talk about innovation is kind of interesting, but i would really like you guys to take one thing to heart, and that was, with michael crowe said this morning that you've got to bring everybody in the system along, and until the average education system in the u.s. is world class, you got a hell of a job in front of you, and we dance around that, you know, pisa sults showing mediocre results are in the headline for one day and disappear. nobody picks that up. nobody takes responsibility for it but it is the achilles heel of this country and we're not going to increase the nun of workers with post-secondary schooling until we fix the primary and secondary school system of the u.s., k-12. that's physically broken today on average.

they're bright examples but it's broken and until you get that one fixed, the job with the council is going to be increasingly difficult. >> thank you, craig. you know, our last few minutes here and of course, we heard this morning from jim clifton at gallup, the drag on productivity from our education system apart from the social issues and economic issues, that is clearly one where we need a whole new type of innovation and really also i think new relationships between industry, academia, and also labor, very importantly, but a few other issues. john young last night in our video, i had the wonderful honor and pleasure to go out and interview him in august out in silicon valley and one of the things he said, we were sort of laughing but i said you know, we created the council on competitiveness. we thought it was just going to be around for a couple years, you know, and now it's 30 years and it's obviously sustainable, and contributing and what's going to be the next 30 years?

is it this nexus of innovation, sustainability beyond moore's law? you're moving into 4d printing, genomics, there are lots of things we can do but at the end of the day you three leaders who contributed so much, craig, you've talked about the criticality of our k through 12 education. wayne, and then i want to ask bill and we'll wrap this up. >> bill? >> oh -- >> now remember, you're king for a day here, so you can -- posit into the future. >> i found the discussion about the gdp to be fascinating. it's also in line with an argument, a recent book that argues that the age of innovation was really and i think it was basically the same period that was talked about this morning from 1850 to 1950 in the u.s. and over the last 70 years or so, the u.s. gdp is

basically, productivity growth has basically been stagnant and that's really because the kinds of revolutionary changes like electification, the automobile, things that have had an incredible impact on people's lives. despite thedigitization of the revolution, what is going to be the impact. we talked about 3 d printing beyond moore's law, all of the innovations clearly important to have an impact, what is the next electification? global electification? solving world hunger, moving off the earth, colonizing the moon. using the informatics and large scale computing to preserve the biodiversity that we're losing every day. i think these are the kinds of

big ideas, really big problems that we should be thinking of over the next 30 years. this is a real futures looking agen da and it seems to me that it's important what the council does in looking at what's evolving today. it would be interesting to take a 30-year view of what the really huge impact things could be, doubling the life expectancy of everybody on earth. >> thank you, bill. wayne? >> i think a big challenge certainly for higher education in this discussion is access, and we all appreciate those of us of the set here, when we went to school years ago tuition was very low. i could go to georgia tech to get my education and be a co-op student and pay through my education. that's not true anymore.

there is this great fear of leaving people behind. georgia tech will get good students because so many are applying but those cadre of students in another corps fundamentally just as good as the students up here but can't financially afford their education today. that accentuates, exacerbates the problem of people getting left behind and frustrated in our society. i'm stunned by how bright the students are and excited they are. they want to be motivated. they want us to provide them with the kind of education that gets them excited. in the technological fields it's the help i think these students broaden their view. i love the concept bill gates has thrown at big history. i love history and i think as you get into history you learn an awful lot about becoming something bigger than yourself and i think that really helps. new approaches to education, georgia tech to its credit started the first degree program

and a masters degree in computer engineering online. the whole degree program. not a course, but a whole degree program and it's enormously successful. 4,000 or 5,000 students are taking this course. half the cost of what they would have to pay if they came to georgia tech. i think we really have to look at these models and find the best practices and make sure we marry them in a way that inspires and reaches way down to the second graders and third graders so they get inspired and want to learn. it's there. but we really have mismatched ourselves in terms of being able to do that. >> well i want to thank you all for coming, and helping us celebrate our 30th anniversary, but very importantly, sharing your story and these three gentlemen have had and bill continues in his current leadership role to have tremendous impact on our country and i'll just close by saying that, in the beginning of the council, there used to be a saying that what's good for america is good for all

americans, and i think going forward we need to reverse this and really think of what's good for all americans is good for america and so with that, i want to thank you all for being with us. >> thank you. [ applause ] >> ladies and gentlemen please welcome the assistant sick tear for energy efficiency and renewable energy, dr. david friedman. [ applause ] >> hi, everybody. well thank you very much for that introduction, and first off, thank you very much to the council on competitiveness, and especially to deborah wentz smith in particular. under your leadership, the council has been an incredible collaborator, including through our american energy and manufacturing competitiveness

partnership. the regional dialogues that we held across the country were truly a really rich way to directly engage with stakeholders, including i think many of the folks here in this room. this was a great way to talk about how we can tackle our challenges and unlock our country's leadership in innovation, science, and technology, because that is exactly what it takes to ensure competitiveness. leadership in science and technology, leadership in innovation, especially when it comes to manufacturing. now nations around the world have their own ways of working towards competitiveness in manufacturing. of course, given the great nation that we are, we have our own way, which includes using public/private partnerships to drive innovation and expand manufacturing and jobs right here at home. so on behalf of the department

of energy, i'm really excited that i have the opportunity today to announce the selection of the lead for our latest manufacturing institute. in fact, the tenth institute in the manufacturing usa initiative, but i'm not going to tell you quite yet. i'm going to leave new suspense for just a little while longer because i want to talk to you about the natural outcome of innovation, and that's revolution. innovation is at the heart of everything we do in my office at d.o.e. in fact, when it comes to making america more competitive with nations like china, germany and japan on clean energy, we at the office of energy efficiencies and renewable energy, we are the solutions people. our mission is as simple as it is ambitious, to create and sustain american leadership in

the transition to a global clean energy economy, and really this is a transition that's already under way, as we save money and as we create jobs while changing how we generate and use energy across the country. i mean, just think -- technologies like solar and wind power, l.e.d.s and electric vehicles are rapidly spreading across the country as costs drop by 40% to 90% thanks to innovation, and around the world, global investments in clean energy have quadrupled between 2005 and 2015, and i would argue that within the next decade, those investments are going to reach the trillions when it comes to the opportunity before us. so to paraphrase the beatles, you say you want a revolution? well you know, we are changing the world. it's incredible the pace of

change. but as these technologies continue to be deployed, we face a fundamental question -- who's going to make them? if you look around the country, we have two options. we can cede the mantle of manufacturing and innovation leadership to germany, japan, china and others around the world, or we can step up and lead. now, i guess looking around the room you all probably have the exact same answer that president owe bama has had, step. and lead and that's exactly what he's done. i think that choice is pretty clear. after all, manufacturing, it plays such a critical role when you look across our economy. you all know this sector supports over 12 million u.s. jobs across the country and contributes to more than $2 trillion when it comes to our gdp. these are well paying jobs with

an average manufacturing worker earning over $80,000 a year, and these jobs, they're creating incredible domino effects. the economic policy institute found that for every single person directly employed in manufacturing, another 1.5 jobs is created elsewhere across our economy. that's exactly why we've been working hard for these many, many years to create a lot more of them, because, as i've gone around the country and talked to leader after leader in industry and government and around communities, i've seen a growing awareness that if we're going to play to win on the deployable stage, many, many more clean energy technologies need to be made in the usa. and the entire manufacturing process needs to be here, and

whether it's clean energy or not, all of our manufacturing facilities need to get a lot more efficient so they can become a lot more competitive. now other countries are also making significant investments in the world of clean energy manufacturing innovation. germany, japan, singapore, the uk, these are just a few examples of the folks who are working hard to challenge us and to challenge our leadership every single day. we need to do the same. in fact, we need to do more and we need to do it better, and that's why president obama launched the manufacturing usa initiative. this effort it's been a great partnership, it's brought together industry, academia, other federal agencies, including commerce and defense, in order to create a growing network of advanced manufacturing institutes, each one bringing in different technology focus, different

ideas, different innovations to enhance our competitiveness and revolutionize manufacturing. now with the department of energy, we've played a key role by standing up institutes in emerging fields like power electronics and advanced composites. the goal at the department of energy here is to help manufacturers of all sizes, large and small, to save money, to save energy by adopting new technologies and by providing workers with the skills they need for the manufacturing jobs, not just of today, but of tomorrow. if you look back over the four years since this effort has begun, the administration has already committed over $700 million in investments and we've already gotten so much for that investment. in fact, we've already leveraged more than double that, more than

