and a lot of u.s. contractors and government employees come back to the states and we see them there. we've never had a problem where people can't find us. they always do and are always nice and interesting places. i've met people under trees and at night, behind buildings when i'm in the embassy. there are plalss where you can meet, so that's not a problem. in my staff i have interesting and devious ways of meeting people. so if you need to talk to us, we'll get a way to protect you, we're very serious about protecting people, whether you're afghan, u.s., or international coalition. the question about -- and i don't really fully understand, but the question about how to this get with ngos and work with them, it's -- we try to work with them all the time. i meet with a group of ngos every time i go there. my staff meet with them on a regular basis. they do get outside the wire. they are outside in the

provinces. they give me a better feel, and actually get a better feel than the embassy gets. whether our government will be able to continue working with them, i don't know. it's going to be the difficulty of getting out there. ch and that's a serious problem. that's why i so much encourage, you know, helping the ngos in afghanistan, whether it's on oversight or green issues, health issues. because they're the ones with the eyes and ears. they're out there. they're community based. that's what we're going to have to rely on. and we're toying with an idea to yutz the ngos. to be our eyes and ears to monitor programs. that's more difficult. tths not the gold standard. we have to, who is watching the watchdogs? who is going to watch the people, you know. so that's a whole process that we have to do. we have to deal with the ngos.

we can't forget them. we cannot forget an independent press. let me just be clear here. the reason -- the reason chicago organized crime and the al capons and the mafias did not only take over country is not only because of brave law enforcement, brave press. and it was the press. if you want to expose problems in afghanistan, we have to support the independent local press. those are the eyes and ears. and if we had more independent press in some countries, maybe we would have better rule of law in some countries. i low that out. >> thank you. i know that we're running over. and i appreciate you taking two more questions if we can. >> happy to do it. and i apologize. i talk too much. >> we have the lady in the front, and then in the third

roud. if you could please ask your questions, one after the other, and keep them short. identify yourselves. >> my name is farrah stockman. i work with the boston globe. i've been to afghanistan several times. i'm wondering if you can say a few words about the commander's emergency response and the military has been pushing so much to this be table to spend money quickly, is it a good idea? >> thank you, and then we go to the lady in the third row. and then maybe you can answer these two. >> thank you so much. i recently did research on governance. the major finding of that research was that corruption may not just be a political crisis, but also a cultural crisis. and by that i mean it may not just be a technical challenge that could be addressed by experts and policies and strategies. but may have adaptive elements to it, in which people would

have a greater role to play, and the fact that afghans paid $1.25 billion in prescribes indicates a clear role that people have in maintaining the flow of corruption. i was wondering if your findings did point towards clues to suggest corruption would have serious cultural roots to it. and if it did, what recommendations could you share on that? thank you. >> okay. let me deal with -- oh, is there another question? on the programs, we haven't done a full blown audit, we have concerns. we've touched on it. many of the programs we've identified that are very poorly done were funded. i think congress itself has has some problems. i think the amount has been decreasing. the bottom line is, control and oversight. and the funding was just for

those of you who don't know, it was special funding set up for the commanders in the field to help them as part of the coin doctrine, another acronym. to try to win the hearts and minds. we've done some audits where we found rather than winning the hearts and minds you've actually lost some of the hearts and minds because it was so poorly done. we're going to send a letter about the bridging solution in kandahar, part of a funding. a diesel power. but the power may go off. and then you've lost all their hearts and minds. with we've got briefed. there's a new bridging solution to the bridge bridging solution. really a solution to the fact that we haven't put the third turbine in. and so you know, it's a beautiful dam. i got a chance to get out there.

surrounded by 200 well armed marines because of the security situation. but my god. we still haven't finished it. it's taken longer than it did for the pharaohs to do the pyramids. we've been doing it since 1952. still isn't done. we don't know if it will ever be done. we issued a report saying we have some problems about funding this thing. all i'm saying is you have the to be careful. good idea, but you have to make certain it's done correctly. the problem is the troops who are monitoring change out every six months or nine months or maybe a year and nobody knows what the heck we did. so going back to the cultural roots, we haven't really focused on the cultural roots.

i had -- and i won't mention the person by name because he's a presidential candidate. but i had a conversation with him some time ago, this gentleman. and he said, look. you know, this idea about cultural. we're culturally more attuned to corruption. he said i spent time and i saw -- i remember reading the story of a truck overturning in manhattan and the back doors opened up and hundred dollar bills floated all over the place and everybody grabbed some. the americans are corrupt? if there's so much money floating around, it's natural. especially if you're very poor and you could make more money in one day than an entire year. it's going to change the culture, the economy, the value system. and that's something we have to look at. we have done an awe dilt on

that. but a number of people have told me that. and that's the thing we really have to know. too much money, too little oversight and too short a time, what do you think is going to happen in any country? i use my daughter every once in a while. and she hates this. you give her a $10 allowance every year -- every week. wow. i'm really cheap. every week you say, here's a thousand dollars. i'm going to give you a thousand dollars. what do you think is going to happen? i don't care if your kid is 13 or 20 or 7. bad things are going to happen. so let's stay instead i give you a $10,000 allowance this week. real bad things we know, as parents are going to happen. what did we do f in afghanistan?

we didn't have much oversight. and the general's report. our reports, everybody who looked at it said bad things happened. we have to make certain that doesn't happen again. >> i thought you said you were an optimist. >> i am. >> i would have said she invest it in a savings account. >> i have to talk to your daughter. >> he would have told that a pessimist is an optimist with experience. so i'm so sorry we weren't able to take all the other questions. i'm sure with this audience we could have spent another hour. but there's a limit on your time and on the time of our friends from c-span and the audience at home. so on behalf of my colleagues, i want to thank you for taking this time and being so candid and open with us. it's good to know that you have that $250 sml limit before the

sunsets on this operation, and we hope that you will come back and on progress. particularly after the elections as we see things emerging. >> happy to do so. >> thank you very much. [ applause ] >> thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2014] tomorrow night, a house energy and commerce subcommittee hearing on sports injuries.

here is part of the hearing. american football is an inherently violent sport. that is one of the reasons why we love it. that is -- the forces encountered in football can be huge. football is called a contact sport. two player who collide at full speed helmet to helmet are experiencing the same force to their heads that one of them were feel if he had a 16 pound headng ball dropped on his from 18 feet. forces to the head and neck cause concussions and we just heard how big this forces can be. here is another problem -- they are getting bigger. since 1920, the average weight

pro lineman has increased 60% to 300 pounds. at the same time, they have gotten 10% factor. energy,ing kinetic we found that the amount of energy dubbed into the pit at the amount of the line of scrimmage has doubled since 1920. in opposition of this trend is the fact that players are shown the protective gear. buying knee pads that used to be centimeters thick now bear a remarkable resemblance to teacup doilies. horse collars have gone the way of the flying wedge. arerate for all helmets modern marvels but players choose them for how cool they look. another problem is the poor state of our medical knowledge. while i am not competent to explain these issues, i think it is safe to say a roomful of

head trauma doctors will not agree. this means the diagnosis and treatment of concussions has a long way to go. as our understanding of these issues improve, we may find that injury rate due to the increasing energy of the game and the wholesale shedding of equipment have increased faster than we thought. day, the end of the economy will continue to need enormous monetary stimulus. so i think the fed will not be raising rates for quite some time. i am optimistic since the u.s. economy is going to accelerate. one of the core dimensions is the u.s.that last year economy grew 1.9% with fiscal drag from higher taxes and government spending cuts reducing growth by 1.3 percentage points. fiscal tightening, the u.s. economy would have been growing over three percent. do notou know, cbo's

make policy recommendations, and that is very important because policy choices depend not just on the analysis of the consequences of different courses of action but also on how one weighs the consequences -- what values one applies. there is nothing special about our values. it is up to our elected leaders to make those policy judgments. our job is to help commerce understand the consequences. >> this weekend on c-span, views on the u.s. economy with the cbo director and experts from financial times, m.i.t., and the university of maryland, followed by the first prez conference by new fed chair janet yellen saturday morning at 10:00 a.m. eastern. live coverage from the virginia festival of the book. first, a panel on african-american history, followed by the impact of foreclosures in the aftermath -- african-american community.

and on american history tv, who might have been time magazine's person of the year in 1864? historians decide saturday morning. at 1:00 join a story to talk about the pick live on c-span 3. next, former microsoft ceo bill gates talks about global poverty gatese bill and linda foundation which fund health care and education efforts to developing countries. forbes estimates his net worth at 76 billion dollars. from the american enterprise institute, this is just over an hour. >> good afternoon ladies and gentlemen. i'm arthur brooks, president of the american enterprise institute. and we're delighted to welcome all of you today to this event, entitled poverty to prosperity. so, this is bill gates. >> thank you.

