mountain, west virginia, a picture along with this story, a small shed housing components for cold mountain. one of the residents put bleach in their system every so often. jim is in north carolina. the speaker pro tempore: the house will be in order. the chair lays before the house a communication from the speaker. the clerk: the speaker's room, washington, d.c., december 20, 2016. i hereby appoint the honorable thomas j. rooney to act as speaker pro tempore on this day. signed, paul d. ryan, speaker of the house of representatives. the speaker pro tempore: the prayer will be offered by the guest chaplain, the reverend harles shakorsky, divine mercy university of arlington, virginia. the chaplain: heavenly father, we thank you for the many

blessings you bestow on our nation and we ask you for your continued providential care. may our citizens enjoy the blings of freedom, peace -- blessings of freedom, peace, security of brotherhood. we pray for your guidance and wisdom as we seek to build a more justice and flourishing society and world. founded on solidarity, subsidiaryity and the common good. we ask you to bless this session and all the important work that it entails. help our legislators to proceed with concern for the dignity of every human person and respect for the responsibilities and obligations that come with the freedoms and the blessings that you have begin us. may their work be motivated by the quest for justice and truth. finally, we pray for our citizens who are in distress and for the protection of the

noble men and women of our military spread throughout the world. amen. the speaker pro tempore: pursuant to section 2-a of house resolution 944, the journal of the last day's proceedings is approved. the chair will lead the house in the pledge of allegiance. i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the chair lays before the house n enrolled bill. the clerk: senate 3084, an act to invest in innovation through research and development and to improve the competitiveness of the united states. the speaker pro tempore: pursuant to section 2-b of house resolution 944, the house

stands adjourned until 10:00 a.m. on friday, december 23, >> that wraps up this session in the house. on friday.omes back new members are making their way to washington for orientation meetings, and we caught up with one of them recently. >> representative-elect andy biggs representing the fifth district. you are replacing a republican who has a long history. what advice if any did he give you? representative-elect biggs: matt is a good friend. he has represented the district well for five terms.

his advice was to be myself. represent the constituents' interests and really remember where i am coming from. and i have lived there for 30 years and i am in arizona native. i know the district pretty well. matt is right there still if i need help. he will respond anytime. >> what is your background? mr. biggs: i am an attorney. i am retired. i have served the last 14 years in the arizona state legislature. the last six in the state senate. for the last four years i have been the state senate president. i guess that is the immediate background. >> what about that experience do you think will help you in this job out here in washington? mr. biggs: for one thing, i am really familiar with the legislative process. we just attended a meeting on

rules, and although the rules are somewhat different, the process remains the same, so that is helpful. the other thing is that being the author of the arizona budget for the last six years, one thing i know is how to work with people from divergent viewpoints to get something done. believe me, looking at congress and my constituency, people want to see things get done in a positive way. that does not cannot go into an isolated shell. >> what is on your agenda? mr. biggs: the most important thing for members of my district would be regulatory reform. we have got small and large businesses in my district, and they would like to expand. they are being hampered by regulations. it is a drag on my district economically, everything from epa, clean air regulations shutting down one of our power plants that impacts

our district. the other thing people talked about was budget. everybody is sensitive to the fact that we have a massive national debt. they are concerned about what the direction of the country is going to be. the third thing would be wrapped up in the idea of national security and border enforcement being on a border state. >> our viewers know there are factions within the republican party out here. the house freedom caucus is a name they know. do you plan to join that group and if so why? mr. biggs: i would be honored if they asked me to join. they have not. but if they do, i would be happy to join. matt was one of the cofounders of the freedom caucus. the other thing my legislative experience tells me is that i know where i am, i know what my

belief system is. it is good to have others that share that believe system. and in a place where there are so many people, sometimes you need to leverage that up a little bit. but at the same time, i know how to get things done and work with anybody that will help me get the stuff done that i believe is important to the nation and to my district. >> you also are a lottery winner. the clearinghouse winner with a $10 million jackpot. is that right? mr. biggs: there were two sweepstakes at the time. the one you hear about on tv with the prize patrol. and then there was another one called the american family publishers, and that had ed mcmahon and dick clark. that is the one i won. it was $10 million. no, they did not come out with balloons and a big check. they notified me by fedex. i have been very blessed. >> did that experience change you?

how does that impact you if it all in this job? mr. biggs: i will be honest with you, i don't think anybody can go through that without being impacted. it certainly impacted me and my family. but really, it did not change us too much. we still live in the same town, we have the same friends. we go to the same places of worship. the one thing i guess i would say that i know how to stay grounded when people are really looking at you. believe me, people were really looking at me for a while after we won that sweepstakes. yeah, i think i have learned how to stay grounded with the family. >> tell us about your family. mr. biggs: i have been married to cindy. we met on a blind date at a political event, and we have been married for 35 years.

we have six children. only one left at home. the other five are all out of the house doing their thing, and four of them live on the east coast doing different things. we have four grandchildren as well. >> will your wife and your remaining child join you here in washington? mr. biggs: my remaining child is a junior in high school, and she is really reticent to leave behind the friends that she has made. and she loves her school. so my wife and my daughter are going to stay there. my commitment is to get back every weekend if at all possible and when i am here, i will be working as long and as hard as i need to to get the work done. >> where would you be living here in washington? mr. biggs: one of my kids and i will probably bunk together into one of the suburbs of d.c.

>> no plans to sleep on the couch in your office? mr. biggs: no plans to do that. >> what committees would you want to work on? mr. biggs: judiciary at this point. foreign affairs is also -- i think i have an expertise in international relations and foreign affairs. i have been recruited to be on the science committee, which i think might be interesting. natural resources is hugely important to arizona. but i think my wheelhouse is really judiciary. >> in your times out here, short times out here with these orientation meetings and setting up an office, what have you been told that maybe surprised you or stays with you as you serve this new job? mr. biggs: we have been told a lot. so i am not sure how much has stayed with me because we have been getting a lot.

i think what is really important and we find it at every level, i found it in my experience at the state, is how you treat people and the relationships that you form and that you must always be honest. 100% honest in everything you do. if you do that, you will be in good stead. >> representative-elect andy biggs, we appreciate your time. mr. biggs: thank you so much. glad to be with you. >> we have more light programming coming your way. minutes, a conversation on economic growth and income inequality. the brookings institution will host in washington, live at 5:00 eastern on c-span. florida wherek at president-elect trump and his family are gathered for the holidays. up north preparations continue for the inauguration. here is a look at the work being ine were already underway

washington with bleachers and viewing stand being constructed outside the white house. [captions copyright national cable satellite corp. 2016] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]