$1.4 billion in private and other nongovernment investment from our partners. because that's what we can do. we can leverage our work into much greater progress around the country. and as a nation, we have grown from just one institute with 65 members to an entire network that now includes ten institutes and over 1,300 participants. so on that note, i'm going to end the suspense. so today, i'm incredibly pleased to make the announcement of our nation's tenth manufacturing usa institute. it's called r.a.p.i.d. which stands for the rapid advancement of the process intensification deployment and i'm happy to announce that the new institute will be led by the american institute of chemical engineers.

they will be serving as key drivers behind the institute's cutting edge work in modular, chemical, process intensification. common household word everyone's familiar with it. i believe karen fletcher is here in the house. karen, are you out there somewhere? there she is. all right, so karen is now, has an incredibly impressive career. she's now moving from industry to tackle this great new challenge, to serve as ceo of the institute and leading this coordinated effort. karen, i'd love for you and i know several members of your team may be here as well, i'd love for you to stand and i'd love for everyone to give them a loud applause for their great work. [ applause ] that's a lot of folks and that's just the xwik of all the folks who are going to make great things happen because there's over 130 partners across

industries that are part of the r.a.p.i.d. manufacturing usa institute so thank you all and congratulations. it was a great proposal and i look forward to the amazing work that you're going to do. when we look at this new manufacturing usa institute, it's going to leverage up to $70 million in federal funding, with another $70 million in commitments from partners already in hand, and in just five years, in five years the institute will be standing on its own, driven by industry and other stakeholders to be completely self-sustaining. it's going to focus on new technologies that add up to big savings on the manufacturing floor, from improving energy efficiency and cutting operating costs to reducing waste and cutting the amount of equipment that's needed. i mean, in the chemical industry alone, these technologies have the potential to save more than

$9 billion in costs every single year, and on top of that, there can be huge benefits for a variety of other industries, too, including oil and gas and the pulp and paper industry. so what's our end goal with all of this? it's to see the growth of more customized factories, more and more local manufacturing across every corner of our country and to make greater use of u.s. feed stocks, all while training workers in advanced fields and the next generation of manufacturing. now this institute is just the latest example of how the department of energy continues to invest in the manufacturing technologies of tomorrow, like high performance computing and the next generation machines, as well as 3-d printing, just to name a few. now we've also seen exciting steps forward with major new u.s. manufacturing plants in the

works supported by the department of energy, including tesla, who's been doing great work in batteries and suniva and solar city and solar modules. 1366 technologies in solar wafers and sora, with high-efficiency l.e.d.s. i love the fact there's no debate anymore over a compact fluorescent or incandescents. l.e.d.s are cheaper over their life, better quality of life, incredible and we're making them here in the usa. now on top of all that, if you look across our government, if you look across our nation, the u.s. manufacturing sector as a whole has added over 800,000 new jobs since february of 2010. now of course that doesn't change the reality that manufacturing has faced challenges and will continue to do so. the number of our successes aren't comforting to those who are still hurting, to those

folks who have been left behind. yes, we've created many more jobs for example in the energy sector than we've lost in recent years, but they aren't the same jobs. they aren't in the same place for employing the same people. so we know that the clean energy revolution, while real and while revving up, still hasn't been felt in every region, at least not yet. and that's why we at the department of energy must continue to accelerate our efforts to invest in innovation, innovation that will continue to enhance america's manufacturing competitiveness, innovation that will bring more good jobs and innovation that will strengthen our economy as the clean energy revolution expands around the u.s. and around the world. and that's why every single one of us in the room need to help,

because this challenge of ensuring the revolution, excuse me, this challenge of ensuring that that revolution is spread across our great nation is way too big for any one person or any one sector to solve alone. so one last quote from the beatles. we all need to come together right now. i know that if we work together across industries, across sectors, we can create more prosperity and many, many more jobs and a much stronger economy, but to do that, we need to face the reality of the market, where the trends in clean energy are crystal clear, the choice is not whether or not there's going to be a clean energy revolution. it's happening. the choice is whether or not we as a nation are going to continue to lead it. i encourage all of you to take the opportunity you have as leaders to keep focused on

progress, because i have no doubt in my mind that we can boost u.s. competitiveness across the board in our manufacturing sector and beyond and we can ensure that the united states leads in the global manufacturing marketplace if, if we continue to innovate and fight to win the clean energy race. thank you. [ applause ] >> ladies and gentlemen, please welcome the president and ceo of excelon corporation and director of argon national laboratory for moderating conversation with washington correspondent mr. steve levine on the future competitiveness of american advanced energy infrastructure.

>> good morning. in a time of great change in the world in the united states, in the world, it's said that the transformation that is going on in electricification in electricity in transportation and in our electric grid is bigger and more profound than any, and today we're going to try to take that apart. i want to open up right away. when chris, i want to start with you, when we're talking about a transformation of the grid that the grid of the 21st century, which is the mantra that we hear is going to be much different from now, what are we talking about? what is the problem, and what kind of a solution are we

looking for? >> sure, let me tell you where we've come from in a very short period. technology is morphing and changing and faster in our industry. up to a couple years ago you didn't know if your power was on unless you called us, monitoring on a distribution system was very limited. it was based off of previous engineering calculations on line size, load, what the demand would be at peaks and so it was not a very intelligent system. in the last ten years we put over 7.5 million smart meters on. now we're starting to see how the system operates, the demands of the system, what our customers are looking for. there's a lot more intelligence that we can put on fault detection, fault isolation, but the customers now are becoming much more engaged in what they

want to, how they want to control their energy consumption, and how they want to manage the cost. so as the technology becomes available, the customer gets more control, how do we integrate that in maintaining the premise that it has to be reliable, it has to be clean, but it has to be affordable. so as we look towards the future, significant amount of distributed generation, how do you control the grid with that. there's a potential desire that one neighbor will want to sell his solar power to the other neighbor, and how do you manage that? so energy storage systems, energy management systems, intelligent operating systems and trading businesses are going to be a big part of our business as we go forward. >> and we need more electricity, right, 7% more electricity forecast by 2040. >> that's the estimate. >> peter, do you want to unpack that, too?

>> yes, so firstly it's very interesting to see this transformation from the outside. i thought i might warm people up actually by putting up a slide if we could have the slide coming up. if you go back a century, we had a discussion earlier about gee, is the disappearance of productivity growth due to the fact that all of the big things are already invented and all being done? so actually beginning with this, what you're looking at is telecommunications and the electric grid in 1915. one is clearly new york and the other is in california, and it's snowing in new york and they have horses and california it looks like they just had a vehicle accident, but you may not be able to tell which of that was electric power and which of that was telephony. if you look forward, click again on the slide, you see where that's gone. so those two things in 1915 were

in many ways very similar. what you're doing is pushing electrons out in one direction, and one case producing power and the other case sending information, but by the time we got to 2015, at least for telecommunications, everything has changed. there aren't any wires. the information is going around through photons rather than electrons a lot of the time, and there's been an amazing change of that. whereas what actually happened on the electric grid, it's got bigger and there have been many changes within that but fundamentally as chris just said, the mechanism of what we're trying to do has been until recently the same. so a bit of my own history, i used to work for the phone company when it was marbell, at&t, when i worked for bell labs in 1980 the model for telephony was the same as it was in 1915. it was universal service at the lowest possible price.

and the assumption was that you had to regulated mo mop know which had to deliver just that and it was delivered by cost, by price, whereas everything changed after that. so one of the effects of that is that my phone bill is about an order of magnitude higher than it would have been under the old model and the reason i'm happy to do that is i get more stuff, and the question is, is that going the same way with energy? and i think it is, and chris has already pointed out that you begin by having more smarts on the grid, you know what's going on, we're no longer in this central push out where you're regulated by price. there's real value, and if you ask how much are people prepared to pay for energy? maybe six cents a kilowatt hour but the best price, if you go to a rock concert it's been going

for a few days, everybody's phone run down and a business model people charge for ten bucks. you're not paying six cents a kilowatt hour to do that. there's a different model which may emerge with that. >> so chris, just playing directly off of that, you've established what the problem is in the system, and how in some ways it sounds primitive when peter describes it. you have as a bridge to getting there, you formed a relationship with mit, northwestern, and with argon, deciding that you didn't have internally whatever means of intellectually bridging that gap. can you describe that, what are you lacking and what is this relationship all about? >> sure, as a publicly traded company that provides energy delivery services and energy, there's not a lot of capability

or balance sheet space for r&d, so it is the jewel of our competitiveness going forward is the work that's being done at the national labs and the work that's being done at the universities and how we can support the labs and the universities is a much more efficient model than us being a utility company or a competitive generating company trying to come up with our own bell labs type design. the work that we're trying to do, the partnership that we're trying to do is we know the practical on how the system operates. we have some imsight into what customers want and what customers at this point are willing to pay, so we have a practical knowledge where the theoretical, the deep theoretical knowledge is within the labs and the universities, and how we can help commercialize that in a very

affordable way, but a more expeditious way is what we're looking for with partnerships with the labs and the universities. >> but peter, the labs are research facilities. chris seems to be describing a think tank operation, right? how formulating what the future looks like. >> that's what we're trying to do. so we have to see how this works. so it's certainly not a model whereby chris says i have this problem, i need a widget. would you please design it for me and go back? we do work like that, many of the labs do, universities do. we're really trying to get into a piece of white space and say what actually are the problems? how can you think them through in a different way? of course we could do that from a theoretical perspective but it wouldn't be useful if we didn't have a partner to be able to do that because we don't understand the constraints, how stuff works

and indeed we are a research lab, so you know, it's not appropriate of course for us to be doing certain classes of things, but it really is i think appropriate for us as part of a national endeavor to bring out competitiveness in the system to be working with very forward-thinking companies line excelon that want to think through this. it's more of a think tank than it is let's design some better widgets. >> all right, so let's have a mini think tank here now. of course you only just started and so what the future looks like is vague, to say the least, but you must have already had some brainstorming. can both of you give some possible scenarios of what the world looks like in 2040? >> well that's a risky proposition.