>> with his wife, melinda, he's the co-chair and co-founder of america's largest private foundation, the bill and melinda gates foundation. they work to reduce poverty and expand health care overseas and to improve education here in the united states among other things. previously, he was the chairman and ceo of microsoft, the world's largest software company, which he co-founded in 1973. most importantly, like me, he's a native of seattle and somewhat of a seahawks fan, which is good. but that's not what we're here to talk about. we're here to talk about his incredibly important work with the foundation, the work that he's doing here and around the world. he shares so many of the priorities of the american enterprise institute to build a better life for people here and everyplace people who suffer from need, people who suffer from disease, people who suffer from tyranny. what can we do about these things? well, he's asking the big questions and he's putting his own resources behind the answers.

and we're going to hear what he has to say about his latest work. so, welcome to aei. it's an honor to have you and to be among all of our friends here. you just issued your annual letter for 2014. i recommend that everybody read it. it's a very interesting piece of work. it's detailed, and it explodes a lot of myths about poverty around the world. and you offer an incredibly bold prediction. you say that there will be almost no poor countries remaining by the year 2035. what do you mean by that? what do you mean by that? >> well, the primary measure, which has all sorts of challenges, is gdp per person. but it's still we don't have a substitute measure. so just if you take that world bank classified countries with over 1,200 per person per year as moving up into a middle-income bracket, so moving from low income to middle income.

and we have today 45 countries that are still in that low-income category. and what i'm saying is that, by 2035, there should be less than 10, and they'll mostly be either places like north korea, where you have a political system that basically creates poverty, or landlocked african countries where the geography, the disease burden, the disparate ethnicities mean that they haven't been able to bring together a government that in terms of education, infrastructure, health does even the most minimum things for them. and so we're on this rising tide that's not recognized. it's overwhelming how prosperity is spread around the world, say from 1960, where there were very few rich countries and a gigantic number of poor countries.

now most countries are middle- income countries, and poor countries are much smaller. now, just saying that they'll all move up past that threshold doesn't mean they won't have poor people within the countries, it doesn't say their governments will be fantastic, but it will be a lot better on average than it is today. >> that's an extraordinary thing. we have a tendency to despair when we look around the world, and we have a tendency to say the world's not getting better because of the way that we see the news. but you're saying that's a myth, right? >> yeah. i think that a deep problem in perception is that if you want something to improve, you have a tendency to be bothered by the status quo and to think that it's much worse than it is. and that can be beneficial because you don't like, say, the level of violence in the world, the level of poverty, the level of number of kids dying. but if you divorce yourself from the true facts of improvement

and look at the exemplars, look at what's worked if you get sort of a general despair about is the world improving, then you won't latch on to those examples. the steven pinker example, one of my favorite books of all time, is that if you ask people, is this one of the most violent eras in history?, they will say yes. overwhelmingly, americans say yes. well, it's overwhelmingly the least violent era in history. and so what it means is your disgust with violence actually increases, and that's partly why we take steps and why within our own society and the world at large it's come down so dramatically. >> i love your optimism. and so, based on your optimism, given the fact that the world will have only a few poor countries in the year 2035, what's the gates foundation going to be doing in 2036? >> well, there are a lot of diseases.

over 80%of the difference of why a poor child is 20 times more likely to die than a child in a middle-income country, it's these infectious diseases. it's diarrhea, pneumonia, malaria. and then there's a few adult diseases which are way more prevalent in poor countries tb, hiv. and we've taken on as a central mission it's a little bit over half of what we do to get rid of those diseases. and so that will remain our priority until we're basically done with those. and those are tough enough that i'd expect us it will take us 30 to 40 years to really be done with those. and then we will have a crisis because we will have the problem of success and we'll have to say, ok, what is the health inequity between well-off countries and poor countries?

is it, you know, obesity, heart disease, and what interventions? and even before 30 years are up, we'll start to think about this. but right now, we're sort of maniacally focused in our health on those poor world conditions because we see that between research and getting things like vaccines and drugs out there, we can basically save a life for about $2,000. but everything we do should be benchmarked if it's not that effective, then we shouldn't do it. so, you know, we're pretty specialized in making breakthroughs in those areas. >> you've been involved in projects all over the place, from eradicating polio outside the united states to improving schools in cities and even in rural areas around the united states. what do you consider at this point, given all of the resources that you put into these important projects, to be your most important victory or your area of greatest success,

and what did you learn from it? >> well, we've had the most success in global health. you know, there's over six million people alive today that wouldn't be alive if it wasn't for the vaccine coverage and new vaccine delivery that we've funded. and so it's very measurable stuff. and, in fact, if you applied a very tough lens to our work, you can almost say, ok, why are you even involved in u.s. education? well, we have a reason that you could say is not all that numerical, which is that the success that i had, that melinda had, came from the u.s. education system. it came from the u.s. system of encouraging innovation and business and, you know, protecting the intellectual property. and so we feel like we need to have take what we think is the greatest cause of inequity, the

greatest challenge to america's continued leadership in innovation, which is the failures of the education system, that we need to be dedicated to that even though the risk that we might not have a dramatic impact is much higher in that work than it is in any of our health or agricultural or sanitation or financial service work, which focuses on the poor countries. you know, we feel that it's critical that america get improved education, but that's very hard work. and, over the last 20 years, where government spending in this area and philanthropic spending, although it's a tiny percentage, has gone up dramatically, the proof in achievement in terms of reading ability, math ability, dropout rates, you know, kids graduating college, there's been hardly any improvement at all despite massive resource increases that have gone into the area.

so it's critical, but it's not easy and there's no proof that it's necessarily going to be dramatically better 10 or 20 years from now. >> so let me ask you about that intransigent set of problems that we have in u.s. education. and i understand that there are certain problems that you can you can eradicate the guinea worm. you can't necessarily eradicate ignorance. here at aei we're trying to improve the free enterprise system. that doesn't mean we'll be done at some point. i mean, that's just the nature of social enterprise as i understand. here in washington, d.c., we talk about public education all the time. this is the capital of the free world. we should have the best education system, and it should be an exemplar to the whole world. i think we should we should agree. we're pumping more than $18,000 per kid per year in the system, and 15%of eighth graders read at a nationally acceptable standard. so what do we do? >> well, it is phenomenal the variance in how much is spent per student. you know, utah's below $6,000 per student per year.

a lot of states are in the $7,500 per student per year range. you've got some that spend more than d.c. new jersey would spend a fair bit more. the northeast as a whole is where the biggest spending takes place. and yet, there is no correlation between the amount spent and the excellence that comes out, you know. yes, massachusetts is good, but if you take the high-spending states as a whole, then you get pennsylvania, new jersey, washington, d.c., mixed into that, and it doesn't look like there's any correlation. so it's a very strange system. washington, d.c., on a relative basis, actually has improved a fair bit over the last three or four years a combination of improved personnel policies, shutting some schools, letting the charter schools take a somewhat higher share of the cohort. it's about the fourth largest of

all the districts in the nation, new orleans being number one in terms of the percentage kids go to charter schools. and the charter schools here on average are quite good. so, you know, there are some things that have gone well, but it's still an abysmal system. and, you know, the fact that there isn't more of a consensus on what should we be doing to the personnel system and using innovation to, say, be almost as good as the countries in asia, it's got to be a concern both from an equity point of view and from an overall country competitiveness point of view. >> so if spending more money is not the answer i mean, it would be great if it were, because as a rich country we can do that. but there are innovation ideas about choice, charters, etc. if it's the disruptive innovations that are going to make it happen, how do we inject those ideas more systematically into public bureaucracies, not just in schools, but in government in general?

>> well, if you look at the education system, the amount of actual research that goes on to understand why some teachers are so extremely good, giving their kids more than two years of math learning in a year, and why the teachers who are at the other extreme, giving less than half a year of learning in a year why we're not taking those best practices and at least trying to transfer those into the other teachers by doing observation and feedback, you know, having the schools of education really drive for high-quality teaching, it's not a personnel system that right now is focused on teacher improvement. teachers get almost no feedback. they get almost no sense of, ok, i'm good at this and i should share that with other people. i'm not very good at this, and

therefore i should learn from other people. it's very different than most other so-called professions. and, at the same time, technology is coming along in terms of taking the classroom video, and, you know, sharing it, having people commenting on it, delivering personalized learning to your kids so that you can assess where each of them are and tune lessons according to what they're having the challenge with. the opportunity is there, and that's what our foundation invests in. it invests in studying the very, very good teachers. we took 20,000 hours of video and looked at various measures, you know, what were they doing differently? and we created a lot of model districts where there are so- called peer evaluators who are in the classroom, observing, giving feedback. and, you know, it looks like the results on that are very good. and so there are points of light that if we could get it adopted permanently and scale it up, it would start to move the dropout rate and the math and reading achievement.

