[inaudible conversations] [inaudible conversations] [inaudible conversations] >> please welcome to the stage the honorable ceo of counsel on competitiveness, debra wynn smith. [applause] >> good morning. welcome to the 2017 national competitiveness forum. i hope all of you that were with us last night had a lovely evening at the university club for our annual dinner. i know we were all absolutely

blown away by the fantastic talk that there was on sustainability. thank you, again, for that wonderful tour deforce of the imperative for sustainability in our future. allow me to recognize and thank our sponsors for their support and commission for the council. and i want to thank lockheed martin. pepsico, snap-on, deloitte, air chairman sponsors asu, university of california san diego, as well as our benefactors and patrons, hntv, michigan state, university of michigan. verizon, marquette university and white cap investment. without this we could not do the forum and we thank you very very much for that. well, we have a full day of very exciting talks, as well as the release of some of the critical annual policy work at

the counsel of competitiveness. calling for our clarion call that we will release shortly and i want to really just frame that in a few overarching facts about the good and bad of our economy right now. the good news, of course, is that gdp growth over the past two quarters has been very strong while productivity was flat through most of the year, it's rebounded recently and unemployment is low. in fact, the lowest level since 2000. we know that consumers and investors are optimistic and inflation remains game. we are seeing action on long-term council priorities such as reducing the corporate tax rate and implementing a territorial tax system to repatriate the off-shore earnings of american corporations as well as a much more balanced friendly commitment to regulatory reform. the fed just recently raised

its expectation for growth this year and next year, on the economy, expecting us to be about 2.5%. not at the level that tim says that we need to be at 3.5, but nonetheless, that's great, great news and of course, unemployment is expected to continue to drop and we hope to see some gains in wages. but, of course, we know in competitiveness that there's not a silver bullet and this is an eco system and there's still a myriad set of challenges facing the country. as we say, they continually increasing growing deficit, and ensuring the ability of our middle class families and ensuring that the crown jewel of our higher education systems does not have an unfortunate impact coming out of this new tax legislation and very importantly, we want to work very hard as this u.s.

investment in our r and d, particularly, our basic research, continues to decline. at today's form-- forum we'll look at competitive prosperity and you'll hear from the board about the state of our agenda about the clarion call and we will look into the future. we're excited we'll hear from the ceo and chairman of deloit on the latest report of the council's partnership with deloit on counsel of technology and advanced manufacturing. we will have a discussion about the director of the national science foundation and two university presidents on the work coming out on exploring frontiers that laid the groundwork for commission on frontier that we will release later today. we know, of course, that energy and manufacturing are

inextricably linked and we'll look at deep dives of our economy and bring the forefront the challenges of educating our work force as we discuss energy and manufacturing throughout the day. i think all of you are going to love our luncheon talk by the are to of body builders and that will be substantive and entertaining. this afternoon we are going to have a series of mini talks taking a look at disruptive frontiers, eight automation, cyber attacks and the rise of the robots and what that means for american workers. so i want to thank all of you for coming and supporting the council on competitiveness. i want to thank our tremendous leadership, our chairman, sam

allen, our vice-chairman, the global advice chair of pepsico or for university. dr. michael crowe, as well as the members of the executive committee and of course, the great staff of the council on competitiveness. with that i would like to invite the board and the executive committee to come to the stage for the formal release of the clarion call for competitiveness. thank you. [applause] ♪

[inaudible conversations] [inaudible conversations] [inaudible conversations] . [applause]

[inaudible conversations] [inaudible conversations] >> welcome, everybody, i'm larry webber and i'm going to moderate this panel this morning and welcome them all. i understood there was an introduction that i was not in charge of, but we will go away from that. i think i'm the second longest member of the council and i have to tell you, in almost 30 years that i've been here, the work on competitiveness probably could not be more

important. the kind of challenges that we're facing and in almost every aspect of our leadership on a global basis are being tried every day. today, we have obviously debra, we have sam allen, mike crowe from arizona state university and from pepsi. i wanted to start with the first category of tax since when i woke up this morning at the hotel that seemed to be on the cover of every-- or the front of every newspaper and also was in my smartphone. and maybe, sam, i'll start with you. one of the biggest, at least benefactors of what the tax reform is, is corporate tax going down to 21%. i guess, the question is, one, how do you see that as, you know, a ceo and chairman of one of our major corporations in the globe and how is that going to help you? and second, how do you think it

could hurt, maybe, you know, in our competitiveness and in any way, and will it actually create more jobs or more innovation and competitiveness in our country? >> well, that's the $100 question right now. it's interesting. this week i've been out with our investors all over both coasts, and that's one of the first questions everybody asks and we start out by saying, well, the devil is in the details, however they end up writing it. what it-- it's not, maybe, from our perspective, you know, our tax rate today is roughly 34%, normally what we pay, about 55% of our earnings come from the u.s. so, if the rate does go down to 21%, our effective tax rate will probably go to 26, 27% in

total. and people have a tendency to lose sight at most multinational companies, it's not going to go down to 21%, it doesn't have earnings coming from other parts of the world. but certainly will, if -- what everybody is writing, if it ends up being something similar to that, the analysis we've done, first and foremost, for our customers and our dealers will be very, very, very positive. and that's even more important than it is for us, quite frankly, if they do well, then we'll do well as well. the -- there's no doubt it will be stimulative. i've read all kinds of things from economists, it will add to gdp 50 basis points plus, i'm in the camp it will add 50 basis points plus to gdp, but

feathered in probably-- it won't happen the first year because there are other parts, provisions to it that in your first year are negative from the company standpoint. the company like ours immediately if the tax rate goes down. you've got to go in and all of your provisions for tax losses that you've had, you've got to restate those, they were at 37% and now you've got to right them back down. there are other sides to this that will have an impact, but in my opinion, if this does go through, it will be very system -- stimulative over a long period of time and yes, it will help with competitiveness. but i think the stimulative part to the economy is even more important than the competitiveness part, that it may help a company like ours.

>> i tried to get through the 500 pages about you they just delivered it, you know, yesterday to everyone. but one of the areas that doesn't look so promising, mike, is higher education. and the way that the tax reform seems to be looking at restrictions and things, thoughts from you and your colleagues on that? >> well, first, the tax reform is positive, it needs to be constructive and it needs to think about the entire productivity of the country, but at the same time. what's happened, many members of congress have become frustrated with universities for lots of different reasons and so, they're, in my view, eking out punishments that-- no joke, that the proposed now apparently off the table, but the taxation of tuition benefits to graduate students, a taxation of certain endowments which is on the table and the change of overall status of the universities

themselves. viewing the universities as problematic is all a sign of the fact that i think there's two things that are going on. one, there's concern about the responsiveness to the universities to the bigger advancement issues of the united states itself and there's some that are concerned that we're not doing what we need to be doing. there's others that unfortunately are using tax policy to send signals about what they-- basically their view of the culture wars that are going on and so, you take those two things together and it's not well thought out tax design related to helping the university to do what the university needs more, which is contribute to the most fantastic human capital production that the world has ever seen. like i talked about last night. as well as knowledge capital enhancement and production. universitying need to also think rethinking the way we're communicating what we're doing and communicating to the general population what the universities are all about and

what we're working towards or we're going to have this continuing, ongoing argument where tax policy. student loan policy. regulatory policy. structural policy. governance policy are all going to be shaped by politicians, many of whom are unhappy. right now, what we need is, the business community and other communities to also speak out for what they think the university should be doing and the tax status of the university being largely not taxed entities, has been a critical success variable in them being able to achieve the levels of success we've been able to receive. >> if the university is just another tax entity, that's a completely different kind of thing and we're moving in that direction and we immediate to be very careful about that. >> couldn't agree more. you know, last year the council did a long-term study on productivity and i'd like to ask you to look at where we