>> the presidential inauguration of donald trump friday, january 20. c-span1 have all the coverage with all the day's ceremonies. watch c-span and c-span.org, and listen live on the free c-span radio app. >> now a look at welfare programs and other social services from "washington journal." this is about 50 minutes. host: charles murray is a scholar at the american enterprise to, also the author of this book, "in our hands: a plan to replace the welfare state." charles murray, welcome. guest: thank you, pedro. host: could you give your assessment of the current welfare program or social safety net program as far as it is operating? do you think it is an efficient

way of doing things? guest: it is crazy. we have $2 trillion a year we spent in transfers. we still have 13% poverty depending on what year you are talking about. we still have millions of elderly without the means to live with decent existence. it is crazy you can spend that much money and still have poverty be a serious problem. host: is the problem the money transfer itself or the rules attached? guest: it is a combination of things. it is not so much that we are paying thousands of bureaucrats. that is not the big deal. it is doled out and did 10 pieces. a lot of it is in kind. a lot of it gets lost in the pipeline. what we have now is a kind of patchwork of assistance that we try to target to individual needs. we do not do a good job of that. if we instead just gave people

cash resources to make their own decisions about how to deal with their needs, i think you give a way for us to get rid of what i call involuntary poverty. under a guaranteed income, will we still have people who waste their money? yeah. but are we providing a way in which they have a clear path to a decent existence? yes. host: the concept is a universal basic income. could you describe how you came across this philosophy? guest: excuse me. i came to it because i have been a longtime writer about welfare and the social welfare system. i looked back in the 1980's at the idea of let's just give people money. but when i did the numbers, we could not afford it. it was much more expensive than the existing system. 2004 or 2005, i looked at it.

we will be able to afford this by about 2011, which turned out to be true. as of 2016, the system i am proposing is a couple hundred billion dollars cheaper than the system we have now. i have been looking at it as an ideal for a long time. it is finally becoming realistic. host: some bullet points of your proposing, that every u.s. citizen would receive about $13,000 a year annually. you can earn income on top of that you are getting a guaranteed income. you could earn about $30,000 before losing anything. that is funded by the total elimination of welfare social safety net programs. guest: including corporate welfare and agricultural subsidies, anything that is a transfer some american taxpayers to other individual americans. all of that goes. host: how did you get to the

$13,000 figure? guest: a combination of things. one is affordable. i was asking myself, let me put in the caveat. of that $13,000, $3000 has to be devoted to medical care insurance from the age of 21. the health care thing is a very interesting issue. i would like to focus on the $10,000 of disposable income. if you ask how i can to $10,000 of disposable income, i don't want a basic income that allows someone to go surf on a beach for the rest of their life. i want an amount of money that is enough to put together a decent living if you cooperate with someone else, whether that is a spouse, $20,000, a friend, two friends, $30,000. or it is a comfortable income if you have a low-paying job.

if you are making $12,000 a year at a really low-paying job, that is $22,000. 22,000, you can have a very different life. if you are married, $22,000 for you, $10,000 for your spouse, that is $32,000. pedro, the persisting theme is that it is easy for people to put together a life. i think $10,000 works for that. host: we will talk more with our guests. pedro: $10,000 does not seem like a lot. how when you start paying rent and utilities -- how does that

work as far as the practical day by day aspects? guest: the current poverty line for one person living alone is $11,000 and something. that is really low. when you talk about rent, and we are in washington, d.c., you cannot do a thing with that. if you're talking about a small town in iowa, the whole question of rent is different. you better note, try doing this on your own without working on your own. you better find someone to cooperate with and join forces with or work at a low-paying job. if you do either of those two things, than we are not talking about $10,000 anymore. host: the figure changes depending -- guest: if you are making 12 grand a year at a job, that is $22,000.

host: if you follow us on twitter, you can make your thoughts known on twitter. our first call is bill from pittsburgh. go ahead. caller: good morning. mr. murray, i apologize. i had hoped to hear more about your plan before i was called. obviously, this does not work, your idea would not work if social security was not bundled into it. and frankly, i think social security as a contributory plan as a mandatory retirement savings is one of the best ideas that we have ever had, the idea that from your income you

produce your own retirement savings, and what you get in return is proportional to what you have put aside. most people -- a lot of people simply aren't able to do that in real life because whatever -- too many expenses. when everyone has to do it, and the economy adjusts. and you are able to do it. my problem with social security is it needs to be adjusted so contributions pay the benefit. that is being discussed now. i simply cannot support your

idea of not relating your later income to your own contributions from your income over your working lifetime. guest: it is an interesting question. let me get into the reasons why i think you can get rid of social security and not only that, it will be better for the elderly. let me just run through a couple of things. one is social security is not universal. there are a lot of elderly people who are desperately poor that have no income from social security. if youtop of that, look, have a couple who are of retirement age, they're getting $20,000 a year. a lot of people receiving social security, that works just fine. i paid in the absolute full amount into social security all of my life, and i get about about $33,000 a year.

that is for somebody who paid in all that much. what it would have taken for someone to pay into this payroll plan incentives to switch to something like i am proposing? if you offered people the choice of the $10,000 a year of discretionary income and social security, and said you could go into either system, you are a lot smarter if you go into the guaranteed basic income any time until the 40's. even people and their late 40's and early 50's might choose to switch to this because social security is not very good deal in terms of the return you get. the main point is this -- this plan that gets rid of social security does not leave you destitute at the age of 65. you still have the same roads of putting together a decent

existence, and unlike the current social security system, everybody is getting this money at 65. that is a good thing. host: st. petersburg, florida, welfare recipient. caller: i was listening to this. i am on my social security disability because i am disabled. before that i was receiving ssi. i do not know how the gentleman thinks anyone can live on $10,000, around $20,000 a year. i have been struggling. i have been struggling desperately for 10 years now, and it is not possible. it takes -- i have about just over $25 every month out of my check that does not go to my rent. that is it.

