challenge to our financial system since we've had the great depression. >> in a word, should we have repealed glass-steagall? which for those who do not know, it was the >> no. but if you step back from. and look at the broader consequences for the financial system, it was many of the sort of mon line institutions got into trouble. lehman brothers got into trouble, northern rock got into trouble and so on. >> and what about regulating the derivative? should that have been done sooner? >> you can always sec guess it. >> right. that's what i'm asking you to do. >> and i'm avoiding your question. [laughter]

>> i'm going to give you another question to avoid. let's start to where the crisis hit the fan. bear stearns has been saved. lehman brothers was the next one up. we can talk about whether they could or couldn't but in your mind, was that the right decision as when liam fell -- >> and we'll leave the discussion to go for a briefing with the spokesman, rear admiral john kirby. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2014] captioned by the national captioning institute --www.ncicap.org-- >> as you may recall and i talked about this before, a couple of weeks ago, secretary hagel led a task force to accelerate resupply efforts and the central government of iraq and baghdad. secretary hagel will announce today that seven additional ations have committed to

helping provide kurdish forces urgently needed arms and question. operations have already begun. the secretary is grateful to each of these allies for working alongside the united states military. this multinational effort which is being coordinated with iraq and baghdad will help them. and the determination of the iraqi people in the international committee to counterthis -- counter this threat is only going to grow. and with that, i'll take some questions. >> could you be more specific about munitions? what type of munitions you're talking about? >> and this is an important point. what's great about this effort is many of these partner nations have in their stocks, more than

we do the kinds of equipment that the kurdish forces use, which isn't necessarily just merican made material. so it covers the full range. >> could you confirm the reports f egypt and u.a.e. carry out airstrikes in scomplib the u.s. tried to warn them against it? >> well, we do believe there were airstrikes undertaken in recent days by the u.a.e. and egypt inside the libya and i would refer you to those governments for any further details. and as for our knowledge of it, i won't get into discussing the specifics of our diplomatic discussions. >> has the secretary have any

conversations with people in this country for u.a.e. or egypt in recent days? >> not that i'm aware of. >> admiral kirby, if the u.s. in surveillance enter a country that it is not currently at war with, for instance, syria, is that an act of war, and if not, why not? >> well, i'm not going to ypotheticals, jen. the president's been clear about this. secretary hagel's been clear about this. his is a serious threat. from a serious group of terrorists. and we need to stay mindful to do what we need to be doing to protect americans at home and abroad. and as i've been stated before. we're not going to hold

ourselves to geographic boundaries to hold our jobs. without getting into international law for which i would be ill educated to speak to you, we will do what need to do to protect americans. >> for instance, there's an operation that you have talked about which is a rescue mission that failed in july. is that considered an act of war when we send special operators into the country? >> that was a rescue attempt and we only divulge it because of leaks. it was never an intention to talk about it. no, it was not an act of war. it was a rescue attempt of americans that were being held hostage by terrorists. and i also would like to just push back on this idea that it fail. it wasn't successful in terms that we didn't get them but it was executed very well, very professionally. >> just one last question. can you characterize the relationship between the u.s. and qatar right now? because, obviously, qatar was

very instrumental in releasing the hostage yesterday, american hostage, but at the same time, there are so many reports that tar is supporting other liss islamic groups. how would you characterize the relationship between u.s. and qatar? >> we continue to have a solid military to military relationship with qatar. and we want to continue to broaden that military to military relationship and that's our focus is on the military relationship. putting that aside, obviously, we don't encourage any support by any nation for terrorist groups and extremists, particularly in that part of the world. >> are you concerned that qatar had supported terrorist groups? >> if the report is true, absolutely it's concerning.

>> did the president offer the white house or did the pentagon to conduct submissions over syria and what comes next? >> don't talk about intelligence matters, on they. i'm not going to today. we have to be prepared for all kinds of options and with respect to providing military options, we're going to ready to do that. >> intelligence is normally -- the james bond world. we're talking about airplanes now. you can't confirm that you were authorized to fly aircrafts over syria? >> i'm not going to that. >> last week, the world was consumed by bombing syria to get them to give up their chemical weapons and there was discussion about syria's air defense capabilities. last year, they were characterized as dense and sophisticated. one year later, is that still the case with syria's air defenses?

>> there has been no change in our assessment of sinner -- syrian air defense capabilities. >> is the u.s. flying any -- and before you say that you can't talk about it, i want to point out how many times we've been told how many missions are flying. >> sure. not going to talk about it, courtney. but i appreciate the warning as you asked it. but the difference here is in iraq, we were specifically asked by the government of iraq to come in and assist them. it was an overt ask. so we accommodated that request and we continue to accommodate it today. that's a different situation than the one you're hypothesizing right now. >> there's been a couple of members of congress yesterday and today who say they believe the president should ask for an authorization if he decides to order military actions in syria. what are secretary hagel's view

f that question? would congress have to change it some way if the president gives that order? >> i'm not going to speak to that. what i can tell you is we are operating inside iraq, given the authorities that we've been given by the commander-in-chief and we, not just the defense department, but the u.s. government has kept congress informed of what we're doing. the president's filed i think four war powers resolution letters in response to -- or because of what we're doing inside of iraq. there's been a concerted effort to keep congress informed. joe. >> do you know if the pentagon has enough information, clear picture about isis capabilities nside syria? >> we've been watching isis for

many months now and we recognize the increase in their capabilities, it hasn't happened overnight and it has happened regionally, that they operate pretty much freely between iraq and syria. do we have perfect information about them and their capabilities whether it's on the syrian side of the border or the iraqi side? no, we don't. now, we're gaining better knowledge of iraq because we have been flying more surveillance flags over the country since we were asked by the iraqi government to do so. and because we're in better and more frequent contact now with iraqi and kurdish forces. so there's a growing sense of knowledge there on iraqi side. but it's mixed. >> how many flights have you contacted over iraq since the beginning of -- >> i don't have -- i would have to point you to -- i would have to point you to the other

department. as chairperson dempsey said, we're up about 60 i.s.r. flights per day in iraq. but it various. -- varies. some days it's more, some days it's less. >> the head of the combat mmand said he would fly a 10 over syria. how are you possibly conduct these operations without some sort of coordination with the syrian government? >> the question presumes that i'm going to operations being conducted and i'm not going to do that. i'm not going to talk about intelligence matters here. yet.en't seen that >> back in june when things were heating up in iraq, you announced you would move the carrier group goo the persian gulf. have any forces been added either to the persian gulf or to the med?