as you say, it's tough, though, because when we invented the malaria vaccine, no school board gets to vote to uninvent it, whereas, you know, if you make an advance on personnel system senator alexander, when he was governor of tennessee in the 1980s did a pretty good system where people got feedback and evaluation, and, you know, it looked like it was starting to work pretty well. and yet, it disappeared. >> the malaria virus is not unionized. excuse me. i'm sorry. that's not my place. please. >> yeah. ok. i certainly agree that there are various groups that can stand for the status quo. when you want to come in and change things, they are worried not as much for the students, but for the teachers. so they can defend the status

quo. but if it was the case in america that the less unionized places were like singapore and more unionized places were poor, and if you had some direct thing, and you said, ok, well, here it is, and now we can explain it, that would be one thing. that is not true. our education is very poor across the entire country, and it does not correlate to unionization. massachusetts, pretty heavily unionized, they do relatively better. you know, some other places not unionized, like actually, on an absolute scale, ok, take arizona it isn't there is no single factor you can say that in the 50 states, when that's been removed financial constraints, union constraints that something like asia is taking place. >> let's go back outside the united states just for a minute again. you wrote in your letter that there's a lot of misunderstanding about u.s. foreign aid. now, if you read what people are

writing about aid, there are a lot of critics who think it's just hopelessly ineffective. some think it's actually positively destructive. what's the misunderstanding about foreign aid from your point of view? >> well, whenever we give foreign aid, you have to, for any particular grant, say what your goal is for that grant. if you goal is famine relief, then you should measure the grant by whether people have been starved to death. you shouldn't go in and say, ok, did the gdp go up? if you're trying to have a political friend like, you know, you want egypt to sign a treaty and be a friend and that is your goal, then you just and you're not measuring the dollars according to human development then don't come back later and say, oh, their gdp didn't go up or you didn't achieve human development. so a lot of foreign aid, things are labeled foreign aid, to take an extreme case like sending money to mobutu when he was the

dictator of zaire, it was labeled foreign aid but it was just kind of a joke that, you know, people act like, well, yeah, that's going to help the people in that country. well, ha, ha, ha. now, because you don't have that cold- war imperative, a lot of the aid is actually trying to uplift their health or agriculture, you know, get these countries to self-sufficiency. and so the aid community does a lot more measurement. we've learned. we have a lot more rich countries. korea was a huge recipient. now it's turned around and is a very significant donor. so you have more rich countries giving to far less poor countries china, brazil, mexico, thailand, they were aid recipients in varying degrees. now they're no longer aid recipients. india, the aid it needs is very targeted. a very small part of it is gdp. within 10, 15 years, they won't need to be an aid recipient. so this is a field that makes advances.

and when you label it aid, it seems mysterious. when it comes to inventing the seeds of the green revolution that avoided famine in asia or the smallpox eradication that was a u.s.led effort, that a disease that was killing two million people a year hasn't killed a single person since 1979, when you look at that, you say, well, was that worth it? well, i guess it was worth it. there are so-called global public goods creating seeds, medicines or -- vaccines for these infectious diseases that the normal market mechanism does not work, that is, it's not rational for a profit-seeking company to do a malaria vaccine because there is even though it kills a million children a year, the parents of those children don't have enough money to justify the research. and so it's a market failure. now, markets are extremely good. they work you know, they're the best

mechanism we have. the more you can use them, whenever you can use them, that is you know, that's one of the key mechanisms along with science and government that have led us to be so much better off than we are than we were hundreds of years ago. but for the diseases that we work on, there is no the r&d would not show up except for government aid and philanthropy. >> well, so your philanthropy is working alongside government aid to be sure. and you show that in your letter and we've known that for a long time. but there are a lot of people who believe very strongly that the presence of philanthropy like yours is evidence that the government simply isn't doing enough to help people. and i'm going to quote ralph nader, who once said that that's not a laugh line, you people. there's a rowdy crowd here. ralph nader once said, a society that has more justice is a society that needs less charity. what do you say to that?

>> you don't want to depend on charity for justice. charity is small. i mean, the private sector's like 90%, and government's like 9%, and philanthropy is less than 1%. there are things in terms of trying out social programs in innovative ways that government is just because of the way the job incentives work they're not going to try out new designs like philanthropy can and they're not going to have volunteer hours coming in to leverage the resources like philanthropy can. so philanthropy plays a unique role. it is not a substitute for government at all. when you want to give every child in america a good education or make sure they're not starving, that's got to be government because philanthropy isn't there day in and day out serving the entire population. it's just not of the scale or the design to do that.

it's there to try out things, including funding disease research or, you know, academic not starving, that's got to be government because philanthropy isn't there day in and day out serving the entire population. studies to see if something is more effective. so i'd agree with that nader quote. if you want broad justice, you'd better be doing that through government mechanisms. >> does that mean that we need less charity, however, if we have enough justice? >> well, i guess if you have perfection, then you don't need charity anymore. charity plays a huge role in america. our universities, one of the reasons that they are world-class is because there's a tendency of the graduates who do well to give back to those universities. and that is the envy of the world. every other country is trying to think, ok, how do they get this magic cycle going where they create successful people in their universities and then they more effective. help make those universities be a lot stronger? in terms of various scientific

ideas, you know, hughes medical foundation there's just a whole ton of things rockefeller foundation, if you go back in time, they invented things that the government research projects were not moving into those areas, not doing that work. the march of dimes invented the polio vaccine. you know, the thing that we're using to go out and eradicate, make it the second disease after smallpox that gets eradicated, this is the oral polio vaccine. that's 10 doses, and this thing costs $1.30, so 13 cents per kid. that was philanthropic money, march of dimes money, that caused both its predecessor called ipv, which was the salk shot -- this is the sabin oral -- they created those things, so philanthropy has, you know, some amazing hits to go along with lots of money that was probably wasted. >> now, there's a related question to my last one, which is the number of people who talk

about charity and free enterprise as if they were in conflict. they believe that capitalism, that people who trust capitalism because they don't believe charity is a good solution to problems, etc. in other words, there's an antagonism between markets and nonmarket mechanisms that are philanthropic, and how do you square those? i think i understand, but i'd like to hear your thoughts on that as well, given the fact that you've been involved in one of the most important capitalistic endeavors in the history of our economy as well as the biggest foundation in our country. >> well, once you get past basic research and drawing the boundary of how much is government funded and how do you define is a tricky area. there is a market failure for research as a whole, not just research for the poorest. but, once you get past that, most innovation is driven by private enterprise the magic of the chip, the optic fiber, software, the magic of new drugs, new vaccines, all of that stuff

how you come up with it, how you make it safe, that's happening in private enterprise. so, for our foundation, where we're trying to help the poorest, our relationship with the pharmaceutical companies has been fantastic. and it's great every time they're successful, they come up with a new drug, they manage to keep profitable because of that. that's great for us because it means they're going to have a little bit more understanding to help us with our issues and a little bit more on the way of resources, all totally voluntary on their part to pitch in. and so the private sector you know, we've got to bring private-sector agriculture in all of these countries. that is the ultimate sustainable solution. charity, as i said, won't be there all the time. government aid won't be there all the time. the question is how do you get them out of the poverty trap? you need

you know, right now 40%of their kids don't in africa, don't develop mentally so that they could ever, say, be fully literate. that is through malnutrition, treatable malaria, a variety of health insults, they're not achieving anywhere near their cognitive potential. and so do you need to go in and remove that barrier, that friction, in order to get them into a sustainable situation? in africa, and particularly the disease burden, the way the geography works, the split of ethnicities, it's been given the toughest problem, to create countries that are totally self-supporting, you know, running a middle income or above democratic-type system. they'll get there, but they, for a variety of reasons will be the last most of the last to achieve that. >> philanthropy can stimulate the mechanisms of free enterprise, which will then become self-sustaining and help

these people well beyond the scope of your foundation or any bit of government aid? >> yeah. absolutely. the poor farmers, the real solution for them is to be farmers who are in the marketplace, selling enough of their produce to diversify the diet of their kids, to be able to buy the school uniforms where those are necessary, and even when a tough year comes along to have saved up enough that they're not starving during the year where weather is working against them. >> people think a lot about leveraging technology in international development. we hear about that constantly, you know, the big headlines like give every child a laptop, etc. and these are great ideas. and what i want to know is from your point of view, what's the most exciting opportunity for technology to change lives today? >> well, i think the greatest injustice in the area of health. and, you know, that's my bias. that's the area that i spend time in. and i think a child dying is an injustice no matter where that takes place in the world.