might be headed in the direction of productivity in the united states and-- because the council had a long-term decline. where do you think that will end and what are the sort of levers that we need to look at to get productivity back, moving in the right direction? >> look, as we talked last year, and as we've written, productivity, as you say, has been declining to flat now since 2008, 2007, so several years. excuse me. now, there is some encouraging data and that is the last quarter, so we're trying to see for the first time an increase in productivity. however, the question is is that a blip or is that sustained? >> and the reality of it is that overall, the trends, as you pointed out. have been very, very either

depressed or negative. >> what is pepsi doing about their productivity? >> look it, we're doing what all of their large corporations, we're looking at the most efficient way of deploying our capital. the most efficient way of using our labor force, what isn't sort of generally discussed as much as it should be is with productivity and automation and everything else that we're doing is that it is improving the efforts of our industries, but we're not replacing those jobs with new jobs. and so i think more important from my mind is not just productivity, is what types of jobs, and i touched on this last night, are we going to create and invest behind and educate people in order to have a work force that's engaged and the biggest worry over the

decades to come is the mismatch between the jobs we're creating and the skillset of the work force that's available. that gap is widening. >> this is the central issue, so, productivity in certain sectors is accelerating at the fastest rate ever. the actual people who are working and developing and so forth, unable to re-enter the work force, it's accelerating and part of the response to the universities themselves. we haven't adjusted also to look at this problem on a different scale. >> but, if i can just build on that point. >> sure. >> as an employer, you know, people ask me what keeps you up at night. i tell you what keeps me up at night. and the chief technology officer, the. >> an age of an american with the training in science and engineering and mathematics

working in any industry in this country is now over the age of 50. so the next decade half of that work force of the entire country's work force will anticipate retiring. there's no where near enough students that are going to full that pipeline that are coming out of institutions like mine that we're going to be able to hire. so the time period it's taking to fill a position, actually i look back at my last ten years at pepsico is longer and longer and longer. productivity can't continue if we can't fill that work force. so we have not only a mismatch, but we have a diminishing pipeline of talent. and in particular, in fields that take a long time to train people in. you can't train a scientist or an engineer or a mathematician in any of these fields overnight. so, somehow the discussion that's going on has got to take into account what are we going

to invest behind institutions. i don't train scientists, i don't train engineers, i don't train mathematicians, the universities do. i pick them up from there and we've got a mismatch. and we use today supply them from outside of united states and that is drying, what are we going to do. >> and a tangent, i'll go to you, debra, and science and technology disruption, now computing have been topics of deep interest and obviously, impact productivity, education, everything. we're also seeing at least in my opinion, the recapitalization of the economy where you've got five companies basically worth four and a half trillion dollars. apple, google, facebook and wondering, you know, where is

our leadership right now in science and technology? and where does it need to go? and we're seeing all of these, you know, words like artificial intelligence, machine learning, which, by the way, mit had the ai lab started in 1981, but, so, you know, maybe you could give a frame a little about that and then the rest of the panel, sam, i know you guys just bought quite a large ai company and how you see that from a competitiveness point of view. and in general, science and technology education, productivity, and disruption as we move into the next five to ten years? >> thank you, larry, well, you know, when the council was formed 30 years ago, the whole issues around u.s. technological leadership were one of the driving forces of the creation of this organization and we've always made the case that our nation has to invest in the forefront

of knowledge creation and deploy the technology to the future in our companies that can compete globally. so, we have been very concerned and this is reflected in the clarion call with in long-term decline in our federal investment in basic research and research and development as a percentage of gdp, it continues to decline. other nations are surpassing us, japan, korea, a percentage of gdp. now, we still, as a country, perform about a third of all global research, but china is on a track very soon to surpass us on that. so, the investment matters. and the investment matters because through the national science foundation, through the department of energy, through the department of defense, our universities and our national labs companies actually come together in these strategic partnerships. that's one of our real core

advantages, vis-a-vis the rest of the world and others continue to come and really want to understand how we can have that eco system that moves so quickly, now, the companies you mentioned na are at the top of the s&p, they were enabled by huge investments since world war ii in electronics, in the microproce microprocess, that enabled the googles and amazon and facebook to create what they have. >> looking to the future, what our chief technology officers do, we are really working hard at the counsel and in the country to really focus on how all of these science and technology frontiers come together in multi-disciplinary ways. and i think we'll hear when we release our report on exponential technologies, the digital, biotechs, nanoteches

coming together and colliding and i think these are really going to be the drivers of productive in our standard of living. but back to our earlier conversation, we have to invest in the people. without the people to drive this, we will be the ones who do a lot of the core initial research, but other countries in the world will capitalize on it and create the jobs and the wealth for their country. so, this is a big challenge and a great opportunity for our country. >> sam, some thoughts? >> i guess i've been on the line, i've put it in a couple of different categories, first i can tell you from our standpoint, the next five, ten years, next five years, some of the innovations that are coming in are just phenomenal and whether it be in artificial intelligence, augmented learning, whatever you want to call it. the digitization, there's

tremendous, tremendous productivity improvements. i agree with everyone that the issue that we have today, everybody has today, is attracting the human talent and it's just going to get worse. but as a company, you'll find a way to attract the talent to work on whatever it is you're working on to derive value for your company. free market enterprise will allow that to happen. one that you don't do, you don't fund the basic research and that's the concerning part from my perspective. companies will find a way to get the people they need to do what they're doing, but the basic research that creates the platform upon which all of us build are-- that's where the funding, again, needs to be invested in

so that the country itself can stay very, very competitive and you know, if you had a-- if you only have so much water in a bucket and if you have to say how are you going to divide the water up between companies and free market enterprise, universities, and basic resear research, i would be putting a lot of that water in the basic research category, whether it is at universities or whether it is in other areas like the labs. that's the platform that lets all of us and grow upon it. and we'll find a way to get what we need, but we don't-- we don't develop that platform and that platform has got to keep getting better and better and as this world is now changing as debra pointed out with digitization and everything else, the platform

we've invested in the past is no longer in the future. that would be the area that i would really, really think we ought to try to really focus on the clarion call talks about that as well. but these are very, very exciting times. i've reinforced what others have said and you know, from our standpoint i can tell you just as an example. we've had autonomous vehicles 20 years ago, but they weren't cost effective and we will inside of five years, we will have autonomous vehicles that are cost effective and the critical beyond the technology in terms of sensors, and et cetera, the big difference n now... sclooep

that type of change is coming very, very quickly. >> absolutely. >> what i would add is we are in this weird moment of cognitive dissonance so unemployment for peoplewith college degrees is under three percent , during the recession never higher than five percent. industry leaders produce more

and better, more and better, faster and faster and we deal with political leadership and they say listen, people are just a function of commies at the university so we're going to start cutting back your funding. going to beat you into the ground and get you under control and we are like, really that's not true. we are told by industry that we need more ideas, more people, better people faster. more technology, more options, more tools and so forth so there's this weird thing going on. universities are being battered several demands being made so it's creating tension in society that's very, very significant. the universities in the united states, research universities are unique institutions globally. i've traveled all over and looked at research universities everywhere. there are few institutions that even meet the lower tier levels of activity of an american research university so we have this high-performing entity which can do a lot more but there's this dissonance going on.