and did you get a response from the chinese about the barrel rolling? >> i'm not aware of the naval assets. that said, john, you know the naval forces come and go routinely swapping on. i would point you to the navy for what the naval lays down. i'm in the aware if that's what you mean the bush is the on carrier in that part of the world. all i saw from in terms of a chinese reaction was public comments they made through their media that they did acknowledge these publicly that there was an intercepted stressed and in their view it was done at a completely safe distance and with professional demeanor and we obviously take deep issue with that characterization of the incident. >> there is a meeting with the chinese officials in the building here later in the week and do you know if that topic will be discussed? >> i understand that the navy is

having some discussions this week with some of their chinese counterparts. i would point you to the navy for details on that. i would also from what i gather this morning, john, this was something that was long planned, long scheduled, routine staff talks that kind of thing. and i would point you to navy. >> i want to follow-up on the u.a.e. flight over libya. last week from the joint staff, you said repeatedly that the u.s. didn't know who is responsible for those flights. what is it that you're able to learn in the last few days to say those flights were being flown by the u.a.e. and why couldn't you say so the last week? >> i couldn't say so last week because i didn't know. and now, we know. and so, now i'm able to acknowledge it. mean, i don't think it's worthwhile going through the mechanisms for which we learn information. there were more than -- last

week, it was the first such strike and it was unclear. as to who conducted it. we didn't conduct it. we since gained more information and in light of the second strike over the weekend, we were able to ascertain that we know it was conducted by u.a.e. and by egypt in some fashion. i would point you to those countries to talk about that. >> i guess i'm having a hard time that the u.s. have depurged them from conducting such flights. >> i did not know that we discouraged them from conducting these strikes. what i said is we don't talk about our diplomatic discussions. >> and is the position still that you welcome that the u.a.e. in egypt are trying to tackle their terrorism problem without u.s. help? >> we want the issues solved and libya to be done peacefully and through good governors and

politics and not politics. that's our position. >> they've started to begin -- i can get you a better seasons that -- sense of that later. i know al banea can the u.k. have started to deliver but i would have to get you more fidelity on that. this is an effort that's just tarting. we too have taken part of the delivery of equipment and personnel -- i'm sorry, equipment and material to kurdish forces, helping the iraqi government conduct that supply, using some of our aircraft. >> another question on iraq. where does the request from state department for additional security personnel stand? >> still reviewing it.

i would remind you that we get many requests for forces here in the pentagon. some come from the state department. some come from combatant commanders. there are many options. we're working through those options right now. yeah, phil. >> on u.a.e. and from the strikes in libya, why wouldn't that be seen as something that would be helpful, the united states wants its allies to step up and in support against militant threats? why wouldn't the united states be at fault in that? we -- what we don't want is more violence on top of the violence that's already existing inside libya. it's already a tenuous security environment enough as it is. and we do want to see that resolved. we do want to see a peaceful stable future for the libyan people. it's not just good for them,

it's good the that part of the world which has already got issues of security as it does. but adding more violence on it to, we don't believe is the answer. yeah. >> i have to ask it seems so obvious to iraq where we're expecting airstrikes on violence on violence. could you describe what differences the two situations? >> sure, absolutely. first of all, we're there at the request of the iraqi government. this wasn't some unilateral decision by the united states to strike targets inside iraq. number two, we are there -- we we are onstruct which conducting in a very limited targeted discreet matter to protect u.s. personnel and securities as they go after this threat inside their country on behalf of their people. and then two, to help contribute to any human nairn --

humanitarian missions. we're there at the request to the iraqi government. yeah. >> along the lines with the d.o.d. consider any role as part of an international force in libya? >> i'm not aware of any such consideration. yes. > [inaudible question] >> we've talked about this for a long time. they're well rain showersed. they get money from donations they get money from ran some. frankly, this is a group that tries to develop their own revenue streams. they grabbed ground and tried to keep it. they're selling oil on the black market. they are well funded. they get a lot of their training from across that border in syria which is one of the reasons wry

we got to take regional approach here. >> this is your last follow-up. >> yesterday, they talked about osama bin laden and what -- what i'm asking you, one, are you watching situations right now, what's happening in pakistan and do you still believe they are still training centers for -- major has trained centers? the pakistan has training centers for extremist -- >> do you believe they still have it? >> it's a complicated relationship and we want to continue to work with pakistan to deal with what we believe is a common challenge and a common threat faced by both our countries. and by afghanistan as well. and that's extremist and the safe haven in the sanctuary that they continue to join but the pakistani military has taken actions. they've conducted operations not too long. it's just this summer.

and it's important to remind everybody that they have taken casualties in that fight. so it's a common threat. we don't always see eye-to-eye on how to address it. that remains to be the case today. but what's different today is we have better vehicles for dialogues and cooperations for the pakistani military that we continue to enjoy and want to continue to improve. >> thank you. >> regarding the interception that your counterparts spokesperson did respond and while the u.s. stress that the p.a. was an international air space that the chinese government the defense ministry mentioned that the mission of that flight was to track chinese submarines and other military activities. so in order to build a better military to military relations that the u.s. needs to reduce this kind of number of flights even. and also from the pentagon's

perspective, i mean, the two leaders of the two countries are calling for a better military to military relationship. so from the pentagon's perspective, how realistic it is to build that such relationship with all this going on in south china sea and east china sea? >> it's important that we continue to work at this relationship, absolutely. that has not made easier by incidents like we saw with the patrol of our p.-8 aircraft. and under no circumstances and under no military relation is it accept to believe fly a jet fighter in a redistance airplane the way that was done.

>> and the u.s. will still, will continue to conduct those reconnaissance flights -- >> we're going to continue to fly just like we're going to sail our ships in international waters the way we've been. the united states is a pacific power. we have responsibilities. five of seven treaty alliances. we're going to meet those commitments. we want to do this in an open and transparent way. we want to share as much information as we can and we want to do that. but none of that cooperation is aided along by that kind of reckless behavior, by that articular pilot. response to his question was the strategy against isis was very iraq focused for you and others always call this a regional

problem. how do you square that? how do you address a regional problem with a very country specific response so far? >> well, connecticutly, you're right. most of the reaction has been inside iraq. but even before we started conducting airstrikes inside iraq, we had a regional approach. we took -- we were studying and trying to monitor and gain information about isis from a regional approach. it's no different than the way we try to get at the extremist threat on the border between afghanistan and pakistan to my previous answer. there's a regional threat there too. but you can't -- where we are authorized to act from a military perspective, it's inside iraq and that's what we're doing.

much has been made about the threat they pose and you don't need to look any further than the recruitment of foreign fighters and the degree-degree to which not just the united states government but many western governmentings are concernsed about the foreign fighters going over there, getting radicalized trained and coming back. >> you mentioned the foreign fighters. nbc reported that one of the american fighting with isis has been killed. do you know anything about that? >> i don't. i mean, i've seen the press report just recently but i don't have anything to add to that right now. barbara. >> what can you tell us about an encounter with the iranians with

the persian gulf? >> i don't have a whole lot on that, barbara. and i can point you to fifth fleet on that. as i understand it, a coast guard cutter, the small boat crew off a coast guard cutter in a routine maritime security operation approached an iranian do you. the iranian double. double pointed a machine gun at he at the boat crew. nobody was hurt and the dowel pulled away and in the coast guard consider it retrieved the boat crew. that's all i know. were they planning to board the

dowel? >> i don't have more details on that, barb. i know there was one shot fired. nobody hurt. both the cutter and the dowel parted ways and there wasn't more to it that that. - than that. >> recently, authority north korean -- united nation had mentioned at the news conference in the united nation north korea urged it to stop ongoing u.s. and south korea military exercises and the north korea -- [inaudible question] how -- >> our security to -- our commitments to the security of the peninsula and to our treaty allies in south korea remain steadfast. our exercise will continue and we continue to call in the

obligations. >> [inaudible question] >> i will just say that our commitment to the security and the peninsula and to our alliance with south korea's ironclad. >> you said a couple of times today that american airplanes are operating at the invitation of the government there. is there anything about that government that restricts their ability to surveil over the border of syria? >> that's -- we're there at the invitation of the iraqi government to do a couple of things to help and mainly to help iraqi security forces ombat this threat by isil. and that's whether the limit i an talk about today. we're authorized to conduct air

operations over iraq for two main purposes and i've talked about that and that's as far as i'm going to go. >> by that logic, the u.s. could never fly surveillance missions because the government would never invite them to fly surveillance. right? >> we are not coordinating with the assad regime on the operations that we're conducting operations. the >> does it still exist? the general said there is no border. >> there's a border. if you look on the map, there's a border. what we're saying is that it's porous to the degree where in all practical purposes, it doesn't exist for isil because it flows freely back and forth.