the one thing we know is to stay on path is we have to stay educated. we have to stay informed. in relationships like we have with the labs and universities, help inform us, as we're trying to define what is the utility of the future. it's another overused phrase, but as i said earlier, the customer desire, the technology advancements, the capability of our grid, getting smarter, the data that we're going to get off of the grid, how to figure out the best way to use that, we do have a big picture vision that there's going to be much more distributed generation on the system, so you'll have more solar panels on individual houses, and how we operate the system and what the customers want to do with that is something that we have to be forward-thinking about. we have to ensure that it's an

equitable process that we go through. we don't see distributed generation serving the industrial load, and so if we overcompensate an individual at a house with a solar panel at the cost of the grid to the industrial customer, or the commercial customer or the metropolitan area, it would be difficult. so we have to keep a balance on what we think the future can look like, what the technology evolution is, and how we're able to keep that affordable energy component going so we can continue to drive competitiveness. >> it's never a good idea to try to predict the future but a few odd things that may be out there. there are relatively conservative projections of energy use but let me offer a nonconservative one which is to note while we're getting more

efficient at using energy, for i.t., it's now running at 6% of global energy consumption. now if more were to continue and this is one of the arguments explains that it won't continue running with current technology at 10 to the minus 14 joules per bit you project that both continuing to go on and by 040 the whole of the world's energy consumption will be for i.t. that probably won't happen, but it means that for example and i think this was referred to an earlier point, when we think about high performance computing and the direction that's going to go and the way computing will permeate everything there will be a model for computing which will change. one possibility is that there will be much more computing on the edge of things. so rather than the current model we have, where the data is kind of centralized, you take it here, you put it in the cloud somewhere, as i'm pointing out

the cloud is not, the cloud really is somewhere, it's in northern finland, melting the permafrost probably. we won't be able to have that model of just beaming stuff around the planet. we will have much more intelligent agents doing computing on the brperiphery. so what does that mean for us, and how does that connect with the kind of stuff that's happening in this space? it gets to something which is relatively prosaic. in chicago we're putting out 500 sensors called the array of things and these are things which sit out in the environment, they have cameras on them. they measure all kinds of things, gases and whether it's raining, and whether there's a dog crossing the street and things like that, but it has a lot of smarts at the very end of this, so that it computes with that and makes decisions and call up city hall and say there's a flood in the street, you need to pump out the drains.

that requires actually a lot of power. all of this is sitting on light poles and it's been put up by con-ed engineers. you begin to see how the need to put in power is not just going to be associated with people or with factories, it's actually going to be associated with autonomous stuff which is all over the place, and that's one piece of the scenario that we're going through, along with the other things that chris is thinking about, which is how do you integrate renewables onto the grid, how do you balance having wind and solar, and what other technologies do you need in order to get that to happen, including electrical storage, about which you know a bit. >> so just throwing in exactly where you've left off, let's talk a little bit about politics. so in january, we have a very different administration coming

in, in the united states, with a very different idea about energy, about the environment, and i'm wondering, until now, for the last eight years, the themes have been sustainability and green and renewable. your decisions are 30 and 40 years in the making. to what degree we're going to possibly have over the next four and possibly eight years, does that change what you're going to do? >> the last over decade has been a frustrating period for our industry. we have environmental policies that are set at a desire to have a reduction in greenhouse gases and have a low carbon future, but that's an environmental

policy and it incents or targets specific technologies. it doesn't incent or design an outcome. the low carbon future is the dream of the current policies. the energy policy over on the other side does not incorporate the desire or the outcome of the environmental policy, so the way the markets are designed, it's around reliability and it's around affordability. it's not around low carbon, so we've had an issue with predictability on making investments. if you were to go out and build a new nuclear plant today, it would cost you $16 billion. it would have a 60-year life. the dilution period during construction is seven years. it's a huge investment. it's not something even with our large balance sheet we could do,

and there isn't an energy policy that says go do that. so what we're looking for with whatever administration comes in, is a recognition if you're trying to get to a low carbon future, it can't just be on the back of renewables. you have to come up with some market design that says energy, transportation, agriculture, all of the industries together have a carbon footprint, and what is the most economical way to get to that low carbon future? if the new administration changes their mind or changes the policies and the positions at the federal level, and leave it to the state level, we'll work it with the states, but our customers in majority of the states that we operate in have a desire for a low carbon future. the confusion over federal policy and the confusion with the state policy has got to be what we work out.

>> okay. just trying to bring some clarity to what you've said. the shale gas has been a big driver in the reduction of co2 and this has happened, irrespective of anyone's policy and it's resulted in utilities taking coal fire plants off and putting gas fired plants on. that's a piece of the landscape. are you speaking of nuclear then, of policies that encourage nuclear andle other thing i wanted to ask on low carbon, are you saying irrespective of whether the new administration has a goal, objective of low carbon, that's going to go on anyway because the states favor it? >> couple bites there.

the current economics of the current prices of electricity are set by the marge alproducer, which is the natural gas plant. shale gas, the revolution that has come on to our industry has greatly reduced the prices of energy. it has made it more competitive. in many plants that were say the eisenhower era inefficient or less efficient heat rates, thermal transfer and heat rates can't compete with these low natural gas prices so there are some environmental rules that took coal plants off and just the economics that have taken coal plants off. so that's been good for carbon reduction, gas plant is 60% of the emissions of a coal plant. it has been good for economic growth in industry, so there's a

positive portion of that in any plant that is in a competitive market, needs to compete against the marginal producer, and if you can't compete against that marginal producer, then you need to be shut down or you need to make the prudent business decision. there's a lot said in that. just having everything on one fuel source is probably not the smartest way to go. so you have to design markets and evolve markets that have fuel diversity. this is not environmental policy yet. this is just sound resilient to make sure you have a reliable system. couple years ago the polar vortex came in, very cold. our gas plants, our natural gas plants couldn't get gas until 10:00 or 11:00 in the morning because the primary priority for natural gas is home heating. if you let the pressures go too low and you allow the pilot

lights to go out in the city of new york, it could take a year to relight those things. there there's some dynamics around the way the current system works that yes, natural gas is good. yes, natural gas is competitive, but you need fuel diversification for reliability. so that's one thing. on the other side, if you're looking at environmental, we don't know where this administration is going to come down. we've heard some commentary, and then we've heard some retraction or just stated that they'll be looking at it. the supreme court has mandated that the epa is to regulate carbon. now, how that manifests it self, we don't know, but there is a court mandate to do it. we can invest in our systems. we can work within the business models as long as we know there's predictability. like you said, our investments in our utilities are our investments in our power generation stack are 30 to

