the implementation definitely lacks. so we have the international security policy you had offered a year ago. how does the national action plan relate to that, and why do we need nip if the nisp was a vision of what exactly the state has to do now? >> well, you come from pakistan. you know we normally or most of

the time we act first and study later. we have been engaged in this war against extremism for the last 13 years. we have no strategy. almost everything was being handled by the military. and a lot of it was off the cuff. a lot of it was knee jerk. there were a lot of problems on who was responsible and who was accountable. so for the first time when i took over when this government took office i think one of the first imperatives for all of us was to have a strategy, have a policy. so that is the reason we worked almost six months. we worked with the military, we worked with the provinces, the provinces are a very, very important part in the whole organizational setup, and it was difficult. it was easier working with the military.

it was more difficult working with my fellow colleagues in the provinces. we worked with a whole lot of experts, with the media, national security experts, and it took us almost seven to eight months to come up with this policy. part of it was implemented. you know i could sit and discuss the things the policy people did for us. but it was not announced for the simple reason we cut corners, we cut ends. it would have taken anything upwards of a year to a year and a half to put in place. we, as a short-term measure, got civil armed forces and forces from the military to act as a

response force. before we announced it, in fact pakistanis were jolted by the realization that we have almost 33 -- not almost, but exactly 33 intelligence agencies working in pakistan. i mean, a country engaged in the war against extremism for whom intelligence agencies rule and work is of federal importance. you will be surprised to know that even at the very high level, we were not devoid of agencies. most of these agencies were working in competition with each other, they were never sharing information. i can say now that there has been a sea change. i don't say there's been a total transportation but a sea change from june 2013. there's a lot of intelligence sharing, there is a lot of close

coordination. if a certain agency is looking in a certain area and the lead moves on to another area where another agency is working, without a moment's hesitation, they pass on the information and let the other agencies take it. i could give you a few instances in this regard. so a joint information directory directory, which was a dream a few years ago, is mostly working. mostly it is being handled by the military but it is working under the ministry, so it is working under the civilian leadership. a whole lot of other things. national internal security policy was the organizational and administrative and strategic policy paper that we announced over a year ago.

national election plan is the proactive part. some of it is part of the internal security policy that would have followed anyway, and some of it, i think, was needed given the precarious situation that pakistan was facing. >> thank you. let me sort of just ask one more thing on the coordination part since you mentioned it. we at nisp published a book on pakistani terrorism challenge. one thing that came out across the whole book -- there was a common thread -- was necta. and if i may the history of necta is not too pretty. a political football one place to another. what we concluded is that has to be the apex body that takes sort of the center rule off pakistani terrorism task. where do you see that going from

here? is this a paradigm shift that we're seeing now, or are we still deciding what its role is going to be? >> no it's still a start. i think there is too much competition between agencies, between departments. so for necta to become a sea change, to basically assume the role that it was designed to play, it would take a bit of playing. but a start has definitely been made. the ministry of interior is playing a proactive role to try and build that framework under which necta can work as a totally independent body. it will take a bit of time. we come you know, just to make a difference. what happened in the united states, it took upwards of a year, if not two years, before the homeland security put its act together. for a country like pakistan, the

systems are not as firm and as strong as here in the united states. i think it will probably take time. but i think for the first time everybody is convinced that necta has a role, and you need to -- every department, every organization needs to cede space to necta for it to play that role which i think is department in its role against terrorism. >> we talked about the ttp as being the perpetrators, we talked about afghanistan and the safe havens. there is a whole slew of other organizations that we have to look at when we look at terrorism in pakistan. just this morning we had another major attack in bindi, and this is the fourth one in the last month and a half.

there are also reports that julungi is active in boluch and complicating boluch. what is your plan and how does your plan address the civilian groups, and that whole question of punjab and what it comprises. is this plan comprehensive enough to deal with it, or is the pakistani ministry stretched in a way it has to sequence this? >> obviously, we will have to sequence the questions of capacity problems built up over the years. it will take time. but as to its success i mean the taste of the pudding lies in its eating. we will have to work overtime to address the problem. the sectarian problem has been

there, i think for almost 30 years now, if not earlier. one of the offshoots of the jihad, we join the jihad and use that as a platform to attack sectarian groups in pakistan. it has been a problem for 30 years. it is difficult because it is ins insular. the difficulty here is that these people are living amongst you. it is very, very difficult for intelligence to pick up their communication or any kind of warnings. they normally interact to words

of mouth, to direct communication. so it is very difficult. as i said in my initial remarks, you can't close down your religious places. you have to keep life going. so it is a difficult process. what is the strategy of the next election plan? use the consensus buildup on the fight against extremism and use the religious elements amongst the community to try and work out lost common denominator of understanding, of tolerance between various sectarian groups. and this is not just hogwash this is not just talk. i think within the first few weeks, we were able to do that. i cheered -- in fact, i convened a meeting of all the religious segments of society and we were able to work out an agreement on

ministry form. this has never happened in pakistan. that included auditing of funds that included registration that included transparency and a whole lot of other things. so we need to work from the inside to address the sectarian problem. there is no outside factor or force which can dissolve this terrorism problem in pakistan. we're trying to work from the inside, and hopefully over the next few weeks, you will see improvement in this regard. but the sectarian attacks which are taking place right now they are terrorist related.

jungi is unofficially part of the tpp. this is not totally the sectarian divide which is being targeted. this is totally terrorist related, and since most of their activity has been limited by the military operation, they are using the sectarian divide for -- to hit the softer targets. >> what do you make though of some of the reports which say jungi is also operational in boluchistan? >> a lot of the movement of the terrorists have taken place once the military operation took place. a lot of them moved across afghanistan. then there is a certain corridor that use the afghanistan territory, and then they cross over into juluchistan.

it is the major religious sectors that have moved into parts of pakistan. they have over 500 intelligence-based operations by our civil armed forces and the police. we have managed in a very measured way to restrict their activities and to curtail their violence. unfortunately, that particular progress is never identified not even appreciated, because for so many reasons, we don't always make it public. so we are focused, the pakistani government is focused the military is focused on these developments in afghanistan the transformation that is taking place, the migration of the terrorists into lost areas of boluchistan, but i think generally speaking things are under control. >> the two or three questions at least, and i sort of lumped

them together about the band organizations and -- banned organizations and the recent move to ban more organizations. one, there has been a history of banned organizations using new names and coming up and doing what they were doing in the past. there is also specific concerns here about groups that seem to be anti-indian. we hear the pakistani state saying they're going off to everybody. although there seems to be some confusion about who is being banned, is there a delay, what is the delay? what is the understanding now that it's not only going to result in a name change and their operations come to an end? >> i'm almost embarrassed to give you feedback on this, because it's not a question of this government or past government. we're talking about what past

governments have done that goes into the area of responsibility of the state of pakistan. they have been very vague policies on these and other issues. and that has led to a lot of confusion on the number of organizations organizations. they have operated with different names and operating within pakistan. when we decided to identify these organizations, you'll be surprised to know there was no tangible record on the exact number of prescribed organizations. the government had taken a decision position on it. so it was a difficult area. as i said, i'm almost embarrassed to give you this

particular feedback, but over the last few months we have fought very proactively. as you have rightly said there is now a tremendous humanity among all sections of the government on treating every prescribed organizations with the same rule and the same stick. but lack of government action spread over so many years has led to a lot of looseness on the part of the government in this respect, so it will take a little bit of time. but the positive thing is that there is now a consensus that anybody picking up arms must be disciplined, must be brought to