guest: well, you have to ask what constitutes a living income. if you want everybody above the poverty line, and you're talking not just one person but two people, you are around $20,000 range depending on the specifics of your situation. which -- i'm essentially saying we will guarantee an income at that point which puts you at the poverty line. and if you supplement that at all, all that you get to keep. i guess the question i would ask about people who are on welfare right now to think about couple of problems you face. one is if you managed to qualify for the package of welfare benefits that is available in your state and locality, and you are of working age and would like to go to work and hear of places where there are jobs, you

cannot pick up and go where the jobs are because to do that requires you to forfeit the benefits you managed to qualify for. if the job does not work out, it is too risky. the plan i am offering gives you a lot more cash than almost any men get and a lot of women get. and it also frees you up. it enables you to change your life for the better in ways that the current system prevents you from doing. host: california, independent line. mark, go ahead. caller: good morning to both of you. thank you for c-span very much. i am a disabled vietnam veteran. i have no kids. was married, am divorced now.

i have not been able to work. i do get about $1100 a month from the v.a. i was not hurt during the war, but i became disabled after that. and i have a hard time making it. eureka, california, is a place that is not in the big city where you have to pay a lot of rent. and so that is one question. the other question is, is this for everybody, any age, or once you reach 65? thank you so much to c-span.

guest: the basic ground rules are that the universal basic income begins at age 21 for all american citizens. it continues until death. that is the ground rule. i guess with regard to your situation, i should specify that the benefits you are getting as a vietnam veteran i think of in the same way as pension benefits or other earned benefits that would not be subject to the plan i have. so government pensions, whether they are for veterans or for civilian employees, that is a separate thing as our pensions azhar -- as are pensions in the private sector as well. i guess that the disability that you now get would be replaced by this plan. you would be getting the $10,000

plus your benefits as a veteran. host: if everyone gets it at 21, does it matter what income bracket they are in? how do you square that? guest: no. this will be a hard thing to get through. if you are thinking about asking people to give up social security, you also have to provide them with some incentive. what i am saying to someone who is an upper-middle-income person or expects to become one, you end up after paying back part of the grant around $30,000. let me back up and make it clear. you keep everything you make up until $30,000 of earned income, so you have a net at $40,000. from $30,000 to $60,000, there is a slow clawback. by the time you get to $60,000

of earned income, you have $6,500 but your $10,000. $6,500 left of your $10,000. that is your compensation of giving up social security. if you say to someone at 21, would you like to go to social security that we have now or would you like to have $6,500 a year that you can do what you wish with? it is a no-brainer that you take $2,500 of that and put it in an index fund for 40 years, you will do way better than the social security system. that is the reason why. bill gates gets 6500 bucks a year. host: you mentioned social security. on the pagewas done of "national review, and he writes the first flaw is the inclusion of medicare and social security. medicare spends more than $11,000 per recipient, and this

only covers half. guest: i will go back and look at the numbers i present in the book comparing what the alternatives are if you take $2,500 year from h 21, and if you are paying the maximum amount, i cannot tell you off the top of my head what social security payments are, it is way more than $2,500. if you do that and even if the stock market grows at a 4% average over 40 years, you will end up with a retirement payment if you put it into an annuity which is a multiple of your current social security payment. when we talk about how much money is spent per person on medicare and social security, you cannot think of it in terms

of here is the money you get after 65. you have to think of what could happen if you started with money being paid in at age 21. it is like a -- how can i put this briefly because i don't want to get too deep into the numbers here? why is it that life insurance companies can sell you life insurance really cheaply even though the odds that you will eventually die are 100%? the answer is because of you start shooting when you're 21 when you are unlikely to die, they can make money off of all that until you reach 65 or 70 and you do die. the same thing happens with money that is coming in from age 21 on. it can accumulate the kinds of returns which make it a much preferable choice

to the current system. host: here is a welfare recipient from new york. go ahead. caller: good morning. and morning, mr. murray, thank you for all the c-span workers behind the scenes that get everyone on. if i can make to brief remarks and then my comment, one, i live with disabilities. me and my service dog were convicted last week by a judge in new york when we called the cops to get on a bus and a bus driver refused the flag woman's authority to put me on. you're talking to a criminal, and now the state is going to have to pay because i'm not going to pay any fine. the other thing i want to bring up is that the universal declaration of human rights, which the former first lady of new york and the united states, eleanor roosevelt, championed has article 25.

i would like to make my comment after this. "everyone has the right to a standard of living adequate to the health and well-being of oneself and one's family, including food, clothing, housing, and medical care and the right to security, unemployment, disability, widower, widowhood, and the lack of livelihood in circumstances --"nd one's control host: i would love you to make your point if you can. you are still on. caller: the number one myth in america is that we don't have money because of social security being stopped at 118 -- host: we will have to leave it there. guest: i guess i don't hear a question there. host: we will move on. bellingham, washington. you're on.

caller: hi. i have a question. my question is what happens if the woman has a family of five. does that mean she gets $50,000 a year? also as a welfare worker for a number of years, there is a lot more to just getting a check. you have to deal with the social problems. if you are in such desperate need, you are willing to go to a welfare office to deal with the problems and the paperwork to get a pittance of money, then you need help. and that's what we're there for. that is why we go out and talk to people and get programs, a service to help people, and we have the programs to do it.

we have to talk to them. host: apology for that, caller, so sorry. guest: i'm really glad this caller has given me a chance to talk about what i think is the most important outcome of guaranteed income. it offers a way to resuscitate civil society in this country. and the other thing is to give people a moral agency that the current system has taken away. let me give you a couple specific illustrations of how i think that might work. if you -- let's say, are getting 833 bucks deposited electronically to a known bank account, that is how the system would work, and you do stupid things during the course of the month, drink it up, gamble it away, you got 10 days before the next deposit hits, what do you do? you can't go to the welfare agency. because it doesn't exist anymore.