this intellectual rejection. we're hearing even from people in industry we don't get too many college graduates, there's emphasis on this or that. everyone does going forward, we know this that the new jobs added in this economy going forward, 80 percent of them require beyond a high school diploma. 80 percent. there is not a general political consensus or policy level consensus of that reality. we've taken steps and last year we had 8000 degrees. we have 20,000 engineering majors now, 4000 online and some really fantastic online engineering degrees, undergraduate degrees and 17,000 students with unbelievable diversity, etc. 8000 employers coming to help hire some of those people. so it's not the case that there aren't kids in the

united states that want to do these things or moving these areas, there are. the universities have to change some things that they are doing but we've got this bigger political discourse problem. somehow the universities are marginal assets in terms of the country. they're not a marginal asset, their essential asset. that's no longer received and we shifted a little bit and we need to work our way into a new understanding of universities but then there's this thing that's going on, white working-class families that is, if you look at all my other relatives wherever they are there mostly angry at the outcomes of their lives. why are they angry? they're not prepared to deal with the economy that they are confronted with. they're angry. so the economy has shifted, they blame the universities for creating this new economy and for creating what they perceivedto be in the individuals who are not part of the core culture .

you've seen some of their political statements over the past few years so there's this turning, with the universities need to figure out how to start communicating to everyone and to some and to communicate to everyone in ways where they can see future economic opportunities for themselves by enhanced learning opportunities. in our case we decided to move forward and find ways to educate across the spectrum of our society in addition to thosethings that come and live with us for four or five or six years . >> i like your thoughts on this conversation but also i'd like to add, might like i said the responsibility of the university system about innovation, science, technology, learning. what is the responsibility of corporations to innovation and to science and technology and learning? i know pepsi spent a lot of money on research and but i just want to add that after.

after you address the general question. >> i will reiterate as far as what pat has alluded to. but i looked out in my mind that the creation of knowledge within the academic institutions of the country, in the first and second, belongs with you. and i'd like to broaden that out not just at the university but are our laboratories. the us has created world war ii essentially, six or seven decades, this economics and what's visible as you said with the google and facebook, they artistically a product of that engine. >> so the very commercial face of that engine. at least your second question which in my mind i always go where there's invention, there's innovation. innovation doesn't happen without invention .

then investment is by default innovation. innovation in my mind relative to your question is the ability to solve societies and improve problems. if you leverage technology, you leverage invention. several institutions can bring them together. i think what industry does well is the ability to configure an aggregate several inventions to come up with a method whether it's on autonomous vehicle or it's a way of new agriculture, it's communicating and accessing innovation. the core of them is the aggregation of industries responsibility.we can understand consumer problems and how do we now bring these in the most successful way possible. it's something industry does well. we optimize until a new, somebody has created a completely new way of doing things and the early adopters

picked it up and then it becomes a newway. the us has done that better than any other . there may be a bigger online markets in the world now that amazon but the internet was invested invented with another layer on it until we reach those rooms. again, my concern is exactly what mike says, do we have alignment between universities. and the demand. and that's, we are living in a world where were going to see democratization of technology. we are rapidly seeing the democratization happen and what used to be the domain of the elite. now becomes the through this accessibility, everybody has access to it. the good thing is everybody has access to increasing knowledge, to information, two different capabilities and activities. right now to our forefathers in africa.

now how do we connect all of this in a favorable manner. so that we can actually now increase productivity. this can be leveraged in a way but we have to create it. that's the challenge. i think if we figure that out, business figures out how to work within that theme. >>. >> i'd like to have a quick answer before i set up the lightning round. >> final questions but deborah and sam, i couldn't help but let our conversation go without a comment about trade. and the current administration view, i can only say it looks like protectionism to me. that said, where there's trade playing in our competitiveness in the last few years? >> this is probably from my perspective it's the most

disappointing part. . >> and you know, the problem we have is for so long, certain parts of will talk about the abandonment of free trade. and they pull it aside. . from that standpoint and all of a sudden that same group will come back later and say trade is good. >> a lot of the people in the general public don't know what to believe as a result. >> the reality is trade is great for this country. great for the world. yet there are people that get dislocated as a result of that and we have to figure out ways to profit them but in terms of helping the global prosper, there's nothing that can be free

trade. we were going right now, you know, some people say that nafta is going to fit the negotiations and it's not going to spiral out and cause protectionism. but the risk is there that it will. and you're seeing that now even in president mah-jongg of france, all of a sudden they're trying to set up careers even within the eu to protect their slice of the pie and when everybody does that, it brings this global economy down. it makes it less prosperous. it doesn't open up also to bring those two other areas of the world so this is an area where it's amazing to me that people, we have people

that believe that protectionism is going to help and as i indicated, this is an area that i'm very, very, personally out of touch with the direction certain people are trying to take this and somehow we've got to get the public educated again about the benefits that everyone has received as a result of global free trade and how that has further turbocharged the global economy which has been good for everybody. so i guess enough said. it's an alarming area right now but it has things with it

and hopefully calm her heads will prevail in the long run. >> any thoughts to add, deborah? >> i would add that the success of american companies in the marketplace was poured to the creation of the capital impediment and we know just one of the data points, two thirds of all revenue produced by the us terms are outside the country. these are our customers and we have to be engaged not just in selling what we make and produce but also in a leadership role in terms of hoping set the environment for trade and the impact it has on raising the standard of living of people around the world. having said that, there's no question that in some of the multilateral trading agreements as well as some of the bilateral, there are provisions that could be

improved. it would be in the benefit of all. intellectual property protection, that continues to be a huge issue. i serve on this commission on american intellectual property and i share this that if china implemented their existing ip laws on the books, our economy would be $1.4 trillion more. that's a huge impact but that doesn't mean we should turn our back on trade as we try to improve some of these things and of course another area that's very, very important is the whole digitization of information and i'm very concerned that in the eu with their provisions on privacy now and data, how is that going to impact the technological frontier we are talking about? the bottom line is the us has been a leader, a supporter and really the evangelist for trade for many years.

with a huge impact on our economy and standard of living and we can't give that up and it will be an important part of our work going forward. >> thank you debra. >> and the rest of the panel, if you had your forced to boil down to what you're most optimistic about. >> right now, in the country from a competitive point of view. and what's the most unexcited about, what do you see is a big risk, what comes to mind? >> i talked about optimism point of view is despite everything we've said, we have a tremendous ecosystem of innovative startups and in fact what i've seen changing in the last several years is the traditional silo of private sector startup in academia and academic

research world, those barriers and silos are starting to break down so it's getting more and more seamless and the partnerships, i know my team assigned about 50 partnerships from last decade between these institutions that were traditionally over there. and now they are emerging. you're seeing this conductivity. despite everything else, i think that is going to be a great engine and i'm already seeing. i sit on the board of some of those startups and just the pace with which things are moving, that's exciting. the number and the ideation and the conductivity between our institutions. i think what is scary is what i just said. which i said earlierwhich is , we cannot continue to get the pipeline and nurture the investment is going to take you jeopardize this new

ideation. that pipeline telling. we will lose the need for it and as we take the lead, is not bad that others should be playing. the more the merrier, but that doesn't mean we can concede our leadership position and in support of all the investment we've done. >> for me, i most optimistic about the millennial's. i live in a community of 100,000 learners deeply immersed with us. unbelievable energy and creativity, unbelievable desire for to their lives have some sort of meaning. they're open-minded, their adaptive, they are high-speed. we draw energy from them those of you that read these negative things in the media about millennial's, these people must not live with them. they live with us, 15,000 of them live on our campus with us. i'm most optimistic about what they represent. their desire for successful

