up to these electrical wires. so one statement might say guns should be allowed in school and some of the republicans, yes, and some of the democrats, no. another statement said that roe v. wade should be settled law, that kind of thing and they watched the center of the brain to see what activity had been activated. one amazing outcome of the study was that part sops on the left and right actually have brain and this was amazing outcome of the study but the second major outcome was in looking at the centers of the brain that are

lit up when we look at the statements and lo and behold the centerses were not the centers of reason, it was the centers of em ohing which makes sense. i implore you to breath through your emotions or what i would like to try to do is look at policies from the poised view of outcomes. if a policy is intended to protect jobs, no matter how that policy may feel, the way we evaluate the policy is working is whether it protects jobs. that's what i want to get to. i want to start with a little quiz which my kids at georgetown hate. you can remember mitt romney's campaign slogan?

believe in america. yeah. so similar to make america great again, trying to get at the same feeling that the sun has set on the american empire and that the next generation will not do as well as previous generations. and this is something that gets reflected back to us poll after poll after poll and we were moving into the obama and romney election, there was at least $80 million of advertising spent on negative china ads focused on trade in cleveland alone. you know, that would later be the site of the republican convention. trade has been a contentious

issue in elections but i would argue that in this election something more deep resinated in the electorate. if you look at the primaries, right, over 20 million voteers favorite and vote for the upstarts, over 20 million voters went for trump and went for sanders and a big reason why, i think, is trade. the two of them were very much aligned on trade and the thinking goes like this, the once great middle class of the united states has been hall lowed out by globalization and trade and the way to bring american jobs back from overseas is to start enforcing trade rules and raising tariffs, we heard that from bernie sanders and donald trump and we al heard

frit both of the candidates, the desire to exit the transpacific partnership, the tpp. no matter whether you voted for president trump or you voted for hillary clinton or bernie sanders, whoever, some of these arguments just hit home, right? i don't care if prices at wal-mart go up a little bit, these guys are stealing from america and are taking american jobs and darn, right, we should retaliate, if you look at the polling, very interesting polls, the pew poll that does the attitude survey, just a couple of years before the last election an attitude survey that looked at what is the world's number one economic super power and they asked respondents from all over the world and the majority of americans said china

because as world economy super power and the majority of the brits said china, interesting, prebrexit and the majority of respondents from 26 countries at china, the only country that did not say china was china. there's a reason for this. we can understand why we feel this potential about china bus all of the economists echo this point of view. everyone who reads the newspaper you see china, the second largest economy, coma, now we have been told it's the first largest economy. anyone who is reading vanity fair in december 2015, january 2016, an article by renowned economist called the chinese century where he said china has surpassed the united states as the world's largest economy. how could we not feel

existential inks? how can you feel that the best days of america are behind us and try to make ourselves great again. china is the background to this desire. where do we get this? where does joseph say china is the number one economy, well, it's based on numbers and this is why it's difficult to get this across sound bites and bumper stickers but it's important. economies are sized and compared today using gross domestic product and gdp was developed during the time of fdr. this was a metric developed as fdr was trying to calculate

recovery. by adding up spending from across an economy, consumption, so how much did consumers spend, how much did the government spend, how much does businesses invest and assets. we add up the spending of the economy and then we add the value of exports, what we sell other countries and we subtract the value of import, we will get back to that in a second. but the notion of spending this is a metric that may have been applicable in 1930's but today in today's global economy is absurd and i will tell you why. if we were trying to compare our economic household size, for example, would we tally how much we spent last year and compare that? i had two girls and one of them had braces and summer camp and it was kind of a tough year, i spent $300,000 last year and you

spent $400,000 therefore you're the larger household economically. that's absurd. we would compare balance sheets just like in business. we compare our assets and our liabilities, how much do we own minus how much do we owe otherwise known as net worth. if we compare the national wealth of the united states and china, we see that the u.s. is $45 trillion wealthier than china. that includes our national debt, the famous 20 trillion-dollar debt. by the way, china has a lot of debt too. so we subtract that from the balance sheet but all the united states is $45 trillion wealthier than china and if you look at the household level it is gap is even more. federal reserve measures household wealth. the u.s. household wealth is $82 trillion, china is $26 trillion. and the gap in national wealth

is growing not shrinking, okay, so america is becoming wealthier and wealthier while china stagnates. i would argue that this is a more relevant metric to size national economies than gdp which not only is looking at, i think, arbitrary metric spending but we are also taking the chinese gdp numbers which all chinese officials know is absurd. chinese officials don't even believe their own numbers. it's true. the last head of the statistic bureau was on trial for corruption and part of the reason is because chinese statistics are done at the local level, so imagine if all 50 states in america each had own statist call bureau and imagine if there was one party rule and if you're an official you get promoted based on how much gdp growth you have in your profits,

so each province overstates and why do we know this, because you add up the numbers of the province in terms of gdp and that number is growing. the last job was a trillion dollar worth of delta between the national gdp and provinces and by the way, the provinces are growing faster than the national poll as well which is a statist call impossibility. you can't grow faster than the whole. so it's like the producers, you know, you can't sell more than a 100% more of anything and in china you you can. officials don't believe that number and say it's for reference only but the imf take this number as gospel and call collate with purchasing power parity, a unit of currency in beijing to a unit of currency in new york and that's how joseph