book must be prevented. no militias no armed militias should be allowed in pakistan, and only efficient security agencies should be allowed to carry arms. that is a policy which is being implemented. various terrorist groups have been arraigned, arrested put in jail. their militias have been put in jail. so it's a major step forward. but it's going to take time. you know giving a free hand to most of these groups over the years has given vice to a lot of problems. but now the commitment is to treat everybody alike and you will see improvement in this

area sooner rather than later. >> you have lost your microphone somewhere there. i think it's -- there we go. because we're telecasting this live. if i may ask you more about this specifically about groups that this town asks about and one is asked over and over and that is groups that may not be doing anything in pakistan, but are seen being active elsewhere, maybe the f-1 insurgent groups being the obvious one. people see on tv december 4, there is a big rally. then it's also listed as one of the organizations that is to be banned or taken to task or whatever. this dichotomy i think, confuses a lot of people about

the intent of the pakistani state. >> i can speak about the intent of the pakistani state as of today. i cannot speak about the intent of the pakistani state or various pakistani governments over the years. >> sure. sure. >> but more importantly, the international community have understood the point of view in this respect of successive pakistani governments. so why blame us? i think the intent in this respect is very, very clear. our point of view is that it will take a little bit of time. research has shown you can't expect overnight solutions. the intent is there and actions have been taken over the last few weeks which are a manifestation of that intent. >> another question in the same vein, and you rightly pointed to the improving relations between pakistan and afghanistan at the track 1 level. but the question pertains to the

exception perception about pakistan and afghanistan, specifically to the presence of insurgent groups, some of them in pakistani territory. the question from the audience is what would you tell them today if they were to raise the same concern? what is there to show the policy has moved on from the past? >> i think it's not a question of my telling them or the government of pakistan telling them. it is reflected by actions on the ground. i think the operation, the military operation which was started within pakistan in june of last year, it has given very, very positive results. and i think it's not just pakistan there isit is there across the board. having said that, let me also

say there is a whole area on the border between pakistan and afghanistan which is inhabited by tribes which live on both sides of the border, the afghanistan side and the pakistan side. so movement across the border is a nominal phenomenon. and these terrorists have used these means of communication, this open border, to move freely between pakistan and afghanistan. as of now, i can say with a lot of confidence and a lot of responsibility, most of the terrorist groups have run across the border into afghanistan. we are now working very closely with the afghan government to work out a strategy to -- not through a joint operation but

through coordination, operate we're on their side and they're on our side. and once that particular exercise takes place, a lot of the concern that you have expressed will die out automatically. >> okay. let me just ask a couple more before we end. on afghanistan/pakistan one of the arguments, if you will, is the refugees in pakistan. one track moves forward and then you see that pakistan has had all of them expatriated, et cetera. what is pakistan's thought on the moment of refugees? whenever there is a crackdown in that sense, they tend to stand out, perhaps. >> there is a problem on that account. as i said, it is anywhere upwards of 3 million at one

time. a few have gone back. we're still left with a huge majority. as of today the figure is around 1.2 million registered and almost the same number who are without any papers. they're a huge drain on our economy. but most importantly, we have hosted them for the last 30 years and we are willing to host them for many years as long as necessary. but as per the agreement they were to restrict themselves to idp camps. they would be fully registered. the international community would also lend a supporting hand. all of that now is not there on the ground. no camp is populated now. they've all moved out of camps.

they're lifgving in populated areas. they have their own societies, so to speak, and a lot of terrorists coming from across the border or even within the frontier use these camps use these avenues to carry out their activities in pakistan. so that is an area of concern. what we're trying to do is we are trying to put them back into the camps as originally intended. so exercise of registration has started. it is going to take time. we are going to have serious financial problems taking them back. the agreement to let them remain in pakistan runs out in december 2015. the bottom line is that although we are concerned about the role of some of these camps which are

playing -- which is being played as far as the security of pakistan is concerned, we are also conscious of the fact we will not do anything which can be an area of concern with the afghan government. so we work with them to work out a timeline and schedule of event wal ual expatriation. in the meantime we need to sit with them and work out a mutually agreed timetable for the depatriation of unregistered in the first place and discuss the eventual dissolving of the refugees by december 2015. >> finally minister one final question on the police. i know you've been investigated

quite a bit in terms of how to make the police do a better job. the rapid response force is one element of it. what is the pakistani state doing in terms of either revamping or improving the police per se, because ultimately they are going to be the front line of crime prevention and terrorism control. >> as we said, if the police is able to -- somehow we are able to, in the shortest possible term, carry out the next phase of capacity strengthening i think that will do wonders for our fight against extremism. we have a lot of problems on this score. the element of time, finances, training, the police in pakistan, as you know, is not equipped or trained for antiterrorism or counterterrorism. it is a phenomenal activity.

the little help and support that was available nationally that has timed out now. so we have now engaged the military in capacity building of the police. and the first force of the police, which was just recently in punjab, that was entirely supported by the military. so in the short term, we are getting the support not only in terms of training but also in recruiting some personnel from the military in the police force also. people who are close to retirement in the military or people who have left the army and are now willing to join the police force. so it is going to be a bit of a mixture of police and officials working as a reputable response force in the short term, and the immediate and long term, of

course, we have program of training, but that will take anywhere from 18 months to two years. >> i did say finally but there is one last finally, which is there is some concern here and otherwise about international ngo presence in pakistan. there is this newbill bill to regulate ngos, and one question asked is what is pakistan's outlook toward ngos which have done very good work in pakistan for a number of years, and whether there is going to be a lesser space, perhaps for them to operate, or is this bill and the current structure or the effort just to bring them into the mainstream? because there seems to be some concern with this new sort of ngo bill and sort of movement around it. >> this should be of absolutely no concern. basically we're about to regulate the whole system. over the years we actually

didn't have a policy in this matter. the idea is to regulate no circumstance circumvention on that score. the government needs to know which area a particular ngo is operating and to ensure that it works within that framework. and for the ngo to be very clear about its own area of responsibility. so it is simply the idea is to bring about clarity in the system, not to bring any kind of restriction on any ngo. >> nisar, let me thank you. before we end also let me invite them to present you with a momento. and let me say you have a very difficult task. thank you for joining us. [ applause ]

>> thank all of you for braving the cold and joining us today. also for those who joined on line, but very much i'd like to take this opportunity to thank the minister for joining us today. this is a topic which we could go on and talk about for quite a long time, but unfortunately ran out of time. a small memory of your visit to usip. more importantly pakistan's antiterrorism challenge we would like to present you with a gift for your visit here. >> thank you very much. [ applause ]

the c-span books tour takes to the road, traveling to new cities to learn about their history and literary life. this weekend we've partnered with time warner cable for a visit to greensborough, north carolina. >> after months and months of cleaning the house charles halpern, who had been given that task, was making one more walk-through. and in the attic he looked over and he saw an envelope with kind of a green seal on it and walked over and noticed the date was an 1832 document. he removed a single nail from a panel in an upstairs attic room and discovered a trunk and books and portraits stuffed up under

the eaves and this was this treasure of dolly madison's things. we've had this story available to the public, displaying different items from time to time but trying to include her life story from her birth in guilford county to her death in 1849. some of the items that we currently have on display, a carved ivory calling card case that has a card enclosed with dolly's signature as well as that of her niece, anna, some small cut glass perfume bottles and a pair of silk slippers that have tiny little ribbons that tie across the arch of her foot. and the two dresses are reproductions of a silk peach silk gown that she wore earliest in life and a red velvet gown that has intrigued both that it lasted and was part of this

collection, and there's also a legend that now accompanies this dress. >> watch all of our events from greensborough saturday afternoon on c-span books tv and sunday afternoon at 2:00 on c-span3. here on c-span3 we take you live to the national press club where the brookings institution is hosting a morning-long forum on the impact of technology on the u.s. economy and the work force. the event brings together former economic officials economic scholars, technology experts and business leaders and one of those former administration officials is robert rubin, former treasury secretary. he will open it up in a couple minutes. you'll also from a former

treasury secretary, larry sum measures -- summers. a recent string of strong job gains may continue. recent applications for unemployment aid dropped from 20,000 to a seasonally adjusted 283,000. they write those are a proxy for layoffs. they have been near or below 300,000 since september. the very low reading pointing to solid hiring and the ap says the average has dropped 16% in the last year. news this morning on unemployment applications. this event at the national press club should get under way shortly live here on c-span3.