you'll have to go to -- if you are a guy, go to a girlfriend, to you your parents, to your friends, the salvation army, you have to go somewhere there is a big difference with the universal basic income over the current situation. right now you can present yourself as, what can i do, you know, i don't have any money, i don't have resources? under the universal basic income, people can say to you, as they cannot now, we're not going to let you starve on the street, america has never let people starve on the streets, but it is time you get your act together. don't tell us you are helpless and can't do anything. we know you will have $833 hit your bank account in 10 days, it is time to get serious about this. imagine that kind of conversation going on millions of times a day, as people once again living in the same neighborhood, living the same family, people who are interacting with each other

directly are dealing with the problems of the people who they know, and with all due respect, sir, as a former welfare worker, i do not doubt your goodwill, your intentions, your skill. i'm saying the worst possible way for dealing with human needs is through a bureaucratic system. bureaucratic systems have to be run according to certain guidelines and rules, you can't break, it's part of being a government program and bureaucracy. human needs are not like that. some people need a pat on the back and a lot of support. some people need a kick in the pants, and the people who are most likely to know what is going to be the effective strategy are the people closest to. it is this kind of benefit of universal basic income, giving people moral agency, which i

think is its most profound benefit. host: a viewer asks, no better social program than job. dust off work boots and go get a job. guest: this is one thing that is the great advantage of universal basic income. if you are low level, say, in and out of jobs, and you have qualified for welfare, it better be off the books because in many cases, you will lose welfare benefits. you don't have that problem with universal basic income. every dime you make up until $30,000, you get to keep. that, i think, is an incentive. for people who are not in the labor force, getting a job would pay huge marginal tax rate and get in the labor force they don't have now. host: augusta, georgia, welfare recipient.

mark, thanks for waiting, you are on now. caller: thanks, pedro. mr. murray, can you hear me? guest: i can. are you a veteran by any chance? guest: i am not. caller: i joined marine corps at 18, after the vietnam war. left springfield, illinois, we had a huge caterpillar industry, which is no longer there. i served age 18 to age 30, came home and that is now a business plan, so there are no jobs there. i guess what we've watched and you're old enough to know better, we've watched jobs leave the country, and americans are left with needing help, and i don't blame my fellow americans or my fellow veterans or nonveterans for that. that is where the hedge fund money went. it made money overseas. my point to you, mr. murray, anything with attachment with american enterprise institute

says wall street, big banks, privatization and monetization, which means less for the people and more for -- even you yourself would probably get ripped off by your owners, which are your bankers. nothing personal against you, sir, but privatization, anything public is handed over to private enterprise, works good for a couple weeks and then the wheel come off. i'm bright enough to know having served in marine corps on embassy duty. i saw right before i left argentina what happened with chile with privatization of social security, you know that story, probably inside and out better than i would. the point is, the poor peasants that trump wants to build a wall for here were bright enough to figure out privatization of social security failed right in the world space, but that story is not told. host: ok, we'll let our guest respond, caller. thanks. guest: i was smiling when you talked about aei, and by the way, i appreciate the civility with which you made your point,

and i will say go to the aei website and you will find people talking about how to deal with problems of poverty that i think you will find very surprising. that in many ways, my colleagues at aei, who don't agree with me about the basic income -- and one nice thing about aei, we can disagree if we don't have a party line -- they have much more ambitious plans in terms of trying to deal with the poverty problem than i have. so i was smiling because if there is any place in the country that is i think a rich source of ambitious new ideas to deal with poverty, it is the american enterprise institute for whom some of the large donors are indeed hedge fund people and hedge fund people who care deeply about the problems we're facing. host: charles murray, our guest, author of "in our hands," a scholar at american enterprise institute.

among his works, "losing ground," and co-authored "the bell curve," in 1994. "the bell curve," what did it deal with, for those who don't know? guest: boy, it caused a firestorm. host: dealt with intelligence, right? guest: role of i.q. in reshaping social structure of the united states. we had stratification going on, you had cognitive elite out of touch with the rest of the country, and i guess, pedro, look at what happened in 22 years since the book was written and as predictions go, that wasn't bad. host: such as? give an example. it dealt with race, and what did it say about race? guest: just let the finish, subtitle, "intelligence and class structure in american life," that was the topic. and what we have seen in 2016 is

cognitive elite in place and mainstream america deeply alienated from them. when you said race, there was a chapter in the book that talked about ethnic and racial differences in cognitive test scores. and that chapter presented the facts about what the test scores are. that is not a matter of opinion. it also presented, you know, why do we have these, and it presented the case for a variety of explanations. and in the course of that, dick hernstein and i made a fatal mistake in terms of the reaction to it. we said, if we have either convinced you that either the environmental or genetic reasons for these test scores explains everything and has won out to the exclusion of the other, we have not done a good enough job of presenting one side or the other. that was enough to lead people to say that hernstein and murray

were arguing for genetic inferiority of racial minorities. that, by the way, is the sum total of anything in the book involving genes. a very strange situation. host: in 20 years, have you rethought positions, clarified these positions, particularly when it came to the race issue? guest: they had a task force for -- of the american psychological association -- that prompted by "the bell curve" that put out a statement, an official statement of the american psychological association about the issues in "the bell curve" we discussed, including race. and you can take the american psychological association task force statements about what we know about ethnic test scores

and differences in them and put it up against what we said in "the bell curve," and the differences are miniscule. essentially, no, i haven't rethought that because dick and i did not push the envelope in terms of what we were saying is the stated knowledge. host: our guest's current work, a plan to replace the welfare state, scholar at american enterprise group. charles, go ahead. caller: mr. murray, pedro, thank you for letting me speak. i have a couple of points i'd like to make. one, i read your last book, i guest: yeah. -- one, i read your last book, i think "coming -- guest: yeah. caller: i enjoyed that book. i would just, one point, i've recently been involved with college selection process and of course in my life, i've lived in very poor areas and very affluent areas. i continuing is interesting, with the college admission process, it's very interesting to me.

i think it is self-selecting in one way of thought, people are saying on college campuses, it is really one dominant thought, and i think the people who make the selections, i would love to see you explore that at some point. the second point, observation is that in the last eight years, it has become so commonplace for young women to accept the fact that they are going to have children without their fathers and it is across the board, increased, i has gone as high in the african american community as 70% of all babies that are born do not have a dad. it seems like that puts people behind the eight-ball. broader question on the welfare state. but when we have medical and housing, all these government programs designed, support people, you have people going headlong making decisions in the poverty, how do you ever correct that? guest: well, i guess that is one of the things i really like about the idea of the universal

basic income. let's take on the specific question of the young woman who has a child and the man does not take care of it. well, i'll tell you one thing, that changes drastically with the universal basic income and with the ease of d.n.a. tests to established paternity. right now, when you have a man who fathers a child and walks away from the child, it is really hard to collect child support. they just too easily disappear, say, i don't have any money. in the case of the universal basic income, all the woman has to do is go before a judge and establish paternity, which is really hard to collect child real easy to do and guess what -- the judge can issue an order, garnishing a certain amount of child support from that man's income, from his basic income, that will pay for child support, that is a really good thing in terms of the welfare of the child being helped. i will tell you a more important thing, other guys will be