outcomes, their desire for a successful country. it's really quite overpowering and it makes me worry a little bit less about the future than some of the common everyday rhetoric. the thing i worry the most about, i've been hearing more from fuchs on the technology side , we're going to build all these autonomous vehicles, all these people are going to be forced out of work. what we need is a solution about universal income, that's one of the stupidest things i heard anyone talk about. what we need is to assume there will be a group of people who will no longer be employable. going to have to tax all these technologies to be able to find money forthem to live off of. if we do that within 20 years or less, there will be pitchforks and tar and feather at the doors of everyone that built these

robots wanting to take them down . so why did you ruin our lives? life is not about your job only. it's about your purpose. it's about what you're doing, your contribution. every human being is going to need an opportunity so we have to move away from the idea of a universal income and move to the idea of a universal learner. that's something we haven't conceptualized yet. how are we going to have everyone universally have access to learning through their life though they can adjust to the new way the economy and our society works? >> i haven't decided if alexa is going to make me more stupid or smarter. >> the alexis in my house in my office are fun to deal with. >> i ordered paper towels for the first time and it worked . >> what are you optimistic about and what are you not so optimistic about, and don't say universal income. >> you can, it's still stupid. [laughter] you know, i'll be a little more near-term with my thoughts on this.

as we look to 18 for the first time in a number of years, almost every country around the globe is forecasting positive gdp growth. and all of these things, if you're seeing gdp growth everywhere, that's great for optimism. that fuels a number of these engines and there is a rising tide for everybody. so i'm very, there is a chance here for the first time since probably the 08, 09 crisis that you can get back to a level of optimism about economic growth throughout the world which is good for everybody, but for all of us. and i get to travel a lot everywhere and you are seeing it. the economies that have had

negative gdp growth the past few years, it's amazing the change in public perception almost overnight you are forecasting things are going to get better. that's why i'm optimistic about this. and on the flipside of that, the biggest thing that could detract from that is some type of conflict and the risk of conflict today is higher than it's been in many, many years. and it there doesn't appear to be the recognition that there should be that that risk is higher and what do we do to mitigate that risk and bring it down? so those are the two that i would say why i'm most optimistic. >> maybe base yours a little

less on your opinion and maybe the what the clarion call is? >> the clarion call is, our grades, we don't have an a this year for anything. we have a number of bees. >> you wouldn't allow us to graduate with these grades. >> but if you look on your talents we've got a d in taxes meaning something good is going to happen. trade, it's b. research a d and infrastructure a d. from that perspective building on what everyone said, we have to do everything we can keep this growth going but at the same time we have to work very hard across the spectrum of competitiveness. the talent at the top, one of the things we will talk about

later this morning that come out of our work on exploring innovation is how do we bring the new demographics of our country into the innovation space? we are on the cusp of this world of abundance through all these capabilities and yet a very large percentage of our nation is not participating. that's what worries me tremendously and it's something we're going to put a lot of attention on at the council. if we can get our tax and regulatory needs in a good place, let's build on that so that we have amuch more robust and inclusive standard of living for our citizens and that's really what we are all about . >> last question, we had an interesting year speaking of grades. we had an interesting year in everything. but one area that i'm opposed to me is media and how the media is represented that are happening and i wonder from our panel what grade you

would give the media the last 12 months in covering what seems to be one of the most interesting moments in american history, debra? >> i would give them a d. the reason is i think that not completely, but in most cases, the leaders of our media are not accepting and larry, you should comment on this because you are a leader in media that they are in a disruptive state. the country is no longer accepting elites to tell them what they need to think and do and that they really have to recognize that and get with the program in the sense of not putting their personal views andreporting the news . >> whatever grade, it would be a great grade. but i put it in two categories. i don't know that there's,

it's an opportunity lost. maybe. >> it's not so much what they've done, it's what they could have done a little differently. so you know, whether it's a d or a c, i don't know. but there was an opportunity here at least mainstream media, an opportunity that could have taken a higher ground. to help build instead of also being a part of the destruction so that part, they certainly missed their opportunity. >> first, we operate a large journalism school called the rock walter cronkite school of journalism and it's a massive enterprise, 1500 students. so i communicate my concerns about the unbelievably poor

intellectual basis on which most broadcast journalism is advancing at the moment. and i think what are we going to do about this? the notion of a fact, the notion of a fair reporting, the notion of reporting what's going on on different sides of a complex issue, the notion that educating the public and holding people responsible, the notion of not pursuing justice, how many people can i get to advertise my news show as i'm running it on a new cycle, backup my ratings and doing everything possible to jack up ratings, these are fundamental issues we are facing in this era of technological and all kinds of other things going on. so i'm getting a poor grade because the industry isn't able to adjust and learn and keep track of their responsibilities. we are lost at the moment.

so i probably would give it a warning to the students, you are falling below a c into the d range. i'm going to give you an incomplete because you're not working hard enough. you some fundamental changes in the way you think and i'm going to read your paper again because it's not very good right now. >>. [laughter]. i won't repeat, i agree with what was said. i think the media in general has actually contributed to the divisiveness of our society. not just the politicians. i can read the same issue, different parts of our society are now using their information in a very segregated parts of the media. but they're not researching and that has gotten harder and harder. so a certain segment of society either by faith or geography, they play to that.

what's happening as a consequence is what we've said of not only partial information, sometimes sort of inaccurate information but extremely biased to the targeted audience they want and that's now resulted in this channel for this part of society, this channel for this park and we recognize that. and that's what worries me the worst because they taught us to accept it. as i travel around the world on the same issue, i could be in europe listening to the bbc, do europeans in the us, you think i'm hearing a different story. even the facts don't add up. surely that isn't all by accident. >> bread can talk about this all day. i'll only add that my optimism, this is going to force us to a period of validation and there is only that a lot of this mainstream journalism and news will be

in a higher validated way. i encourage everyone to read the clariion call police. i put these out just for the fun of it soeverybody, please spend some time with and i want to thank our panel . . sam and debra for your great thoughts today. and everybody have a good day. [applause] >> ladies and gentlemen, to present us with insights from gallup global analytics into major trends that make the us and global economies in 2018 and beyond, these welcome mister jim lewiston, ceo of gallup . [applause]

>> deborah, thank you for all you do. sam, you mentioned something at dinner last night that ties in larry with thepanel you were just doing. it's so hard to find information you can trust . and you mentioned michael walter cronkite. you wonder if trust in media died somewhere with walter or maybe all the way up to tim russert, maybe some died there too. larry, if you were to ask the american public would be for their grade to media it's a f. it's the lowest trust they had since gallup started mentioning this some decades ago. i'm saying this becausewhat a great organization . one of the few places you can go do you do this?

if i read the new york times, we all know about that. the wall street journal but even the economist, every line i read i go what kind of angle are they trying to put on this? earlier in my life i never did that but that's one of the reasons why my firm takes so much pride in being part of this organization and all the data and having sort of a nonspecialist take on what's been doing but thank you for all of that. i'm going to cover some material here that i have covered before and i'm not real good at it. that's a hell of an opening, isn't it? >> there's been a question that comes up about why do we keep getting surprised with big changes in the world? let's just do their aspirin, how come nobody saw that

coming? i heard jim clappersay something and i really admire , i admire everybody in this town, i admire him, i think he's a great american but you referred to it as being kicked in the stomach. the president obama said to him we spend 100 billion a year with intelligence and nobody could see the arab spring coming? we don't have any answers at all. and i want to propose something before i show you some slides and then maybe we will, maybe you will have some questions?>> what we do is we keep working economic data. we work economic data over and over again. gdp is pretty much single metric that we used for human development. but we say hey, how are things going in egypt, how are things going in bahrain? we use gdp per capita, we use that one.