stiglitz that somehow china is larger than us. made-up books that are adjusted further with calculation that does not affect how economies really operate. taking a step back if we look at national wealth, the u.s. is still far and away the world's number one economic super power. no country is even close. now, this whole debate about job s and trade is what is called the imbalance in trade. the fact that we buy more from china than we sell china has been labeled a huge crime against the u.s. in fact, it was called rape several times in the election. we also heard several surrogates like jeff sessions on the stump repeat this that trade imbalances kill jobs. well, again, we go to the numbers. the amazing thing is that the

world has accelerated so fast that very few of the products around us were made by one country. so if you look around the room, you know, this chandelier, those return air grills, the electrical high hats, the chair, the shoes, et cetera, in the old days when basic trade theory was aspoused by a by ricardo in 1830's, you make wine and i do clocks. we trade and we both benefit. these days the wine was probably made by country a, b, c and d and the cloth was made in collaboration by many, many countries. yet our numbers have not kept up with globalization, so astoundingly we still count 100% of the value of the stuff we

import from the last guy that shipped it to us. that's wine for clothe but that's not how the world works today. let me give you an example. you know, we all have something like this in our pockets. now, because china was the last country that shipped this to us, this is counted 100% as a chinese value import to america, yet, if you break down the actual value added of the parts that go into this thing, you see that china actually represents about 10% of the value of one of these things, 10% for some noncritical comp components and assembly, our trade statistics distort china's trade by making it look much bigger. it's called gross trade balances. and what we need to get to is something call value added trade

balances. when you look at value added trade balances, you start to measure the value of the stuff that goes into products and when you do you start to see what a -- an important role, a vital role the united states has in the global supply chain and these value-added numbers illuminate dynamic of regional trade and global trade, so we can see this in many, many things. if you look at, for example, the steel that went into these return air grills, chances are the steel came from a recycling plant probably in the rust belt. it could have been the plant that donald trump was speaking in front of on his speech on trade. you know, if you look at these shoes, chances are the hides came from america. so when you actually break down the value of our import, you see

hidden inside the numbers is u.s. value. the united states tends to add value at discreet parts of the global chain. raw materials and finished goods and a smile those goods get sucked into china where they're assembled and often reexported to us where we then support jobs on the other end to support transportation, retail, et cetera. you start to measure all of the jobs in the supply chain. you start to see that of every dollar we import in mexican goods, at least 40 cents is going to u.s. firms that make the ingredients that went into the goods that do not get measured in the gross trade balance. and when you look at chinese

import you see that at least 50 cents if not more goes to u.s. companies for the inputs and also the firms that get these products to market. so that a dollar worth of goods that we import, in fact, a large share of that goes to supporting u.s. jobs. now, the whole basis of the trade imbalance argument, the trade imbalance that killed jobs is based on the notion that a dollar spent on import is not a dollar spent on u.s. content and in fact, there's a single think tank in dc that specializes in the scholarship around trade imbalances and if you start to open your eyes, you will see that no matter where you follow in the political spectrum, if you're a proponent of tariffs, chances are you will be using this think tank research to support your conclusions that

tariffs will protect jobs. this think tank is called the epi, economic policy instate and you will see it referred to numerous times in trump speeches on the stump and sanders' speeches and also the graham bill, epi tends to be the think tank that is referred to. the reason why this is interesting is because epi's numbers have been discredited by the bureau of labor statistics, so bls said, it's never intended to use this way and the methodology assumes that for every dollar spent on imported goods is a dollar not spent on u.s. value. so epi is based on gross trade and balances an therefore gives a false picture of trade balances and jobs. where this really gets us into

trouble is in bad policy decisions, so if you're looking at gross trade numbers, you say, well, we are getting barraged by solar panels. they raised tariffs on imported solar panels and if we were looking at the gross trade numbers between china and the u.s. we are getting creamed by solar paneled but -- panels but if we take a step back, you realize that there's a lot of u.s. content in there. in fact, america is a net exporter to china in solar. not in the panels, right, but if we go upstream, america does a design, an engineering, we also produce an export, the raw materials that goes into the panels, it's made here. it's made in washington state and other mining states. and the capital equipment that

the chinese use to make the solar panels is made here so we ship the raw materials to china, we ship the capital equipment to china and then the panels are fabricated back here. so when we raise tariffs on those solar panels, you decrease the demand for the solar panels because they become more expensive and you therefore decrease the demand for the upstream american value. less orders for raw materials this year, less order for capital equipment this year and that's why the solar panel tariffs were a net job loss for the solar industry. but this is not unique to solar. every industry that you look at, tires, steel, it's the same dynamic. every one job protected by tariff kills at least three other american jobs in other parts of the supply chain. it is no longer wine for cloth.

we participate and you wind up inadvertently killing a whole bunch of other jobs. why is this relevant for today? we are talking about tariffs, we are also talking about a border adjustment tax. so bored adjustment tax would be a tax on import at the border, but not a tax on exports. so we hear this is great for exports, it would stimulate exports and tax import as they should be, the problem goes back to the solar panel case. look at cars, look at the auto industry. a typical car cross it is nafta border six or seven times in its manufacturing and a typical car that's imported from canada or méxico, usually canada has at least 60% auto parts in it. at least 60% of the content is

u.s. made. if you raise the prices on autos, right, by using that border adjustment tax to tax the import, you're going to depress the demand for the auto parts that go into those cars from u.s. companies. guess where those firms are? mostly the rust belt, mostly michigan and pennsylvania. so we need to think about these policies less in terms of does it feel good, are we getting back at quote, unquote bad trading partners or are we actually doing what we say we are doing which is protecting jobs? i would argue that these protective tariffs do the opposite of what they say they are going to do. now, briefly as we wrap up, what are we to think of china? if the united states is the world economic super power by a long shot, what are we to make of this power that is