the national press club at the brookings institute is hosting a forum they're calling

"the future of work in the age of the machine," a look at the impact of technology on the u.s. work force and the u.s. technology. it should get under way shortly. part of our live coverage today includes also the white house summit on countering violent extremism. live coverage under way now over on c-span2. the president will be speaking again to the gathering. that's coming up this morning at 10:30 eastern and that will be live over on c-span.

okay. i think we'll get under way. good morning. i'm bob rubin. and on behalf of my colleagues at the hammond project, i look forward to talking about the machine age. let me say a few words first about the hamilton project. we started about nine years ago. we are not an institution, but rather, we're a small partnership of policy experts former government officials, academics and business leaders organized as an advisory council. and our architecture is totally open. when we have policy proposals, they are commissioned from leading experts around the country and then they are peer reviewed rather than coming from internal staff.

our purpose is to support policy development and to support serius as a purpose of discussion debate and dialogue. we believe that is particularly important at this time when, unfortunately, the public policy debate has become so affected by policies, by idealogy and by opinion that is not grounded in facts or an objective analysis. the hamilton project works in partnership with the brookings institution. brookings contributes enormously to our intellectual vitality. since launching the hamilton project, our view has been that the objectives of economic policy should be growth, broad-based participation. in that growth, an economic security. we believe that these objectives can be mutually reinforcing. for example widespread income gains promote growth by

increasing demand, by increasing the ability of workers to access education, nutrition, housing and so many inputs and factors that contribute to productivity and by increasing support political support, public and political support for growth enhancing policies. we support market-based economics and equally we support a strong role for government to perform the functions of parktsmarkets that by their very nature will not perform. that takes us to today's subject, the future work in the age of the machine. technological development and globalization are keys to increasing productivity and growth. but they put pressure on job creation and on wages. over the past few decades, as as technological development as increased at a rapid rate and as global development has

increased, wages have been slower and in many cases stagnant and inequality has increased substantially. the exception was the second half of the 1990s when tight labor markets increased in connection with at all levels. today we're going to talk about how to think about that tension between the growth-enhancing effects of technology and globalization. on the one hand, in the effects of technology and globalization on wages and on job creation for lower and middle income workers. this forum is a continuation of a long line of programs that we've had at the hamilton project focusing on middle income and lower income workers. growth is necessary but not sufficient for the purpose of aiding and enhancing the economic position of middle income and lower income workers. growth creates tighter markets

labor markets, as happened in the mid to late '90s and it increases the pie. but we do need a broader perspective. for example, policies that focus on education and policies that focus on job creation and on productivity through infrastructure adjustment, basic research and so much else both promote growth and directly improve the position of the american worker. with this frame in mind, i'll pose a number of questions that today's discussions may address. is technological development likely to continue moving forward at a rapid rate and with great economic significance? or as some argue will its pace and its significance decrease? relatedly it's a biomechanicism of the technology has it declined? if you don't have dynamism then the rate will not be applied.

the rate of business in the united states has increased significantly in very recent times. is that relevant to the question of dynamism in our society? and if it is relevant, is that a cyclical phenomenon or has something more fundamental changed? productivity has clearly fallen to lower levels in the last few years. again, is that a cyclical phenomenon or is something for fundamental happening? if labor and technology does move at a rapid pace and if dynamism continues such that technology is deployed will new industries and new jobs develop that will replace those that have been lost and will those new jobs be well paid? in other words what will the net effect of all this be on job creation and on wages for middle income and lower income workers? to go further, are there trends in the work force that aren't yet adequately understood that

may relate to these questions? for example, would the nature of jobs themselves change? with fewer employees of companies and more independent contractors. with the increase in the number of functions performed by independent contractors being a function of the enabling power of technology. for example, what's the future of clerical help when you can get clerical help on an on-line basis on demand? and that takes us to policy. policies that could help address the pressures from technology and globalization if those pressures continue aside from improving the ability of workers through the many facets of education and training to succeed in this new world are going to need an enormous amount

of creative focus. for example, we may need an increase in the income tax credit, not only for those who receive it at the present time but perhaps much further up the income scale. measures that facilitate collective bargaining can result in a broader participation in the benefits of productivity and growth. and there are enormous number of other possibilities and potentials we should consider in the policy arena. moving further i think there may be a more fundamental question that's going to have to be answered at some future time, and that may be a distant future time. but if we have ever rapid technological development and it is labor displacing, at some point in the future -- as i say, that may be some distant point in the future -- should that lead to some basic change in our lifestyles with less work, more

lecture and a richer more more robust use of that leisure? and if the forces of economic globalization continue to a great, rising inequality even if that rising inequality is accompanied by growth, in addition to everything that needs to be done to enhance growth and tight labor markets and to improve the position of middle and lower income workers, should there be increased redistribution to accomplish the broad objectives of our society? and if there is to be increased redistribution, how does that get done without impeding growth? the united states has tremendous strengths, and i think we are well positioned to succeed over time, but we need an effective government. one that can deal with the

usually consequencetial policy issues we face immigration k-12 education, energy and so much else. in that context, technological development and globalization raise the thorny issues i just mentioned and i'm sure many others that will come up in the course of these discussions. we will begin our program with framing remarks from eric binelson, professor of management of science and director, mit school of management and andrew mcafee, principal research scientist at the center for business at mit. they will be followed by the founder and chairman of evercore. our first round table is entitled "the future of jobs." participants are eric yosfelson

a n aneice, and larry somers, and university professor at harvard. elizabeth carney will be the moderator. the second panel is the future of business innovation. in addition to andy mcafee whom i've already introduced, the participants will be john hotelwanger, distinguished university professor university of maryland, and art d.probiker director of the defense advanced research agency known to all of us as darpa. the moderator will be laura tyson, professor of business economics at the berkeley high school and member of the hamilton project. let me close by extending particular thanks to melissa

carney, who i already mentioned our director, kristin mcintosh, our managing director, and brad hershbine, the visiting fellow with visiting fellow. providing the construct of this session and putting together truly a remarkable program. let me thank the members of the staff of the amount projects who thoughtful hard work is central to everything we do at our project. with that, let me turn the podium over to roger altman. mrk . roger. >> good morning, everyone. i'll be real brief. i think that the upcoming framing remarks and the two panels we're about to have are going to fit any's description of provocative. i, too want to thank melissa

and kristen and the entire hamilton staff for organizing an event as rich as this and as substantive as this. as bob said we're going to starlet start with framing remarks from eric and andy, both professors at mit and the sloane school of management there. eric runs the mit initiative on the digital economy and andy is a principal research scientist at mit and the sun school in his field of research is the impact of digital technologies on business, the economy and on society. so we really could not have better frame ersrs, including because they've written a profoundback, many in this room i'm sure have read it.

the second machine age. i took away three points from that book. mrk profound book. one, we're at an inflection point on the pace of digital technological advance, that it is accelerating, and that it will produce unexpected and transformative effects. two, that these effects will be on the whole, positive, more choice, more freedom more wealth. and, three getting to our focus today, that these effects also will produce considerable domestic disruption in particular the premium ss, which

labor markets have increasingly been placing on education and skills will rise. rise sharply. and by implication, the wage pressure s pressures and lack of employment opportunity for those workers who don't possess those skills will worsen. bob reviewed a series of questions we want to debate today that stem from the book. i'm really just going to add one to his very good list. the past 20 years have already seen labor markets place a big premium on education. most people in this room are familiar with the youubiquitous charts that detail the returns to education. so this trend has been under way for some time. and it's an absolutely central

element in the outlook for american society. and that it's been under way for some time even apart from this prospective acceleration of technology and its impacts is why larry and claudia for example, describe the challenge as a race between technology and education. and the obvious question is is it imaginable that we will raise education levels in this country in proportion to these rising skills premiums and in proportion to the acceleration and the pace of digital technology and software and its impacts that eric and andy are now going to discuss. over to you.