it still exists for the defense department. we recognize there's an international border between syria and iraq. what we're saying is isil treats that part of the world as if there noise border for them. i got time for one more. >> is it o.s.d.'s responsibility to calculate the cost of the iraqi airstrikes. do you have a cost yet and will we have to wait for a comptroller's request before we hear it? >> who said it's our responsibility? >> centcom. >> right now, what i tell you is funding for the operations we're conducting in iraq are being absorbed through current year allocations that central command has. the chairman and the secretary both said that we're ok in 2014. and if operations continue, we might have to take a look at 2015 to see in there is a need to request more. i don't have a estimate for you. it's being absorbed through

current allocations that central command has at their disposal and through the service because the services are really the force providers. ok. thanks, everybody. "washington g in journal," we asked president obama should seek authority in syria. you can weigh in on our facebook page. go to c-span.org/facebook. facebook.com/c-span. this morning in "washington journal" in a related story on cq today, a pair of seniors want president obama to come to congress for authorization of any airstrikes in syria targeting the group known as isis. others, not so much interested in congress getting involved.

cq's role call has the story about the two senior senators. in separate remarks over the past few days, democrat tim kaine who shares the committee subcommittee and bob coker said the use -- and before the iraq war were no longer suiten to ddress the threat. coming up live at 3:30 eastern, we will bring how the future of the european union the secretary general is here in washington. he'll be taking part. it's hosted by the wilson center starting at 3:30 eastern here on c-span. right now, more from the third annual new york ideas festival. and how digital technologies are transforming our economy.

>> we have andrew mcafee who has got one of the hottest books on the digital economy and co-author of the second machine age. i should say that at our opening dinner last night, david brooks talk riveting sobering about the subject happiness. in the back of my mind, i have the farrah williams song going on but david did away with that very quickly in looking at the contending moral and economic tracks to happyness and how we think of it. so i hope you'll get into some of that in terms of the moral versus the economic as we look at the machine age that's coming. david brooks. >> i don't know how we're going to that with computers but we'll try. >> first question is machines think. humans think. what's the difference?

>> the first thing i want to say is i think we both wish that i were thomas these days. you think you've written a book about economics and then somebody shows you what that actually means. so hopefully, we'll get a chance to talk about what he thinks versus what's going on versus what we see going on. but machines don't think. in the same way, there's a great pioneer of artificial intelligence who say airplanes done flap their wings. we see cool stuff going on in nature and we build machines that get there but they get there via a very different path. and when i talk to these uber geeks who are building watson and making cars and drive themselves, and i say are you building artificial brains and minds? they generally say i have no idea how the brain works. i'm solving an engineering problem. if we happen to back enter an artificial brain, that would be an astonishing coincidence. now, there are guys who are trying to reverse engineering of the brain and put that in

silicon if they're successful, it's going to take them a long time it's a horribly difficult problem. so the terminator or the matrix nightmare is not the one that i find myself waking up dreaming from. -- screaming from. >> i would prefer a machine to do it or at least a set of rule -based checklist, maybe. and one, i don't want that. so i'm thinking i walk into a hospital. i've got some kidney problem. i probably want the checklist. >> yeah. >> i'm going out on a date, i'm not sure i fall in love. i don't want the checklist. >> no, you do want the checklist. [laughter] >> social life at m.i.t. >> exactly. >> take dating advice from m.i.t. people. >> ok. skeptical. >> sure. and we should probably be skeptical about the dating example. but most of us have really lousy intuition about a lot of things and a very lousy -- you know this. a lousy internal compass.

a very weak ability to look at ourselves and be objective at all about what we see. i'm not saying we should turn oh you will our personal decisions to computerings. we should be using them more than we are now. again, don't outsource everything to the computer but the market share of the algorithms should go up in a lot of domains. >> some people say that intuition is unconscious pattern recognition. >> i am one of those people. to believe otherwise, you would have to believe that there's something magical or inevitable about the human sbrue tiff ability. i just don't believe that.

>> why don't you describe why humans working with machines are better at chess than machines only. why? >> and chess is such a wonderful thing to look at because it encapsulates this seesaw between human and digital intelligence. before we had chess playing computers we used to think that chess was one of the highest expressions of human intelligence. and there are great quotes from people talking about these mystical chess grand masters out there. we realize etter, this is just numbers matching. i had the chance to talk to gary and he was the world chess champion during a really interesting period. within he first became world champion in the mid to late 1980's, he played 3 simultaneous matches against the best playing

computers at that time. he won 32-0. 10 years later, i.b.m. beat him in a pretty close match. and now it's not even close. they asked the grand master a little while back how he prepared his match against a computer and he said i would ring a hammer. except when we are able to combine human ability and digital ability and play these freestyle tournament where is any kind of team comes together. i get optimistic as a person again because it turns out that the right team will beat a grandmaster or a super chess super computer or a grandmaster with a super computer. the right team is fairly geeky people who are both chess geeks and computer search and algorithm geeks and they combine what they can do versus what their machines can do. and you just beat everybody. >> and what is the grandmaster bringing to the table? >> he talks about it as the ability to generate a new idea,

which seems weird to me because the computers can just it rate from so many more ideas than we can these days. there is still something, especially in that portion of a chess game and i don't play nearly well enough to know this in any detail but when things are completely wide open, our weird computers can do a better job that can see it for real opportunity through some pretty -- i won't say magical but some pretty wild process. >> will computers ever write column? [laughter] and i should say that thinking of some of my fellow columnists. maybe they already do. >> they careerly already do. but the earnings announcements for corporate websites and for corporations are written entirely by an algorithm. now, that's just pretty run of the middle journalism. here's a body of facts. whyy a pros narrative on that. and none of us could tell the difference if the by line didn't

say narrative science instead of a person's name on it. it's always a good idea to flatter your interviewer but what you and your colleagues at the "times" do, i don't think it's anywhere close to being auto nated. - automated. the mantra is i try to figure out what technology can and can't do. the man trace never say never. >> you're around a lot of young people at m.i.t. how do you tell them to prepare for the future given they won't know exactly what the technology is? >> i don't worry too much about the kids at m.i.t. mark has a great quote about this. he says in the future, there are going to be two kinds of jobs -- the jobs that tell computers what to do and the ones are told by computer what is to do.