militarizing on the south china sea and that seems to be the key to many foreign policy puzzles around the world so the way we think about china needs to be on the ground and it needs to put aside the notions, the myths of the chinese manufacturing miracle. what you have in china is not so much a boom economy or a bust economy, all indicators point to a stagnating economy, stagnating economy, so we have three aspects of that economy that make it stagnating and is stagnating now and one is bad demographics, so you've got decades of the one child policy that have tipped the balance of demographics and now china has more elderly than working-age population which is what happened in japan and which was one of the drivers of the last decade. folks who do business on the ground in china are saying that labor prices are going up and up

and up and part of that because the labor pool is shrinking and the qualified labor pool is smaller than that. the second aspect of stagnating economy is china's manufacturing platform. it's very different from ours and when we read tom freedman we assume that it's a flat world adder we can push a button and china can make anything more cheaply. that's not the case. tell that to the people that bought the san francisco bay bridge from the chinese. when you look at the actual value chain, the way that china makes things you see that china has a highly risky production platform. so what might take us three or four players to make a product from beginning to end will still take china 15, 16, 17 players and this is why over the past few years you have seen

thousands of safety scandals coming out of china. thousands, in the paper every day in beijing and shanghai, food, drugs, toys. we have seen some of the scandals too but china much more so. the reason is because risk is bake intoed china's manufacturing platform and in order for them to fix this, they need 400 years of evolving cooperation law as we have had, really, you need rule of law and you need well-run companies in order to make things safely and to make things reliably again and again. china will need to renovate entire political economy before it can fix those problems and the third issue that points to stagnation is an environmental catastrophe. that china is going through today. so you look at china and you think big country, a lot of people, 20% of the world's population. you can fit their arable land to

texas. 19,000 square miles because of climate change and urbanization. china lacks arable land. the chinese government found that at least 20% of all the grains in china have been contaminated but we know the number is much higher. china is already in a major water catastrophe. most of the cities don't have enough water. 120 cities have less water than they need. so as we move into the next century, what's going to drive trade is not so much trade deals but scarcity, scarcity. china will be driven by the needs of feeding and powering

and caring for its populations and scarcity plays very well not just in the united states competitively but also colorado competitively, the u.s. is a highly diversified economy. the sweet spot of manufacturing is advanced manufacturing. so if you look at the place that is we participate in the global supply chain tends to be the value added, the advanced, the innovative, the difficult, there are companies like caterpillar and john deere that say castings can't be made anywhere else. where do you think it's sourcing most of the nuclear island, all the high-index treatmently advanced parts that go into the reactors, from the united states. supporting jobs in the rust belt, by the way.

it's just not looking closely enough. yes, we have lost jobs in the rust belt, but we have also created jobs, there are tens of thousands of advanced manufacturing plants in the rust belt that export and that support thousands of jobs in the rust belt. so the portrayal of the united states as one in decline and two a victim of china is simply not true.

is trade fair? no. trade has dislocated some jobs, i think the number is highly overstated. if you look at our manufacturing today, we -- the output is twice as much as it was in 1980 with half of the workers, so we are producing more than we ever have. it's not as if the jobs have gone overseas, we are doing it with fewer workers because we are getting better at it. so the answer is not the tariff the heck out of import, the answer is to look at negative extranalaties stuff that happens outside of a happen and there are kinds of negative extranalities that we as business subsidize. for example, when we eat the

gordon fisherman which we trust, we trust the gordon fisherman and it may have been caught off the coast of alaska chances are it was ship today china thousands of miles away to be debone and sent back, that happens with 80% of our seafood that's processed. soon it's going to be chicken. soon it's going to be chicken. think about all of the carbon miles that are being generated from that transaction. ships are spilling, they burn bumper fuel which is the durtyiest fuel. they are traveling thousands of miles burning durtyiest fuel so we can save. that means carbon tax. the only reason -- the only way

we could have a global regime on carbon is through multilateral trade deals. the tpp was starting to get at some of the environmental standards actually. another negative we don't pay for is health and safety. countries like japan are wise, they make it very hard for china to export food and drugs into their country. we not so much. we let anybody export, just about. just about. and so 80% of the active ingredients of our drugs are coming from china and india. the world's two safety offenders. china scarcity is good news and bad news for america. bad news because health and safety, right, and environment. these are the true threats. the good news is jobs because as china struggles to make things

safely, they justifying youred -- figured out how to make a ball-point pen. they had to source it from japan. as china struggles to feed population, power its population, it will need what america makes in terms of goods and services in agriculture but specifically colorado. so colorado's industries are well positioned to support jobs through trading with china both through exports and bound investment. if you look at the last ten years, colorado's exports have increased significantly to china. they have grown about 30% over the last ten years. if not that, if you look at the country as a whole, america has more than doubled our exports to china over the last ten years. if you look at the level of congressional district over 90% of all districts have at least doubled their exports to china

in the past ten years. so that means that across the country in every town in every city we are selling our goods and services to china hand over fist and the reason is because china needs what we make as china deals with scarcity in the next century, i believe colorado is ideally position to sell into that not just in terms of agriculture and advance manufacturing, if you look electronics but $750 million, electronics, but increasing colorado was selling services to china. goods increase 30%. services increase almost 300% from colorado to china over the past ten years. so part of that is tourism, we count that in the number. that's in the number. but another big part of it is firms that are helping china with infrastructure building, with cleaning up its environment and some of those firms are