>> roger good morning. great to be here. america has never been richer. private welt over a trillion and private income although at record levels and american workers have never been more productive than right now and the reason for this bounty is because of recent advances in technology. there's also a paradox. as bob mentioned median income has stagnated, lower than it was 15, 20 years ago. andy and i -- let's see if we can get the chart up here. andy and i call this the great decoupling. the share of the wildfires that's employeed hasd has also fallen. if you look back for much of the 20th century there was a rising tide that lifted all boats, an

implicit social contract people would participate in that. recently, that's become somewhat unravelled. again, a number of reasons for that. the great recession didn't help. as you can see this decoupling really started before the financial crash of a few years ago. there have been changes in tax policy and globalization there's some measurement issues, we're not counting some of the free goods like wikipedia or free apps that give us driving directions. that's not really enough to close this gap. a lot of it has to do with changes in the nature of technology. if you look at the broader sweep, much of the wealth creation has -- can be traced to some amazing improvements in technology going back to say 200 years ago when a powerful general purpose technology, the watt steam engine helped ignite the industrial revolution and

successive general purpose technologies replaced a lot of muscle work with machines and by and large broadly, these machines were complementary to human labor. wages grew and more people were working. but we're now in i think, the early stages of what andy and i call a second machine age, where machines are also beginning to supplant supplant minds as well as muscles and do a lot of the control functions that used to be integral and only done by humans. in fact about 10 years ago many of us thought that there were a number of categories that humans were uniquely good at and humans were not -- the machines were not very good at substituting for in areas like dexterity, language unstructured problem solving. in recent years, there have been big improvements in machine intelligence in all these areas, catching some of us off guard even. there have been improvements in

robotics robots like baxter here are working in more and more factory, doing all sorts of manipulation. improvements in mobility. baxter according to rod breaks works for about $4 an hour and a bunch of simple tasks like this people all over the world, people in mt.s and throughout the world are doing tasks like this. machines have made huge advances in language which used to be a uniquely human capability. these dies, if you see somebody talking on their phone, there's a good chance they're actually talking to a machine, not to another human, and expecting the machine to understand. of course, they're not real good yet. we're in the middle i think, of a 10 year period where we went from machines not being able to understand what we're saying to machines being able to understand what we tell them and answer our questions and carry out instructions. by any measure that's a remarkable milestone.

machines are translating between languages. skype will let you speak in english and speak in some version of german or french and chinese to other people. they're also telling simple stories, a story about apple and a byline called narrative science and a machine that writes thousands and thousands of stories about sports and lots of other topics. my favorite example of unstructured problem solving what happened with jeopardy where you have all sorts of questions and variety of different topics of human knowledge whether sports or current events. and the father of watson brought a chart i want to share with you, these dots are the charts of the human jeopardy.

most are pretty good getting a large percent of the answer ss correct. when watson came on he couldn't answer the questions all that well. but watson had something the humans don't, to learn at a ferocious rate and learned from wikipedia and there's watson that got better and better and then they went on national tv and played ken jennings, the champion of jeopardy. watson won, as you may know not just $75,000, but now watson is being used in all sorts of other applications. there's a call center in south africa that answers questions and watson is powering that question/answer system. there are legal versions of watson, runs in the cloud now. a banking version my students actually -- a team of students of mine work with ibm to create a version of watson that has read the dodd-frank rules and

helps. [ laughter ] >> explain them to companies and apparently there's billions of dollars at stake there. versions of watson in a medical diagnosis, describe your symptoms close to english and does a good job diagnosing however obscure it may be. if watson is not today's best medical i do og nos decision, i expect it will be in five years and in the cloud and you may very well be going to your first or second opinion to versions of watson or other related machines. this is great news in many way because it is creating all this wealth i mentioned. it was a puzzle to me when we were looking at stats of stagnant and median income and didn't understand how that could be. there's no economic law that says technology automatically, even if it grows the pie, that everybody is going to benefit evenly.

some people could be left behind. buggy whip manufacturers when cars came in or there could be potential potentially a majority of people left behind who do routine information processing work or basic manual skills. there's nothing in economic theory says that can't happen and we recently have had various flavors of technical change. there are three sets. skill-based technical change and my colleagues at mit made a very nice one that illustrates the scanning out of skillby as technical change leveling out towards the end. capital and labor getting different shares. the share going to workers has been falling in the united states and other countries quite precipitously, which may be some evidence machines aren't just complementary as they once were to human labor. superstars are getting a bigger

and bigger share. there are a number of reasons. one of the reason is the nature of technology. digital technologies are quite different. you can take a process and codify it. once you codify it, you can digitize it. once you digitize it you can make a copy or 10 copies or 100 million copies. each of those copies have three very interesting characteristics. they can be made at almost zero cost, they're perfect replicas of the original and they can be transmitted anywhere on the planet, more-or-less instantaneously. free, perfect and instant are three adjectives we didn't use to describe most goods and services historically, but they're standard for digital goods and they lead to some weird and sometimes wonderful economics. they can lead to a lot of bounty but they can also lead to winner take most markets. if you codify tax preparation you don't need hundreds of

thousands of human tax preparers each serving a local market. a few good tax programs, maybe one or a few can cover a big chunk of the market. of course, as marc-andrias son said this isn't just in a few obscure corners of the economy. software is eating the world. it's coming to retailing, to finance, manufacturing, to media, more and more parts of the industry. so these economics are coming to more and more parts of the economy. ultimately, this can have profound effects as roger is saying not just on the bounty but distribution of income. really, it's how we use this technology, not the technology per se, that does this, how it interacts with our organizations, skills, institutions. at the end of the day the most important thing to remember is technology is and always has been merely a tool. we have more powerful tools than we ever have had before and they have the potential to create

enormous wealth with much less need for work. some people see that as a bug. i think we should see it as a feature. it should be good news. i think shame on us if we aren't using these amazing tools to create more shared prosperity. so, at the end of the day, ultimately, what's going to determine how we distribute this bounty is our choice our choices in tax policy in education, in health and welfare. ultimately technology doesn't determine the distribution, it's our own choices. thanks. let me turn it over to andy, who has a few additional comments on that. >> thanks, erik. >> before we get to the panels i would just like to say two things building on what my colleague and co-ahuthor erik just talked about. first thank you to our host this morning. fantastic for brookings and the amount project to convene this

conversation and bring such a room of fantastic participates together for this. i'm deeply grateful. in particular, i'm extremely appreciative of the focus that the amount project has. to my eye, a lot of the debate about the trends in the economy, not that it's pointless or misplaced. it's missing the really important story. we're arguing about the 1% and the 1% of the 1%. that's a valid conversation. the much more important one is what's happening at the 50th percentile of the american workforce, what's happening at the 50th percentile of income and earnings? these are the people as we look around really facing job and wage challenges. hamilton's focus on those populations in our workforce seems to seems to me exactly the right focus to take. the second thing i'd like to do is congratulate our host, particular particularly bob and roger, for bringing a particularly diverse