and this is another one of those good news stories that's not well known. in 1960, 20 million children a year under five were dying a year. now we're down below six million, and we have over twice as many people in that age cohort, so the rate reduction is pretty phenomenal. and we can see a path by working on diarrhea, pneumonia, malaria we can see a path to get that over the next 20 years below three million a year. and, at the same time as you do that, you're not only reducing deaths. you're taking all these kids who survived and yet don't survive intact that is their brain never fully develops, their body never fully develops. and you're reducing that quite dramatically. and so i'd say health is a necessary condition to get a country to have kids who, when they go to school, they can learn to read, and, you know, therefore, it's the thing we've

chosen as the big priority and i think will unlock the potential of these countries. >> so a lot of us in this room are probably looking at your incredible successes and thinking, you know, if i could construct the world's largest foundation, i could do a lot of great things. but for the rest of us, who can't do that, you must have thought about how each one of us can make a difference as well. what kind of advice do you give to everybody who wants to act philanthropically notwithstanding the limits on their own personal resources? >> well, certainly, picking that cause of inequity, whatever it is you know, pick a local charter school, pick a disease that somebody you know was touched by, go out to a poor country and see what's going on with the health or education there

you know, all these problems require volunteer hours, expertise, somebody who's articulate. and a lot of people get frozen just seeing that the need is infinite and say, ok, when i pick, will it be the best pick? well, there's no sort of deeply rational way we're going to have time to enumerate all the things you could work on, and, you know, compare all those factors and then jump into that. it's best wherever you can get your passion engaged to pick something and jump in. for most people, the first philanthropic thing they'll do will be something in their neighborhood where they can go and, you know, put their hands on it, meet the kids at the charter school where they're volunteering their time, meet the kids that they're mentoring and see the progress that they're making. if you could connect up with the poor countries, the marginal impact of your time or even pretty small resources is higher in many cases than anywhere else you're going to look, but it's harder to access that and figure out how you're going to, you know, stay involved in a sustained way.

so as long as you're engaged with something, then throughout your career, maybe more time will be freed up, maybe you'll be able to draw your friends into that. and, if you're lucky financially, then you can apply resources against it. and so the diversity i mean, when de tocqueville came to the u.s. and saw all these nonprofit things people were doing, he was amazed. and other countries have not to this day gotten the level of civil engagement that we've gotten. there are factors that show that it's even going down somewhat in america, that we're less unique in this respect than we've been, and that's unfortunate because it is a real strength. >> so you recommend that each of us given whatever resources that we have do something that we can touch and see with these particular resources, thus giving us a sense of the good that we're creating. and i appreciate that advice. i want to turn now to some of our colleagues here and start with one of our colleagues from education. your foundation has generously

made it possible for us to do a lot of reform work on k-12 education and higher ed as well. and so i want to go mike mcshane, who is over here. mike has got a question that's been coming up all over twitter and across our email hoping that we would ask you this question. mike. >> thank you so much. your foundation has been known for supporting the common core curriculum standards that have become increasingly controversial. and the question that i have is, why? what promise do you see of the common core standards? how do you see them as a lever for improving the american education system? >> ok. so what is the common core? it's a very simple thing. it's a written explanation of what knowledge kids should achieve at very various milestones in their educational career. so it's writing down in sixth grade which math things should

you know, in ninth grade which math things should you know, in twelfth grade which math things should you know. and you might be surprised to learn how poor those i'll call those standards, but to be clear, it's not curriculum. it's not a textbook. it's not a way of teaching. it's just writing down should you know this part of algebra? should you know trigonometric functions? should you know be able to recognize a graph of this type? and doing that very well is hard because there are certain dependencies, if you teach it in the wrong order, if you try and teach too much at once, too much too early, which the u.s. was doing a lot of that, it can be very, very poor. and if you compare we have 50 of these things and there was quite a bit of divergence. some states had trigonometry, some didn't. some had pie charts, some didn't. so, ironically, what had happened was the textbook

companies had gone in and told the committees that make these things up that they should add things over time. and so we had math textbooks over double the size of any of the asian countries. and we had the ordering in almost every one of our 50 which is strange. you think if you had 50, one of them would randomly be really, really well ordered. some were more ambitious than others. so, for example, being high, that is, having the twelfth grade expectation be high, there were a few like massachusetts that were quite good in that respect. and so when kids from massachusetts take international tests or the sat, anything, they do better, better than the rest of the country. and so often, when you see those country rankings, they'll take massachusetts and show you where it would be if it was a separate country. and it's way past the u.s., that now is virtually at the bottom of any of the well-off countries, with the asian

countries totally dominating the top six slots now. finland had a brief time where they were up high, and now they're not even the european leader anymore. so a bunch of governors said, hey, you know, why are we buying these expensive textbooks? why are they getting so thick? you know, are standards high enough or quality enough? and i think it was the national governors association that said we ought to get together on this. a bunch of teachers met with a bunch of experts, and so in reading and writing and math, these knowledge levels were written down. and at some point 46 states had adopted that curriculum, a variety of competitive curriculum, now that small companies can get into it because it's not just doing a book for florida, and so the sort of barrier to entry that was created by the large firms there goes away.

the idea that you those committees rig it so you can't use the old textbooks, you know, that idea will go away because in math, this can have real durability. changing your math standards is not like some new form of math that's being invented. and there has been in a sense a national expectation. when you take the sat test, it has trigonometry on it, so if you're in a state that doesn't have that, you're going to get a low score. and they use a certain notation in the way they do math and certain states were different than that, so you're screwed. if you move from state to state -- >> in the vernacular. >> you experience discontinuity because of this. and it's made it very hard to compare things. and this is an era where we have things like khan academy that are trying to be a national resource and yet they you sit down, it will tell you, are you up to the sixth grade

level? are you up to the ninth grade level? are you ready to graduate from high school? and so this common core was put together. if somebody and states will decide this thing. nobody is suggesting that the federal government will, even in this area, which is not curriculum, dictate these things. states can opt in. they can opt out. as they do that, they should look at this status quo, which is poor. they should look and find something that's high achievement, that's got quality. and if they can find something that's that, if they have two they're comparing, they ought to probably pick something in common, because to some degree, this is an area where if you do have commonality it's like an electrical plug you get more free market competition. scale is good for free market competition. individual state regulatory capture is not good for competition.

and so this thing, in terms of driving innovation, you'd think that sort of pro- capitalistic market-driven people would be in favor of it, but, you know, somehow, it's gotten to be controversial. and, you know, states will decide. whatever they want to decide is fine. but, at the end of the day, it does affect the quality of your teaching, does affect when your kids go to take what are national-level tests, whether they are going to do well or not do well. >> speaking of competition, let's go to competition outside of the united states and the extent to which it helps people who are poor. and i want to turn to paul wolfowitz now. >> thanks very much for coming. it's terrific to have you here. i have a quick comment and then the question. the question is about trade. but the comment is about this issue of waste in foreign aid. the amazing work that you're

doing in the foundation, that the u.s. government is doing with pepfar, other things demonstrate that there are lots of ways to spend foreign aid that are the opposite of wasteful, they're accountable, they're measurable, they make a huge difference in people's lives. but i would submit that there is a lot of waste. and i'll give you just an example. if you give $100 million to a government that is so tyrannical that you really have no idea what's happened to that money, by your numbers, that's $100 million that could have saved 50,000 lives. and i think you'll have a stronger case for foreign aid if you go after the things that are wasteful as well as the things that are good. but here's my question. in talking about foreign aid, you correctly say, we spend less than 1%. we could afford to spend more. in fact, we spend more in agricultural subsidies. well, the agricultural subsidies aren't just a waste of money. they are making it harder for poor countries to export the very products that their competitive natural advantages would lead them to, which is in agriculture.

i wonder what you think about our agricultural subsidy systems and what its impact is on the poor countries that you visit in terms of their trade opportunities. >> well, we certainly distorted the market in agriculture prices. there are some cases where it's fairly extreme, like sugar. and there are some cases where it's more modest, like the big the big cereal crops. in africa there's a few things like cotton, horticulture, where you can make a clear case that the sort of dumping out of the rich countries because of strange subsidies actually is affecting their income. they're not yet as competitive in the big-value crops as they need to be. so we have a lot of work to do in africa. africa right now can barely feed itself. so the huge rise in productivity it's called the green revolution, that was more than a factor of two increase in asian cereal crops

that never happened in africa because it has a unique ecosystem, so even maize and wheat in africa are very low productivity. that's very fixable, both with conventional breeding and with gmo-type breeding to give much, much better seeds. and so the effect of trade barriers once we fix african agriculture, the impact of trade barriers, then the numbers will get very, very large. and, you know, it's just too bad that both europe and the u.s. sort of and japan compete to distort those markets. and, you know, it doesn't look like there's going to be any change in that. now it's called mispriced insurance instead of price supports, but it's still money. and, as you say, it reduces some level of efficiency in terms of who should be providing which products. >> one of the most striking statistics that i've seen as an

economist comes from a catalan economist, his name is xavier sala-i-martin at columbia university, who notes that since you and i were kids, the percentage of the world's population living on $1 a day or less has declined by 80%. it's just amazing. this question is related to that and it comes from our economist michael strain, who says that the spread of free enterprise has dramatically reduced the share of the world living on $1 a day or less, this standard that we've had since we were kids. is that the right standard? you're looking at 2035 to wipe out at least average poverty across all but maybe 10 countries in the world. what should the standard be? what kind of measurements are you using, and how should we be thinking about it to update those measures? >> well, any single measure isn't going to capture what needs to go on. the extreme poverty line now s $1.25 a day, and the poverty line is $2 a day. and you can certainly argue that they should be a bit higher than that.