60-year investments, and in an understanding you'll be able to get a return on that investment is very critical. over the next five years, we'll invest $25 billion into our six utilities. that's a significant investment, half of it is dead on the books and half of it is shareholder equity that you have to be able to pay the debt and you have to be able to give a return on the equity. with the level of uncertainty that we have, that's a hard investment. the one thing i'll tell you, if we're looking at a low carbon future, we have to balance the technologies and the capability of the technologies. we think the future, there is a very bright future for energy storage and energy management systems, and that's, that was the cornerstone of our new partnership with the national labs. that's got to be advanced, and we have to help commercialize that technology. but to do that, and to maintain

a low carbon environment, you have got to have an all of the above strategy. when california shut down two nuclear plants, with all the investment that's been made in renewables in california, the carbon output went up 35%. germany has invested significant amounts of money into renewable energy and technology, and transportation capability. they determined they were going to shut their nuclear fleet down and now they're burning lignite. the reduction of carbon in the country of germany, started down, ticked back up and now it's flat. some of the highest energy costs in the european union pabased o of that design. we're saying give us an outcome. where do you want to go and let the market design how to get there in the most economic way or give us predictability. if that's not what the nation's policy is about, then we know how to make investments and how

to support these investments going forward. >> let me jump in there. first thing i should point out from the perspective of the labs, we work for the federal government and therefore the federal government suggests, sets the agenda, and we deliver on that, but you should understand that the balance between sustainability and manufacturing has actually tilted over the past few years. i would argue that what's actually happening in parts of the market now particularly around electrical storage with electric vehicles is that that's fast moving into a situation where people choose this because they want one, and because they want one of those, then the technology needs to be there. so it isn't just i think driven by regulation or by a view of the market. another point to come back in sort of a historical public/private partnership goes all the way back to the founding

of argon. in 1946 argon was formed to produce nuclear power, to create all of the first generation nuclear reactors, several of which are now operating, and there was a very clear set of a public agenda which involved the transfusion of these new technologies into private industry for the benefit of the country, and so when do you have that purposeful policy, which sticks for a while, then in fact we can, turns out we can work together very well. we didn't of course put in nuclear pow there because we thought it was low carbon. wasn't the reason. >> too cheap to meter. >> too cheap to meter apparently. >> we have one minute left. i wanted to pose the other big thing that's going on, cyber attacks, cyber war, the german intelligence, british intelligence and u.s. all are describing cyber attacks as a

threat to democracy, to our systems. to what degree is protection against these attacks one of the aspects of this research? >> so partnership between the industry, the national labs, the department of homeland security, and the d.o.e. is very collaborative right now. it's very structured. there's an electric sector security council that we meet on a regular basis. we have live monitoring on 75% of the consumers, electric consumers today. we have monitoring on the systems of intrusion, detection devices. it was with the partnership and the national labs we've been able to develop that technology. the labs developed it and we've been able tocommercialize it coming up. there's a focus what we have to do going forward but it is really one of the best public/private partnerships that we have. >> peter? >> yes, i think i agree, and you

know, that's a very important link. it's doable. you know, i mean at the moment there's all kinds of stuff which is connected to the grid and the internet that doesn't have any security on it at all. any secu at all so that's really vulnerable. there's a real opportunity, i think, as you go to more distributed systems to build in a level of resilience which is very different from being completely fail safe but undoubtedly there are threats out there, people who are going to take advantage of our vulnerability and that's one of the big roles for the lance to do. we are here for the nation's security, that's our job and something we take seriously and there's a great partnership with the electric power distribution. >> we'll have to stop right there. thanks very much both of you. >> thank you. >> thank you, appreciate it. [ applause ] next, in a series of short

presentations, leaders from industry and our national lance will showcase exciting potentially game-changing innovations. ladies and gentlemen, please welcome the vice president and chief technology officer of lockheed martin, dr. kioki jackson. [ applause ] >> well, good morning. let me start off, are there any pilots in the audience? i know we got a few ex-combat pilots out here. i'd say most of us probably aren't. so i'm going to take ask you to take a tour with me through the eyes of one but in two very different airplanes. let's see if we got the -- okay. so right now you're flying a p-38 lightning. this is a world war ii long-range interceptor. you're in a combat situation

flying about 350 miles an hour. there's targets, there's adversaries everywhere. your eyes and your brain are your sensors and your data processing. so most of your time is being spent looking out the window for those adversaries and not a whole lot of that fraction is devoted to actually thinking about your mission and your tactics. and so this is a very dangerous business. if you think about just the last two years of world war ii, over 7,500 american fighter aircraft were lost in total. so now let's fast forward to today. so now you're flying 2 fifth generation f-35 lightning 2. this is mach 1.6, over 700 miles

per hour. you still have a crew of one, yourself. but alongside you you have an advanced computer system. it's a co-pilot, it's a navigator, it's a weapons systems operator, it's your air traffic controller. so this is a completely different situation. this aircraft is actually a flying sensor. it's integrating all kinds of information for you. surrounding the airplane looking out in every direction are visual and ir cameras and you also have an advanced electronically scanned radar assembly and, by the way, all of these sensors are being tasked in realtime automatically by the airplane. all that information is being brought back and integrated in the advanced visual display in your helmet so now what you're seeing is integrated data like terrain, navigation data,

weapons data, tracks both on the air and on the ground, aircraft in proximity. and when you look down, you're not looking at your shoes or the floor of the airplane, you're looking at the ground below you. with that advanced synthetic vision in the helmet, you are literally able to look any direction through the airplane itself. so what is this? this is actually an example of advanced human machine teaming. you're collaborating through an intelligent machine through that advanced visual interface in your helmet. you're allowing the machine to know more, do more, make better decisions and that's a quantum le

leap. so now let me give this thee says -- thesis. when i think about it as the cto of lockheed martin, i work with teams that are engineer ago better tomorrow and to me no technologies feel more like the future than machine intelligence and human machine team iing the are really, as i've shown there this f-35 example, increasing competitiveness through reducing cost, time, and risk across our nation. so what does that mean? what does that mean? let me start with an example that is now not up in the air but on the ground in our factories of today and our factories of the future. we're using what we call the collaborative human immersive

laboratory, the chil. we're using that to build satellites in the virtual world. so we'll be on a motion capture floor. this is in our final assembly building for satellites in denver, colorado. the engineer here is actually viewing and working through a satellite building operation looking at this virtual simulated factory in his vr headset. at the same time, there are motion capture cameras tracking his every move. his avatar is duplicating those moves in this virtual world, working with other operators to build the digital twin of this satellite, of this real actual satellite. so now i've moved into a cave, a 3d virtual environment. and here the team is working something out. they see the operator has to lie down on a diving board, reach out over the satellite to do this installation operation. so they reconfigure it in realtime. okay now he can do this, he's

not putting that $200 million satellite at risk. so now we can build the entire satellite before we touch a piece of hardware. on the left, the simulated satellite, on the right you see the same satellite on video going through that lifting operation and it is perfect the very first time so what have we learned? we've learned to do things like take out half of the moves and lifts and the risks associated with building a satellite. we've learned to take out two-thirds of the actual physical distance traveled by the satellite on the factory floor so we are driving productivity. we are driving competitiveness through examples like this. what are we doing? we're amplifying human capacity and productivity. we're actually taking the human

and lab and enabling that person to do so much more with their inherent capabilities. but i would say it's actually more and we have to keep in mind it's more than just the dollar saved, the time saved. and i'll give an example. we were actually saving property, saving human life. so i'd like you to consider -- and i'm going to touch on the theme of autonomy, which have been very huge in the tech world in the last couple of years. and so consider where a firefighting application in australia, they used an unmanned aerial system to relay some information back and they were able to save 100 infrastructures, over $50 million in property, they were actually able to save, most importantly, many lives. but this is just the beginning. and so if you think about wildfires -- and these have been on the news a lot lately, from california to tennessee. you think about fighting these

fires. the u.s. forest service spent over $2.6 billion on fires alone last year. in one week last august they spent an incredible $243 million. a single large fire can cost more than $2 billion in property losses and don't forget about the lives. every year several lives are lost. in 2013 alone, 29 firefighters lost their lives in these kinds of blazes. so how can autonomy and human machine teaming help? recently, lockheed martin did a demonstration with four of our autonomous technologies working together to show how you can take this the next level in fighting a moderate-sized fire. so in this exercise we started off with an indigo -- this is a small quad copter that has an infrared camera on it so it can find that hot spot. next we used this hand-launch desert hawk. it went out and located a

stranded civilian. i'll say simulated stranded civilian. relayed that data back. we sent out our sikorsky autonomous research aircraft, it went out, located the individual, came in, landed safely nearby and actually was able to evacuate this person and bring that person back without ever putting a pilot at risk, belief it or not, the command-and-control for this is a very simple ipad interface. and last but not least, now we're sending out, here, this is an awe on the anonymous k-max heavy lift helicopter. thousands of operations in places like afghanistan, collects water and ultimately douses the fire. so you can see in this fairly complicated example how you can use autonomy and human machine teaming to protect property and lives. to save time and money and to

actually make it look easy. so this is an incredible time. human/machine teaming, machine intelligence, they are transforming our world today like nothing else. these are challenges that when we look at them, they're disrupting how you drive a car, they're disrupting how you fly an airplane or build a satellite but more importantly, they are taking the dull, the dirty, and the dangerous out. they are unleashing human creativity. they are enabling people to do much more. so think about it, we're actually upgrading our airmen, our soldiers, our sailors. we're letting them focus on those missions and tactics that are most important. we're upgrading our manufacturing so that we can increase productivity and allow our teams to focus on inventing the next new project or product. and we're upgrading public

safety and saving lives, so it's been a real pleasure to be here with you today and, remember, this is just the beagaining of a revolution in the teaming between humans and intelligent machines. join me, join lockheed martin, our partners, our customers, our nation in revolutionizing things like air and space flight, manufacturing, education and training and ultimately the business of saving lives and securing our nation. thank you. [ applause ] >> wlladies and gentlemen, plea welcome dr. tom mason, director of oak ridge national laboratory. [ applause ] >> well, there's only two buttons so there's a good chance that if i press it something will happen.

