companies to hit homeruns come to swing for the fences not to do an incremental innovation, not to do some enqueue. >> the business model venture capitalists. the mac absolutely.

that is not part of the problem we are talking about. that is a good thing instead of the bad thing. >> let me translate to what happens with a small startup. the conversation around the table every single month is about the burn rate and that is about not hiring too many people because you run out before you get the product built and get revenue generated. there's never a conversation about it would be really good if we could employ a few more people. that is holding a consequence of achieving the hypergrowth sometimes once in a great while. >> i heard someone say and there is a kernel of truth and it goes to your point about globalization as well. i have heard people say the u.s. has the very best incentives until recent things like cotton boxers. we have great days to do the research in the united states. we have incentives to the employment in the united states and very weak incentives to keep the profits.

basically you have a situation where all of the incentive structure in our tax law and other things are yes yes locate around great university and start the google apple app everything. doesn't worry too much about climate except for the people you employ under premise because you actually have to keep it going, you can do most of this for some other place and don't worry about revenues because you can put them in places where they are not highly taxed. i think this issue of thinking about employment certainly is not something which a well generation venture capitalist or non-venture capitalist has on the top of their agenda. weber is a cost. so sometimes the discussion of talent, when you talk about talent, talent is something you want to acquire. but labor is a cost. can i ask a question about

darpa. you were both in and out. to what john and arati were saying, you might think the rate of diffusion of ideas that are generated is slowing down. the private sector is not making the most of it. we were really worried about whether there is enough to all use to spill over. now we believe there's a huge amount of spillover, that is the recipient, the catcher not there to catch? >> we think all the time about how technologies will move into the world. some are very specific military systems and they will only through dod. but a number of the enabling technologies we talked about today, but also the information technology duty pad undergraduate students going off in starting new companies are

established companies adopting names i've basic research. fundamentally at some level the decision has to be made around commercial opportunities. there was a time in the history when we were scaling the arpanet and the internet in this huge number of amazing companies was thinning out mostly from the university research we were funding. i would tell you i think that is a very lucky thing. we are in our six decade. there is a huge amount of it to vivian also a modest amount. it is according to my most markets present themselves in notch burner as does take those opportunities. it goes on today, i was at that level. >> or whether it is secular decline in the ability to pick this up is just over.

as >> my sense is much more about what is yours and ask more organic bribes is just a burst of activity or moderate -- some of the things i could add to see the smart choice. >> it is too far from the market. whereas when they have the arpanet it got to the market in a while. all of the stuff that has grown up in the last decade. just to finish, the arpanet the idea against connecting computers as 19 xga. it was 1993 was the year that every business card you got had an e-mail address on it. that is when the market started exploding. >> you talk a fair amount about the decline in product to the

growth and i think it is important to remember that it is especially the high-tech sector that has had a break in product candidate. so a decline since 2003 according to the very nice work by john furneaux. so that says in terms of what other darpa has to be doing is not showing up in the productivity statistics and 2003. >> i have to caution you darpa is 2% -- please be careful -- [laughter] >> i will make the point andrew could make which is a lot of people do dispute the measurement of productivity from these types of technologies. we heard this morning other retail sector may not have shown any productivity increase because you put it in the machine. i would say that the quality of

locating the product you want at the price you want has really improved. the quality of the shopping experience, the productivity of the shopping experience measure by quality may be entirely missing from productivity numbers. we really have a problem here. >> productivity is growing rapidly in the retail trade sector. back this morning was off base. in that case, you diss was related in a good way to the decline of mom and pop to wal-mart has actually been very good for the retail trade fact year. >> so my point is whether it was the right one to use or not is do you think given the nature of the technical logical changes we are going through that a lot of this is not measurable in terms of output per unit of input unless you do a huge amount of improvement on what the output

actually is. >> i agree. we have moved increasingly to parts of the economy hard to measure. a couple of decades ago we are already back 20 years ago moving and that is increased. i agree or productivity statistics need lots of work. >> first thing everyone said is the evidence doesn't support that theory. i don't want to rely on that productivity numbers in base of this idea carrots are you the invasion of some of the is see. the near future i believe is going to look fairly different, even in some of the very labor intensive, low-wage service sector without much growth in

productivity and therefore big increases in their contribution to a very high levels. you talk about health care for 10600. there is a hospital that just opened up a little while back in san francisco where every meal has not been coached by robots but delivered to patients by robot. the dirty laundry is carted throughout the hospital by robots. automation is coming to these factors. >> this is a good point on which to draw the panel together. the part of that argument is how much better if you are a patient in one of these places and you'll get get your food well prepared on todd by somebody who is not going to make a mistake. the bad news in every every projection i've seen for employment growth in the united states and for other countries around the world, caregiving and health care is a major source of employment growth.

let's say middle educated to low educated workers. if the robots are smarter in the robots can do it more precisely, then that is where you start to get to the issue we talked about earlier today. who is going to be technologically and plays and what do we say in society? one of the most brilliant lines in the book that and are wrote what eric is the essence of capitalism is that most people get their income from their labor. what if machine take away certain jobs altogether and undermined the return to labor for a large fraction of society's workforce. social problems we have to begin to think about. i really think the hamilton project for having us all here today. i think my very distinguished panel for forcing us to think

about technology and business models and how we get this to work together. it has been a great session. more to come. thank you very much. [applause] [inaudible conversations] >> woody guthrie is the most famous writing this land is your land. he was much more than not. ..

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