also the way that gdp is measured in poor countries is extremely random not random. it's inaccurate. the errors bars are gigantic. there's a book by jerven called "poor numbers" that just talks about you know, for example, for a subsistence farmer, what are you putting into that gdp number, you don't have some market transaction. and there's a book by charles kenny, the getting better book, that talks about the fact that gdp misses a lot of things. if something comes in, like a measles vaccine or increased literacy, that improvement in human condition doesn't necessarily show up in gdp at all. in fact, there were radical advances in health and literacy in africa during a 30-year period that its gdp per person moved not at all, zero. and so you want to put into a human development index, you want to put in gdp, you want to put in some health, maybe

under-five mortality, maternal mortality. you'd want to put in something about education, something about freedom. and people like mo ibrahim have a variety of, in his case, mostly governance measures that i think are throwing light on these things. there's still some work to be done to capture this. gdp, if you have to pick one single thing, i'd still say it is it is the measure. even within rich countries, you do have relative poverty. and so the idea of do you worry about getting enough to eat, if you have a medical condition, can you expect to get treatment, there are things like that that even if the economics kind of look ok, you know, then you shouldn't be satisfied. and so the field of economists giving themselves a hard time about how weak these measures are, i think over the next

decade, there can be a real contribution to how we look at well-being beyond gdp. >> let's talk about poverty right here in the united states a little bit more. and i want to turn to my colleague, robert doar. >> thank you very much for coming, and thank you for all that you do for people around the world. poverty in the united states is often related to employment and economic growth. and i wanted to test your optimism a little bit and ask whether you thought we could get back to a 4%annual gdp growth in the united states, and if so, how? what would be the key things to make that happen? >> yeah. you know, i'm not a fan of the way time-series adjustment for comparing gdp between various

points in time is done. i think it meaningfully understates the rate of progress. if you take, say, how you get news, your ability to get news, as far as the gdp is concerned, the news business is down. it's employing less people. it's gathering less money. and are you impoverished in terms of your ability to search and read articles today versus, say, 30 years ago? probably not. you know, buying encyclopedias, you know, i bought it my parents bought a world book. i read it. you know, i had to learn the world alphabetically. very weird way to learn things. you know, now, every kid who has internet access has wikipedia. and so whether it's in the area of technology or medicine or various things, you're there's a lot of a qualitative nature that's not captured in those things. so whether the gross number goes up or not, the rate of improvement in livelihood, you know, i think will be very rapid in the future.

i do think tax structures will have to move away from taxing payroll because society has a desire to have employment. of all the inputs, you know, wood, coal plastic, cement, there's one that plays a special purpose, which is labor. and the fact that we've been able to tax labor as opposed to capital or consumption, you know, just shows that demand for labor was good relative to other things. well, technology in general will make capital more attractive than labor over time. software substitution, you know, whether it's for drivers or waiters or nurses or even, you know, whatever it is you do >> we wonder that too sometimes. >> it's progressing. and that's going to force us to rethink how these tax structures work in order to maximize employment, you know, given that, you know, capitalism in

general, over time, will create more inequality and technology, over time, will reduce demand for jobs particularly at the lower end of the skill set. and so, you know, we have to adjust, and these things are coming fast. twenty years from now, labor demand for lots of skill sets will be substantially lower, and i don't think people have that in their mental model. >> so aligning the incentives in our economy to move away from taxing labor, moving to something like a progressive consumption tax is just a smart thing to do to stimulate to have an economy that's better aligned? >> well, i think economists would have said that a progressive consumption tax is a better construct, you know, at any point in history. what i'm saying is that it's even more important as we go forward because it the distortion i want to distort in the favor of labor.

and so not only will we not tax labor, things like the earned income tax credit, you know, when people say we should raise the minimum wage, i think, boy, you know, i know some economists disagree. but i think, boy, i worry about what that does to job creation. the idea that through the income tax credit you would end up with a certain minimum wage that you'd receive, that i understand better than potentially damping demand in the part of the labor spectrum that i'm most worried about. >> so something like a guaranteed minimum income for people who are working full time through an expansion on the eitc or a wage subsidy seems like the right way to go. >> yeah, one of my favorite aei papers i didn't get time to look it up

last night >> he's going to give us his top 10 list here. >> no, it's the looking at consumption instead of the income. because income's complicated. if i'm a student who's, you know, making no income, but i'm investing in my capabilities ok, my income looks funny. if i'm a trader who had a bad year, my income looks funny. consumption really is what you care about. so when people say, hey, >> you should feel guilty because you have so much money, well, it's not that i have money. it's my consumption i should you know, if i'm supposed to feel guilty, it's my consumption. the part that is going to philanthropy really is in a sense in the pocket of the poorest, assuming that we're smart about getting it to benefit them. and the idea that consumption should be progressively taxed, i think that makes a lot of sense. people have tried to do that by doing particular taxes on luxury goods, some things like that. that's very not very effective. it's sort of picking favorites type things. but yes, consumption should be progressively taxed. and we should understand the consumption. inequality of consumption is more an injustice than a number

in a book is. >> so inequality of consumption is the real inequality we should be worried about. i suppose you'd also say that inequality of opportunity is that which is the greatest affront to dignity. i think i'm sort of paraphrasing >> yeah, no, i agree with that. >> is that fair to say? >> yeah, absolutely. both measures, we should understand inequality of opportunity and inequality of consumption way better than we do today. >> right. we've been doing a lot we've had a lot of interactions with dignitaries from india. we just had the dalai lama here a couple of weeks ago. and we're going to have sri sri ravi shankar, who is a very prominent guru, who has many, many millions of followers here. and we're talking about indian issues, in particular, of late. sadanand dhume is our scholar in indian studies. and he has a question about that country. >> thank you very much. i have a broad question about india. when you look at your engagement

with the country, what do you think it's done well, and where do you think it needs to do the most work? >> well, india has a lot of very socialistic policies having to do with labor and land and the fact that it has not risen as a manufacturing power is an indictment of its government policies. that is, as china's incomes went up, the place that the world should have moved to next, as the manufacturing hub of the world absolutely should be india. and that's only happening to a very, very tiny extent. and it has to do with, you know, regulatory complexities, infrastructure quality. now, you know, i'm optimistic about india. we've put more into india than any country in the world. india benefits from a funny form of competition, which is competition between the states. and so, you know, when one state

really gets its act together, the other states tend to feel jealous and they, you know, are kind of looking at what policies led to that. the states in the north that we're particularly focused on, bihar, uttar pradesh should lead in every human development number, as well as income. but the improvements and we have a big partnership with nitish kumar, who's chief minister in bihar. the new chief minister in uttar pradesh decided that these health things that we care about he'd get very involved with. and so we're seeing a very fast rate of improvement there. vaccination coverage. we got polio. the last polio case there was three years ago, which is an amazing triumph. we've taken the polio quality audit group and we've turned it into a primary health care audit group that's looking at where do workers not show up? where does supply chain not work? why don't people go? india's health is very complicated because they have a lot of these a private sector that's very low quality.

and the government hasn't figured out how to get the private sector to be high quality. and yet, they haven't built the capacity in the public sector. but you know, things time is on our side in india. it's just frustrating, you know, they haven't adopted a few new vaccines. that between there's two new vaccines that will save over 400,000 lives per year in just india alone. and they're being quite slow on that issue. so india's great. and in 15 years, you know, we'll probably be out of india because its budget will get bigger and it'll allocate more of it to health. >> why did the -- what result the delays and actually the permitting and what owes to that? i suppose the virus has been unionized there. >> the suspicion of the bureaucrats really like the status quo. the way their career system works, you're much better off

not to change things. and so getting somebody to say, yes, we'd like to spend more money on a new vaccine, knowing that there's a crowd that's going to come in and attack that. there's a little bit of conservatism. and there's an election coming up, hopefully you know if you get close to an election, you get particular paralysis in the bureaucracy. post the election, there's a lot of optimism that things will, both in terms of deregulation and taking on new health initiatives, that things will be even more aggressive. >> your work all over the world is in so many facets and so many different areas. and i asked you to survey the sample of things that you've done to talk about the things you were proudest of, the greatest successes, what you've learned from that. i suppose i should ask you also what was, you think, in your view, your greatest failure and what you learned from that? >> well, we fail all the time

because we back scientific approaches for creating vaccines and drugs that fail. we did a thing in education, which was changing the high school size to be more like 400 than 1,500. that actually where we created a community, where the adults and all the kids, they had an expectation of what the kids were doing. that actually had good results. it raised attendance. it lowered violence. it actually raised completion rate about 15%. what it didn't do on any meaningful level was raise the educational level of the kids who graduated. and so we called it college readiness. but we had a view of what sort of the reading, writing, math skills you'd have on graduation. it hardly moved that at all. and so when our goal was to get more kids to have the income uplift that a four- year degree provides you, it didn't look

like we were we weren't going to get to what we wanted to at all. and so we step back and say no. we have to get involved with helping teachers be more effective. we've got to learn about why the teachers in this country are not being more effective. and so that was a big change of strategy. some people call it a failure. it's a failure in the sense that our high goals for four-year completion were not going to be achieved. the kids were all better off in the smaller schools, measurably better off than they had been in the gigantic high schools. >> now, the reason that that's an encouraging lesson is that you learned something and you didn't adhere dogmatically to what you wished worked, but rather what did work. are you able to take this lesson to public policymakers who tend to stay with the public policies that they wish worked, but manifestly don't? >> well, public policy

we need more people examining effective ways to achieve public policy goals. and it's unfortunate that, a little bit, the idea of making things more effective and getting rid of things, those are, you know, separate issues. so there should be a, you know, a class of people willing to say, ok, in terms of helping with deprivation in america, could we, by having less vertical programs, maybe achieve that for you know, even be neutral about for the same amount of money we spend today? and then, as a separate question, ok, you know, is that are we spending too little or too much? because the complexity of improvement is high gathering data, trying different things out, and political dialogue isn't very good at very complex things, a lot of the airtime, instead of being about relative approach, is about more or less, more or less.