[ laughter ] . there we go. the quote at the bottom is from 1907, "intelligence, considered in what seems to be its original feature, is the faculty of manufacturing artificial objects, especially tools to make tools and of indefinitely varying the manufacture." i wanted to talk to you a little bit about some of the tools we use to make tools and really in particular three that are enjoying right now, i think, a lot of opportunity associated with some of the technology improvements that have been coming to fruition over the last couple of years. and the three things that i wanted to bring together is our ability to understand, control, manipulate and even design materials, the technologies by which we can assemble those materials into functional forms and the way that we can use computers, supercomputers and maybe even not so super computers to understand the performance of those materials,

it rate on their design and understand how they will be intomorrow rai incorporated into finished products. so first starting with the materials themselves it's not by accident that we refer to the ages of civilization by way of the materials that were at human disposal. the stone age, of course, is probably more accurate to call the stone, wood, and bone age. people had materials around them and that was the first instant stance, really, of manufacturing was assembling those into simple tools. however when stone age civilizations began to encounter bronze age civilizations you found there's an advantage if you could go beyond that, probably initially accidentally discovering there are rocks you can throw into a fire, malachites, and extract copper and sort of by trial and error discover that maybe if you mix in a little bit of tin or zinc you could get properties that were desirable so that defined

for us another age of civilization that eventually gave way to iron, the ability to forge iron and control impurities so that if you had just the right magical mixture you might have a sword that would be resistant to corrosion and hold its edge and it was probably sufficiently magical that you might give it a special name because you didn't really understand why it was that it had those properties and you'd call it excalibur. and, of course, more recently the material that has defined our age has been the silicon age and actually once again this is a case of controlling impurities and, in fact, all three of those cases are by today's standards pretty simple materials where we're trying to control to increasingly tight tolerances the level and the nature of impurities to give us desired properties and, of course, we can do amazing things with that.

however, those materials that have -- you know, if you think of the case of silicon and just spatially among rating the impurities, giving us integrated circuits they have been largely developed over time through trial and error. the sort of cook-and-look, people call it. not so much driven by real understanding phenomenon the latter half of the 20th century well, that certainly no longer needs to be the case. partly because of the tremendous tools we have to interrogate and understand materials, experimental tools to measure their properties, computational tools to model them and analytical models that we can apply to derive understanding. the reason this is important is because it does take a lot of time to go through that exploratory process. hundreds of years in the cases

of prior ages of civilization but even as recently as 2005 allegheny technologies introduced a new nickel super alloy that took 40 years to develop so this is not something that's just ancient history. it's still a long and laborious process. it doesn't need to be that way. using an approach that you might call integrated computational materials, engineering, that's probably not a good acronym but i'm sure we can come up with a better one, by applying the tuuls we have in modeling and simulati simulation, understanding manufacturing processes and ultimate design goals in a more integrated way it's been possible for scientists and engineers at oak ridge working with their colleagues to bring a new cast aluminum alloy into use in four years instead of 40 years. so that's just progress that's happened over the last decade. so once you have the materials, the question is how are you

going to put them together? what's shown here is a picture of a 3d printed permanent magnet. you can see if you probably look closely it's probably a little hard on the screen but there's some ridges on the interior of the magnet that show the layer by layer build that has gone into that ch. the reason that's important is because as you make these more sophisticated materials that have very important characteristics for the performance of a particular component, might be a managgnet used in a hard drive read head, you're dealing with expensive materials, in this case rare earths. those are terms that have supply chain constraints on them as well as environmental impacts soernlted with their manufacture. so you'd like to minimize your use of the material to only where it's needed and by 3d printing it you can dramatically by a factor of two reduce the amount of material that goes

into production and get a further reduction from the fact that you have now a design space where you only put the material where it's needed and that can lead to both improved cost as well as improved performance so with things liked additive manufacturing, you have the ability to put material where you need in the a macro stop i can sense. you'd like to take that down to another level and what's shown here probably doesn't look like that earth shattering. it's a chunk of -- i wrote it down -- incannell 718. this is another t alloy. what's imaged is something called the crystal graphic texture. the reason that's important is any metal that you see and use today is actually -- usually a pretty iso tropeic materials,

vary according to their orientation. you have a jumbled up mix of all possible orientation and that gives you a nice ice tropic material so you give up on the opportunity to take advantage of particular directional aspects of its characteristics whether it's things like structural integrity or electrical conductivity. in this example here what's been done in a 3d printed monolithic slab of incannell is to control with quite a degree of precision the electron beam that's used to melt the metal in a way where you can build in pre-designed orientation of the individual crystals. and what this means is that you now have the ability to design a component where you can align its strengths and weaknesses to the strengths and weaknesses that you want reproduced in the manufactured item. this is not just a surface thing. in fact, you can't even see it

when you look at it, it looks like a slap of metal. you have to image the orientation. it penetrates all the way through inches of incannell. so going from control of the object in a kind of macro sense to control of the structure at a micro sense is something that we can do just with relatively conventional 3d printing, of course we also have techniques where we can control the assembly at a nano scale. the two most celebrated paradigms are something called skanling tunnelling microscopy. you've probably seen pictures drawn of individual ie toms, that was discovered by ibm in the late '80s. the only challenge with it is the number is big so if you're trying to build things one atom at a time it takes a while to make something big enough that you can pick up. so there's a scale up question.

the other paradigm is the wonders of chemistry and, of course, just this week we have the celebration of the nobel prize in chemistry for the development of what you might call molecular machines. sort of designer molecules that can perform functions that are really put together essentially chemically at an atom-by-atom level. a new approach that's being looked at -- and this is where i'll finish up -- is similar to scanning tunnelling microscopy, using another imaging technique and see if we can use that to scan materials. this is called a scanning transmission electron microscope. the challenge is that you have to worry about damaging your sample which if you're trying to image is a problem but if you're damaging the sample, that means you're changing it so the atomic forge is something that people are now exploring where instead of viewing that as a liability you view it as an asset and not

only can you in a controlled way introduce defects into the material but you can image it as you're changing the structure so this takes you well down below the scale of that texture modulation that i showed you. of course, in the end you have to understand all that and that's why we need our supercomputers to do the modeling and simulation that underpins the design of these new materials, how will they perform in manufactured structures and how will we improve through a kind of rapidly it rating loop the development of the new materials, the incorporation through the manufacturing process into finished products in a way that i think changes the manufacturing paradigm from what it has been. so i think it's an exciting time. it certainly is one which, as we have heard from many of the speakers today, is going to demand a different skill set. manufacturing looks a lot

different when you are not trying to find the lowest cost labor to assemble very simple things. instead you're trying to get fairly sophisticated work force who can help maintain, manage, and design around these things that really aren't incorporated into most of our curriculums but i think they promise in terms of new products, new markets and new economies is something we can all be excited about. thank you. [ applause ] >> ladies and gentlemen, please welcome chief executive officer and co-founder of loco motors, mr. jay rogers. [ applause ] >> good morning. or good afternoon. it seems that the commencements that most of us are traditionally used to celebrating that we know in our hearts that we're celebrating the end -- the end of a post-doc, the end of a college

graduation time and so i'm going to start today at the commencement of the next big idea with the traditional story of the end. and so for me, in starting this company, it is the only appropriate place to start and then we'll continue from there. if you could cue the video from here. >> this is the end. the end of the assembly line. the end of the show room floor. the end of the smooth talking sales pitch. the hard sell. the soft sell. the oversized inflatable gorillas. and overinflated inventory that must go.