crowd this morning. erik and i have a fantastic partnership and have a bit of a problem now that we're finishing each other's sentences and we see technology under every rock. this morning, you will hear from people who don't quite look at the world that way and have done the best work in many areas and will bring a variety of viewpoints and perspectives and stories what's actually going on in the economy that will be extremely valuable for all of us to listen to. i know i will learn a lot. our colleague is a grow we're living in deeply interesting and somewhat weird times. we better figure out exactly what's driving these changes so we can figure out what levers to pull on. as i said, erik and i think technology is one of the big probably underappreciated levers. the second point i'd like to make before we turn it over to the panels if that story is anywhere near accurate hold onto your hats, everybody, we honestly, we ain't seen nothing yet when it comes to technological progress. we heard this idea of an

inflection point and erik talked about how surprised we have been by examples of technological project. even after writing our book the two of us get surprised because it appears objects in the future are closer than they appear. i want to tell you three quick stories to make that point. these are things we learned not since publishing the book in january 2014, these are things we learned this year so far. in our conversations so far in 2015, erik and i had a chance to talk to an entrepreneur whose name would probably be familiar to you, whose pretty well-known for making really cool fast cars. and we were talking to him about the amount of automation in his vehicles. we said, when will you have the capability for a fully autonomous car. he essentially said yesterday. we said i'm sorry. he said i believe our cars are about as good as the average human driver in fully automatic mode. >> i said why haven't you

turned on that mode and made that available to us? are you worried about regulators or liability? he said that's not the main factor. when the time comes we will deal with insurance issues and liability and regulation issues. the main reason we haven't enabled that fully automatic mode yet on our vehicles, we want to wait until we are confident our technologies are ten times better than the average human driver, not just at parity with them. we asked, of course, when does this happen? he said, look i have stopped trying to make that prediction because i kept noticing the date kept going like this, kept marching forward in time. so the driverless car, erik and i have ridden in one version of it. i think more robust versions are coming more quickly than even he and i anticipated. the second example i want to give is of a task we've been trying to get computers to be good at almost as long as we've had computers honestly 40 or 50 years of progress on this with

unbelievably poor results. how many of us have heard of the asian board game "go"? is this familiar to people here? if you're a strategy geek, "go" is the highest form of strategy for a beak.geek. geek is a form of praise. when i surround your stones i take your stones off the board. a sentence to say lifetime to master kinds of games. people spend decades playing the game and trying to understand it well. the computer geeks saw this, great, strategy game let's try to program computers to be good at it. they have made unbelievably little progress at that for two main reasons. one is the game is just too complex for brute force simulation methods to work. you can't come close to simulating all the possible "go"

games before the sun burns itself out so the brute force we have is not useful in that context. geeks say, okay why don't we teach computer the right strategies and program in the strategies and refine them over time and beat the best human players that way. the main problem there is when you go ask the best human players how they knew what move to make, they go i don't know. i've done this for 30 years i understand the pattern. some part of my brain gets it. that move just felt right. they cannot articulate the strategies that they're using to play the game at a high level. so our brute force methods won't work. understanding strategies doesn't work. it feels like a little bit of a dead-end. just this past year, a team of geeks said let's try a different approach and show it a bunch of examples of games played at a very very high level. we have a library of "go" games

played at a high level. let's show the computer a bunch of examples of those games that's it. we won't try to elicit the strategies or point out the strategies to the matters most salient here. we will show it a bunch. they showed it high level games in midstream and they said hey what's the smart next move here? they're at the point right now where that system is able to come up with the exact same move as the mu man expert more than 50 50% of the time after six months or less work on this problem. i made a bet on twitter intera platform for all deep thoughts, i made a bet the world's best "go" player will no longer be a human being. with a couple of examples like that it becomes more and more clear to me and erik that the future is coming at us more than the experts are predicting. that means the economic consequences are coming more

quickly than a lot of us are expecting and makes the discussions for today all the more important. thanks very much. [ applause ] thank you all for joining us this morning. my name is melissa carney. i have the privilege of

moderating our first panel discussion this morning. this panel is going to take the premise that andy and erik laid out for us, that there has been rapid technological advance particularly in the information center. we will ask the question what does that imply for the future of work the future of workers and the nature of employment in this country in particular? as we i tried to lay out in our hamilton project framing paper there are a lot of views on this topic if this will be good or bad on that or how good or bad on that for society. fortunately this morning we have a really expert group to discuss these issues with us. truly, i would say some of the leading minds in the world on these very questions. you have their full bio-s in your program. i will just briefly introduce them. to my left is david otter,

professor of economics at mit one of the nation's leading economists who has probably contributed more to the nation's leading trends and labor market than any. we have larry summers, university professor president emeritus at harvard university and served in a number of senior policy positions including secretary of the treasury of the united states and director of the national economic council. and anish chopra served as our first nation's technology officer appointed by president obama and served as the virring'svirringginia leader of technology and now in a technology firm. and erik has already been introduced and still a professor at mit. [ laughter ] >> the way we will do this, i will pose an opening question to each of our panelists and we will move to a moderated free

flowing discussion and leave the final 10 minutes for audience q & a. we will be collecting your questions on note cards which then will be brought up to the panel. david, i'm going to open it up with a question for you. you have written extensively about the nuanced relationship between technology and computers and workers particularly noting that there are certain things that computers can do that substitute for tasks historically or traditionally performed by humans and other things computers do that complement tasks performed by humans. so, in light of your research and the framework that erik and andy have laid out for us how do you see this all shaking out for workers? >> that's a great question. i'm honored to be part of this discussion and really like the work they've written. i'm glad this topic is getting the thoughtful discussion it deserved. 15, 20 years ago erik and i

started talking about this when i was a graduate student and erik was assistant professor. at that time we felt people weren't take ing thising this issue seriously, if anything i thought people should not panic at this point. [ laughter ] >> i think there are a number of remarks i could make. i think there's reason for some skepticism about how fast things are actually moving and a lot of aggregate data that don't support the idea the labor market is changing or economy changing as rapidly as the story so dramatically the premium for higher education has plateau'd over the last 10 years and we see evidence highly skilled workers are moving -- have less rapid career directories have, an important part of the puzzle and

productivity not moving rapidly and a lot of growth has been in relatively low education with a public service element to it. it's easy looking at these examples to see an inflection point but when you look at the aggregate data there's nothing to suggest there is an inflection point. it could be in the wrong place but a reins for skepticism for things not changing that rapidly. the second point i want to make, when we think about how technology interacts with labor market we think of substitution of labor with machinery. that's a completely natural thing to do because technologies are made to substitute tasks we were doing. we've been substituting machinery for labor for as long as we've been able to think of ways to do that. that's a first order effect a mechanical effect we can automate transportation, we can automate calculation and automate information stories or

retrieval. in general what is neglected is that complements us as well. many activities require a mixture of things. it requires a mixture of information process ing and creativity, motor power and dexterity. if those things need to be done together if you make one cheaper and more productive, you increase the value of the other. doctors have not become less valuable as medical technology has advanced, right? they can do more, diagnose more and that makes them more valuable. ultimately, there are three things that sort of contribute to how angryggregate results in the production of technology. and one whether it indirectly substitutes you or helps you do one thing so you can do something else. if you think about diagnosing medical testing obviously