coming from right here in colorado springs. so if anything i feel colorado could be doing more of the same and as china begins to open up market for beef which is beginning to happen, colorado is ideally positioned to be selling beef into the chinese market and supporting jobs here. so in closing, and if we think about the next century, yes, there are problem spots all over the world, but when donald trump said that the u.s. is dealing from a position of strength with president xi and leverage that we don't typically acknowledge, i agree with him, we do. we are $45 trillion wealthier as a country and that gap the growing. we are light year ahead of china technologically and we have the software of a great nation, the dna of a great nation, openness, the rule of law, these are the

dynamic drivers of innovation and the challenge will be to see how policies that may fly in the face of these pillars of american openness and democracy, how they impact the body politic and how they impact our economy. it's an object lesson and we will see how it plays out. thank you for your attention today. [applause] >> okay, we are going to start with some questions here, so anybody? >> can you for the benefit of the audience speak a little bit about ip theft and how it might add or detract from the chinese economy? >> the question of ip theft and one that we are reminded a lot about.

i mean cyber spying is in the news these days and we hear about two chinese hacking, one hacking of personal data and the office of personalel management and government worker files that were stolen and the other kind of ip theft is industrial ip theft and that's the kind i want to address today. underlying this issue is a lack of rule of law, right, there are plenty of laws in the books in china but the enforcement kind of sketchy. china is evolving in its enforcement of ip because china, i mean, most of the cases in chinese ip courts are chinese companies against chinese companies. so china knows that it needs to compete by bolstering ip, but in the meantime what are we to do in america? here is my thinking. if you are -- if you are thinking that china can make whatever we make at the press of

a button, look at the chinese safety scandals. look at the thousands of scandals over there and look at the hundreds over here. so a very recent one was the san francisco bay bridge where the death plates, football field death plates were sourced from a large chinese enterprise and the welds were coming back cracked and rather than fixing the problem california transportation authority decide today fire inspectors, avoid that bridge in an earthquake. but you know, this is not on outside case, if you look at the high-speed rail industry which is a perfect case study of china copying ip for the high-speed rail technology, you know, from hyundai and kawasaki. yet, if you look at that infrastructure project, it has been an example of corruption

and lack of safety. so the crashes that you've had has been because of systematic failures, failures that happen up and down the system, not just a single point of failure and what shows is because you download a terrible data on how to make something, doesn't mean you can make a self-fighter reliably safely again and again. you need more than just advanced equipment. you need a whole value chain that is transparent and well run with good corporate governance and a foundation of rule of law. so while the ip issue is a problem, i tend to look at it with -- with less breathlessness that some of my colleagues do because i believe yes, many secrets have been stolen needs to go through china risky manufacturing platform to be executed and therefore it's not

like choina can just leapfrog over us and start making self-fighters. do we need to harden up our defenses, you bet. industrial, absolutely. government, absolutely. government specially. industrial absolutely. we can do more to harden our defenses. the feeling that china has already leap frogged over the u.s. in terms to have economy based on the theft of ip i think feels a lot of animus towards china and while ip is a big issue, i don't see it as kind of a secret sauce that's going to get china to beat america in the next century. there's a microphone. we will get you next. >> hi, instructor here. okay, so it sounds like you are advocating for freer trade provided we incorporate the

extra nalities, how do you send something like that in a political environment where populism is against free friday and political market elites are against incorporating incorporating the negative extranalities? >> with difficulty. [laughter] >> well, you've got a rising tide of sentiment among both conservatives and liberals for reform and carbon tax specially as we are evolving in the tax code. so james baker being one of the many people who are speaking out in favor of a carbon tax. you know, we did just do paris accords, so it is in the realm of possibility to do multilateral agreements based on intangible extranalities. there was an off-mic

conversation between donald trump and wilbur ross, commerce secretary a couple of weeks ago which was reported on in politico trade where wilbur ross, look at the japanese on food, they don't accept anything, they don't let anything in and, you know what, if they're looking at japan as a model for not just food but calculation of trade because japan is trying to use value added trade accounting, then they'll do well to look at that example. i find that encouraging. not so optimistic in the moment. no one seems to have the appetite and defend what's good about these things. there was a question here, i think. >> thanks. i would like to explore what your thoughts are on the purpose

for protection what i would define by china toward north korea and is that all a trade function and the potential loss of trade and could you comment a little bit about what seems to be a strategy to reduce the country's volatile government by the u.s. and others, but with china it seems at least what i've been reported is that china has a lot of -- of workers that come from north korea and also that means a lot of plants that are there. so how do you reconcile this

with china? >> thank you, yeah. so china with north korea is on the heels of -- or i should say the horns of the themmia, not the heels of the dilemma although it could be after mar-a-lago, we will see. the issue is you have a country that's teetering on the brink of collapse and starvation and it's the sole buffer with lots of u.s. troops, so they are kind of walking that tight rope between trying to rein in north korea, for example, the recent cut in energy. they don't wanting to too far, right, because if you topple that regime, you wind up with a major humanitarian disaster right on your border and also you hurt trade to your point because china is embedded with north korea in terms of trade.