this is the end of the junkyard for all, borrowed from the concept of cradle-to-cradle manufacturing in front of you to be the exact car you want. melted, deconstructed, and rebuilt to be the next thick you need. this is where vehicle manufacturing manufacturing is as it should be begins. >> it's a pleasure to join you this afternoon and, debra, thank you for convening us. we heard about vanivar bush last night. i'd like to take you back to 50 years before that where up in the skies some place frederick taylor and henry ford and gottlieb dime amar are looking

on us and saying we gave you 150 years of manufacturing, take that. i couldn't follow two better speakers today, keogh key and tom standing up and talking about human/machine cooperation and material competitiveness. that's what allows us to define the commencement of this new manufacturing era. and for me, tacking the vehicle system was worthwhile because it's the biggest system of them all. in 2004, i was a marine in iraq patrolling lower 250 miles south of baghdad and two of my friends were killed that year and i decided to start local motors. that was my motivation. many entrepreneurs and business people and organizational leaders have motivations that seem a lot like it. but what i was insistent upon doing was making sure that technology showed up quickly in

the vehicles that i was going to use and that my children were going to use. that's what local motors is about. so the biggest system of them all, henry ford and frederick taylor gave you the mass assembly line on the left and today it's turned into something that looks more advanced but it really isn't much different. it's not a next big idea. that's nothing to say that the work that has gone into it hasn't been anything other than superhuman. it is. alfred sloan created an entire management school to try to manage this complexity. but it hasn't given us enough to save my friends who were killed in combat working in vehicles that could have been different. so for me upending a $2 trillion industry and helping people not die and using our resources more efficiently is a big idea. so moving forward, affecting resources, john rockefeller, inflation adjusted, perhaps the

wealthiest person in history, couldn't have gotten that wealthy if the hand maiden of the vehicle industry hadn't come along and made him a rich man. but changing the resource intensity and the desire to say that's how it's always been done is something that needs a big idea to fix. this was a picture i took outside of mumbai. that's a wealthy family driving on a motorcycle from a very advanced manufacturer that makes motorcycles at two seconds a cycle time. and that's five people riding on a motorcycle doi. doing well in society doesn't necessarily mean you're doing good in transportation. we need to change this. coming from the military, i felt an obligation to be great if i was going to join society in business and leave society in being there to protect and defend the constitution of the united states of america.

we stand here and it's a u.s. national forum on the subject of competitiveness. i grew up in a rare state, i went around the world for serve years on a boat. i wasn't on u.s. soil but i did see a ton of different communities and i would throw my passport out into the crowd as a devoted marine to say that we are in a world economy right now. tom, my predecessor, who stood up here and talked, speaks a lot about his national lab giving back to society in the world, not just giving back to the united states. and so the obligation to be great runs large in what we do and in my opinion, looking and standing on the shoulders of giants, getting rid of the complexity is what is important in order to be able to fix everything that we do. and so going back to the drawing board is what i started with in 2004. we brought ford something called co-creation. co-creation is about bringing together more minds to solve the

tough problems of today. but you couldn't do in the henry ford's time because we weren't digitally enabled. the most important and impressive person i've ever met in life was sitting backstage with tim burners lee talking about the creation of the worldwide web, truly collaborating with people allows you to be able to move things forward faster. these are the collaborators in local motors ecosystem that have helped us go everywhere from the bin necessary book of world record's first co-created car to now the latest guinness book of world's record for the world's first 3d printed car. local motors couldn't have done it by hiring those people. we had to build an engine to let them do co-creation, not crowd sourcing, together. and that engine including micro manufacturing. it wasn't enough to take silicon valley's legacy and say we're going to go out and we are going to give you software that are will solve all of your problems.

we had to bite off on the tough things which means taking the ideas and bringing them in a software-like world to a minimum viable product so lego is a good example and one of the reasons why we show that. today you see our micro factories as spinning ballsover energy to be able to do in the vehicle manufacturing world the seemingly impossible which is to bring for low capital and quick time vehicles like that 3d printed car that we drove on to stage as a prototype two years ago here and now we're putting into production. come visit that micro factory. i guarantee if you bring your children they'll tell you all about it. this is the digital thread that we begin with and keogh key talked about this a lot. the digital thread can start about something that is digital and goes into a shop drawing and then goes to a supplier and later on they deliver you something back, but that's antiquated, we want them to take the digital drawing and assemble everything in realtime as he showed you with the assembly of that satellite.

the promise of a micro factory is we can do it faster and less time because we bring -- less capital because we bring more minds to work. and what i'd ask you to think about in competitiveness is actually being a little more collaborative in order to be able to achieve speed. we've seen in the software today lynn us in is the kernel that runs 90% of our software that runs. for those of you that have an iphone and android device, open software made those possible. open hardware is the next idea we're moving on. so if you look at that, what that means is you're taking more minds to solve problems. we started in the motorcycle industry and 3d printed an intake. that was before tom and the work we've done with the oak ridge national lab allowed us to go big. so that intake was designed the, whole motorcycle was designed by our community but moving forward from there to take a small intake and go to a whole car

structurally and then two years after that to have the knowledge of characterizing the materials in order to be able to make that digital thread come alive truly is the promise of a next big idea. these materials and these people who join the community to make things come alive are the soul of what it means to be competitive. this history of a seven-year timeline is something we've needed to get beyond. this is the automotive supply chain down to customer history. so taking out logicistics like tesla has done is great. the structure of the industry is changing radically right now. we are shortening the development and launch time to six months in a vehicle out of a little micro factory like this and then we distribute those all over the world. today we're in phoenix, we're in knoxville, we're in berlin, we have a demonstration facility here in washington, d.c. and soon you'll see us show up in 20

other locations building vehicles for people to use just for their despoke use. and they are sustainable. they are recyclablrecyclable. this is a project that we started and it took us two and a half months to bring a vehicle out that was an ev that portend it had development of what i'm about to show you. being able to do that work lets us work in this blue sky space to the left. we have taken this parabolic curve of tons of money up on the far left, amoritized by millions of units to bring it down on the far right and we've flattened that curve we've said digital manufacturing can allow you to operate in the low volume and make money. it's that simple. so what we've done with that is we've said now you can imagine building those vehicles that i was dreaming about back in iraq in 2004 and putting them profitly on the market at unit

runs 20600 in a city for that city immediately. now. so the first vehicle we brought out we showed as a prototype. today i'm happy to announce that for the next two and a half years, we have orders for ollie, which is a 3d printed autonomous shut that will will be running here in d.c. this spring and you're going to be able to drive it, you'll be able to ride it, and we will put 120 of those out in 2017. from copenhagen to san francisco. and the next year we're going to put several hundred more on the streets and the year after that we will put several thousand more on the streets and that will still be a year and a half before ford motor company brings out its level four autonomous vehicle for the public. that is speed. but it's not scale. ford will still have a place in this ecosystem. and that's the promise of competitiveness. and if we can do it for that, you should go online and see what we've done with airbus in order to be able to launch this

drone in record time. this is the future of manufacturing new vehicle systems in the ground and in the air and i'm proud to share it with you today so thank you for convening us. thank you. [ applause ] >> ladies and gentlemen, please welcome chief executive officer and co-foundier of local motors -- [ laughter ] >> ladies and gentlemen, please make your way to the ballroom, the program will begin shortly. [ indistinct conversation ] all day saturday, american history tv on c-span 3 is featuring programs about this week's 75th anniversary of the japanese attacks on pearl

harbor, beginning at 8:00 a.m. eastern, national archives christopher carter reads from u.s. navy deck logs describing events on ships under attack in pearl harbor followed by the pearl harbor casualty burial of john h. linsley at arlington national cemetery, one of the 429 casualties aboard the uss "oklahoma." his remains were recently identified 75 years after the attack. and then at 9:00, tour pearl harbor attack sites on the island of oahu with daniel martinez. at 9:30, president franklin delano roosevelt's december 8, 1941 speech to congress asking for a declaration of war. followed by the pearl harbor 75th anniversary ceremony at pearl harbor co-hosted by the national park service and the u.s. navy and from 11:00 to 1:00 p.m. we're taking your calls and tweets live. ian toll author of "pacific crucible, war at sea in the pacific, 1941-1942" discussing the pacific bar from the attack on pearl harbor through the u.s. victory of the japanese at the

battle of mid-way. at noon eastern we're live with paul travers author of "eyewitness to inamy an oral history of pearl harbor" giving a behind-the-scenes account from his more than 200 interviews with pearl harbor veterans. at 1:00, the pearl harbor 75th anniversary ceremony from the national world war ii memorial in washington, d.c. with keynote remarks by arizona senator john mccain. saturday on american history tv on c-span 3. this americaning fedex ceo frederick smith offered the trump administration advice on how to change nafta and other free trade agreements. but first the head on the gallup polling company on what's behind low productivity in the u.s. and slowing economic growth. this portion is just under an hour.