>> sometimes we work it over and over again. that's why .economics works and economics is a real important metric tous until it doesn't . >> we start working on this 12 years ago. we said what is it that we need to know? i did a lot of the initial stakeholder arguments. every time i was with some world leader i would say to them if you could ask the whole world one question, all 5 billion adults, so you could do your job better, and make changes that would change the world, what would you ask them? >> and they were sort of the best leaders at the time. they always came back with something very simple. they didn't have anything that blew me out of my chair.

80 that i wish i knew what they wanted? i wish i knew what they wanted out of life. and i also wish i knew how they were doing? because economics, that doesn't give you any of those. it's a pretty good break you through because he said what you want out of life, 3 billion of those people said what's, they say i wish i had a good job. hardly even written down. but what is a good job? >> if you said i'm going to try to get michael to the very highest level of economy i can, does it matter if he lives in argentina. if you want to go to work on someone 25 years old or somewhere in there, go to work on developing as an individual. right now, we don't have metrics for that. i say i don't know what to do to it. here's what we found. it starts with him having a good job. it's changing a little bit because baby boomers his age we wanted to have a family. it's enormous and a sociological shift. but he says he just needs work. we have partnerships and everything else we're kind of

informal so if he's selling flowers in traffic, we count him as employed. he's still suffering. you want to have three categories, think of suffering, struggling and thriving. you want to get him to thriving. there's one level above that and that having a full-time job, 30hours a week with a paycheck for an organization. if you get in there , it changes the world. the problem with that though , most of them are low-paying jobs. >> so now if you want to go off one more, this is the new maslow's hierarchy. give him a job that gives him a living wage we can have a family. it's totally different. >> is there anything about that living wage.

yes, if he has a boss that cares about his development? go to work, talk to him about what he can become. this sounds soft and i'll go to the next thing. he says can we take an even higher? >> taken one step higher and that is talk to him about what his purpose is at his job or what his purpose is in his life and he's very different. >> the question would be how many people in the world are at that level, writing. doing really good and how many are at suffering? >> can you tell that my gdp, we are going to look. we build consistent sampling frames across 160 countries and we found some questions. and you try this yourself. >> on a 0 to 10 with zero being the worst possible light you can have and 10 being the best possible life you could ask, where are you today? if you are a seven or better, let me tell you something.

san is a seven and i'm a five, he's having a better life but you can't tell who's writing because if i say to sam where is your life would be in five years. that's going to be a four. >> is not thriving. it was danny condon, the nobel prize winner that figure this out. >> i'm a five. and billy's not doing very well but i'm so sorry. >> but then you say jim, where would you be in five years and he says i'm going to be at a 10. i just graduated from this and i've got a degree from journalism school. i'm going to kill it. i'm back to writing. you've got to be in a place where you can get a good look at the spring. how could it be, there's a single item -- what do we use, right there? here's the first question,

how come we didn't see brexit? i can see it righthere i guess but that's near-perfect linear increase in gdp . so that lead up i did with thriving to suffering, that's the brexit vote. everything is fine, i can see why everybodyin the whole world missed it . but the problem with that line is all it shows you is what people are making and spending. it's just the transactions of life. all those stakeholders, i'd like to know how they're feeling. what they like to do is ask all 5 billion people how are you doing? how is your life going? are you leaving a life worth living that has meaning or anything else? that's the thriving in england. you see the towel there?

i think it's the biggest drop we've ever seen. rising in england right before brexit dropped 15 points, it was absolutely seeable. this is where the storm is coming for prosperity. what's thelesson for leaders , we are missing a piece of data. it's not either or so when you line up the transactions in life you're also going to ask how are they doing? let's try another one. here you go, here's the arab spring coming. so i'm sorry i'm not more familiar. get back. >> that's not blended. that's the gdp growth right there. >> so i don't have, i know tunisia is not coming up but this is how wrong we are as leaders. that economic forum gave tunisia a big reward for being this perfectly managed,

and their trendline is exactly this one. there's the uprising. remember, it was started by the food cart vendor. from tunisia who set himself on fire. it wasn't that. it was i just want to work. they took his heart away. look at this one. >> isn't that amazing? >> look where thriving is. go down and it's eight percent. if you're trying to predict it, you just watch the transactions of life, you can't see it because you can't see how well developed we are as humans. the normal accumulation of all of us as individuals but if you ask them what the hell. >> let's give this one. >> okay. here's ukraine. there's the revolution right there. there gdp is a little --

>> this is unbelievable. and what you want to watch for is it's not as much the location of the statistics, it's the direction and speed. that's why you've got to watch out for statistics. you see a spot or some kind of thing you don't have any idea whatyou have until you see the direction and speed. so youcan bring , let's see . what's russia? they just expect to have kind of a worse wife. suffering is part of russia. but i thought that would be funnier that way. >> but in england or the united states, what you're watching for is who's taking? >> here we go.

>> we've got that slow climb, there's your gdp. there is the us presidential election. how many times do you get asked what happened, don't you do this all the time? >> here's one answer. >> that's on. there we go. the united states does pretty darn well. see where we are with thriving? that's the question of where you have optimism, we stayed pretty pumped up here. until we don't. can you imagine, let's just call it a 10 point drop, can you imagine something like he be dropping 10 points? we don't have an emphasis on the emotional condition of a

society, we don't have good math to it. sometime it will be in my lifetime, sometime when we get these things out, people will get knox when they see it. they're telling me there's forthcoming. massive changes coming. well, in the case of the united states, it's virtually nobody, i had a couple friends that predicted the trump win.it was based on nothing, i can count it. it should be go wrong for a good reason. [laughter] >> that's interesting, that was funnier than i wanted it to be. >> so you might ask, is somebody selling a lot of tractors and construction equipment, and how are things going in china? look at that. okay. okay. one of the things you've got to think about china, president xi talked about

world leadership and he's got 80 percent of his populace not doing real well. there's a hell of a long way to go but imagine the open optimism we had and i'm not giving an american pitch that i'm thinking the difference here, i guess that our biggest competitor. there's a long way to go. okay, here we go. here are the russians right here. so they are just really, i know this is going to say. maybe i get a kick out of this. >> what you think that's like is? these guys are going along, they don't have any pride in anything. highest approval ratings in the world, they are like 80 percent. >>. >> who said that? yes. number yes. he wins. michael wins a ride on the duck bus.

>> charge it to the council. >> but you know, there's other aides on this and also when a city wins the super bowl, it goes up, it makes a difference. look at that trend downward, though. if you're going to start with one , the russians don't often go into the streets in a meaningful way but what a consistent trend down. oh, anybody been to el salvador in the last decade? it's awful. they've got to pick you up in armored cars and you have two things in front of you of machine guns and all that. what this one. we put this in here because you can turn around

societies. you've got to work on the right thing. if you were to redo maslow's hierarchy , the most important thing is security. so you have to be in a state of mind, it's the most torturous of all is to be afraid. we've taken a deep look into this. they're doing a good job of locking the place down, america's helping. there's hope for virtually all countries. things are a little rocky but notice the percent. it's nine or 10, can't quite see it but it's a big drop for what's probably the second or third worst country in the world. oh, this one.

that's probably the most troubling of all. something is really wrong in india. down about two percent, the writing is -- of everything we've found in the last few years, that's probably, just a simple line, macro behavioral economics finding, that wouldbe the most serious one . this is an example of -- that about half my time and i'm just going to stop. do you have any comments or questions? [applause] jim?