the m.i.t. students are overwhelmingly going-to-be -- going to be in that first cat gay. that middle is going to be hollowed out even more than it is now and that is what keeps me up at night. i want to tell you how journalist works. if i want to write a piece ripping you, i would take the sentence i don't really worry about kids at m.i.t., says m.i.t. professor. >> yeah. >> and that would be the only quote i get -- you get. >> if that is the worst thing i say, i would be really happy. i don't know how many of us shed tears for the m.i.t. students. >> they do may you. let's talk about this core issue that you hear from everybody else but not so much from your book. and that is that the technology is just going to hollow unemployment. i forget what they paid but it

was something on the order of there are 300 or 400 million per employee. that suggests you can generate a whole lot of value, or at least prospective value with very few people. >> and we do try to talk about this in the book. we talk about the two main economic consequences of this astonishing tech progress that we're seeing. the first is the good news. it's abundance and bounty and just more stuff. the second is exactly what you point out. we call it spread as our overall label for it. the fact that the what's app team is way up the top of any income or wealth distribution now. there are a lot of people at the bottom. and exactly as you say, that traditional large stable prosperous american middle class, it's pretty clear that since about 1980, that middle class has been getting hollowed out. and i don't think it's a coincidence that 1980 kind of started the p.c. era and this technology. it's an irony that as we have

put the most powerful tools for individuality in the hands of people since about 1980. what we're seeing is an increase in spread and inequality in some things that we care about. >> and is that just baked into the cake of technology? >> yes and no. i think that technology does have that super strong tendency but the reason i'm trying to hedge a little bit is i don't want that to be any kind of reason or excuse to throw up our hands and say that's just how it's going to go. good luck to everybody. that's a terrible idea for all kinds of reasons. the last sentence in our book is that technology is not destiny. we get to shape our destiny. i think there are these strong forces. but to me, that argues more strongly for policy interventions and hard thinking and all the things we as a society can do to change the equation a little bit. >> what's possibly big enough? you're talking about fundamental courses that seem on the driving

equality scale just a lot bigger than raising the minimum wage. >> yeah, and i don't know how prominently that intervention should be featured. my mantra i repeat about what the right playbook is going forward is innovation -- more innovation and more inclusiveness in our economy. the thing we have to do -- there's a great exchange. i forget who said it but the quote was gentlemen, we run out of money it's time to start thinking. i think the equivalent for this era is it's time to start innovating even medicine than we are. the only thing that's going to get us out of our problems, we can't tax our way out of it. all we can do is grow and innovate our way out of it. however, some of our current path of innovation is leaving a lot of people behind which is the other half is inclusiveness. the data is emerging. social mobility in this country is a lot lower than we think.

and it's been a lot loweren quite a long time. so this american dream, you and i probably still believe in it and we carry it around. it's been the tougher sell these days so fining ways to restore that is really important. the first winner of the nobel prize in economics had a beautiful way to frame it. he said inequality is a race between technology and education. technology extends to exacerbate it. education is the great moderating force. let's not forget that. >> let's talk about some of the technological effects within industries or within the place where is a lot of us work. so in my work area, the internet had this weird effect. used to be a reporter, you would go to press conference and wow would write 800 words, summarizing what happened. so that's basically gone. and i call those people the mill dance runners. >> yeah. >> and the people who are really good are the sprinters who are tweeting out a zillion things a day or what i hope i am is the

conceptual people. >> yep. >> and it's harder to find conceptual people. so basically, it's distance people and sprinters but no middle distance in my field. what are the other field that you see weird effects from it? >> that pattern that you identified to my eyes, another flavor of the hollowing out that we're seeing happening over and over. the profession of law is in some trouble these days. are several reasons for that. we're probably turning out more law school graduates than we need but that middle distance of law is this work of reading a whole boxful of documents and looking for patterns as part of of a discovery process or something. you hit a button and you get that right now am very good lawyer, the equivalent of a "new york times" columnist for a lawyer is somebody who can prevent the problem upfront or negotiate through a complex deal. i don't see that getting automated any time. but there are some pretty low level people and those middle distance runners are going away.

i wouldn't be surprised to see the same thing happen in medicine. i.b.m. did not build watson just to "jeopardy!." they sent watson to medical school. i am convinced if watson is not the best medical person, it will be quickly. there are a lot of doctors in the middle there. >> did you have -- read michael's book? no. >> people use skills to sort of rig the game. >> yeah. >> and most people, they hit the buy button and they assume it leads to a sale. last lot of inner steps in there. >> yeah. >> and so are there other examples of that? i mean, possibilities for corruption from people who just understand the technology better? >> yeah. there are tons of them. and entrepreneurship and innovation are unguided processes. they take us in the right direction and into a better

place but some of it clearry goes into -- if not outright criminal activities, then counterproductive ones or exploiting these holes that done make us better off. they make the innovator a lot better off. that's going to be a lot better off and on balance, technology based innovation takes us into a better place. >> and what strikes me about that is people who -- they were pushing a button to buy and then when it hit the screen, the shares or whatever they were trying buy were no longer there. what they were seeing on the screen was not reflecting the real market and they couldn't figure it out. and most say that's a mystery. but very people were obsessive. and they spent just -- they got obsessed with the problem and they behaved in market irrational ways because they have this desire to understand what was going on. >> yeah. >> and you have some of that as well, that this obsessive ability does have -- it's a unique human trait and character

that you can bring to the technological world. >> and the positive label is a geek. in my world of the tech industry, geek is a term of high, high praise. nerd is ambiguous. and they've got that character that they're just tenacious about a problem. they don't ever let it go. when they have something like an answer to it, what's amazing these days is that technology gives you leverage. if you answered it a tiny bit better. you can capture a great big huge market. so technology, it's not just a geek to play with technology, it's that technology amplifies geekry in a way that i've never seen before. >> and does it defeat social skills? what other skills are become amplified? >> i know you're a fan of st. augusta. -- st. augustine. he's got the best insight about what's going on with our screens, which are unbelievably addictive, right?

our friends are there. there are these bright jewel colored things. they're accessible in two seconds. when the people we talk about is boring, we've got this whole world right here. it's a dire temptation and i give into it way, way too often. i'm going to get the augustin quote wrong but he said look what the world does is put these temptations in frontal of us all the time. our job to use your words from last night, as more mature and more reflective for deeper people is to be aware of that and to try to become a better or more reflective person in part, by not reaching for the darn phone every five seconds. i still like the phone. i still want it. but we need to be able to have a real conversation. >> do you think it cuts our attention span? >> yeah, probably. but i have probably believing that we could design any technology better at rotting our brains than network television. [laughter] and we survive that. >> the hbo guys left.

>> no, he's cable. it's cool. but my generation survived just that passive completely non-engaging experience. at least what we're doing now is so much more interactive. i do have faith that even with these problem areas, they are going to make our brains better instead of worse. >> my last question. i tend to say that we tend to underestimate the pace of technological change and overestimate the behavioral change. we have these neat gizmos but we're still sitting in the room. will this go away? >> let's not. i come across interesting ideas and interesting people on twitter, on my blogs, in the hon-line world. there is no substitute. and as a natural into vert, i would rather not have to go to conferences and talk with other human beings. but part of the struggle that where i've learned is that's

actually where you get a spark, a new idea. something real and kind of cool in your life is not just by staring at the screen or not just doing that but getting out there into the real world. i figure it would be dire if that went away. >> we are out of time. i would say too wrap up. you're a well-disguised into vert. >> thank you very much. [applause] >> and we will go back to the new york ideas festival in just a moment. we will be live at 3:30 eastern with the discussion of the future of european union. the european parliament secretary general is here in washington. he will take part in the discussion at thed who roe wilson center in about 40 minutes from now. more now from the new york ideas festival and the chairman of morgan stanley now, discusses banking. this is about 15 minutes. >> we have 16 minutes and 37 seconds, which i guess is a version of speed dating. i never went on a speed date. i don't know about you. >> i did not. >> ok.