physicians can get a lot more information in the course of a day. the second is how elastic is the demand for those services? we are so much more productive in medicine we could do all the medicine we did in 1950 in 10 minutes a week and people would probably be healthier given the state of medicine at that time. as people get better at it we get more of it partly because of the medical system and because the services are a much greater value and demand for them is quite elastic. third, from a labor perspective it matters how scarce the skill-set is that's complemented. it takes a lot of education and training to become a doctor. when doctors become more productive, we don't just get an infinite number of doctors at minimum wage because they have to have a lot of training and it complements slowly and tends to raise incomes. there are many examples

productivity results in making jobs more interesting and challenging. that's not the case. i don't want to take up too. >>. that's on one side of the labor market. on the other we see a lot of growth of work that require ss generic skills and hard to automate automate. let me make my final point. a lot of things that matters is how rapidly things change. if tomorrow amazon 32edded the $1,000 bezo that could cook for you and clean your house and comes on amazon prime and you could have it by monday, that would be a dramatic advance and we would all buy it. it would be extremely productive because a lot of people that's their primary activity driving and childcare and cooking and lawn manicuring. if amazon said we will have this in 2045 for $1,000 we would be

well situated to adjust to that, because people would recognize that was not the place they wanted to be over the long term for a career. it matters how quickly we get there. i think -- i think a lot of the debate is not whether these things will occur but it's whether we're at the second half of the chessboard where the inflection pointing all of a sudden things are doubling from a small number to small number doubling again to a large number or whether it's a very incremental process. i would say the economicacademic computer science technology believes everything will be accomplish ed accomplished immediately and you talk to the crowd that's skeptical, this is hard and making progress not true 20, 30 years ago, but we're a long way away. as andy said we live in very interesting times. >> i'm sure we will visit those

as we have our discussion. as our nation's chief technology officer you were tasked with using technology and innovation to further our nation's goals of job creation, reduced health care cost, protecting the homeland tall order. you've spoken very optimistically about the power of technology and innovation to improve our lives on a wide scale. i'm curious to hear how your view of what technology has done compares to that as andy and erik laid out, and in particular, how have you seen technology impact a variety of sectors, including education and health care among others? >> thank you very much for the question. i have three general observation, all very bullish on this next decade. the first starts with my first trip to google, which was probably in '06. i was virringginia secretary of technology and we were trying to open up government data to search engines.

most people were getting information about government through search engines not coming to the url of x, y, z.gov. i saw this emitted for every search on google. the globe was spinning. as you get to north korea, it was dark, this stark observation. large swaths of africa and many parts of the world had darkness. you think about the american economy, what sectors are on that level of darkness as it impacts impacts the internet has had on the sector. health care, energy and education have not necessarily been plugged into the internet especially around data sets constrained by regulatory policy, medical records aren't flourishing on the internet and your energy usage data isn't flourishing on the internet. when you look at all this amazing capability and

productivity gains in manufacturing and others you look to more than a quarter of the gdp, you're thinking these groups of sectors have been completely missing from this revolution. obviously, incentives start to change and data opens up at the same time, you might see an explosion of innovation. we're seeing that now in health care. we've made great strides opening up data, digitizing and eventually connecting medical records systems. more venture capital is flowing into this sector than you would have ever imagined, not necessarily because they're trying to make the traditional system functioning incrementally better, now incentives are changing to reward a different type of health care delivery system which makes it a wide open terrain for entrepreneurs. that's very exciting because it's creating new types of jobs that never existed before in the health care sector. not all of which require a phd in physics. you can be a relatively low level employee whose utilizings

the technologies to help on home health needs so forth. category number one is we're now opening up these big sectors to the internet age and i think that will bode well to insure productivity gains hit them. second again when i was virginia's technology secretary the north carolina-virginia border used to be the hot spot for furniture manufacturing. that's it. we went through a policy of debate, those jobs aren't coming back, how do we build a safety net down there and broadband is the answer and we did everything we could to improve that north carolina-virginia border. something interesting happened around this concept of automation. manufacturing is cheaper because you no longer have to have the same labor intensity and can in-source jobs back at faster rate in response to china. so ikea opens up a manufacturing

plant for furniture. where? right in the heart of the north carolina-virginia border the same place that was written off for its capacity to build furniture and you're being told in the neighborhood you have to do different things because your life as a furniture person is over. all of a sudden robots as co-workers, automation you can actually compete on a more effective footing. we're seeing that in-sourcing trend now all across the country. manufacturing jobs are coming back. they're not the same labor intensity they were when they were previously here but that's still net positive. i would say the third observation if i had any is this democrization of entrepreneurship is pretty much the most exciting thing i've seen. in that same north carolina-virginia border there are people who used to have parents and grandparents work in textiles as well. now, they're building designs for clothing that can be 3d printed or their intellectual property can be transmitted over

the internet to textile production all over the world and they're creating economic value in that same market because folks who didn't previously think of themselves as silicon valley entrepreneurs can plug in because of the democrization of capital innovation. i'm really fired up over the impact this has in the next decade acknowledging in certain sector sectors the challenge. too bullish? i don't know, but i'm very excited. >> larry to you, you've been thinking and commenting on these issues a long time and you wrote a twirnt2013 npr piece. and you sponsored the center for american progress inclusive prosperity, the goal of the commission to address rising levels of income inequality and stagnant wages at the bottom of the distribution. in your thoughts and views on all of this, what do you see as the long run implications for the macro economy? >> thanks, melissa and thanks

for the chance to be here. i'll leave the question of what we should do until later. let me focus on diagnosis and make a confession of ignorance and onbservation and express a worry. confession of ignorance is this. i think it should apply to everybody who speaks confidently in this area. on the one hand we have enormous antidotal evidence and visual evidence of the kind that erik marshals, that points to technology having huge and pervasive effects. whether it is complementing workers and making them much more productive in a happy way, that's one pocketssibility, whether it is substituting for them and leaving them unemployed is a possibility and can be debated. in either of those scenarios you would expect it to be producing

a renaissance of higher productivity. so we on the one hand are convinced of the pervasiveness and far greater pervasiveness of technology in the last few years, on the other hand, the productivity statistics on the last dozen years are dismal. any fully sea factory synthetic -- satisfactory synthetic view has to have those two observations and i have not heard it satisfactorily reconciled and something we have to figure out. it is a big problem to believe -- if you believe technology happens with a big lag and it's only going to happen in the future, that's fine. then, you can't believe it's already caused a large amount of inequality and disruption of employment today. so that is a major puzzle which i think hangs over this subject i just want to put out there for

discussion. second observation i think it is a mistake to think of the economy as homeogenius producing something could output as we a approach these issues. there's an aspect that doesn't get enough attention, which is sectors through progress working themselves into ir relevance. let me give an example. the illumination sector, providing light. it actually has had about a ten-fold increase in productivity every decade for a century. and we now think of it as a trivial sector in the economy. no doubt we could continue to produce ten-fold increases in productivity but actually most of us want it to be dark at night. [ laughter ] >> so in fact there are more little league night games than there used to be, parking lots lit more brightly than they used

to be. basically, what's happened is illumination has become quasi--free and whereas candle making was a major industry in the 1900s, illumination is a trivial industry today. we need to recognize that a sector that has rapid technological progress but the world can absorb so much of it becomes ultimately unimportant in the economy. is that kind of thing relevant in thinking about the world? here's a fact that continues to astonish me. i concede there are a million measurement problems around it. but it is a fact, what i'm going to say. in the way they compute the consumer price indices by definition, they were all set to be 100 for every good in 1983. consider two goods today.