>> talk a little bit about productivity and more specifically about growth and we're going to hand the report out in just a minute. i don't want to go through the report because you can read it yourself. as a matter of fact, we have a slide deck with one slide. i don't think i -- i've never done a slide presentation before but i got one slide so i do refer to it as my deck. [ laughter ] but i want to take a little bit of a different angle on it, kind of a leadership angle on what we've done. the guy that founded our company was a guy named dr. george gallup who was an academic more than he was a -- i'm going say entrepreneur. but he -- and he usually makes that list of 100 most influential -- the real good list, not the "time" magazine list that has chefs and all that kind of stuff but the one with george washington and franklin and that kind of thing.

but he had a thing where he loved democracy so much he said if democracy is about the will of the people, somebody should find out what that will is. then he would report that to washington not unlike what debra and the council to make a clarion call because what he said was if you're wrong -- and this is what he worried about -- if you're wrong about the will of the people, when you make policies and you lead and you're wrong about that premise the more you lead the worse you make things. but what a wonderful mission. i was thinking about how that applied to right now and about growth. because let me just ask you. are we in a recovery? because it's a debate. i don't think i should say this in front of this group but i didn't actually know what productivity was.

i know what gdp is and i have some opinions about that. i know that 2.5% is a lot better than where we are now at about 1.5% or 1.7%. i know we need 2.5% to break even and when you're at 1.7% you're slowly going broke. i also looked into -- if you said what's the right amount of gdp to have? i don't think this board is a group like this but i don't know what the right number is. can you go up to eight? can you have 9%ing? what do we need? the biggest moment in the history of human development over the last couple thousand years was between 1850 and 1950 in the united states of america and we just kind of overwhelmed the world and now we're 25% of all the money. here's a good question. what was gdp during that time series? you know what the answer is? 3.75.

think of how small those differences are? so how do we boom and dominate the world again economically? the answer is 3.75 over a time series of a decade. how do you go broke? a time series of what we do now, 1.5 or 1.7 but you have to be somewhere above 2.5%. i didn't know that. the next thing i learned was gdp isn't the best method and if you take a population of economist both right leaning, moderate, left-leaning, whatever it is, they say the best measure is actually gdp per capita. i didn't know that. i started thinking well, maybe it would be gdp per worker would be good. well, you can't do that because you have fewer people in the work force so if too many drop out you have -- you have to do gdp for the whole population because people at home, good for them, there's a lot of people that should be at home but they use the economy, too.

so do babies. so the best number you can use -- and so that's the number gallop and the council and my team of economists chose to use. then we went back 50 years. and when you determine that that was the single-best metric to determine if we here in a recovery, but now remember if we're in a recovery, i look the word up, i was on a flight back from frankfurt and i was thinking about this. you know the way they bring you the newspapers, i had the "financial times," i had the "wall street journal" and the international "new york times." i found an article in every single paper on the front page that referred to america's recovery. that seems like a very important article to me so i looked up recovery. it means that you've been sick and you're getting better.

you're recovering. that's what it means. you wouldn't think i'd have to look that up but i did. but going back to dr. gallup's point, if we are in a recovery, that suggests totally different activities than if we are not in a recovery. if we're in a recovery it suggests everything's going well and you kind of get your hands off the wheel and tweak it a little bit and keep nudging in the that right direction. if we here in decline, that means you have to shake everything up. that means you need a turnaround. you need turnaround -- you see the difference? but it harkens back to you better get your premises right because if we're wrong, the more we lead, the more we ruin the country. so here's my deck, my one slide

de deck, this is 50 years of gdp per capita in the united states. can you look at that and see a recovery? i wrote down three quotes, you can find them anywhere you want. this one is from the "wall street journal," the guy's name is eric. i won't spay the rest of his name but i read him before. here's what he said. "the u.s. economy appears to be growing at its fastest pace in two years." i don't know what he sees. but i guess you can say it. i think you can probably find one little blip somewhere between one quarter and another, i don't know.

this someone from raymond jones, the investment banking company in new york. "growth is a lot stronger than it looks." i don't know what that means. but where do you find growth that's stronger than it looks on there? this one is interesting. this is my last one. have you ever heard of confirmation bias? guy got a nobel prize for this. but when you make a decision, you come to a conclusion, he figured out 30% is based on fact and 70% is based on emotion. he's a psychologist, you want to psychologist to get a nobel prize in economy, about six or seven years ago, confirmation bias is that you look for facts that confirm what you want to believe. but you wonder how often we get into that, whether it's -- mario, you and i were talking about most of the media tried to

find facts, not picking on the media, i did it, too, but why hillary can win, why brexit will never work, why the electorate in columbia wiklu colombia will a farc treaty, nobody saw arab spring coming because we keep -- that 70% dominates all of our thinking and dominates our thinking. we're always in a fight with that 70%. this one is an important one. this one -- we're seeing definite evidence -- i don't know if my senior editor is here in the room but i don't think there is anything called definite evidence. you either have evidence or don't. but we are seeing definite evidence like convince me this is the time i mean that it's evidence, the economy is expanding more strongly. definite evidence. who do you think said that one. do you know? that's janet yellen. she's working on my 70%, do.

we're not in a recovery. it helps me when i can reduce things to kind of their simplest form, but if we were a company and this was a shareholder's meeting, i would be reporting to you that our sales are $18 trillion, we have 100 million full-time employees, we have 50 million part-time employees and we have debt of $20 trillion going to $30 trillion and we have revenue that's increasing at a decreasing rate and our revenue is down to about 1.7 and i can finish the line to where it's zero. do you want some of that stock? the next thing if next thing i

can tell you is i have good news for you. food is cheaper than it ever was before. so when i was a kid, it was twice as much. that's good news. transportation and gas. but we have three expenses that are totally out of control -- $18 trillion in sales, $20 trillion in debt, but we have three line items that are booming out of control. you know what they are? we need to know. education, we all know health care, we all know housing and i see in the clarion call there that i think we know those pretty well. remember there are real basics that you need to know, shareholders, too. one of them is with health care we spend twice what other comparable countries spend on health care per person. we spend twice as much as england, canada, france, germany. two times as much. next thing you need to know is that they all live longer than

we do. you don't like to hear that. that doesn't work well in the confirmation bias. that one doesn't fit neatly in there. the great american health care system. it makes you wonder a little bit. so canadians live three years longer than us, french live three years longer than us, we spend twice as much. it makes me wonder if the more they spend on us the faster they kill us. [ laughter ] did you read this? you can hardly believe it. i was wondering how many people were killed in hospitals. i know the admiral is here. i don't know, i think the single digits in more of the last ten years. you read the "new england journal of medicine," how many people were killed in hospitals last year? put a number in your mind. google it. their answer is 100,000. it's dangerous to be in baghdad -- you want to go places

where you know where you're really in danger? get into a hospital. they maimed a million. just saying. johns hopkins put their numbers out and they said 250,000. but you wonder when you have an expense item that's that out of control and has that little success, do you really need total disruption? another one our analysts found was education. i don't need to go on and on about that but you know what's booming. it has many other implications to the amount of debt boomers have. you know, boomers are going to be wonderful workers they are different. i saw a conversation on squawk box this morning and they were

talking abo ing about are mille different than any other generations? they all -- they said no, they're no different at all, just younger. they came to that conclusion, but that fit -- again, there's your confirmation bias, it fits the line they needed. i'm going to tell you and you tell me if this makes them different. one thing is they don't have babies. that seems to make them quite a bit different. you know, this is the first year where the white man is going to be smaller. they're causing the white man to be extinct. that seems like a real big one to me. they also have the lowest marriage rate since the history of our company. when i was a kid, the great american dream was owning a house. not so much with them. homeownership is the lowest it's ever been. we've just been wrong about that american dream. but it changes almost everything. they don't buy diapers anymore, they all have pets so they buy expensive dog food. i'm not making a joke. if any of you have stock in pet food, it's going absolutely through the roof. the changes are extraordinary

but yet we're wrong about them. i even -- it kind of bothered me, i was watching squawk box i said i wonder if everybody goes away with that confirmation bias and they do their jobs wrong because they concluded the wrong thing there. because they did. i looked up their ratings this morning. they have 100,000 people watching. i don't know if that's a big number or small number but i know it's about the same of a michigan home game, so a crowd about that big. bingo, i can tell that but they're very important people, that's the point. so they all go out, they've got the wrong thing, they're going to -- but there's one real important thing in there that has to do with education baby boomers will be good workers there's one big difference between my generation and generation before. the generation before baby boomers produced millions of babies, the other thing is they started a whole bunch of new companies. the other thing millennials

don't do besides not having babies is they don't start companies. and that needs to be fixed somehow. but education is probably not doing that because what we've done is when we ask them where they are right now, they here in a whole different state of mind than my group because, what? saddled with debt. if other thing is if you ask me will there be money for your retirement i say yeah, i say how about your kids? i think there will be some for my kids, how about your grand kids? i know there won't be. now those kids will become aware of that so if you take education, housing smrks health care it may not be as simple. it's more complicated in how they fit into the decisions we make, the clarion call we make because all of them seem to be tied somehow to growth. i've been trying to stretch my thinking since we started this project because i keep getting

surprised so much but if you said what did you figure out and the report will be -- maybe it's coming out now that's why i'm not doing the report, you can read yourself, i'm trying to make some reckless remarks here. but so we know we need more growth and i can say this to this group because my business is selling innovation but we say how do you fix our gdp in this problem? we know we need to get the pie growing so we say what are you going to do to get the pie growing, you know what our answer is? we've concluded the same thing, we did it with our own confirmation bias and we're wrong. we think it's just innovation. so we just keep building up innovation, we spend hundreds of billions of dollars on innovation. read the "wall street journal" either yesterday or the day before and we have a record number of patents. since 2,000 it's just boom ed.