i do not feel optimism that some chit-chat in palm beach will solve. we will see. ultimately it is up to xi jinping, how he wants to play his cards and we can exert pressure in many ways but ultimately this is china's neighbor and china is going to need to -- to ply a leadership role in solving the problem. diplomatically, sort of punching china in the face repeatedly on the world stage is probably not going to help when you need china's help. yes, did you have a follow-up? >> i find it very difficult to believe that humanitarian concerns are one of the major reasons why china has feeling of

concern for north korea. >> the humanitarian reasons? yeah. i'm doubtful of that as well. >> china holds cig -- significant amount of government debt which would presumably have been repaid at some point, how does that debt impact your view of a challenged china and a kind of rising or healthy healthy america? >> great question about china, we often hear as a national security issue. what if china on any given day decided to sell and dump its $1.2 trillion worth of treasury bills on the market? we heard about this in the last election in the romney-obama election. you remember sarah palin talking about we were slaves to a foreign master because builts.

the nightmare scenario that we have been talking about actually happened this past year. so, you know, we've been told if china dumps treasury bills, the dollar would collapse and interest rates would go through the roof and, in fact, china sold about $800 billion worth of bills last year, not 1.2, of 3 trillion in foreign reserves of bills and what happened, right? nothing happened. and the reason is because our market is a 30 trillion-dollar market, okay, it's the deepest bond market in the world. no country is even close to the size and the depth of liquidity of our bond market. so when the pentagon did a study a couple of years on whether china's ownership posed a risk

to america, the pentagon said, no, it didn't because china would sell bills and other countries would buy them and other central banks would buy them and that's in fact, what happened. china sold 800 worth billion dollars and it was not a ripple in our bond market. so i do not see, you know, ownership of bills as a, a threat and b giving challenge leverage over policies and, in fact, they're buying of bills during our own currency that manipulation helped keep our interests low. when china start selling $800 billion, the reason why they are doing it is because they are trying to keep their currency from falling too fast. so what you have is china has a close currency and there's the special administrator that guards china's currency and last year that administrator loosened

up outflows of currency and what do you know a trillion dollars of capital flowed out from china and most of it to the u.s. people see it on the ground, so what we are hearing from our politics is china cheats on currency, they trying to keep currency low when in fact, china is doing the opposite. they are seeing to try to keep currency from falling too fast. and so what we are hearing signaled in terms of the negotiating posture of our administration right now is addressing the problem that is actually not a problem at the moment. china is not trying to keep its currency cheap. in fact, the opposite. it's trying to keep its currency from falling too fast. so the larger issue is one where americans understand the vastness of economy. 3trillion-dollar market. we have $70 trillion worth of assets in this country too. although china may own

$10 billion of assets in the country it's still kind of a blip in terms of $70 trillion in assets. so even though t-bill money is going out of debt and going into assets like mergers and acquisitions and greenfield projects, some of that must be is coming here to colorado in investment. at the end of the day, that investment is supporting jobs. now, when it goes into areas that are sensitive like the internet backbone, i say there's a reason to push back on chinese investment. but on most industry that is are not sensitive, i welcome the job-supporting investment. i think it's been a big positive for the economy. >> going back on trade. purposedly excluded china. >> right. >> do you have a sense for

china's capacity to fill that void? >> that's a good question and one that economists and policymakers are thinking about these days. i believe hillary clinton disavowed and pivot to asia. this was just not an economic pivot to asia, this was going to be a pivot in hard power as well. a considerable part of the tpp was a security agreement in effect setting the rules of the road for the region without china specially on environment and labor and to some degree health and safety. so, you know, by pulling out of that agreement, i do feel that we have shot ourselves in the foot in terms of trying to

cobble together a solution. we have seen militarization in south china sea and north korea and a lot of nervous southeast asian nations, part of the tpp was to say, hey, we are here, we have your back, we leave more of a geopolitical security vacuum. in terms of trade, i actually feel that the notion that china will sort of step in and become the global in trade is a bit overblown and, again, the reason lies again in the numbers. if you look at gross trade flows, china was huge. but when you look at value-added trade flows, you see that with trade over the last 25 years. fingerprint in asia has not changed at all. it has just moved into china. essentially china is sucking inputs from all over the world in asia putting them together and sending out to the rest of the world.

so in regards the value added numbers, if you look at the actual supply change you'll see that most of the major supply chains that run through asia and china are actually owned by american companies. so china maybe the last stop on the supply chains and it may make them appear much larger in trade statistics but when you break it down in value add, you will see that most supply chains are still mostly u.s. and european owned and that's not going to change whether there's a tpp or not a tpp. so i don't believe that suddenly we are advocating the next century on trade. not at all. where i feel like we have really hurt ourselves is in security in geo politics and that i think is a shame. >> yes, thank you. i have a quick statement to say

at the beginning of my question and then the question. my statement contrary to mr. mr. trump opposed multilateral trade deals and my question is multilateral trade particularly tpp gets criticized, so could you comment on how we could come up with a more effective retraining effort so that if we do a better job of retrain lg people who lose their jobs in free trade we wouldn't have vulnerability in the way to attack multitrade contracts or programs and an example of that is the german country apparently has an effective program, can you comment on how we do a better job retraining our workers? >> retraining our workers is at the center policy for the next century specially when we think about automation.