watching as friends of theirs who have fathered babies find their money, a lot of money in the basic income is being taken away. you think that won't have an effect on men who think about the financial consequences of having a child? the same thing goes for women. so you are going to have young women, ages 18, 19 looking at their older sisters, looking at people in the neighborhood, women who have reached 21. some of them will be using their income to rent an apartment, apartment, to further their education, to spend it on things they want to spend. some others will be spending on diapers and baby food. they will be continueing to live at home with their moms because they need help with childcare. those lessons are also going to be useful. it is really important that once again we as much as possible require people to think in terms of the consequences of their actions, and the universal basic

income i think is benign way of doing that. it provides support. but it also highlights the ways in which the choices you make will affect how much money you have. host: joe from brandywine, maryland. good morning. caller: good morning, pedro, and good morning, mr. murray. mr. murray, you are live nothing a fantasy world, because there are people out here who are distressed and very poor and people around them are poor. they can look for assistance. i grew up with five -- four brothers and a sister, and my mother took care of all of us without a father. she was making $35 a week as a waitress, and we paid $70 a month for rent, and she took care of all of us without the welfare. there was a short period of time

that she did need the welfare, she got on welfare, and we were able to survive. when she found a job, she got off welfare, and that is what welfare is for. some people -- you have vilified everyone on welfare as a indigent, people -- guest: where have i done that? caller: you see, the thing of it is, welfare is immediate situation for people to pass from having nothing into trying to get something. host: thanks, caller. let our guest respond. guest: sir, i guess when you say some people live in neighborhoods where they are poor and everybody else is poor, let's talk about a couple of blocks where you got 100 adults. i'm talking about pumping in a million dollars into that group of people in terms of the basic guaranteed income. i'm talking about pumping actual

dollars, spendable dollars into poor neighborhoods, far in excess of what they have to deal with right now. i am making it possible for people who have hit rough patches to have something to fall back on. i am also making it possible as they try to get out of those to get out of them with a boost. so they got a low-paying job, but they've still got extra $10,000. with all due respect, sir, i think this program is intended precisely on the assumption that human beings need the dignity of being considered moral agents and provides the resources which augments their ability to make good on that. host: one of the lines in your book provides underpinnings of your proposal, and it says humans tend to act in ways that advance their own interest. guest: yes, yes.

let me add, pedro, not only do i not vilify people at the bottom or need welfare, on the contrary, i have another passage in the book where i say, you know what? if i am young, living in a poor neighborhood, i don't have a good education, all of this talk about the american dream and this talk about you ought to take advantage of your opportunities sounds pretty empty, and not only that, i would be tempted either to get some money on the gray or black market, and i would also be tempted to try to game the current system as way of asserting my dignity. in my view, what the universal basic income does is give people who have never had a reason before to believe it -- the message, your life is now in your hands.

that is the reason i titled the book "in our hands." it tries to put ability to shape our lives back in our hands. host: stockbridge, michigan. chris, good morning. caller: good morning. i am 67. i've raised my three sons alone, no help from their dad. i was disabled 10 years ago. my income is 125% below the federal poverty guideline. i just got a $3 increase in my social security, then the state and of michigan deducted $2 from my food stamps, so i have a net income raise of $1. they're giving me $35 a week for food. you can't feed one person on $35 a week. i just went grocery shopping.

i only had two bags of grocery and it cost me $80. the price of everything goes up, but when you live in poverty, if you get a nickel or a dime, they take a nickel. your concept is frightening because as a baby boomer, we were told, oh, you pay into medicare, we'll deduct it, and when you need it, it will be there. well, i paid, i worked 38 years for lawyers. they never offered me a retirement. when i raised my boys, i was concerned about staying alive. the lawyers never paid me retirement. now i'm, like i said, 125% below federal poverty guidelines. i cannot work. i only eat one meal a day. host: go ahead.

caller: it's costing $1,200 a year to pay $100 a month for medicare. it was promised when they took it out of our checks, it is going to be there for you. host: thanks, chris, we'll leave it there. guest: you're talking about your situation under the current system, ok. and part of my response is this is one reason i would like to have it done differently. let me back off from that and say, ok, suppose we had a different system. and it starts from 21. go back to the time you were 21 and suppose you had grown up. under the system, i suggest there are all sorts of ways in which you will not find yourself in a situation you are in right now. one of the greatest mistakes we make about the current system is to think that because the system

says it will do certain things, it is accomplishing it. it says we will keep people above the poverty line, and yet we end up with people way below the poverty line. i'm saying that a simple system that gives people money will not prevent people from doing stupid things. and some people will end up in -- by the way, sir, i'm not saying you have -- i'm saying some people end up living swallowed lives because they don't make choices that would have enabled them to escape it. i am saying that if you grew up in a situation where 21 on you have this resource, the odds that you reach your age with the kinds of problems you face are going to be a whole lot less than the chances you face the problems under the current system. host: let's hear from walter in massachusetts, independent line. caller: good morning, c-span.

how you doing? can you hear me? host: you're on. go ahead, walter. caller: yeah, charles, i'm listening to your idea and i think it is a great idea. it is very practical and makes a lot of sense. i'm hearing a lot of people's responses. i think that is one problem i see about change in america, a lot of people are scared. i think we get bamboozled and jerked around a lot. to hear, i don't know who you really are, to hear you coming up with this plan is like, who this guy is. a lot of americans are looking at you like, who is this guy and what is this idea? we are going to be skeptical. i'm a person that feels that something like this has to be done for our society because there is a lot of unnecessary poverty in a powerful country and it is embarrassing already. my main concern is how feasible

and how real is it. to tell you the truth, politicians are sitting here thinking about this like, uh-huh, this can't happen, you know what i'm saying? not to be a downer or whatever, i think any good idea deserves a shot. host: thank, caller. guest: i'm glad you raised that issue because practicability is a big deal, and the congress of the united states of america has not shown it is very good at having clean, large changes that put aside special interests and the rest of the track record is really bad. income is basic attracting support from all sides of the political spectrum. people on the left also are