well, we're going to our best to try to be about five years of financial history and the whole future in this time. everybody knows who james is. we've known each other a long time. and when a great job he's done at morgan stanley. lets just go back and we'll do this quickly and get ourselves caught up. so looking back at history, there's been a lot of chatter about what could have been done differently. and i'm going all the way back to the 1990's to the time of glass-steagall being repealed to the time when a decision was made over-the-counter derivatives. the decisions not to impose tougher capital requirements on investment banks, things like that. so if you sort of take that time sweep, that 10 years or so, what should we have done differently? >> well, firstly, great to be with you again. we have known each other a long time. and for those of you who stayed for the banking portion in the dead part of the day, we

appreciate that. [laughter] i thought for a minute as giving prizes out as everybody got up to leave. i will try to adjust this in 45 seconds or so. it's very complicated. the country went through a period of tremendous prosperity. so there was a great wealth effect from that. we came to believe that owning a home was a right rather than necessarily something earned. and by the way, that right was promoted by successive governments and by the banks. the banks in turn, were complicit in frankly, adopting -a-appalling underwriting standards that allowed folks who couldn't own homes to own homes. which the economy would lead to disastrous results which it did. the banks themselves through years of prosperity leveraged

out their balance sheets so that -- they think there were some banks that were leveraged 60 times. so if they're wrong one and a half percent of the time, they wiped out their capital. now, not everybody's that good, particularly when things get really grim. so you had very overlevered banks. you had very poor underwriting standards. you had a lot of people purchasing real estate that could not afford it in the down cycle and eventually you had a down cycle. and the barriers in protecting against the down cycle is it's ok because the banks have enough capital and liquidity. but they didn't. everybody has seen the jimmy stewart film, "it's a wonderful life." the money is not there. and that understanding which creates a run on the bank and the penny is what drove the crisis. so complicated story. >> but that is a liquidity crisis, not a sovereignty crisis.

that's not the money being lent out to the house next door as we saw in it is a wonderful live versus the bank simply being bankrupt. so was it all liquidity? some of the banks arguably were bankrupt. >> what happened was you had enough bank balance sheets which were written off and then it destroyed the capital buffer. when institutions see the capital of their bank approaching zero, they say well, either this thing is going to turn around or the bank is out of business. if the bank is out of business, i want my money bank. i'm going to get it back sooner. the next bank, the customers of the next bank looks at the first bank and said that happened there. we could be next. and you get this cascading thing. it leads to a crisis of confidence, leading to i want my money back, leading towards systematic run on the financial

system and that was the single gravest challenge to our financial system that we've had sense the great depression. >> so in a word, should we have people ared glass-steagall which is the law that kept commercial bank and deposit banking away from underwriting activities? should that been repealed? yes or no? >> no. i think the -- but if you step back from it and look at the broader consequences for the financial system, it was many of e sort of mon line institutions lehman brothers got into trouble. northern rock in the u.k. got into trouble. wachovia bank which was for all intents and purposes got into trouble and so on. >> and what about regulating the derivative? should that have been done sooner? >> you can always second guess whether things could have been done sooner. >> right. that's what i'm asking you to do. [laughter] >> right. and i'm avoiding your question.

where do we go from here? >> let's move on from there. >> that was pretty swift. we just covered the whole financials in five minutes. >> no, i'm going to give you another question to avoid. let's get into the fall of 2008 when the crisis really hit the fan. lehman brothers, bear stearns has been saved as we know. lehman brothers were the next one up. a decision was made not to save it. we can talk about they could or could not but in your mind, was that the right decision? when lehman fell, the a.i.g. crisis came after. so lehman brothers, handle right, handled wrong? >> i think it was handle right. they made the call they had at the time which was this government should not be the full stop for every financial institution out there which would encourage the behavior that we were trying to avoid. and the government was making a

courageousic statement that has been second-guessed many times. i've lived through the financial crisis as you did. i was sleeping on the couch many nights and we were working continuously for six weeks. you're making hundreds of decisions every day. and for the way the government stepped in at that point, you can second guess a bunch of them but i think they did a phenomenal job. >> but they didn't save lehman. and they ended up putting more money in a.i.g. >> yeah, but unfortunately, they didn't have a bulk -- book on the show that says theories what happened. when in life, you're presented with the facts in front of you, you have to act based on your experience. they did. ultimately, look at where the economy is. look at where we are five years later. compare this to the great depression. in the regret depression started in 1929. unemployment peaked at 30%. it took 12 years for unemployment to get -- 12 years

for unemployment to get below 10%. here we are, five years after the great recession and this economy may be the strongest economy in the world right now. unemployment is down around 6%. no way we want it but improving. were they perfect? no. but you had bernanke. this was jeter -- rose rivera and i don't know. i'm australian. i don't really understand -- [laughter] the chairman of the yankees was the guy who spent his life studying the great depression. >> nonetheless, the country is not in love with bankers, except for you and me. a lot of acrimony. >> i did not know that. [laughter]

>> i am here to speak truth to power. the question is, was there a way to avoid that? with the tarp money, should have gone in on tougher terms? should the shareholders have had to give up more? why did nobody go to jail? >> can we hold that one for a minute? >> tarp was inspirational. you've of a couple of financial institutions fail and you have a bunch of other financial institutions lined up like the planes landing at newark airport. the government steps in and says, ok, credit quality,

capital, crisis of confidence. you cannot change the credit quality. the government intervenes by saying, not just the week bank gets capital, but everybody gets capital. you all did it on the same terms. with it came certain obligations. interest rates, we pay 21% effective interest on the capital. it was a good return to taxpayers. we went out to the market and raised the money.

strengthened the institution. contrast that with europe. they did not require people to take capital. nobody thinks they will have to raise it. the european banks are still working through the issues our government solved in october of 2008. why nobody went to jail? i used to be a securities lawyer in australia. as far as i know, you have to commit a crime. the fact of the matter is, and i'm not talking about the ponzi schemes, bad judgment, incompetence, negligence, greed, these might be socially unacceptable. they lead to a lot of personal embarrassment. but they are not criminal offenses. we have laws on the books for a reason. in the rare instances people have gone to jail, but taking

people to jail for messing up in their jobs, you would be locking a lot of people up. >> let's move on from that. let's talk about the present and the future. we had dodd-frank pass. one of the questions about dodd-frank, does it take to big to fail off the table? does it provide a way to wind down the feeling institution without having to do a lot of unnatural acts? is there an orderly way to deal with an institution that is insolvent? >> just to broaden it a little bit, i think of it as three pieces. up front, banks will raise liquidity and capital and cut their leverage.