you know, take health care costs. left, right, center show me your best ideas for bending the health cost curve. just getting rid of something, ok, is that going to bend the health care cost curve? what is the, you know, what is the, you know, supply-demand equation, the nature of the professional rules, the nature of the innovation pipeline and the incentives in the innovation pipeline? i think there's a dearth of ideas that are being really discussed that relate to what other than education may be the biggest, you know, government budget issue we face, which is are those health care costs going to crowd out every other government function. >> this is submitted from one of our friends by email. the gates foundation divides its attention between philanthropic

priorities here in the united states and overseas. there's a real need and there's a lot of inequality, opportunity inequality and consumption inequality, as you and i've discussed, here at home. so how and this is, i guess, a question about the execution of philanthropy how do you decide how you're going to allocate the resources between these competing needs here in the united states and overseas? >> well, melinda and i picked two things. we picked what we thought was the greatest inequity in the country that had created the conditions that allowed us to have this outside success. and that was education, both k-12 and higher ed. and then we decided what's the greatest inequity globally. and there we started. and the core work is around global health. and that's expanded a bit. now, it's got sanitation, agriculture, financial services, three or four additional things that are there to help uplift the poor. so we you know, we've got two centers of activity. and you do have to specialize. and so far education has been

our big domestic we did a few other things. we put computers on libraries. we do a fair bit of things locally in the seattle area, washington state. but the big thing has been education. >> i want to turn now to my colleague john makin. >> do i ask a question? >> if you could, put your statement in the form of a question. >> yes, i would. well, we have two things in common. we both spent a lot of time in seattle, i teaching at uw, while you were revolutionizing the world. and we also think a lot about economics. but my question really has to do with the relationship between

the gates foundation and the world bank. when i started to think about questions for you, i looked at the world bank's budget and i saw that they i believe they lay out around between $40 and $60 billion a year on a wide range of topics. so when you entered this field, did you feel did you believe you probably did but how did you think about approaching it? would you be catalytic with respect to the world bank? in other words, get them to do things that or do things yourself that they're not doing? for example, the reduction in infant mortality, which is certainly a big success story, really was not underway for a lot of the time that the world bank had substantial resources. was that something that attracted you? do you think that you can be more flexible than the world bank in terms of moving from one priority to another? really, how do you mesh with the world bank? thanks. >> yeah, we do a lot with the world bank. i had dinner with jim kim

a long dinner last night, because we overlap a lot in health and agriculture, and even areas we don't overlap. we don't do roads, but our agricultural programs work a lot better when there's a road. you want to get the inputs in and the outputs out. a road is a very clever way to do that. and you know, it's tragic. africa, both in terms of power infrastructure that we need and roads is way, way behind. and they're and africa really is bumping up on gdp levels that won't go up unless they solve those infrastructure problems. they've got to solve the health problems. they've got to solve the agriculture productivity. you know, unfortunately economic advance requires a lot of ends, a lot of things that come together, including education and governance as well. the world bank numbers, though, you can't really compare them directly to our numbers because those are loan numbers.

and so you have ibrd loans that are market rate loans. and you know, they tend you know libor they tend to be pretty competitive. but it's the ida piece and sort of the forgiveness part of that loan portfolio that is the really significant overlap with what our foundation does. and there're a number of actors out there. unicef, in the childhood space. the agency that did the most for child mortality was a guy named jim grant during the 1980s, where he convinced countries they needed to raise vaccination rates. and they were below 30%when he started. and they went up to over 70%within that decade. so he probably saved more children's lives than anyone. now, there's various inventors of vaccines. there's deng xiaoping. there's various people who did things that saved a lot of

children's lives. but he'd be certainly high on the list. there's an area we operate that world bank doesn't operate in, which is upstream research. so the invention of the malaria vaccine, world bank does not put any money into that. they don't have people who know about that. the only the other big funder of that is the national institutes of health, particularly the national institute for allergy and infectious diseases, tony fauci's part of nih. they and over 80%of the infectious disease research funding comes either from us or from them. so they are a deep collaborator there. with world bank, the thing that we're super excited about there's two things we're super excited about doing together. and it's basically a personnel system. and we're doing a report card,

like the world bank doing business report card. and we're going to do that in the agricultural space, which is really about how do you turn your agricultural sector into to make it as market driven as possible. are you taking the latest seeds? are you educating your farmers? are your pricing policy, storage policies such that your farmers are being uplifted that the productivity and incomes are going up? so we have some ambitious goals of things we want to do with the bank. we actually a lot of funding we do is through the bank. it shows up because we create like our polio account gets graded through the bank. so they ended up facilitating things. they have a lot of iq. and jim kim has stated the goal that he wants to unlock that iq in a more technical advice way, not just connected to the loans. now, that's an ambitious goal. that goal's been stated before. so you know, now, he's trying to drive that even further. so they're a very good partner.

there's a lot of partnering involved in this, the development world. >> we're out of time. before we finish, i just want to say it's an honor to on behalf of all of my colleagues at aei to share an objective of a better world, particularly on behalf of those who can't fight for themselves and that aren't here represented today, but we are their intellectual and action representatives. what you're doing is truly important. we endorse it, and we appreciate it very much. before mr. gates leaves, i would like to ask that you all sta this gusrian anderson is the variety of services provided by health centers.

washington journal begins live at 7:00 eastern on c-span. >> joe biden talks to the national association of community health center. >> 435 years, bringing public affairs events from washington directly to you, putting you into the room of congressional hearings, briefings, and conferences. all as a public service of private industry. we are c-span, created by the cable tv industry 35 years ago and brought to you as a public service by your local cable or satellite provider. president obama additional sanctions against russia or its annexation of crimea.

the president made the announcement on the white house south lawn. we have seen an illegal referendum in crimea, and illegitimate moved by the russians to annex crimea, and ainge risk risks of escalation, including threats to ukrainian personnel in crimea and threats to southern and eastern ukraine as well. these are all choices the russian government has made. choices that have been rejected by the international community as well as the government of

ukraine. because of these choices, the united states is today moving, as we said we would, to impose additional costs on russia. we are imposing sanctions on more senior officials of the russian government. in addition, we are today sanctioning a number of other individuals with substantial resources and influence who provide material support to the russian leadership all stop as well as a bank that provides material support to these individuals. we are taking these steps as a part of our responsibility in response to a russia has done in crimea. at the same time, the world is watching with grave concern as russia has positioned its military in a way that could lead to further incursions into southern and eastern ukraine.