innovation, we're blowing it through the roof. so how are we doing with new companies? this is the lowest it's ever been. so we keep booming because somebody told us innovation creates companies. and we don't consider it. we don't consider the other side of it. of course it's a big part of it but i'll throw this out to you. what if innovation has no value whatsoever unless it's in the presence of a customer? we don't think of that. what about innovation has no value at all until it has a business model that works? it's the story that's unbelievable but y'all know who vince surf is? what a great guy. he and bob kohn got the pacts to fly through fiber optics and that became the internet. they were the wright brothers or something. he told me this story at dinner,

it's got to be true because it's not complimentary to vin and he's one of the most important americans ever. he already built that thing at darpa so we could send signals around and a guy came over from the u.s. senate who loved technology and said to him "let me see that thing." he showed it to him and he went "that's the greatest thing i've ever seen in my entire life, can i go back to the senate and pass a bill and throw it out to commerce and see what they can do with it?" what a conversation. what know what vince said back to him? "fine with me, but i don't see what value it will have to business." that's a lot bigger conversation than "watson, come here, i need you." or whatever. but you know who the senator was? yeah, it was -- i'm the only guy in the world that tells a nice story about al gore, i think. but think if al gore hadn't come over. maybe he knew that that innovation had no value at all.

about $100 billion for that darpa piece. but until you have customers, boom, we gotten a explosion out of it. but maybe when we build institutions of innovations somebody better raise their hand and say it's not making the pie any bigger. what fixes it is when somebody starts a business. there's been about -- you read there's 26 million companies but only six million only four million of them have only 1.4 employees. there's only two million businesses, that's getting smaller. we keep working on innovation while the part that creates gdp per capita that's getting smaller but we keep working on this because that fits our confirmation bias. i think i'm going to end it with this point. but i think i can -- i think

there this will make sense. here's where you have hope. if you're an engineer you look for solutions where you find yo variation. so these terrible numbers aren't consistent across the cub. so you have some states that probably never turn themselves around. i don't know what you do with illinois, california. they are so under water. but then you have other states that make a profit. florida is killing it. wyoming, they are printing money out there. i don't know what's going on. see the variation. i get a kick outfit tennessee. that's a good one for researchers. obviously same country, they have the same laws. state stays so they have the same governor, all the legislation but you have two

cities with very different outcomes. memphis is really struggling. nashville is killing it. what it does is gives you hope. but leaders of these communicates, especially by cities, i think even more by states can change the outcough america. i notice, debra, that somebody turned our story into obama's failure. if you look at the line, the conclusion you have way outside of confirmation bias, you could ask your self how much does the president really change the country. because obama's line is bad, so is bush's. you go clear back to where there was really a big lift, reagan had a big lift. went down a little bit, get the recession and then clinton came back a little bit. i just throw this out to you. generally when we say things aren't going well, we go, we

need a new president. that one is no good. that one debate work. let's clear out and try this one. i'm just wondering, there might be more solutions from the leadership of america. maybe 10,000 of us. maybe 100,000 of us than there is with the president. thank you again, debra, for all you do. congratulations on the 30 years and thank you very much. [ applause ] presenting his views on u.s. leadership in the global economy and the ways open trade and approved tax policy will help keep the u.s. competitive while creating opportunity at home and abroad, please welcome our morning keynote speaker, the chairman and ceo of fedex, mr. fred smith. [ applause ] >> good morning, everyone. thank

you for having me here today. that was an important presentation by jim clifton a minute ago with a lot of very sobering information. before i get started on my remarks, let me first congratulate president-elect trump and vice president-lake-effect pence. i think the caliber of the cabinet nominees to date is quite reassuring given the many economic challenges that the united states faces today. our economy has been growing too slowly, as the presentation just before us certainly underscored. our national debt has increased from 63% to 105% of gdp just since 2007. the u.s. now owes, again, as jim mexicoed a moment ago, almost $20 trillion, and this is

projected to grow. federal investment is at the lowest level since the late 1940s as a percentage of gdp. net business invest men is subdued. infrastructure is deteriorating. protectionist tendencies are increasing here and abroad. and the election results certainly show that too many people feel they are being left behind. some blame these problems on trade, but the facts indicate otherwise. history shows clearly people have always wanted to travel in trade. today that desire is stronger than ever. with our constantly growing digital economy, anyone with a mobile phone can reach new markets in nanoseconds, funneling tremendous digital connectivity into more buying power, more economic growth, and a higher standard of living.

fedex is at the nexus of globally trade. we move 12 million shipments a day, so we see the value of trade every day. in fact, as jim said, although we're not up to par with our friends in nashville, the largest pointd of clearance in america is the memphis airport where our fedex super hub is located. so we at fedex are passionate about supporting trade. we consider all fedex jobs to be trade jobs. we have over 450,000 team members around the world who help enable the supply chains of companies from the united states to uganda, from singapore to south africa. we know trade means more markets and opportunities for u.s. companies, especially small and

medium businesses which comprise about 97% of u.s. exports. based on what we've seen over the past 40 years at fedex and beyond that from 20th century history, we know several things to be true. centrally planned, government directed economies simply don't work. they can't sustain growth, they can't respond quickly to change in market kbs. they innovate more slowly and they don't attract much foreign investment. look what's happened in socialist venezuela. the price of oil main export all-time high the government used its revenues to fund massive social programs without investing to diversify its economy. when oil prices dropped, the country had to discontinue most of those social programs and could not even afford to import basics such as milk and eggs.

grocery stores shelves stood empty and citizens stand in lines to get basic food rations. protectionism doesn't work either. november 25th "wall street journal" article examined the impact of brazil and argentina's protectionist policies based on high tariffs and promotion of domestic production over imports. such policies have, indeed, created factory jobs. they come at great cost at consumers who pay higher prices for goods and the taxpayers who foot the bill for subsidies. the article notes taken together these measures essentially transfer wealth from society at large to a smaller group of workers. december 2nd article in the "new york times" did an pelt job describing global supply chains and u.s. manufacturing's dependence on imported content.

the article discussed the reduced competitiveness u.s. manufacturing firms would experience if the prices of their inputs were to rise because of new tariffs. we have the best example of protectionism from our own history. the devastating smoot/hawley act of 1930 raised tariffs on more than 20,000 items. this contributed to a 66% decline in world trade from 1929 to 1934. this misguided act of congress ignited great depression. in 1934 with the leadership of secretary of state kordell hull, tennessean, franklin roosevelt overturned smoot/hawley act and established the trade policy the united states pursued every since, one of me tiff markets. history has shown repeatedly

that free market economies create human opportunity. the post-war general agreement on trade and tariffs or gatt, which sought to reduce trade barriers was deciding factor in the post-war growth of the united states, which became the richest country in the world. u.s. trade policy was also a major factor in the recovery of japan, germany, and other devastated countries. now, trade certainly got its fair share of attention in the recent presidential campaign. but much of what was said was inaccurate and i'd like to set the record straight. first trade is good for and absolutely essential to prosperity. trade is a two-way street in which both imports and exports are vital. keep in mind the u.s. exports goods and services. in 2015, the united states

exported more than 750 billion in services. we also import products for other countries, import materials to create american products and imports give our families more choices and lower prices. from 1960 to 2015, trade rose as a percentage of u.s. economic activity according to the world bank from 9% to 28%. even though we're the world's largest economy, 80% of the world's purchasing power and 95% of its consumers lie outside the united states. our farmers rely on foreign markets to remain financially strong. in fact, one-third of all american farmland is planted for exports. american manufacturer's depend on foreign markets with about 25% of all manufacturing jobs in this country being support