increasingly looking at a basic income has a way to go. the stern is an advocate of universal basic income, and the reasons are essentially similar to mine. we are spending all this money and doing such a bad job of meeting human needs, this is a better, simpler way. ok, one thing is that there is support growing. the second thing is, and we have not talked about this at all, the entitlement programs we have now are on an unsustainable expenditure curve. you look out 20 years, we are not going to be able to do it. there is going to be radical change. the congress will not be of the kick this can down the road forever. future, there will be an

opportunity for politicians to say, is there another way we can it is not just that our specific plan will be enacted in every detail as we wanted it, but we pointed the weight to a much more sensible framework. columbia, missouri, hello. caller: i have two comments. what reason is there behind our governing to bring people not from this country into our country and not care of our own people first? sick, two, it makes me so i am an african american woman and i am disabled. i have a fifth grade education. i raise three kids who are educated now. i was arrested in the state

missouri, molested, taken away from my back toat 12 and given the same a lester, ok? state custody doing all this stuff, but i strive and hope for a better day every day, and i made it. with a fifthhere grade education, but i still have the drive and hope in me. i have three homes. i'm not on any welfare or anything. i raised my kids because i hope for a better day. married,re educated, love the lord. god gave me a wonderful husband who seen me for what i am. i am not a quitter.

host: we are going to have to leave it there. guest: the program i am proposing, i love the idea that a person like you has his program to support the things you have done with your life. the second thing is, if were talking about immigration and illegal immigration, this program takes care of that because -- announcer: we will break away program andcorded take you live to the brookings institution, a conversation getting started on income inequality. >> we know the broad picture against the backdrop, at least between the powers between 1990-2013, over one billion people were moved out of extreme poverty, and roughly the middle

class, especially in asia. , it benefited tremendously in this growth and the economic order that underpinned it. it has certainly raise questions about its impact on american and faceean society, and we increased evidence of the gains have not been for all. in the wake of the global financial crisis, related discontent has enabled nationalists and populist movements that have advanced in europe and the united states. , even admits to theing tension between united states and china, russian aggression in eastern europe, this threatens globalization, the greatest challenge we confront in the liberal international order. the transatlantic community is

the heart of that order. if we turn our back on the system that has kept us prosperous and safe, it will slip away. before,let that happen and history tells us how it unfolds. , andctionist measures rise the global other becomes the enemy. these de-globalizing moments are precarious and dangerous. we are on the cusp of such a moment, although not there yet. through positive dialogue like tonight, we can hopefully push back against that trend. the lesson from history that we should reflect on tonight is that those who believe should fight for it when it is under challenge, and that is the context in my mind that we are debating this and related issues tonight. we are delighted again to present philippe aghion. the leadings become

forum for debate and topics and the transatlantic relationship and how the transatlantic relationship tackles broader global issues. and hostwe pay tribute to notable economic scholars and authors. and heatherion boushey. i would also like to mention how fortunate we are an grateful i am to have our bookings cal colleague to moderate the discussion. to conclude, i would like to thank those who made this event a success and possible, the embassy of france for the collaboration and support, and recognize the ambassador with us here today and thank the french foreign ministry and the planning team. so now i will turn the floor do ato philippe aghion to

formal introduction of our two speakers. philippe: thank you. >> thank you. i am pleased to introduce professor philippe aghion. an unusual french academic who has spent most of his career on this side of the atlantic, obtaining his phd at harvard, taught at m.i.t., before becoming a professor at the university college of london, then harvard. analyzed theon design of growth policies, much of the work is summarized in the books that he co-authored.

selected a fellow of the economic society and a fellow of the commodity of arts and sciences. lecture.he 13th we always try to find a link with the great 20th century french intellectual who was everything you like it brookings, prolific scientist, author, writer, journalist, but also an engaged intellectual who forces ine french world war ii. his major works such as the opium of the intellectual forcen world war, a true written assault on the french intelligentsia, or the critical essay, the imperial , the united states 1945-1973.

he was also an associate professor himself. i want to use this opportunity to talk about this extraordinary institution founded in 1630 under king francis the first and still located in the heart of paris in the latin quarter. lectures by attend some of the world's best professors in science and humanities, professors are lectured by their peers. it teaches everything. live in paris, which i suspect is the case for most of you, i highly recommend you go online and watch some of the hundreds of podcasts on itunes in french, english, and chinese.

watch different .ndividuals the subjects that we at the on the united states and europe, part of foreign policy is highly relevant at this critical moment. let me also say we are very fortunate to have with us dr. heather boushey, the executive director and chief economist for the washington center for equitable growth. she received her phd in economics from the new school .or social research the economic policy institute and the united states congress joint economic committee. her research focuses on economic inequality and public policy, specifically employment, social

policy, and family economic well-being. her latest book, the economics conflicts was published this year. let me now welcome professor philippe aghion for his lecture. thank you. [applause] it is a great honor to be here. thank you so much for inviting me to you were generous in your introduction. so i would like to start with that sheerng quote, i have a picture, there is light coming out of him -- so in

-- ch, it is i tried to translate it. men are those who write history, but they don't know which history they are writing. particularly true of recent economic history. crisis, butinancial we did not anticipate the effects of globalization and the revolution, and not adequately prepared to deal with some negative secondary effects, increasing inequality and populism we see now. therefore, that motivates the question, how can you make growth and innovation more inclusive, and i will try also to say a few things on what can europe learn from the u.s., and

vice a versa. u.s. andwe learn, the europe, from each other's experience on how to make growth more inclusive. and to avoid or stop the rise of populism that we see now. he is a giant and i would never dare to compare myself to him. we have points in common. we are both french jews. also, i discovered, i didn't he knew karlat marx very well. shame on me. i also study karl marx a lot. in fact, the following quote, which is to say that marx is too good to be left to the marxist. due to -- is

that is what he would say. he took a lotw from volume three from dos cap the book. so what i have done for the past 30 years with my colleagues and , it is to develop a theory based on some ideas. when i started growth, the model the model was the solow with only two equations to describe everything. it is very elegant and very

helpful, but the purpose was to say without technical progress, you cannot have growth. you cannot rely on capital accumulation to grow forever. steam and cannot have our long-run growth. it was a growth model to explain to us that we cannot have long-run growth if we don't have technical progress. say you needed to find something else, but there was no such model. ,ou would hear about one person very interesting ideas, but no model and empirical analysis. so we did is take some of his a modeld try to build around those ideas and see how we can dialogue between the something about the growth process, and so we and it revolves