a television set and a year at a university. and instead of using a year at a university, i could use a day in a hospital. [ laughter ] >> the consumer price index for the latter two categories is in the neighborhood of 600. the consumer price index for the former category is 6. so there has been a hundred fold change in the relative price of tv sets and the provision ofback basic education and health care services. if nobody is wondering why governments can't afford to do the things they used to do, i just gave you a big hint. if nobody's wondering where most people are growing to be working in the future, i just gave you a

big hint. if everybody's -- if anybody's completely confident we will have rapid productivity growth in the future they should be giving pause because no matter how much productivity we have in agricultural or illumination it doesn't really matter for the aggregate economy. increasingly, that's becoming true of a larger and larger fraction of what it is that we produce. third, i was -- when i was an undergraduate at mit, in the 1960s, there was a whole round of concern about this. will automation displace all the employment? and what i was taught as an undergraduate was that basically the people who thought it would were a bunch of idiot ledites and obviously there would be enough demand and work itself out and if people got more

productive and they'd spend and maybe we needed some transition assistance, but it would all be okay. that's what i thought and bob solo thought and he was a hero and the other people were all a bunch of goof balls, kind of what i learned. i believed that for many years and actually repeated it often. it has occurred to me that when i was being taught that about 6% of the men in the united states, between the age of 25 and 54 were not working. and that today, 16% of the men in the united states between the age of 25 and 54 are not working. and it won't be very different even when the economy is at full employment by any definition. so something very serious has happened with respect to the general availability of quality jobs in our society and we can

debate whether it's due to technology or whether it is not due to technology we cannot debate -- we can debate whether it's the cause of dependence or whether it is caused by policies that promote dependence. but i think it is very hard to believe that a society in which the fraction of people in -- choose whatever your most prime demographic group is that should be working, whatever that group is, a society in which the fraction of them who are not working is doubling in a generation, and seems to be on an upwards trend, is going to be a society that is going to function well or at least function well without major

social innovations. i would want to leave you with that concern as there, whether you think it's due to technology or think it's due to globalization or due to the maldistribution of political power, something very serious is happening in our society. >> great. thank you. i definitely want to make sure we return explicitly to the questions that larry has raised about policy and where we need to push. but before i do i want to pick up on the first observation larry made this is a great point, erik, for you to jump in on given all these technological advances, really celebrated, why is it that gdp per capita isn't rising more rapidly? why is it that median wages are essentially flat and in particular what does that imply about the impact technology is having on our living standards? are we just -- we're not seeing

it in the numbers. are we not measuring it appropriately? >> that's a great question. it's good for larry to bring up and what spurred andy and i in the beginning and others talked about a great stagnation and these amazing things andy touched on a few of them. there's lots more and we could spend days talking about the wonders of technology we're seeing. it is a bit of a paradox there. there are a couple of parts there worth decomposing. the part about median income i don't see that being such a paradox. i think, as i suggested earlier, there's no economic law that says everybody is going to evenly benefit. it could be some small group is left behind. it could be unfortunately a big group. you can have biased technical change that grows the pie and some people are made worse off. i think that's a fair description, at least in my mind, i don't know if other people would disagree about a

big part of the story of what's going on that people with certain types of skills are in much less demand than they were in the past in part because of technology and many in the median income and david is one of the people that has documented this and lots of people have touched on it. gdp per capita is more puzzling, although as i showed you the chart, you don't see as much of a problem in that decoupling chart as the angst whether tea party occupying wall street is that median line not the top line, even there it hasn't been quite as robust as maybe some of us would have expected. >> it should have been. technology has been super and more strong and more potent and more everything than it should have been before. the question isn't whether it's slowed down, the question is why didn't these new gale force of technology lead to a big acceleration. that's what you would have

expected. >> let me address that. i've spent a lot of time visiting companies installing these technologies. some are quite complex. an ert system or customer relationship management system. we documented it takes five to seven years to roll out. during that process there's a huge amount of organizational disruption and you can do this on a case by case basis and case studies of disasters at mit and elsewhere trying to roll these things out. quite disruptive being rolled out and no productivity or increase while being rolled out and we have aggregate data from hundreds of these firms and i've written papers to show there's a long lag. if you roll that up to an entire supply chain or entire economy you can imagine these organizational disruption, organizational complements often about 10 times larger than the technology investments themselves. they take much longer to roll out, can be part of these --

both enormous disruption and until they're in place with the complement ry complementary complementary pieces are in place you don't get the full benefit but with previous technology, it can take 20, 30 years. i think we're in a big organization of the economy and we see these people have to be laid off and other people hired and other people reskilled and in doing that you don't get the full productivity gain but get a lot of disruption. that can partly answer larry's question how you can have disruption without getting the full payoff. if i could take a moment to touch on some of the things that david brought up i think those are also very interesting, partly about the leveling off of skill by technical change or the college premium, i should say, is actually very consistent with changes we see in technology as

i have showed addressing, different parts of the labor market. more broadly, i think he raises the right question about complements and substitutes and what's happening. you look, oftentimes technologies initially are broadly complementary as many pieces of the system require humans or others to fill in. you look at horses, the number of horses increased all through the industrial revolution up to about 1901 that was peak horse, because, you know, whether saddles or carriages or other things made horses much more valuable. but then the numbers plummeted once the remaining component that horses added wasn't so -- was no longer not automatable, if that's not too many double negatives. you could see similar things potentially, you know are humans different than horses? of course we're different in many many ways. we have a much broader skill-set

and can think a lot better mostly. >> and horses doesn't own capital. >> also, once labor starts disappearing, you can have humans own capital or at least some of them. humans can vote, humans can have guns and do other things if they're not happy with their income distribution. there are a lot of other things potentially different. as an economic fact i don't think there's any necessary inevidencibility, as larry was saying -- inevidenceability that it take cares of itself and we should discuss the policies and in the first industrial revolution a lot of policy changes helped navigate that in a way we did create shared prosperity or inclusive prosperity. >> larry, you want to jump in? >> just on the productivity and disruption thing, i think it's a difficult argument. let's take retailing.

you can imagine you can have all kinds of spiffy technology so you no longer have to have people behind cash registers all of that. the problem is you wouldn't expect the people behind the cash registers would get fired before the people working the systems got the new systems working. so the challenge about right now is people see that there's a lot of disememployment that's already come from the technology but they don't see any productivity increase. i understand why it might take years for it all to have an effect. what i have a harder time understanding is how there can be substantial disememployment ahead of the effect of the productivity. that is, if you thought that it just was impossible to put in these systems and so forth then you might think that in the short run j it would, it would be a big

employment boom. you have to keep your old legacy system going and you have to have a million guys running around figuring out how to put the new computer system in. i understand low productivity. but i think it is hard to square, and it's not like i have the answer to this puzzle. but if you think about it hard i don't think it's easy to square low productivity and substantial disemploimt. i don't knowing the i don't think the lags to reorganization story quite does it. you shouldn't be getting the disemployment ahead of the productivity. >> it is a complicated story. i don't think i've totally nailed it yet but i think another part of the puzzle is that there are a lot of rents in the economy as well. if you get the types of people who do the reorganization being different than the type of people demand is falling, you can have big changes where the

rents are happening way ahead of the changes in the overall out putt output. >> let's deal with the fact there is decrease inging ploimte inging employment. >> we all agree we don't want go the way of the horse. [ laughter ] >> i want to talk about policy and i'm going to pose this to the panelists a two-part question, so bear with me. first, it seems to me in large part the way this is going to play out for the american worker is going to depend on how labor supply responds in particular in terms of skills. in other words will -- is there a way to imagine that a sufficient number of people in our population will acquire the skills or the talents that are needed to economically prosper in the second machine age? and what would it take? is our -- is our education