for this reason, we have been working closely with our european partners to develop more severe actions that could be taken if russia continues to escalate the situation. as part of that process, i signed a new executive order today that gives us the authority to impose sanctions not just on individuals, but on key sectors of the russian economy. this is not our preferred outcome. these sanctions would not only have a significant impact on the russian economy but could also be disruptive to the global economy. however, russia must know further escalation will only isolate it further from the international community. the basic principles that govern relationships between nations and around the world must be upheld in the 21st century. that includes respect for sovereignty and territorial integrity. the notion that nations do not

simply redraw borders or make decisions at the expense of their neighbors because they are larger or more powerful. one of our other top priorities continues to be providing assistance to the government of ukraine so it can stabilize its economy and meet the needs of the ukrainian people. as i travel to europe next week to meet with the g7 and other european and asian allies, i urge congress to pass legislation necessary to provide this assistance and do it right away. expressions of support are not enough. we need action. i also hope the imf moves swiftly to provide a package of support for ukrainians as they pursue reforms. in europe, i will be reinforcing a message vice president biden carried to the baltic states this week. american support for our nato allies are unwavering. we are bound together by our article five commitment to defend each other and a set of shared values so me generations sacrificed for. we have increased support for our eastern european allies and

we will strengthen nato's collective defense and step up our work with europe on economic and energy issues as well. let me close by making a final point -- diplomacy between the united states and russia continues. we have emphasized russia still has a different path available, one that the escalate the situation and one that involves russia pursuing a diplomatic solution with the government in kiev with the support of the international community. the russian people need to know in mr. putin needs to understand that the ukrainians should not have to choose between the west and russia. we want the ukrainian people to determine their own destiny and have good relations with the united states, russia, europe, with anyone they choose. that can only happen if russia also recognizes the rights of all ukrainian people to determine their future as free

individuals and as a sovereign nation. a right that all in nations all around the world understand and support. thank you very much, everybody. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> russia responded with sanctions of its own. one of those targeted, john, issued a statement saying -- ukraine and russia are on the

agenda for next week's european union summit am at which president obama plans to attend. a pencil -- a panel previewed the eu summit and looked at how europe is react into russia's annexation of crimea. this is one hour and 10 minutes. you all for joining us. i have to tell you if there's a nirvana for european analysts i've been in it the last several days to be surrounded by the people that i read, i listen to very closely to help me understand world events and they all came to williamsburg and we talked about the future of europe and we talked about the seismic events that occurred while we were discussing it. the annexation of crime crime by russia. so i can't begin to tell what you a pleasure and a delight it is i can share my nirvana with

you this morning and we can share three incredibly, thoughtful, insightful journalist who is have agreed to be with us today. we have gideon rachman, the chief foreign affairs commentator and a weekly columnist for "the financial times." we have dr. joseph joffe, the editor of german weekly "die zeit". and all having journalistic careers. when the president does a visit overseas we do a briefing for the press and tell them what is important and what to look out for. we'll do that with csis scholars tomorrow morning. i thought there could be no better opportunity to talk about the president's trip to europe next week with roger gideon and joe to get their insights what they think is important.

i'm sure when the white house was planning this trip very long ago they had no idea that this trip would be this critical, this vital. i think they started out thinking yes, this third summit of the nuclear security summit an initiative president obama started this is part of a important legacy for him. he would visit brussels perhaps to buttress criticism that he has never been to brussels as president. he made eight trips to europe but never visited the capital of europe and so hitting that as well. then he is off to rome i think for to see pope francis but now to meet the new italian prime minister, prime minister renzi. then he is off to saudi arabia for even more difficult conversation and even more difficult bilateral relationship. but now the world has changed and so this trip has changed. so i thought what we would do is talk, have a conversation with

gideon, roger and joe about, not only what's at stake for this mission. i won't call it mission impossible but it will be a tough mission for the president, as he confronts this new challenge but i'd also love your take, the three, on really what the state state of the mood in . we had, this is the first time the president will travel after the full and devastating impact of the nsa revelations particularly the impact on the german revelations. we have in two months the european parliament elections which will perhaps change europe how democratically they speak to the future of the e.u. there are lots going on. i can't think of three people who i want to listen and their thoughts. with that we'll start with gideon and go to joe and roger weill:up. we'll a clean up here and welcome you into the conversation. with that, gideon. thank you, again. >> thank you, heather, for a very kind introduction perhaps

excessively kind but i'll take it. it was very nice of you and arranging the whole forum and it is a great time to be here in washington to figure out how the americans will react to this joint challenge that we now face after the crimea incursion and indeed annexation. i think we have one small thing to thank president putin for which is that he made what would have been a rather peculiarly timed trip into a very well-timed trip. it was peculiarly timed to have a u.s.-e.u. summit now was a bit strange because as heather mentioned, the whole of the european establishment is about to change. we'll have european parliamentary elections. the commission is going to be reshuffled over the summer. so the people obama is meeting won't be there in a couple months time. i realize that is typical kind of european wind. you said for years you haven't come to brussels, you haven't come to brussels and he comes to

brussels and you're coming at wrong time. he was sort of coming at the wrong time. now suddenly this is very relevant trip. the u.s.-ue -- e.u. summit is will have a g7 summit in the margins. the g7 is back. the g8 is no more. that will be an extremely important meeting. interestingly i saw originally president putin was expected to come to the nuclear summit and finds himself otherwise engaged. leader of china will be there. and it will be almost a mini u.n. happening in the hague after the ue-e.u. summit. let's backtrack briefly and look at the u.s.-european agenda. what will obama and the leaders be talking about? it won't be just the commission. you will get the leaders of the european nations meeting. some of the old agenda, most of

it will survive although recast in this new framework of the events that just happened in russia. i think one of the big questions is, will ptip, the effort to create a transatlantic free trade area, will it get a big boost because of what's happened in crimea? and theoretically one would imagine it would because it always had a kind of geostrategic or geopolitical rationale behind it. of course people want an extra economic boost after the kind of tough types we've been through on both sides of the atlantic but there was also a sense maybe we on both sides of the atlantic kind of have to rediscover each other and create a large block, oddly not vis-a-vis russia but vis-a-vis china. you heard from both american officials and european officials if the west were to have a chance to continue to shape the global economic agenda and free trade framework, perhaps it was

no longer enough to be the e.u. and the us. if we have a economic spin-off it would have political spin-offs. that political agenda has now been ramped up by what happened in russia. however i must say i'm skeptical i think you will see increase in the rhetoric how necessary it is. i don't see it enough to over come the entrenched obstacles which you have on both sides of atlantic. will harry reid suddenly say i will give obama fast track? i doubt it. maybe americans no better. will the french farmers or other protectionist groups in europe suddenly say, because of what happened in russia we drop our objections to this treaty? i don't think so. so there might be a little boost to it but politics and political concerns are pretty entrenched. so, i doubt we're going to get a huge surge in ttip. heather referred to the nsa and how we will get over that. everyone i suspect will tiptoe a

little bit around the issue. i don't think it is particularly in the americans interest to have a long, open discussion about it. i think the europeans having registered their disapproval don't want to turn this into an operatic larly now at this time. it has done damage to america's image as well as britain because we're complicit in the whole thing and germany where this issue was taken seriously and merkel's phone being bug. i would add, i think that one of the central tasks of facing american foreign policy and obama in particular, and even more important now, in the context of what is going on with russia is to rebuild the german-u.s. relationship. which is the key relationship. and is in much worse shape than i think people realize. the bit they have seen is the rau over the nsa and the stuff in the german papers and cite

crosby her standards, statements by angela merkel. i think even before that it was in disrepair because of a rau happened over syria where the germans, failed to sign a joint letter that the americans were putting together backing obama's position, about military action on syria but that provoked a really bitter rau between the principles in the white house and chancellery which i can tell has not been mended. the fact these people don't get on with each other or speak to each other regularly is a problem and has to be fixed i think, now more than ever because what germany decides to do on sanctions will be almost as important as what the u.s. tries to do. the germans, as well as being the largest economic power are also at one end of the european debates what to do about russia. they have always for economic

and political reasons, in another context we call constructive engagement with russia. they continue to have a big economic interests. not just pure, filthy lucre and dividends for energy companies. there are actually direct implications for the living standards of germans. 30% of their energy comes from russia. our colleague wolfgang who is with us, said to me in a conversation, if they don't get russian gas, germans will freeze because, we're going into the summer but this could be a long standoff. so it is really serious issue for merkel. so how the germans react will be very important. think one of the things that obama will swiftly discover, i'm sure he knows it already but he will see in person, there is as ever no single european position on this i think the europeans realize they have to be an

effort at european unity. and the germans in particular will very much want to try to stay on the same page as the poles who are, you know, obviously neighbors. the eastern end of the e.u. but they represent the people who are most alarmed by russians and most keen on a tough response. and the at beginning of this crisis you saw the polish and german foreign ministers together with france going to kiev together and i think people were very pleased with the symbolism of that because the two end of the european debate, the poles and the germans had a common position. whether that common position can survive this now much more prescient situation is going to be very important and i think the americans potentially can play a constructive role in trying to bring the sides together and to make sure that at least we don't display our

divisions in public to the russians because that of course can only encourage them. trying to think how the europe and u.s. will react to this. we know issues they will talk about, sanctions and so on. i think nobody has any appetite for military response. there will be some discussion about how tough you are and reiterating article five. whether you start moving military assets into the baltic states. whether you begin to offer the ukrainians something rather more substantial than a meal ready to eat as potential assistance. those issues will be very important. therethere will be this questio, what kind of sanctions and how can we make sure we all suffer equally because the, the odd thing about globalization or

this economic relationship between developed with russia is that it does differentiate from the situation in the cold where where there wasn't an economic relationship. there weren't huge russian banks with stakes in the city of london and so on. that's changed and it give us leverage over them but it also gives them leverage over us. we have to work out, are we prepared, we can certainly do them some damage economically but we in doing so would damage ourselves and how do we strike that balance and how much pain are we willing to take and so on? and also, we have to try and begin to think through the russian reaction because, you know, if putin is in full great patriotic war mode one thing we know about the russians is they can take a great deal of privation when they feel national interests are at stake. i don't think we can feel overconfident that these

economic sanctions will with russia in internationalistic mode will change course but we have to try to do something. i think a lot of the reaction of the europe and u.s. together will come down to personalities of leaders as it often does. i think it is potentially significant that the two most important leaders, obama and merkel, are both intrinsically quite people. you saw that in the libyan crisis when obama and merkel were both very reluctant to go for military intervention and that was driven by cameron and sarkozy and quite hotheaded. cameron despite his lange quid air he is faced with a crisis of somebody who wants to act. i think obama is somebody who wants to think. we'll know more about it but he seems slightly paradoxical at home. he seems quite paralyzed. overseas he has been quite activist with marley and so-and-so.