>> thanks for your presentation, it reveals a whole lot. i wanted to ask you about manufacturing because we are in this colossal supercycle of innovation. we are in this colossal supercycle of innovation right now with companies, it's incredibly exciting and i go back to my hotel room and i got a tv and everything else that's made somewhere else but the united states and i was wondering with all your research in things that you do i'm concerned that the us is incredibly competitive in innovation and ideation butin manufacturing , especially in these and what you would call maybe the science manufacturing, that

leads to all the things we're talking about in ai, nanotechnology and so forth like that and for instance where i am in arkansas we created $100 million nano institute of engineering and lost five companies, one of which is mine and the other four had already moved to china. all four. i'm the only one left.>> how long are they there? >> two or three years. and this is everywhere i go pretty much. it's china, ukraine, russia, wherever. we've got russia and china wanting to invest not in the us in terms of government, not that we want them. it's a state-sponsored company but it looks like manufacturing. we talked about two or three years ago, it's getting worse in termsof , we are creating all the ideas. we have these incredible universities and incredible innovation and so forth but on the practitioner side whether it practitioner professors or whatever for innovation or whether it's being able to put it in as entrepreneurs and capitalize,

the us is just, when you look at what's happening inchina right now in terms of what's being built and manufacturing , i'm worried that the us is continuing to lose its edge especially in science manufacturing, not just ordinary everyday stuff where will building steel and putting out products but on the science manufacturing that can make a difference, that's going to create the next generation of gdp. do you have any concerns with that? >> i have a concern jim that's a little deeper than that and that is that millennial's don't start companies at all.you almost have to start there. because you get all the innovation and i say the same thing over and over again but innovation doesn't have any value on its own until customers stand next to it and americans are quite clear on that. but when we get the extension

and then you get an entrepreneur or builder next to it and some investors, that's the moment of conception. nothing is more important to america than that moment. we've got to get those. and then you try to hold the thing as long as you can. that's my theory. it's two or three years that is very long but if we can invent them and start them and maybe they go out to the rest of the world, there's no other side to it then free-trade. americans have to have free trade but we're punching so far of above our weight class we have to kick the world in the you know what in trade or we can have all this great stuff. great universities, great everything that we have. i don't think we can ever give up. we've got to start companies but nano tech is a good idea. i don't know what's going to happen with a non-combustion

engine. there must be all kinds of things we can do in healthcare and space but we've got to get those first cycles. the future might be the cycles are getting shorter and shorter and then we spend them off but for us to start more companies is a good future for us. i want to say one other, if this was poker, and we were playing china, the hand that they're holding compared to ours is horrible. you want these cars, not those. i don't know why you don't read much about it anymore but that one decision that they made, man is that thing coming in right now. the problem with the one boy is you can't fix that. you can't go back. they even tried to bust girls in from indonesia. good luck with that. you've got to busing 100 million of them and you can't do that? they totally destroyed their environment. every single lake, every single everything. that's such a massive project and the bubble, i don't know

what to think about that. who knows, we have our own growing debt and all that but the last one, this is my own opinion. the corruption in china is still so bad butit's very difficult to build a great economy . in the presence of that kind of corruption. there's corruption in a lot of places but we've got to make sure that we have our premises rights on what the conception is to create a great economy and i'm confident, i don't think we should worry that they keep going over. that could be our new business model. >> can you hold your questions for one second? he's going to come running, i think they can't hear back here. thank you.

this is sort of off gym but the research you presented, could you do that by category? do you then know if in industries not driving and at some point it's either going to be disrupted or disappear? >> not with that particular -- not with that particular methodology. that would only be for our society. i'd have tothink about it , think about it but we're down to six minutes. i'm going to give you and i don't know. but i will think about it. there's got to be some way. sandy? >> jim, awesome data and obviously it shows global trends. the world is losing confidence either in themselves or in society large. hugely dangerous for society as a whole. what are they looking for?

what potentially are the common reasons for this drop in confidence and thriving and what are the potential remedies to get our society out of this? >> okay. the, what you're looking for is a statement that describes the most events so i'm going to make a statement that describes it. are you sure smoking does it because i have an aunt that lived to 95 and she's a chain smoker. good luck with that theory i'm going to tell you what describes most events. it's that it sam and i are both 20-year-old in cairo, both of us are out of work. start with that. because we are not in good

shape. in the middle east, you know this stuff but if we don't have work, you can't get married. that's out. that means you can't have a family. you also can't have sex you got all those kind of things. everything working against you, life is crashing. men, young males get really bad ideas when they are out of work. it's better to have young males out of work then young females. it's better to run in and fix the young males, describing the most events though what do you do? you say are one of you going to get a job and he goes yes, i'm fine. and sam says i'm goingto get a good job , i'm being trained. michael's going to hire me and i'm going to do this kind of thing. he's completely fixed because you know what? you just found the hope. he has hope. that's what fixes it. you say to jim what about you

? are you going to be able to get a job? i'm 20, totally screwed but he's not.we look the same and all economics, you can't see hope. you say jim, what about you? i say i think i never will. because the question you are asking that economy thing i told you about is you think the best part, ask yourself or your friends or anybody, you think the best part of your life is ahead of you or behind you? that's the net of the question we asked twice so if you 20 years old, what i'm asking is you think the best part of your life is ahead or behind you, he just said ahead of you but me at 20, i say no, i'm never going to get hired, i've got nothing but at 20 i think the best part of my life is behind me. fix that, you can fix a society. thank you very much. [applause]

>> please join us for coffee in the foyer. the program will resume promptly at 11 am. [inaudible conversation] >> the national competitiveness forum is taking a break for half an hour. when the forearm resumes we will bring it to you live here on c-span2. right now some of the discussion from earlier with

discussion among ceos on how to increase economic competitiveness. >> i think i'm the second-longest member of the council . i have to tell you that almost 30 years i've been here, the work on competitiveness this could not be more important. and the challenges that we are facing almost every aspect of our leadership on the global basis today. >> .. it could

hurt may be you know in our competitiveness and in any way and will actually create more jobs or more innovation and competitiveness in our country? >> that's the hundred dollar question right now. it's interesting, this week i been out with our investors all over both coasts, that's one of the first questions anybody asks and we start out by saying the devil is in the details however they end up writing it, it's no not, maybe from our perspective, our tax rate today is roughly

34%, normally is what we pay, about 55% of our earnings come from the u.s. so if the rate does go down to 21%, our effective tax rate will probably go to 26 or 27% in total. people have a tendency to lose sight and most multinational companies, it's not to go down to 21% because they have earnings coming from other parts of the world. but it certainly will hit, if what everybody is running, if it ends up being something similar to that, the analysis we've done, first and foremost for our customers and our dealers will be very, very positive. that's even more important than it is for us. if they do well we will do well as well. there's no doubt. [inaudible]

i've read all kinds of things from economists, some people say it will add to gdp 1525 basis points, other people say 50 basis points plus i'm in the camp that it will add 50 basis points plus to gdp, but it will be feathered in, it won't happen the first year because there are some other parts, some other provisions to it in your first year that are negative from a company standpoint. a company like ours immediately, if the tax rate goes down you've got to go in and all your provisions for tax losses but you've had you've got to restate those, they were at 37% and now you have to write them back down to 21%. there are some other sides to this that will have an impact, but, in my opinion, if this does go through it will be very stimulative over a longer period of time and yes it will

help with competitiveness. i think the stimulative part to the economy is even more important than the competitiveness part that may help a company like ours. >> i tried to get through the 500 pages but they just delivered it yesterday to everyone. one of the areas that doesn't look so promising is higher education and the way that the tax reform seems to be looking at some of the restrictions. thoughts from you and your colleagues on that? >> first, tax reform is positive and it needs to be constructive and think about the entire productivity of the country, but at the same time, what has happened is many members of congress have become frustrated with universities for lots of different reasons. they are eking out some punishments. no joke.