system broadly defined up to the task of delivering those skills and talents? the second part of my question is, what about those workers who simply can't acquire those skills or don't possesses those talent s talents or even the ones who do but simply aren't enough high paying jobs for everyone. i will admit i am in part worried about a scenario where a small share of the population commands increasingly high wages and a larger share is relegated to low paying service jobs presumably providing services to the high wage folks. it doesn't make me feel much better that robots are not going to be able to give a good manicure or clean houses any time soon. is that a reasonable thing to worry about? if so, don't we need to really rethink our social contract and dramatically expand our system of wage subsidies and income supports? >> may i -- i might want to take

a stab at this, starting with the premise if we applied the same capabilities we said may have a positive or negative effect but to unleash them in this particular question how efficiently are the skills being communicated by employer, the training programs communicating what you get if you join and what the job seeker has or might wish to get. to me we're like in the dark ages of the quality of that experience. you log onto amazon.com, there is feedback loops they've been analyzing, what's the probability i'm there to shop for a video or lawn equipment or whatever. if you ask the same question of the workforce, the sad answer to that is drastically, no. we just did a study on the unemployed veterans skills gap. what we tried to do is we read every job posting in the economy and said what are the underlying skills associated with the job postings? we then looked as best we could through open government data the

underlying skills of unemployed veterans. we took a spotlight on the commonwealth of virginia. you had hundreds of technology companies post jobs from employers who made a commitment to hire veterans. they're going out of their way to want to hire veterans. and they -- but they communicate the job in such a manner that feels like it's not really available or attainable to some set of the population. by doing this sort of skills assessment, what we figured out was every single entry level technology job, every single one in april of 2014 from an employer who made a veteran hiring commitment could have been filled by a tech trained vet at that time unemployed in the commonwealth of virginia yet neither the employer knew to look for the tech trainable vet whose background might have made the initial screening nor did the vet know they could get that

tech job because it wasn't in their suggested career path saying this is an attainable opportunity to get you to the next stage. if there's that just basic matching of talent. every one of these "new york times" story how many people have the skills to get into a harvard or mit? didn't even apply because they didn't know financial aid is available. so, we're making bad decisions in our economy. so, if we unleashed recommendations engines, the go game or whatever, if the same capability if every person in the economy had a helper that said given where you are, here's the shortest path to awesomeness to land the best job available to you. is that anywhere near in our system today? how exciting would there be if there was a marketplace of tools to do that? just make the system work better. i think that's an initial place

to start. >> and where is that going to get those skills? from the employer, local community college? >> this is the other fascinating question. we did a little panel, the center for american progress highlighting this at&t partnership with udacity for six month chunks of learning. they're great for cybersecurity and other interesting areas of growth, so, i asked the question, are any of you regulated as learning programs that qualify for government subsidy, whether they be title iv funding or qualify for the gi benefit or workforce investment board vouchers and the sad reality is these innovations are just connected from any actual government support because there aren't thoughtful regulatory on ramps for these new entrants to be reimbursed in that manner so, these are the areas where i think there's opportunity. >> sure.

i. >> i agree with the direction you're going in in terms of skilling. there's a policy focus on sort of college for all and that has been healthy at some level, but it's, it's very incomplete. our education system is geared towards get people out of high school and college. if they don't go to college well, it didn't work out. that's not productive when less than half of young adults are going to pleat a four-year degree and that's not going to be 75%, although there has been an increase in both high school graduations and college completions over the last ten years. i think we need to think about the skill sets that allow people to do evolving jobs in health care professionals, in technical positions, many of which require real skill set, but don't require four year liberal arts training, so, i think we push

too many people towards expensive four-year degrees, which are either not as efficient or not as appealing as they could be. there are opportunities in kind of areas, written a lot on kind of this new middle skill occupations. there aren't things you can just get with a high school degree. it is foundational credential, but for further training. i think there's a lot of productive room for investment there. hopefully, technology will allow us to be better at that. unclear. as with so many thing there's a great potential and uncertainty about how fast and how well it will work. my biggest concern in this is the sort sort of inequal thety with which people have responded to these market signal, so you might have thought at a time when college had become more value valuable and plr people going to college, the gradient between household income and college going would get shallower and that has not a occurred.

the rate in college going has become much steeper and in college completion, much still. and so, i think that works against economic mobility. it means that kids from low ses backgrounds are less likely to be going to school and be gainfully employed. when larry talks about the declining employment rate among u.s. workers, we're talking about young males, many of them minorityies minorities, many from poorer families, so it's a pretty concentrated problem, which makes it worse, r not better. if you sort of look from the median on up u.s. society looks mobile, healthy looks like it's make making the right investments. if you look below the median there are just that message and tools to correct that problem are mow not coming together. >> let me say a few things and i'm actually more confident about these than i am b about

the technology stuff. given the productivity question. first, with great respect i would engage in the experiments. i think the policies that she's talking about are largely whistling past the graveyard. the core problem is that there aren't enough jobs. and if you help some people you could help them get the jobs but then someone else won't get the jobs and unless you're doing things that have things that are effecting the demand for jobs, you're helping people win a race to get a fine night number of jobs and there are only so many. this was powerfully demonstrated by a study done in france where they looked at a variety of theodis kinds of job matching innovations and found that in a low unemployment areas of france, it worked and in the high unemployment areas of france they only helped some people at the expense of others with no net impact.

folks, wage inflation in the united states is 2%. it has not gone up in five years, there are not 3% of the economy where there's any evidence of hyper wage inflation of a kind that would go with worker shortages. the idea this you can just have better training and then there are all these jobs, all these places where there are hunl shortages and we just need the train people is an e vision of the problem. it is fundamentally an evasion. second, what we need is more demand and that goes to short run cyclical policy and the enormous importance of having tighter markets, so that firms have an incentive to reach for worker, rather than workers having to reach for firms.

it's quite iraqable to look over the years at the harvard economics department. 30 professors and 40 graduate students, it's remarkable how badly graduate students get treated. every professor wants a graduate student, it's remarkable how well they get treated and that, people who have been to school in environments where there's 60% men or women are not unfamiliar with this. having the labor market run tight is fundamentally important. it is important for generating investment and work. third thing i would say. is that i and this is in the same direction as what david was saying.

i think we can't think of capital where more is good. the idea used to be kind of, the way i would have sort of thought about this 30 years ago was that part of what would be good about having more education is that people would be able to work in an office rather than being plumbers. that was good. that would upgrade people and give them new opportunity and plumber's children could work in offices rather than being plumbers. it's kind of the essence of the changes that are being described. that they are more heavily bearing on people who work in offices. than they are on plumbers and so the whole idea of working with a craft and a specialized skill rather than this generic, general manager with liberal arts competence, is i think

central to thinking in a rational way. about wages. if i could say one other thing, ik i think that the broad empowerment of labor in a world where an increasing share of, increasing part of the economy is generating income that has a kind of rent aspect to it and the question of o who's going to share in it becomes very large. one of the lesser puzzles, but very large puzzles of our economy today is that on the one hand we have record low real interest rates r that are expected to be record low for 30 years if you look at the index bond market and on the other hand, we have record high profits. florida and you tend to think record high profits would think record high returns to capital would mean really high interest

rates and what we actually have is really low spresinterest rates. there's a lot of rents in what we're calling profits that don't really represent a return to investment, but represent a rent and the question of who's going to get those rents, which goes to the minimum wage goes to the power of union. goes through the presence of profit sharing, goes to the length of patents and a variety of other government pollicyies that confer rent and then when those are received goes to the question of how progressive the tax and transfer system is that has got to be a very, very large part of the picture. and i am concerned that if we a allow the idea to take hold, that all we need to do is there are all these jobs with skills and if we can just train people a bit then they'l