he might be in the sort of cameron we've got to do something camp. i think in the end obama and merkel are more important and their instincts just as human beings and leaders have been more intrinsically cautious. so i suspect we're going to get, we're not growing to get sort of churchillian, harry truman type speeches. we'll get something that looks to be firm and aims to avoid looking ridiculously weak and so on but that's not going to be tough something. i think a bit like, i don't know, some you probably heard scowcroft and bra brzezinski last night. they said we may not get there but keep some sort of space with russians and i suspect that is the ink tinge for the moment will prevail. this is moving situation. who knows what it will look like by the time obama arrives in europe, if there have been incidents and the russians are

beginning to look greed i wily at eastern ukraine and the whole situation is different once again. a final point. about how the russians might be reading this and how everybody has based. i think it is important that we look forward and not have a who lost crimea debate. very striking for me in your visits to the city to see that the shape of the u.s. debate about, well is this all consequence of obama's weakness and he was cautious over libya. that he, on syria obviously drew a red line and erased it. and that's an interesting debate but i think that, if my guess is that actually as much as thinking about america's reaction or lack of reaction or weakness or lack of weakness, president putin will have looked at european weakness. and, european reaction. after all, remember this started as a tussle with the european union over the fate of ukraine.

and, a bit like stalin has meant to have said to the pope, how many divisions does the pope have? how many divisions does the e.u. have? the e.u. doesn't really do military power. doesn't think in those terms. thinks of itself as a soft power. has nascent military ambitions and but very, very small stuff. just more generally what putin was facing as a european union that is incredibly internally focused. obsessed with the euro crisis. that is recovering barely from a very severe recession, a couple of these countries are still, deep, deep economic trouble. european union is facing european parliamentary elections where pop you is, far right, far left could get up to the 25% of the vote. this is not a european union really up for a confrontation with russia. it may have to gird itself and get there anyway but i think if i was sitting in moscow you would think these guys are

shallow. they're internally divided. they're obsessed with their own little problems. they're not thinking strategically. they're not really going to be a problem. around for the european union to overcome that, actually fairly accurate assessment and get its act together is going to be a really big challenge but not just for next week. but for the next couple of years and more. >> gideon. thank you so much. that was terrific. joe, i'm sure you have some thoughts on the u.s.-german relationship and the role that germany will play throughout this crisis. >> thank you, heather. i don't pretend to know what obama is going to say and do in europe but i, so i want make it easier for myself and just step back and describe the new stage where both he and the europeans are going to be operating and isolate to draw the contrast is to look back at 2008 and before

the election when obama had a real triumphant gig, and i mean gig, at the victory column in berlin. he drew 200,000 people which is probably, as much as free concert of the rolling stones would have gotten. from that, he bestowed the stage then as -- bestrode as a rock star and redeemer. footnote between him and angela merkel who had told him no, you can't do a reagan, you can't speak in front of the brandenburg gate. he had to move off half a mile to the columns. it didn't start off on a good foot between them. but putin as i tell you in a moment has done worse to merkel. he is the rock star and redeemer. as you know mortal redeemers

never deliver what they promise some disappointment was about to set in very quickly and if you say go into the pew charitable trust figures you see that approval rates for obama began to decline pretty quickly after the, down by double digits in all of europe and the middle east by the way. so why, what, but there's, so how do we explain the decline? of course frustrated expectations. earthly redeemers don't redeem but europeans didn't like a few other things like the drone, drone violence which up compared to the bush administration. and of course more recently the

nsa snooping in europe. europeans conveniently forget the brits in gshq and french with doing exactly the same thing although on somewhat smaller scale but the brits being in a much better position than the nsa because they set astride eight transatlantic cables which all end up in london. so nsa snooping, disappointment in somebody who couldn't possibly deliver but people expected him and i think most importantly perhaps was a sense of, hey, this guy, this guy treats us differently than previous american presidents. previous american presidents had spats with them, big spats but never were we faced with a kind

of indifference obama seeps to exude and indifference of course became more concrete in these, like rebalancing pivot, europe. it has no longer a problem. we have to play the next power game in asia. so this was kind of a, of course, where america actually did pivot to not so much towards china the pacific and middle east and you know all the syria and iran and only to buoy with this. this was the stage until two, three weeks ago. now the new stage is really quite interesting because it, it displays two pretty interesting watersheds in the affairs of nations. and the european-american alliance.

what surprises me is two things. first, first time there was the american superpower no longer taking the lead as it had done the last 70 years. and so the action kind of fell upon others, notably, notably on germany. and that is the second surprise because that is not the game plan for germany. hasn't been for the last 50, 60 years. it was happy in its cocoon of alliance integration and not happy, indeed loathe to take a strategic role. i will take this, germans moved to center stage because they're so strong but mainly because the others at this point, are so weak. think about france. and libya -- takes lead in bombing.

you don't hear much from paris these days. the brits, who for decades faithful american lieutenants, always buy its side. what do they do? they vote in the commons not to get engaged in syria. which kind of pulled the rug under obama but i think he was happy to have the rug pulled out from under him because he was pretty leery to actually use force in syria. so, here is that first watershed, the surprise about how the old prayers shaped up and showed up in a new way. the second watershed, we've been talking about, everybody has been talking about the last two, three weeks, what you might recall the return of history. the return of the kind of history which dominated the first part of the 20th and

19th and 18th century. power politics. zero sum games. he constant readiness to use force for all the great players. and, surprise, surprise, after 70 years or so this was the first time borders were changed or by violence after the verdict of world war ii. lots of borders of course had been changed by violence. two water sheds and surprises. if this is the return ever history as i just outlined. it is turning out, what does the stage look like? look at the two key players i must mentioned. they share similarities though

they are far apart in size, economy and so on. i would submit that neither germany nor the u.s. is very comfortable with its role. why so? well the u.s., has been in reaction mode. obama's america has been in retraction mode. i don't have to go through the details except to stress one key engine of retraction which is this offrepeated phrase by the president, time for a little nation-building at home. i think he said it about a dozen times in speeches. retraction in a way, final victory of george mcgovern and his campaign slogan, come home america. plus of course the opinion figures in this country which tell us pretty much, pretty

clearly, we've had it with all this war stuff. iraq, iraq, afghanistan. enormous application of force, enormous expenditure but not much to show forfeit we look at what the middle east is doing. so suddenly the united states is being dragged back into a game in europe it thought it could safely abandon. the germans, unlike the germ mans of the 20th century are not exactly pushing on to center stage. they found out that, they didn't do very well in 20th century trying to grab germany and a -- more misery. they're not kind of rushing in like a latter day william the ii. they have been kind of dragged into it like the united states is being dragged into it. so, you know, hacks like us, we

always have to come up with a nice little phrase to amuse or, not to lose our readers so i will do this one. i will call them, i call both of them the two great garbled powers. a bit older and know the movie cannon, may remember greta garbo and her famous line, i want to be alone. and she had her huge sun grasses on. -- sun glass glass. there is a greta garbo here. i want to be aloan. expressed by mitt romney when obama chided romney, hey, man, haven't you figured out, haven't you realized the cold war is over? well the cold war is back but it is not a cold war in a classic sense but idealogical dimension is missing. now the germans totally

abandoned the strategic role in the last two generations. and they kind of saw themselves, what they call a civilian power and one that is lodged in the heart of the e.u. called the empire of peace. we don't do war. we do all kind of other stuff. we trade, we give aid, we help people build democratic institutions. we're diplomats. we're intermediaries. we don't do war. and so but you know, this is, this is kind of the situation. i mean this is the mind-set with which these two key players bestrode the stage. strategy by hard power is back. zero sum games are back. zero sum games meaning your gain is my loss.

and both of them are facing an opponent who i think is probably the most brilliant strategist on the global stage today. this is no czar nicholas i who got russia into crimean war in the 1850s and sustained enormous losses. he was impulsive and vain. this guy is not impulsive and not vain. he is very smart. he knows an opportunity when he sees one. boy it was hard to resist this opportunity. my turf. i have some historical claim to it. the west is far away. the balance of interests is on my side. local power is on my side. it's, it was perfect. notice i'm not making any moral judgments. i'm just giving you like a theater critique. somebody turned out to be a brilliant, brilliant actor.