the taxation of tuition benefits for graduate students, as taxation of certain endowments which is still on the table, a change in the overall status of the university themselves basically viewing the universities as problematic is all a sign of the fact that there's two things going on, one there is concern about the responsiveness of the universities to the bigger advancement issues of the united states and there's some that are concerned that were not doing what we need to be doing. there's others that unfortunately are using tax policy to send signals about what their view of the culture wars that are going on and so you take those two things together and it's not well thought out tax design related to helping the universities do what the country needs most which is to contribute to the most fantastic human capital production that the world has ever seen as well as knowledge

capital. universities need to start rethinking the way that we are communicating what were doing, communicating to the general population about the impact of what the universities are all about and what were working toward, or were going to have this continuing ongoing argument where tax policy, student loan policy, regulatory policy, structural policy are all going to be shaped by politicians, many of whom are unhappy. right now what we need is the business community and other communities to also speak out for what they think the university should be doing in the tax status of the universities being largely not taxed entities has been a critical success variable in them being able to achieve the levels of of success. if they become just another tax entity, that's a completely different kind of thing. we are moving in that direction we need to be very careful.

>> i couldn't agree more. last year the council did a long-term study on productivity and i'd like to ask you to look at where we might be headed in the direction of productivity in the united states because they had seen a long-term decline. where do you think that will end and what are the levers that we need to look at to get productivity moving in the right direction? >> look. as we talked last year and as we've written, productivity has been declining since 2008, 2007, for several years. now, there is some encouraging data and that is the last

quarter so we are trying to see for the first time an increase in productivity. however, the question is, is that a blip or will that be sustained? the reality is that overall, the trend has been either depressed or negative. >> what is pepsi doing about their productivity. >> we are doing what all other large corporations, were looking at the most efficient way of deploying our capital and using our labor force, what isn't generally discussed as much as it should be is with productivity and automation and everything else that were doing, it is improving the output of our industries but were not replacing those jobs. and so, i think more important from my mind and not just productivity is what type of

jobs are we going to create and invest behind and educate people in order to have a workforce that is engaged. the biggest worry over the next decade to come is this mismatch between the jobs were creating and the skill set of the workforce that's available. that gap is widening. >> this is the central issue so productivity in certain sectors accelerating at the fact fastest rate ever. the actual people who are creating and developing and then there are people being displaced were unable to enter the workforce because of the nature of their employment skills is insufficient. so this is a process that actually accelerating credits actually creating part of the political response to the universities themselves because we haven't adjusted also, to look at this problem on a different scale. >> but if i can just build on that point, as an employer,

people asked me what keeps me up at night. the average age of american with a training in science and engineering and mathematics working in any industry in this country is now over the age of 50. in the next decade half of the workforce of the entire country is going to dissipate and retire. there is nowhere near enough students to fill that pipeline that are coming out of institutions that we will be able to hire so the time. it is taking to fill a position, if i look back over my last ten years that pepsi is getting longer and longer and longer. productivity can continue if we can fill that workforce. we have not only a mismatch, but we also have a diminishing pipeline of talent.

in particular, in fields that take a long time to train people in. you can't train a scientist or engineer or mathematician in any of these fields overnight. so somehow, this discussion that's going on is got to take into account what are we going to invest behind institutions, i don't train scientists. i don't train engineers but i don't train mat mathematicians. the universities do. i picked them up and apply their skills. we have a mismatch. somehow we are going to have to fill it. we used to fill it from outside the united states. that pipeline is dry. what are we going to do. >> let's carry that thread to a bit of a tangent and i'll go to you deborah, the council has been about many things. the science and technology disruption, computing have been topics of deep interest in obviously impact productivity, education, everything. we are also seeing, at least

in my opinion the recapitalization of the economy where you have five companies worth for a half trillion dollars. apple, google, facebook, and wondering where is our leadership in science and technology? where does it need to go? we are seeing all of these words like artificial intelligence, machine learning, which by the way, mit had the ai lab started in 1981. maybe you could frame a little about that. the rest of the panel, sam i know you bought a large ai company and how you see that from a competitiveness point of view, and in general science and technology education, productivity and disruption as we move into the next 5 - 10 years. >> thank you.

when the council was formed 30 years ago, the whole issue around u.s. technological leadership are one of the driving forces for the creation of this organization, and we have always made the case that our nation has to invest in the forefront of new knowledge creation, and deploy the technology of the future in our companies that can compete globally. we have been very concerned and this is reflected with this long-term decline in our federal investment in basic research and research and development as a percentage of gdp. it continues to decline. other nations are surpassing us. it's a percentage of gdp. now, we still perform about a third of all global research but china is on the track very soon to surpass us on that. the investment matters.

investment matters because through the national science foundation and the department of energy and the department of defense, our universities and national labs at and companies come together in the strategic partnerships. that's one of our core advantages. others continue to come in really want to understand how we can have that ecosystem that moves so quickly. the companies you mentioned that are at the top of the s&p, they were enabled by huge investments since world war ii , all the things that enable the facebook and google and amazon to create the value they have. looking to the future, which of course is what our group of chief technology officers do, we are really working hard to really focus on how all the science and technology

frontiers come together in multidisciplinary ways. i think we will hear when we release our report that this is the greatest time in the world with the digital, the biotech and the cognitive revolution's all coming together and colliding. i think these are really going to be the drivers of productivity in our standard of living, but back to our earlier conversations, we have to invest in the people. without the people to drive this, we will be the ones who do a lot of the core research but other countries in the world will capitalize and create the jobs and the wealth for their country. this is a big challenge and a great opportunity for our country. >> sam, some thoughts? >> i guess i've been on the council long enough that i'm aligned with deborah. >> i put it in a couple different categories. first i can tell you from our standpoint, the next 5 - 10

years, some of the innovations that will come in are just phenomenal. whether it be in artificial intelligence, augmented learning, whatever you want to call it, there is going to be tremendous productivity improvements. i agree with everyone that the issue we have today and that everybody has is attracting the human talent and it's just going to get worse, but as a company, you will find a way to attract the talent, to work on whatever it is you are working on that drives value for your company. free market enterprise will allow that to happen. the one that you don't do is you don't fund the basic research. that's the concerning part, from my perspective. companies will find a way to get the people they need to do

what they're doing, but the basic research that creates the platform upon which all of us build our businesses on, that's where the funding needs to be invested in so that the country itself can stay very competitive. if you had, you only have so much water in a bucket and if you have to say how you're going to divide the water between companies and free market enterprise universities and basic research, i would be putting a lot of that water in the basic research category whether it's universities or other areas like the labs because that's the platform that lets all of us grow and we will find a way to get what we need, but we don't develop

that platform. that plan platform has to keep getting better and better. as this world is changing with digitization and everything else, the platform we've invested in in the past is no longer the platform we need for the future. that would be the area i would really think we ought to try to focus on. these are very exciting times. i have reinforced with others and what they've said. from our standpoint, i can tell you just as an example, we had autonomous vehicles 20 years ago, but they weren't cost-effective. inside of five years we will have autonomous vehicles that are cost-effective and beyond