if you will see your doctor, diet and exercise. put the preventative measures up front. on the backend, there is an orderly resolution authority so we do not have this lehman brothers type failure where nobody knows who owns what. thousands of pages long, but the barriers are up front. along the way, we get an annual health check up. we see our doctor the federal reserve. you pass or you don't pass. >> that is been happening with banks since the federal reserve was created. >> i do not think they were testing bank's viability in a severely adverse scenario. the parameters were much worse in 2008. i was criticized -- i thought

the risk of another financial crisis of happening in my lifetime was near zero. somebody said, obviously, he has some big illness because he will not be around for a while. [laughter] not true, by the way. in the last 200 years, there is been a financial crisis of sorts every 14 years. >> this is a pretty extraordinary one. let me move on. the question gets raised, and a bank like morgan stanley compete under these kinds of regulatory

restrictions when you have a whole bunch of other firms running around outside the system, hedge funds and private equity funds and pools of capital not subject to those restrictions? can you compete? do you stay is a bank holding company? do you go back as being an investment bank? >> the investment banking industry has disappeared. there are some boutique investment banks. large scale investment banks will not exist in the future. there will be bank regulated, and they should be. there should be one governance process. can we compete?

absolutely. we purchase a business called smith barney from citigroup. he will break $2 trillion of financial assets in a business. phenomenal business. low capital usage, great returns. every institution has to look at where they can get the returns. and to adjust their business model accordingly. >> you are moving away from the capital intensive, highly regulated investment banking businesses? >> i would not say we are moving away from it. we have added the ballast which gives us stability. the other half is the engine room. we have a business model which mixes the best of both worlds. time will prove if that is the case. >> new forms of lending going

on. no bank in the middle, peer-to-peer lending. there are some credit qualifications on both sides. the bank that provides the credit evaluation is out of the mix. is that a good thing or a bad thing? >> society started off with the barter system before. the first bank was formed -- i think it is great. innovation, the payment system, these are all innovations. if there is a market for it and they can do it efficiently and manage the credit risk, god bless them. >> is it going to end in tears? with a set of problems emerging? >> nothing is risk-free, particularly around money. again, if people understand the credit risks they are taking. what really matters is getting your capital back first.

>> spoken like a true banker. i have a lot more questions, but no more time. [applause] so james, think you so much. today at 330 live p.m. eastern at the wilson center for a discussion about the future of the european union. congress is onle break, we are spotlighting key congressional hearings. theght at 8 p.m., investigation into the irs. here is a look at some of that hearing.

>> this is a pattern of abuse, a pattern of behavior that is not giving us any confidence that this agency is being impartial. i don't believe you. this is incredible. career, andlong this is the first time anyone has said they don't believe me. >> i don't believe you. >> that's fine. we can have an agreement. have a long record -- >> being forthcoming -- >> i'm sorry -- >> let him answer the question. >> i didn't ask a question. >> yes, you did. gentleman -- i realize disrupting a hearing, sort of -- >>, on.

regular order. >> here is what being forthcoming as. if we are investigating targeting people based on their political beliefs and the e-mails in question are lost because of a hard drive crash that apparently is unrecoverable, which a lot of i.t. professionals would question, and you don't tell us about it until we ask you about it, that is not being forthcoming. >> that's not true. >> i yield back the balance of my time. >> that's not true. >> we will have that hearing in its entirety tonight at 8:00 p.m. eastern. and primetime on c-span2, book tv. authors who have written about property and how to address it. --pan3 features the history features american history tv and

the white house decision to drop the bomb on japan. while we wait for the wilson center discussion to began on the future of the european union, we will take a look at possible threats to the u.s. by isis from this morning's washington journal. >> we are back with the vice president of foreign defense studies from the heritage foundation here to talk about his response to crisis. let me show you the wall street journal this morning. guest: that would make sense. if you are going to conduct airstrikes, you have to know what you're attacking. so the question is what is the

purpose. one of the problems we had in vietnam is we treated north vietnam like no go territory. so, if you are treating isis as an enemy, they don't recognize the border between syria and iraq. if your goal is to truly push their pipelineq, extends into syria. it would make sense that the military would possibly want to do some operation in syria. part of the effort to push them out of iraq. the problem is, when you conduct bombing from the air, that has a temporary effect on things. and you follow up from the ground, it can make a

difference. so in syria, you don't really have anybody to do that that we know of, so if you are just bombing, there is a question about, jew till it eu you are actually going to get out of it that will actually be useful. only makes sense as part of an integrated military campaign to push isis out of iraq. host: let's look at the map again. you were talking about erbil. if you go after isis in syria, you have the other countries around there as well.

what happens to turkey? guest: i don't know if that is necessary. you may have to push them back across the border. the responsible strategy is to have iraqi security forces keep isis from coming back. it's an incredibly sectarian conflict. it's in a really tiny place. it's almost impossible for an outside force to go in there and clean that up. i'm not sure it's really in america's interest to have to do that. what is really key is the stability of iraq. you can do that without broadening the war into syria. host: you think you could just do airstrikes in syria? guest: it depends. if the problem of sitting here, we are not looking at intelligence or targets.

if you can hit a target and that affects your capacity to push these guys out of iraq, then yeah. but that can only be really answered by a guy in the command post. the problem is, bombing has become a metaphor for policy. we devolve into these stupid arguments about bomb or not bomb. i was in the army for 25 years. you do things on the battlefield for a purpose. you are putting lives at stake and people could get killed. nothing is done for the heck of it. you see movies where the first thing they do is a barrage on enemy lines. what is that going to accomplish? every step has a purpose. the people say bombing or not bombing is an irrelevant

question. it has to contribute a realistic objective. if the answer is yes, that makes sense. the question of should we bomb or not is not an answerable question. host: assess the threat of the islamic state. guest: we have to base our analysis of the threat on what we see in past decades from islamic extremist groups. isis is a significant concern. we have seen isis pull and adapt all terrorist practices and integrate those and improve upon

them and synchronize them, which is really troubling. part of this has been to launch attacks against the west. clearly, the potential for that is there. the second factor that is concerning as we know these foreign fighter pipelines, bringing foreign fighters into iraq is a tactic we have seen over and over again since afghanistan in the 1980's. in every case, those foreign fighters can go back and train

others and inspire others and do propaganda and conduct operations and organize operations. you look at the scale of what is happening -- already over 10,000 foreign fighters in iraq today. probably 3000 from the west. that is a number that will be hard to track. the third concern, maybe the greatest concern is -- iraq is a large state that is very key and integral to the stability and geopolitics of the middle east region. a war in iraq -- we saw this in the iraq-iranian war -- a war in iraq can become a sectarian conflict. a wider regional conflict is a

significant threat to the u.s. on those two counts, you do have plenty of history to say that we should take isis as a threat. host: "this has got a lot of folks in congress talking, but it doesn't give us license to ignore the lessons of george w. bush in iraq." going into a country without clearly laying out and having evidence of a threat. guest: isis owns one third of iraq.