this is a challenge to our society beyond retraining but also training in the next century, what does that look like? i would say this, we have more than a dozen retrain programs including taa, that's the issue, so they're largely in effective. they don't work together. they are underfunded. we spend less per capita than any advanced economy on worker retraining and so we are trying to throw a bunch of policies and budgets against the wall and nothing is really sticking. i think we need to take a step back and we need to have, i think, a national policy that

looks not just at his locations in trade but worker dislocation. you know, capitalism is a disruptive system, when we looked at the jobs numbers every month and it says we created 200,000 jobs this month and that doesn't sound much, note are on top of churn and america churns 4 to 6 million jobs a month. a month. think about that. so 4 million jobs are lost and 4 million jobs are created and then on top of that, the net is whatever we have. so we are still a highly dynamic but highly disruptive economy. so think about all those jobs being lost at a month-to-month basis. most of those jobs are not going overseas. they are being lost for a whole variety of reasons. what happens to those workers, whether they lost their job

through trade or not, what happens to them? i think that our leaders have done a particularly lousy job on this policy wise and we have seen the net effect of that in the election and folks are angry and say you need to listen to our needs, i don't have the answer to this but i think that a framework would be creating a national policy of where we want to be in the next 50 years in terms of our workforce, right, now if we look at daily expenditures, the fed measures how much we spend every day on stuff, 80% of what we spend is on services. you know, training folks for health care and next generation services is important. guess how much we spend on made in china goods, 2.5% of our daily expenditures go to made in china stuff, but so we need to set the framework and i really think we need to create state

level marriages of capital, education and government and you see some states doing this now. the state of alabama, for example, you know, was doing a good job in marrying community and colleges with local capital and government grants and that's creating the labor pool that -- that works for huntsville, alabama, the makes an export aerospace, but at the state level localities need to figure out how to best marry the private sector investment with grants and loan guaranties and also, i think, but without that national vision, you know, you can't rely on the states to cobble this together so i think you need a national vision and then kind of a statewide implementation on how to fix that. >> next question. >> a question about your

personal business experience in china and i understand this maybe a delicate one to answer. when you have done business in china and you have to comply with american law as well as chinese law -- >> correct. >> and yet you are probably running into a fair amount of corruption in china. comment on how did you deal with that and to what degree you found it a great disadvantage to be an american trying to do business in china? >> next question. [laughter] >> thank you. so i will say this, 20 years in business in china and not one bribe, not one bribe. now, i am not a big enough company to get to the point where i might need to start bribing. companies complain that when they reach a certain size in china it starts to be a shake-down and we have seen this

with the potential governor who was involved in a major money laundering and went up on charges and there was murder. so corruption is so endemic in china to the point where you're a student graduating from school, you're bribe to go get your dye plomma. you're waiting in the hospital, you're bribing the doctor. the skids are greeced in every aspect of chinese life. now, as an american firm, you know, again, we did not fall foul to those practices and we have not bribed anyone and we have not found it to our disadvantage yet. so, for example, i am selling american agriculture into china at a higher price than local prices because my buyers perceive a quality to be better from the united states and for

it to be safer coming from the united states. and for that reason, i -- i -- a, i don't need to raise to the bottom of price and b, i don't need to bribe my way through. what you do need to establish is relationships because this is a culture that runs on relationships and not runs on contracts. when you sign a contract, that's when the negotiation begins and not ends. beyond contract is about the relationships and over the years the folks that you build friendships with at the local level are the ones who are going to help you when you have a rainy day. yes, the silver bullet, the guys on the standing committee to know, but it's really the local people, the local fda, the local ndrc, the local iqsrq, the local officials are the ones that help you when you need it if you

invest the time in befriending them and building relationships. again, not one of those guys have shaken us for a bribe. it is possible to do business in such a culture of corruption and not fall foul of the foreign practices act. >> a little bit off the subject. it's on or not. there's a myth, i guess, maybe it's a myth, the chinese have sense of priority. do you sense that at all? >> innate sense of superiority? i have not in my comings and goings sensed that. if anything, i have seen something that we might recognize as americans as innate

sense of warmth and hospitality and hard-working values. now, at a national level, you know, there is a long memory, right, so we came out of a century of humiliation and shame where every time china opened up, foreigners took advantage of them and we also have just in recent memory generationally an unimaginably horrific turn of history in terms of, you know, the famines and my business partner -- her dad relocated to a camp and eating bark. this is in the national memory. imagine if our parents or our grandparents went through that nationally. i do believe that china understandably has a deep sense

of grievance from the world and distrust of the world which i think if you look at their contacts and history makes sense but i do not see a sense of superiority. .. an observation at the question. the observation, i get what you say about value added but as long as the product is made in

china at the bottom i don't know that who would ever be able to sell that concept to widely. that's the observation. the question is, i don't know how you say to joe sixpack who has a very basic kind of a job and who loses it to automation, that it's okay and that a lawsuit in a robot, it's someone else's fault. and, therefore, i will rush out. what is a message for some like that who voted the way someone like that probably voted this last time? >> if you look at history of this country and you see with each innovation the disruption that it causes, and so we imagine it the buggy whip guys had a powerful force who'd been elected a president hu would then try to bring jobs back that

group of people. now, i did not wish to imply that we could tell folks have lost their job that if someone else's fault and they need to be retrained. obviously at the local level losing your job is devastating. we see now i believe social aspects tied into perennial job loss such as opioid addiction and mortality rates in white males, which are lower than they've been in a long, long time. firstly, you need to fix the system for training. and then what you tell these folks is in the context of a vision for america and your state. so for example, in coal country just like saudi arabia, right? look at where oil is. i'll is not $100 a barrel. when oil was $100 a barrel the studies were living large.