around three ideas. the first is that long-run growth is driven by innovation. the second idea is that innovation results from entrepreneurial activities that are motivated by the prospect of innovation rinse. rents. tiptoes you institutions and policies impact on growth. country where i have expropriated, i will not do innovation, because i know the rents from my innovation will be appropriated. i will not engage in any nation innovation. the policies and institutions shape the growth process because can impact the incentives

tell you you can talk about policies and institutions of , the institutions that are good for innovation and growth and institutions and policies that are bad for growth. creative destruction, new innovation, frontier innovation, they displace all technologies. it means that growth is a process between the old and the new. you can talk about the political economy of growth, and the thertant thing is that innovators of yesterday tend to become the entrenched incumbents of today who try to prevent new innovators from coming in, so thateed to have a system rewards innovation, but not to an extent that the innovator will use to reward to prevent innovation, and that is the kind of squaring the circle problem

with innovation. some countries are better than others at dealing with this dilemma. it is entirely based on this. there are countries that deal well with it, and there are countries that don't deal well with it. that is the framework we have used. with this framework, we can talk about enigma's of growth. let me go through some enigmas. i will go into what can europe and u.s. learn from each other on making growth more inclusive. is the growthma enigma. the middle income trap. i will take a glass of water. harvard, but it looks

mit, which is not fair. ok. , they are our friend and competitors. gdp of the per capita argentina compared to the u.s. 1870-1930, argentina was your point for percent of the u.s., so growing as fast as u.s. , but after 1930, they grow less than the u.s.. that is a country that started doing well, then they stop doing that well. of sestak the same problem. they say we grew faster through catching up, and now we don't know if we can grow through innovating so much.

they are obsessed by the middle income trap. the way to explain it with our framework is to say you have two ways to generate productivity growth. one is to catch up with the leading edge, the technological frontier, and the other is to innovate yourself. if i was like china was in the late 1970's, you want to catch up. that is the main source of growth. if you are an advanced country, you need more innovators. it turns out that what makes you catch up our different policies and those that induce innovating at the frontier. ofyou are in the business catching up, it is no big deal to have competition on the product markets. you are a big firm and they catch up.

to not have deal much labor market flexibility. you cannot have the same people working in the same firms for ever. it is no big deal to have graduate schools, because you need primary and secondary. you need to have banks and governments. to do frontier innovation, it is important to have competition. you need flexible labor market because you need to be able to hire quickly. you need to have good graduate schools. you see what i mean? so equity financing as also important, venture capital, private equity to finance various undertakings. the policies are not the same for developed nations as they are for frontier nations.

if you want to advance growth and advanced countries, you need to invest in education and have flexible labor markets. this affects the growth of higher entry rate. the blue firms are the firms of the frontier. on them, more competition induces an efficient to escape from foreign entrance. when you are a red firm, you are , scourged the sector by the leaders, and more competition from foreigners will discourage you more. to enhance innovation for those already doing very well, that is to discourage innovation from those who are behind. the more advanced the country is , the more you have blue firms compared to read firms. the more advanced a country is, the more growth it needs to have to liberalize the product market

and have more liberalized competition. it's true for labor markets in higher education. where as if you are an emerging market economy, which you want is essentially like china did. sourced their technology transfers and relocated factory production and improved practices. here is a diagram due to my friend, who show the management practice for various countries. the u.s. have very good management scores, then japan, germany, sweden, france a bit below, latin america below, central europe, then latin and south america, and then africa at the bottom. these are the scores for management practices. when you are a catching up country, you can improve through

improving your management practices. the important thing there is that how can we explain the middle income trap in a simple way? you have countries that started to grow because they were catching up, but the problem is that at some moment they should have switched to policies that favor frontier innovation, but they didn't because you have incumbent interests. in korea, you have the big firms that grew during the catching up of korea, and those we tend to say, no, we don't want more competition. in japan, you have these big conglomerates they grew very big during the catching up of japan, and they somehow prevent the transition or slow down the transition to peer innovation-based economy. you wouldmething explain the middle income, japan

is high income, but that may explain the transition from innovation-based to innovation base. that is the first kind of enigma. france is facing the same kind of problem. we were catching up and had institutions for that, but the problems for france is to have institutions that will help within innovation economy, and we are dragging our feet and making that transition. the second enigma is the debate on secular stagnation. gordon's view is to say, i cannot show it. you see the labor productivity the wave wasbut there, and then you have the second wave of the electricity

and chemistry, and there you have the wave of the information base communications, and each of , so bigves look smaller innovations are a bit like fruits on a tree. the lowest fruits are the ones you get first, then you climb higher to get the other fruits. the other fruits will not be so good. they will be better. fruits, thes like best is the first when you get, then they become worse and worse. now, it is almost finished. that it will be no more. i disagree with this view for several reasons. the ictis the idea that

revolution changed the technology to produce goods and services, but it also change the technology to produce ideas. when i work on a paper, i am on skype every day with my colleagues from australia, the u.s.. better thanlaborate before, so the technology to produce ideas has never then as good as it is today. the second thing, the barriers to innovation have never been as big as they are now. you have the whole world thanks to globalization. nts to innovation are in norma's. energies, health, we would like to see the day where maybe we can do 3-d then ig of my liver and

avoid every illness and can replace my liver with a new one. i don't know if that is the way it will happen. it will be a very big revolution on health. huge demand for such revolution, so how can we believe that this is it for innovation? that you can predict when the new, big innovation will happen, but it will happen. you cannot know exactly when it will happen. the second objection, i'm doing some work with an economist, and leading empirical growth these days. say with the policies we don't know how to measure growth. because the problem is that we know the value in dollars. and dollars.oods

you can compare dollars to dollars, but there is inflation, and the real growth, and we don't know how much is inflation and how much is real growth. you see what i mean? when we see a good that is worth that much more than another good yesterday, the goods today are worth more than others yesterday , we don't know how much was due to inflation and how much of it was real quality of adjustment. know the same good and we it is purely inflation. if it is a good improved, we know by how much it is improved, but when you have a new product replacing an old product, you don't know. you impute the growth by the new goods and you say as if it was done by the existing goods. you do that computation in the u.s., and in europe they call it

extrapolation. it is one of the other. you intentionally use the existing to infer what the new will bring to the old. we calculate that you are point ofne percentage productivity growth. they say it is 1.5 in the u.s., it is truly 2.5. i don't call that stagnation. france, we consider 0% is good, it is better than negative. but 2.5% is great news, i believe. i would not call that stagnation. there is a third argument which is in europe, we have the advantages of a drawback. are behind the frontier.