i don't know what other evidence you need. we know there are thousands of foreign fighters there. these are not subject to much debate. foley is a great tragedy and it's a horrific murder. the atrocities are terrible and

horrible. where does the u.s. vital interest come from? i don't think those are up for dispute. host: this is the washington post front page. egypt and uae hit militias and libya. they went into libya with airstrikes and bond these militias. guest: i was opposed to the u.s. intervention in libya. i did not see those as threats to the national interest. i never thought we had that level of concern in libya. if you look at it from the egyptian perspective, they clearly do. tunisia is right along the fault line of countries that have an interest in not seen a transnational islamic threat spread for north africa. algeria to tunisia to morocco and egypt, that is clearly an alliance or group of states that see this as a threat to their vital interests. in their perspective, they are right. it makes absolute sense for them

to be deeply concerned about a terrorist state taking hold. host: our first phone call for james carafano. oliver in baghdad, iraq. are you a u.s. soldier there? caller: i am in baghdad currently. i called four weeks ago. back then, i said the best thing to do was confront them before they expand. now, i am in baghdad for educational purposes. to complete my studying geology. when i talk to iraqi people, there has been a 180 degree turnaround. everybody is saying we need the u.s. back. in the north and the south. it is the best guarantee against the ambitions of iran and other regional countries. now, there is a turnaround in the iraqi people opinion. my opinion of turning around, they are saying there is a dark future for them. thousands of people are applying for passports, trying to leave

the country as soon as possible because they don't know what's going to happen. people are selling their houses and cars. the situation is still critical. host: i will leave it there. guest: that raised a lot of interesting and important points. there is a future for iraq. i think isis can be defeated. i can certainly understand the concern of the iraqi people. if you look at the levels of post-conflict violence in iraq

after the invasion, they bump up a little bit because you have this regime fighting back. then you had an effort by al qaeda to reignite an insurgency. that will steadily increase until you have this -- then they taper off dramatically. by the time the u.s. forces left, the level of violence was down significantly. over time, it began to creep up.

the levels of violence today, even before isis invaded were far higher than they were six, seven years ago. so clearly, the absence of the u.s. forces there created -- -- help create a security vacuum that has allowed this to somewhat metastasize. i think with foreign support, they have the capability militarily to push isis out of iraq. the second they were going to see and we're already starting to see that is another wave of terrorism and we've already seen that in place where is isis haven't gone yet like in baghdad. already seen increased terrorist activities. we haven't seen a lot of terrorism in kurdistan. you're going to see a wave of terrorist attacks but let's say we push them out of iraq and we get through this wave of terrorist attacks, you still have the problem of an iraqi military and a political system which is shaky. and the one thing that u.s. forces did provide until they left was an element of stability in a

couple of ways. it deters iraq from messing into other people's business. but also a notion that no sectarian site could take advantage of the situation because you have a balancing thing. and what we need is a government that works for all of the iraqi people and a security force to rebuild its credibility and status. that's going to take time even if you push isis out of iraq. and i do think there is going to be a logical argument for a supporting security force in iraq to stand by with the iraqi people while the government and the iraqi security forces re-establish themselves. does that have to be u.s. troops if does it have to be all u.s. troops? i don't know. but i think what is obviously achievable is we could get back to where we were in 2008. we could get back to where we were when iraq was at peace and is of very little threat to the

foreign forces that were there to assist them. we did it once after a really horrible, horrible urgency. i don't see why that could be accomplished again. host: democratic caller from pennsylvania. caller: good morning. i find it -- it has its foundation in your building. forget that. are these insurgents -- now, the same people we paid for two

years and after we left the iraqi government was supposed to keep paying them. but maliki or whoever the prime minister was decided not to do that. host: ok. guest: that's a great question. so isis is not very insurgent in iraq. isis is a small group and they did come from outside of iraq into iraq. so are there other groups that are alive with them? yes. are there sunni groups in the side that may have sided with them? yes. and some of them former folks

that are paid by the u.s. and the government, maybe. there is the coalition that they're in. isis is the top of that holding it together. host: who's their leader? what do you make of them? guest: the core leadership of isis is al qaeda trained, al qaeda experienced and it's much in the character of what we've seen in other transnational groups that we saw in afghanistan is what we saw in syria. it's the same here.

host: so is isis more of a threat in al qaeda? the more of the same? guest: it's an unanswerable question. you get that all the time. the answer is how do you no? -- know and this gets to the problem of our counter-terrorism strategy is because we very narrowly define the definition of the threat. so we said we're going to core al qaeda and any group that is affiliated with al qaeda which is a threat directed to the united states, well, the problem with that is it doesn't take a lot of capacity to back transnational threat to the united states or western allies. it's a question of will and resources. and the problem is if you wait until people start attacking you before you take them seriously, then you can wind up in a situation where we are now, with we have a group that holds a lot of ground, that holds a third of the country. they have conventional military equipment in many ways, they constitute an actual state terrific threat. host: where are they getting their money from? guest: some are smuggling. it is a time honored tradition in the middle east. that's been a source of revenue. they seize a lot of money.

in the past, they've gotten foreign assistance. we know from certain wealthy individuals in the middle east, potentially from governments. host: we'll go to david in maine, an independent caller. hi, david. caller: good morning. first, i would like to talk about a programming that you had on sunday about race in america. and i was wondering why you didn't have open phones so everybody could call in, not block off some people. what i would like to ask james about. as we've known in the past, that our military has been hashed down by the political ambitions of some people in this country. and we can't win the wars anymore. we don't give our military the objectives to get it done. i would like to ask you if it was feasible to hire 100,000 mercenaries and keep them on staff to go out across the world that would be all volunteers and go out and exterminate these people because our military leaders are being hamstrung by our political leaders. >> you can watch the rest of this live on c-span.org. toare going to take you now the wilson center. >> it's a beautiful day here.

we are delighted to host this with our colleagues and friends here at the european parliament. delighted to welcome all of you. delighted to welcome all of you who are members of the wilson center, for those of you who are not, for those of you watching on c-span, let me just remind you that the wilson chartered by the u.s. congress, is an official wilson. to president

the center is global. your program addresses vital issues, europe's relations with the rest of the world through .cholars in residence these programmatic activities energy,pics such as productivity, and the u.s. role in global activities and him and rights. we are delighted to welcome to this presentation cost and anthony teasdale. let me just introduce both of them. they are behind this important showing immense

research on the benefits of immigration on european integration, trying to put this in very real, specific, .ractical terms turn it over to the speakers to talk about the report. bellah has been the secretary-general of the european parliament since 2009. prior to that, he held a number of positions within the european parliament. he was also head of the european

and foreign-policy department of the christian democratic union in the central office in bonn, germany. he is a native of germany and received a degree in economics from thes grants foundation of the german people and other foundations. anthony teasdale a stricter general of european ,arliamentary research service the in-house research center and think tank of the european parliament. he went to oxford university and has worked as a political ,dvisor in london and brussels

as well as general secretary of both the eu council of ministers and the european parliament where he worked for successive presidents of the parliament .earin he speaks widely on institutional issues and is the co-author of the penguin companion to the european union published in the fourth edition in september of 2012. i would like to thank jean-luc from the liaison office for working with us on this event. it is not the first of that we're doing together. it has been a wonderful partnership we have with your office. let me also add that if you are

can usecial media, you the #displayed on the wall. we would like to ask you to switch off your blackberries and iphones. last but not least a would like to thank my colleagues who have put this program and to place. with that, i would turn it over .o you any question would be welcome.