now where oil is where it is saturday's frantic to diversify its economy. similar to ross belt states trying to diversify call. is that a project akin to the wpa? how much federal support needs to happen in cognition i believe with local, the state needs to form its own diversification strategy. how do we train coal people to do other stuff? some of the other stuff might not be manufacturing. i've met many people who are in those years of 50-60 who are out of a job, we need a job, who are not ready to retire and you are not re-trainable. or who are resistant to being retrained. especially if you look at automation. these are not easy pieces of

equipment that man. so it's not an easy fix. i do believe that the diversity of america's economy can absorb folks. so for example, the agricultural sector is still a booming sector. it's not that hard to train. it's a major, major export sector and discussion i will to be. if their summit between 50-60 who needs a paycheck, put food on the table with benefits, if that's milking a cow, i mean, i don't mean to seem heartless. i'm just trying to think sort of what's in the realm of the possible. we hear from think tanks and policymakers all the time about retraining, but what does that mean? we've been trying to do it for decades and we failed. i think we need to go back to the drawing board on what it means to be retraining in the near term and to get people

study paychecks right now versus midterm to long-term. to your point, what you say to these folks? what do you say to people in the rusrust belt who voted a certain way, i think you need, so an old days we stab. >> caller: and shop -- we used to have. >> caller: . the global supply chain, okay? where is stuff made? how to stuff get made? who makes it. what is america's role in global supply chain recs what is china's role in the global supply chain. what your habits on consumers mean for local population and local environment and biosphere, et cetera? that's a long-term problem. but talking to folks politically about this i think you need to present ultimately the competitiveness of the american worker. if you look at all, look at the state for the senators are clamoring loudest for protectionist tariffs. those of the states that exporting the poster goes of the

state that of the most competitive in terms of advanced manufacturing, the states who have the most to lose in terms of job if terrorists were erected. i think you need to point to our america is strong. i think defeatist rhetoric that depicts america in decline is defeatist and gets us into trouble with huge blocks of the population who believe america to hissing its last days. i think it needs to chat with thchief executive present a positive vision for america. the morning in america and the city on the hill is something we would do well to hear right now. because yes things are pretty bad around the world but there's a lot that's going great about this country. there's lots. we need to communicate that to folks of may lost their job to say hey, there's opportunity. it's what fdr did. there is hope. obama tried to instill that help, towards the end of his term, not so much, right?

but there is a lot of hope. i think that has to in into the political rhetoric as well. we can hear all the doom and gloom. we need to the other side of it as well. any other questions? >> the cost of living is much higher in the united states that other countries, right? >> depends on what country. >> mexico, for example. employers can pay less in poor countries than they can hear in the united states. and is that a problem? is that a problem that will get worse? >> yes, it's a problem if you happen to be one of the people who is doing the job that thin gets into mexico. yes, the answer is yes. the problem is that we are a capitalist country and we run on competition.

we run on dislocation, disruption and job loss, right? that's the engine of innovation. the engine of how we grow. so while that job may be lost to someone in mexico with a lower wage and in lower skill, another job in the u.s. was created to make the advance auto parts that winning to that car. if you look at the rust belt, a perfect example. we lost jobs and basic manufacturing but we created all these advanced manufacturing jobs. selling into automotive and aerospace and optics and bio and pharmaceuticals, et cetera, et cetera, that's all coming out of rust belt companies. subpoint is not to direct terrorist that stifled innovation of the exporting firms but to support the folks of lost their job. that's where we really fallen that as a country, and that's what i feel if we need to make a renewed contract with america.

because look, i don't mean to whitewash over our own economic problems. in fact, women $82 trillion household wealth and the fact that our national wealth is $45 trillion wealthier than china, that's nice to know that china is not about to run over us in the global economy but if you are a family whose wages haven't gone up in 20 years or in fact, have declined, who cares, right? we've had wage stagnation, we had growing inequality where more and more and more unlike lesson half percent of everything in the world. >> aren't we handicap because the cost of living is so high? doesn't that handicap is a little bit? >> i don't believe it does. if you look at the stuff we sell the china, we're not competing with them on low value, simple assemble, we're not selling chinese shoes. were selling china airplanes. and that's with her own cost structure built in peer we're

selling china port and soybeans, all with her own health insurance and benefits baked in. the fact we pay our workers more does that mean we're on a race to the bottom on quality of life and wages. because of scarcity. china needs and we have supply. more so than many other countries. so yes, we destroy some job. >> we also great other well-paying manufacturing jobs. the point is to do a better job helping the folks have been dislocated and not to hurt the folks who are making money and exporting. remember trades only piece of our economy. most of our economy is self-sufficient. trade is a piece of it. we are a large economy that consumes what we make. and so as trade declines with china immediately see a trade war with china, do i think this

could impact america negatively? he would lose a lot of jobs? yes, i do. do i think it would be armageddon for us economically? no, i don't. at the end of day we need to fix those economic inequalities that are not being solved, but trade i think is not to blame for this economic inequalities. i think it's our own policies that have created these issues,, not the chinese currency policies. >> we have time for one more. >> we have one over here. >> in terms of gdp and comparative economics, how do you factor in the walmarts and the kfc and mcdonald's and haagehäagen-dazs and all the otr non-chinesnon-chinese companiest operate very successful in china?