the technology in terms of sensors and visions, et cetera, the big difference now is you also have the ai capability that helps you with that vehicle to determine that when you're going down the field for us, for example, it learns that that is what keeps going. that is the farmers dog, i stop stop,. [laughter] that difference. >> i heard gophers are an endangered species. >> they will be, more and more. but anyway, that type of change is coming very quickly. >> i think what i would add as we are in this really weird

moments of cognitive dissonance of some sorts so unemployment for people with college degrees is under 3%. even during the recession it was never higher than 5%. we hear from industry leaders produce more and better, more and better, faster, faster, and then we deal with political leadership and they say listen, you people are just a bunch of commies over there at the university so we are gonna start cutting back your funding and beat you into the ground and somehow get you under control. were like really, that's not true, and we are told by industry that we need more idea ideas, more people, better people, faster, more technology, more options and so forth. there is this weird thing going on. the universities are being battered from several directions and so it's creating tension in society that is very significan significant. universities in the united states are unique institutions. i have traveled all over the world and looked at research

universities. there are very few institutions that even meet the lower tier levels of activity i'm an american research university so we have this high-performing entity which can do a lot more, but there is this dissidence going on. there's this intellectual rejection. we are hearing people from the industry that we don't need so many college graduates and know not everyone needs to go to college, but everyone does going forward. we know this, of the net new jobs added in this economy going forward, 80% of them require beyond high school diploma. 80%. there is not a general political consensus of that reality. we have taken some steps at asu. we had 8000 engineering students in 2008. we have 21000 engineering majors now. 4000 online through some really fantastic online engineering degrees first accredited and 17000 students

with us. unbelievable diversity. 8000 employers coming to help hire some of those mangers. science majors off the chart. it's not the case that there are kids from the united states that want to do these things or want to move into these areas. there are many. the universities have to change some of the things were doing but we have this bigger political discourse that somehow the universities are marginal asset. they are not a marginal asset, they are a central asset, and that is no longer perceived to be the case. i think we have shifted a little bit and we need to work our way into a new understanding of the universities and then there's this in betterment that's going on. i come from a white working-class family that, if you look at all my other relatives from wherever they are, they're mostly angry at the outcomes of their lives. are they angry? they're not prepared to deal with the economy that they are confronting so they're angry.

the economy is shifting, they blame the universities for creating this new economy and for creating what they perceived to be a elite individuals were not part of this core culture that they come from, you've seen some of their political statements in the past few years so there is this churning. the universities need to figure out how to start communicating to everyone rather than to some in ways where they can see future economic opportunities for themselves by enhanced learning opportunities so in our case, we've decided to move forward and find ways to educate across the entire spectrum of our society in addition to those kids who come and live with us for four, five, six years to have an enhanced learning experience. >> i'd like your thoughts in this conversation but i'd also like to add the responsibility of the university system about

innovation, science, technology and learning, what is the responsibility of corporations to innovation and to science and technology and learning? i know pepsi spent a lot of money on research, but i just want to add that to after you've adjusted. >> i won't reiterate what's already been said but i have no doubt in my mind that the creation of knowledge within the academic institution of this country is second to none as long as we keep nurturing it. i'd like to broaden not out not just to the universities but the entire ecosystem that the u.s. has created since world war ii of the past six or seven decades is second to none. what's visible is google and facebook. they are technically a byproduct of that engine.

that leads your second question, which in my mind, when i teach this i say there's invention and innovation. innovation doesn't happen without it but it's not just innovation. it's the ability to solve society's question. you leverage technology and several inventions to bring them together. in principle, it configures and aggregates and comes up with a method to solve a solution. whether it's an autonomous vehicle or a new way of communicating, accessing information, those are all innovations, but the core of them is the aggregation of those. that's what industries responsibility is.

we can say how do we now bring these in the most efficient way possible. that's what industry does very well. we optimize and optimize until the new way comes because someone has done a new way of doing things. others now layer on the ecosystem until we redefine those roles. i would say we are living in a world where we will see democratization happen and what used to be -- now

everybody has access to knowledge, information and right down to the poor farmer in africa. had we connect this to increase productivity. this can be leveraged in a positive way but we have to create the matrix for it. that is the challenge. i think if we figure that out, business and entrepreneurs will figure out how to work within that matrix. >> i would like to have a quick tangent before i set up the lightning round. deborah and sam, i couldn't let our conversation go without a little comment about trade and the current administration view that i can only say looked like hyper protectionism to me.

that said, where does trade play in our competitiveness in the next few years? >> from my perspective, this is probably the most disappointing part of what's going on right now in the administration. the problem we have is, for so long, certain parts will talk about the disadvantages of free trade on the politicize it and use it from that standpoint, and then all of a sudden that same group will come back later and now say free-trade is good and a lot of people in the general public don't know what to believe as a result of that. the reality is, free-trade is great for this country, it's great for the globe, yes there

are people that get dislocated as a result of that and yes we have to figure out ways to process that, but in terms of helping the globe prosper, there is nothing that can be free-trade in that respect. where we are going right now, some people say we ar rescinding nafta is a negotiation that is not going to spiral out and cause protectionism, but the risk is there that will in your seeing that now even in europe. president macron in france, also now they're trying to set up barriers even within the eu to protect their slice of the pie, and when everybody does that, it brings this global economy down, it makes it less

prosperous, it doesn't open it up to bringing those up in other areas of the world so, this is an area, it's amazing to me that protectionism is going to help the globe and, as i've indicated, this is an area that i'm very, personally very out of touch. >> to begin this conversation, please welcome the director of the national science foundation, the honorable. [inaudible] >> good morning everyone. it is great to be back with the council again.

i only have half a voice and afraid, i left the other half in stockholm. i was very privileged to get to attend the noble prize ceremonies because the national science foundation had supported the three physicists that won the prize for the discovery of gravitational waves for 40 years. i think that's a good place to start. >> it's good for all of us to appreciate just what a high-risk, high reward investment is all about. so, that was a progress of technology and super engineering challenges that had to be overcome. a lot of people came and went, and it involved multidisciplinary teams of

people who did the numerical relativity using supercomputers so that we actually knew when the first gravitational wave was detected, what the source was. that it was two colliding black holes that were in a close binary system. in the most recent gravitational wave protection because two neutrons were emerging. it was very longtail. of course there are many program officers and directors involved, the national science board changed over a number of times during that interval and had to prove all the funding, and then of course congress is the ultimate arbiter of appropriations and making the decision to continue an investment but nobody was quite sure would have a result so how risk-taking, we all

knew einstein. [inaudible] so we could expect that accelerating mass somewhere in the universe would produce gravitational waves, but when the calculations were done, the difference, the little jiggle that the earth experienced for just a fraction of a second was so very, very small that who would have guessed 100 years ago when einstein predicted this would happen that we would ever have the technology to find something so incredibly technically challenging. so, since the observatories have been built, we have two widely separated in the u.s., one in the states of washington, new hampshire and one in the state of louisiana outlook livingston, and now there's also another observatory in italy near

pisa. we can now narrowed down to where the locations of the sources are, and in order to achieve such a technological triumph, a lot of engineering had to be done and in successive ways, and all of those have produced outcomes that are now being enjoyed by startup companies and others who just would have had no motivation for going in those particular directions without the motivation of trying to nail this effect down and make this detection. we don't know where it all will lead, it's just in its first exciting moments, but apparently the nobel prize committee thought highly enough of it to award the prize to just three of the thousands of people.