>> thank you very much. thank you also for your interest which might've first glance ,ppear to be a technical issue but i can assure you it is not. i think you all have received the study. the study can be consumed in different ways. time, this ishave page eight. you have the basic information on one page. those who would like to invest more time can of course read the whole study. it 60 pages. those of you that are absolutely , i think you can

follow this link which will lead .ou to about 600 pages and those of you who are nuts and have absolutely the chance to study about 6000 pages. this is theay that kind of consumable tip of the iceberg of work that was conducted very intensively the last two and a half years trying to find out what are the potential benefits of european integration. of course, in the european union, in the past years, we have more been discussing what are burdens of european integration. is it very costly or terribly costly. this as ae contribution to something else. i of course remember the report

from the 1980's that was the basis for the internal market. the basic argument at the time was that there might be benefits in replacing one set of regulations. the question is what was true at the time? can it be updated? can it stay informative for what ?e are doing today it is also something we are considering as impact assessment. of you familiar with the regulation might be familiar with the concept of impact

assessment but it had a very important flaw. normally, we are checking the ,mpact of proposed regulation but what we should be doing as ofl as checking the impact not proposing regulation. if you're going to do this in a balanced way, you have to look at both sides. the cost of regulation but also the cost of not regulation he -- regulating a certain area. we have learned with the financial crisis that large parts of the financial market were underrated and in other areas regulations were quite heavy.

neede insisting that you both. like in a good car, you first want to have the brakes because if you don't have brakes, it but noe quite dangerous, car is working if it doesn't have a gas pedal as well. car has a break and a gas pedal. so, what could be or what are the potential benefits of this exercise? , i think this has build antial to renewed, pragmatic consensus behind european integration.

why is this? because if it is true that there are hundreds of billions of and potentiale gains through integration, then it would be very strange to not use that potential. proven that there are enormous benefits out there, then it is much easier to establish the consensus behind .ntegration in that area the second argument is something that is maybe even more topical. i think we are currently all of us in the united states, but probably also in europe, we are looking at the potential for roles.

we are also aware of the possibilities to create growth .hrough state spending we are on the fringes of being sustainable. if you cannot create growth through state spending, you have to create growth through other possibilities. if there are possibilities to andte growth through reform integration, that should be something where people should be very interested to find about. our current estimates, and we guarantee that doe the estimates are prudent, there is the potential of growth altogether of about 1000 billion euros a year. that is not an exact double figure.

someone might say it is not 1000 billion it is only 700 billion. or 200s only 400 billion whichn, that is something cannot be neglected. toit is a kind of compass reinvigorate growth in the , a compass to grow without debt. there is a third argument i would like to make. we are now having the .ubsidiarity principle >> could you explain that? >> the subsidiarity and bowl means that you should only deal with issues at a higher level of

governance when it cannot be done at the lower level of governance. you should deal with issues on the local level than the national, then the european level. withuld only like to deal issues on the european level if that is the appropriate level and it can only achieve the full potential on the european level. how do you decide this? this approach is one possibility . because the argument is being what currently is being dealt with in 28 national systems would reduce important if weonal benefits wouldn't deal with it in 28 different jurisdictions but

together in the european union. we could argue, if the argument could be successfully made, that there is potential benefit for having one set of rules rather than 28. but the other way around is also correct. then the question is, are we still respect in the principal. the proportionality principles is one of the important principles that should guide legislation at the european union level. the fourth reason i believe such an approach can be very is that it provides, again, and understandable about why are we integrating in the european union? have the internal market.

we had the enlargement. we had these kinds of stories. thelso heard a story in last five years. the story was we would like to survive. we have been able to survive. if you don't survive at the end -- we have been able to survive, but what is the ?ositive story this is providing a number of ,ositive stories we could do like the european union, internal market, cooperative energy and things we will go into more detail on. forthe ordinary citizen whom it must be sometimes very, very difficult to understand with sois all about

many different rules projects being suggested, not only tens but hundreds in the course of legislature, to understand there are 2, 3, 5 major initiatives the european union would like to this very much increasing the readability and understandability of the whole process for everybody. of course, there are also some in-house reasons in the european parliament. all of this is based on parliamentary reports. all of this has been legitimized by members. but of course, we are not happy just in passing a report. would like to pass legislation.

one way we would like to do this is to have a study that says , what areommission the benefits? that is what we're doing with these individual reports. we are also enlisting parliament to be an equal partner in setting the agenda of the european union because it is not so easy for a parliament to develop a view which will be taken everywhere. if you develop these initiatives together, suddenly you see a whole agenda emerging for the next five years, and that is an validatedt has been by parliament itself. that is a precondition to a dialogue with member states and the european commission. we have to know what do we want and we have to define the benefits in order to be convincing, in order to be an equal partner with the member

.tates that is something that of course right now is very topical. this study in the first version was published in march and updated in july. so now you may ask is it working . the different candidates of european political parties for the post of commission president have been using candidate -- have been using the different figures presented here in the debate about the european union during the election campaign. it is also true that the

president voted by the european parliament is proposing a lot of quitety which is important to what the european parliament has liberated. so, we can see that between the different institutions, this is also providing a possibility to come to some kind of common idea of what should be the most important ideas over the next five years. that is one of the still unfulfilled promises you could in the lisbon treaty because of article 17 of the lisbon which reads the european

commission should initiate what should be done in the years to continuesthe sentence , with a view to reach inside institutional agreement. that means we have a treaty obligation between the parliament, the council, and the european commission to try to come to some kind of common understanding about the legislative agenda. we need to have a legitimate , and that istion something where this product could be very helpful. the commission will have to what it wants to do.

also, the counsel for joint is increasing for the very simple reason that at the beginning of the legislature there is very little legislative , but if we have a consensus about what should be done, we could have a much more meaningful agenda. seen whether be different institutions develop clear views about what should be the key pieces of legislation, whether this will be a prominent part of the legislative field in the years to come. it would very much increased the possibility for her to understand what the european union is about and why it is beneficial to their own life.

>> thank you for this extremely useful context for the study and its potential impact. now to put some meat on the of the outline. for the opportunity to express these thoughts to a washington audience. 1.i would like to add to the that ishe has painted, not always obvious to a u.s. audience, is the power to propose legislation in the eu system lies with the european commission. to some degree, there is a ofuggle over the right to

initiative in the system. some ways, we of practice sharing this right of initiative with other institutions and heads of government. political leaders have been instructing or in the european commission to come forward with the commission of -- with initiatives of various sorts and that can have a positive effect. the treaty also offers the opportunity to the european to come forward with legislation in certain fields. it states explicitly that it can request the commission to submit any proposal matters on which it .onsiders that the union act clearly, the commission, the

council and the parliament should and would work together. so, the european parliament has in suggestingtive ideas for future legislation, and it's important to take those as starting points for how and why this particular project was born because it was not one day when somebody said why didn't we analyze 25 different policy areas and suggest how additional gdp could be generated or whether there could be a rationalization of public .pending that has been the effect, if you like. it started in individual committees. they were individually doing work where they felt there was european action that was needed. sometimes it was the general kind.

sometimes there were specific pieces of legislation they thought should be brought forward. this had built up into what you see covering these different areas. we decided it was important to facilitate the ability of the committees to undertake this work. it was particularly designed to strengthen and support committees and support committees in their ability to do this kind of work. now, when the committee and the european arliament decides to do legislation court, it has the of a kind ofefit cost-benefit analysis that enables the committee to better understand the implications of the work it will be doing. areas likeroader security and defense policy where there is a mismatch, if

you like, between how resources are allocated and the effectiveness of getting action. let me give you a concrete example of this. ofthe european development policy. we have the european union level which is based on funding from the european union budget, and as the minister directly by the european commission. for thearrangements pooling of national moneys in the form of the european come fromt fund which 20 different streams and where the european commission is a service provider to coordinated. 28 national have development policies. muchlations vary as to how misallocation of resources follows from this. we have done our own analysis of this winch suggest that simply a b