how does that fit into your equation? >> interesting question to even look at the engine of china's manufacturing, it's their export factor. if you look at the composition of the ownership of the companies and export sector, the majority of companies and china's export sector are joint ventures with american firms or european firms. so really the engine of china's growth is a partnership of the united states. so yes, many companies, i don't know, you say in terms of gdp. they say that walmart imports as much product as if it were a small country. if they give you any idea of the level of gdp of the walmart, for example. their trade flows are again to a company in terms of how much the import from us. many companies have gone to

china and stuck it out and done well. are many, many more companies who have not, and 11 bit the dust in china and have failed. ultimately, china is retrenching in its economy toward state ownership xo more and more, originally we were seeing more and more privatization. now we are seeing more and more of the states coming back. the issue going forward is how to negotiate with china on trade harms that if it abandon, it hurts it's up? it subsidize its own state-owned enterprises because it's trying to keep these uncompetitive companies afloat, essentially, these dinosaurs of a command driven economy. what president trump needs to be negotiated with president xi about our not so much a terrace but about how american company

are treated in china, the openness to our investment in china and the level of subsidization that china's industries go through. for example, china steel industry, its major industry on beneficiaries of every single sweetheart subsidy known to a communist country, from cheap to free raw materials, to cheap loans, debt to equity swaps and on and on and on. we in america think this is creating competitive goliath that we can't possibly compete with. the edges no, it's creating uncompetitive danger with companies. when shall i wanted to build an offshore rig in china, which they haven't been before, they inspected china's biggest, brightest most modern shipyard and the shipyard on the audit on every single vector. mostly because they lack very basic blocking and tackling. they lack the ability to handle

hazardous materials, to do quality control on their suppliers come to monitor for health and safety. so the very, the subsidies are creating uncompetitive and unsafe companies, but china is looking for maximal employment, right? to keep its country secure and to keep its government in power. as long as folks are employed and not taking to the streets, that's what you're looking for. so to have, to try to press president xi off of the subsidy regime, it would be really, really tough because it's against his own national interest. that's why think about the economic issues are going to arrive pick subsidies, and also health and safety issues paper be interesting to see whether those were talked about this weekend, or not. thank you. thanks so much for today. [applause] >> thank you, jeremy. >> that was wonderful. so april 17 to russia and the west. thank you, everybody, so much for being here today.

[inaudible conversations] >> ahead of this mornings senate intelligence committee hearing with former fbi director james comey, committee member ron wyden of oregon discussed his expectations and what questions you want answered. >> we are obviously reviewing the words the president said in public, word for word with respect to the comey firing. he said that he fired mr. comey to make this investigation go away. and i consider that to be an attack on american institutions. >> what are you going to ask him? >> what we're going to do is flash out what those communications were all about, what those interactions were all

about. and right now we're trying to sort through some of what we were told today. for example, i asked director coats about testimony back in march in the armed service committee that he wasn't aware of the president or white house personnel contacting anyone in intelligence community with request to drop the investigation into general flynn. he said he wasn't aware of anything like that. the "washington post" has been reporting that he had been asked to intervene by the president with director comey, back off any fbi focused on general flynn. both of those cannot be true. and so we will have to keep digging to sort that out. that was number one. and number two, i thought it was

very troubling that the head of national intelligence did a complete about-face with respect to providing the american people any information at all on how many law-abiding americans are swept up when there is an effort to target, which i support, somebody overseas. this is a problem. now it will become a bigger and bigger problem in the days ahead as communications systems become more globally integrated, and for the life of me, i don't see how you can have a policy that insures that we show the american people that security and liberty are not mutually exclusive. i don't see how you can do that while allowing these backdoor searches. >> on that topic what you think this investigation is meant for the intelligence committee? it's not a committee we often

see very publicly in the work that's happening in the intelligence committee? >> we only get probably 45 minutes or so a year to ask questions in public. so we try to spend as much time in asking questions that we think will yield real policy returns. and for example, in 2013 i asked then director clapper whether the government collected any type of data at all on millions or hundreds of millions of americans. and that was a key factor in our getting the usa freedom act passed. >> and you think this set of hearings is more light on that work and the skull that you put intelligence committee? >> there certainly is a lot of follow-up to do, but to have director of national intelligence say that it would

compromise national security, to even do a sampling, a statistical assessment of how many law-abiding americans would get swept up when we are dealing with a security matter relating to a foreign target is an extraordinary statement. i have been at this for years now, and this is a total about-face, even from director coats. >> this morning will have coverage of former fbi director comas testimony before the senate intelligence committee. see it by starting at tinian eastern on c-span3 or c-span.org you can also read the former directors opening statement now ahead of the hearing. if you're on the go you can follow the over directors testimony live on our c-span radio app available free in the apple app store or for android

devices available on google play. >> president trump has elected christopher rate to be the next fbi director. he is a yale law school graduate and a litigation partner at a washington law firm. he was nominated by president george w. bush as assistant attorney general in charge of the criminal division and as a principal associate deputy ag at the justice department. >> sunday night on "after words," new america president and ceo anne-marie slaughter examines global networking in the digital age in the book that chessboard and the web, strategies of connection in a networked world. she is interviewed by dennis mcdonough, former white house chief of staff in the obama administration from 2013-2016. >> what would strike it was that we knew there was a world of

state and state rep. >> today if you think about north korea or iran are sometimes china and russia, that world of state to state relations is still graver import and i think of it as the chessboard world because it's the world of how to essentially beat our adversaries, we think about a move and we try to anticipate what moved they're going to make. and that world is there and it's very important. but equally important is what i call the world of the web. that world of criminal networks including terrorist but also arms traffickers and drug traffickers. the world of business, which is increasingly big network supply chains, global corporations and the world of non-governmental organizations. i think of all those actors as one of actors as increasingly important actors, but we don't have strategies or how to bring them together. >> watch "after words" sunday

night at 9 p.m. eastern on c-span2's booktv. >> c-span, what history unfolds daily. in 1979 c-span was created as a public service by america's cable-television companies and is brought to you today by your cable or satellite provider. >> now a look at the history and future of the u.s.-china relations. the council on foreign relations hosted this event with a focus on u.s. policy in the asia-pacific region. panelists examine china's economic and regional ambitions as well as policy under the trump administration. this runs one hour.