look at sweden. sweden is there. sweden was growing at 0.7% per year. you see that in the early 1990's, they improved growth by four. you see japan, their growth of slowing down. other countries have reformed, may have done big reforms in the early 1980's. canada -- that is not in europe, but i mentioned european countries. by almostoccupied 5%. reforms, byral doing that you can increase growth.

what is interesting was sweden is that they did it well preserving the social model. you have a growth but it is inclusive. free, youis totally have active market policies. policy rates are very low. that is very interesting that sweden managed to do that while not reducing social mobility and preserving access to public services. that is what i call inclusive growth. that is my second enigma. my third enigma is social mobility. it shows the evolution of the share of income on by the top 1% of earners in the u.s. what you see is in the early 1990's, it has gone up.

it has been rising sharply. agree. all why -- that is why we start disagreeing. one thing no one want to point out is this figure. this figure is showing the share of income, again, the red curve is the share of income. acceleration in the increase of the share of income of the top 1%. flow -- itrve is the has accelerated in the u.s. that is not proof of profitability. -- proof of causality.

have thus there is a professor -there is a professor in england who knows what this is all about, we worked with them, there is not causality etween this. you can show this with aggregate data. when you innovate, you are very likely to move to the top income bracket. that is no surprise. that is the thing. , he ishest men in sweden

the top guy, he did not exist 20 years ago. the --ng is is that is it is different. i have colleagues and friends innovation does not exist in the only source of top of -- you havese a hotel, you become rich, but that is not true. froms innovation different other sources of income inequality? we can show, and that is what we do in this paper, we show that innovation increases income inequality. innovation and mobility -- i told you that the new replaces the old and increases social

mobility. on u.s. cross state panel data. look year-by-year at how inequality, shares of income, other measures of inequality, measured by the total volume in that state. the first thing we showed is ,hat here i have innovations they are on different curves, you can see them there and there. have lowhave here, you innovation flow and here is high innovation flow. the red corresponds to the top income. , and that isshow

factl, you show that in the more innovative you are, the higher the fiscal income. between a connection innovativeness and shares of the top 1% income. the blue shows inequality, it shows how far you are from inequality. no expectation of innovation. it is true that innovation increases top income inequality but it does not increase inequality at last. is -- they have found the same thing on historical data. that is the thing. measuredbility, i have

by the extent to which the income of the children is not correlated with the income of the parents. i mitchell -- measure social -- we look at social mobility cross commuting zones. i show that the commuting zone thatmore innovative, and is innovation by new people, not all people. that is very interesting because -- ins what i call richest man may have been an innovator in his youth, he became very rich when

they privatized. that is the sort of top income, you become head, you become owner of a lightly regulated but not so regulated private monopoly, that is the way to make money. so we looked at the same data, and we look to the effect of lobbying. you lobby to prevent entry. that is what you do. it prevents growth. we also show that lobbying ,ncreases inequality at large it reduces social mobility.

you have two sources of top income, lobbying or entry barriers on one hand and innovation on the other hand. they don't have the same effect on social mobility and inequality. that system should not reduce the same way. that is my difference. world, steve jobs is not exist for them. when they think of taxation, innovation is not exist. you need to separate your it in sweden, they did a tax system in the early 1990's, they used to have a tax system like france has now, you do not want that. redistributive, and allow them to finance social services and education and everything, and at the same time, it became more induces of

innovation. that is i think a very important thing to show. i write to the conclusion, i can see philip getting a little bit worried. he's doing it in a subtle way. he did not even blush. inclusive growth, what can the u.s. and europe learn from each other? what can europe learn from the u.s.? europe, we know the european economy is less resilient than the u.s.. following a crisis, the u.s. recovered but europe not so much. why is it that europe has not recovered growth? the first type of reason was said it isfriend, he true the sequencing of policy

following a crisis in the u.s. was not great, what they did in europe -- what they did in the deleverage but at by same time they did it accommodating monetary policy. it did not lead to a bigger recession. they avoided a bigger recession. they deleveraged. later on, they did with the budget, and now they start thinking of increasing interest rates. whereas in europe, the sequencing was very different. they did not deal right away with the banking problem. what they did was they very quickly said no, we have to deal with the budget. 2011, veryosed in soft budgetary rules.

-- france, for example had already increased tax dollars. you already had the knife and your throw, he had to do it. later, with the bad loan problem with the banks and all that. it was the exact opposite of sequencing. the u.s. has a more flexible economy and more flexible label -- labor market than we have in european countries. and even have a more proactive macroeconomic policy. europe came later. they came to it later. -- you. has a much more said the macroeconomy has to

accommodate. we don't have flexible markets in europe and we don't have the fiscal and monetary policies you have in the u.s. we know, in fact i am doing work now showing that there is complementary between one hand, the civilized labor market, and on the other hand, a more fiscal -- conservative fiscal policy. if we look at the growth benefits, you do more interest rates during recession, and you look at the growth of the sector, you can see that the gross effects are much bigger where you have more competition. it is very interesting. france of the last year, we had ,ow interest rates, low yield

and we did not grow. that is because we are a very rigid market. without structural reforms it you do not go far. maybe other people are right to saying we should have a more proactive macro policy in europe. both are complementary. you have both in the u.s., much more than in europe, and i think it is a problem of trust. the germans don't trust the french because the french have not done any reform. [indiscernible] they say, why should we ever reform our markets?

[indiscernible] so that is one thing we can learn from the u.s. what can be u.s. learn from europe? nafta, don'tnst try to reduce trade, because we know that single market is good for innovation. i have done work for 10 years, we have seen the enormous effect of the single market. if you only knew the important effects the sickle market has had in the u.k. -- important effects of the single market has had in the u.k. increases competition and that forces people to innovate.

for this reason, trade is good for growth. that is the first lesson to learn. don't try to break out of agreements for trade, because trade is good for growth. it is true that trade creates an apology -- inequality, but don't throw the baby out with the bathwater. don't renounce growth and trade just because you have any quality. have systems that can manage the inequality. to be more inclusive, you need education. vote for -- you need to educate people. this is part of the innovation process. health is also very important. you should not only reimburse

the big operations, you should also reimburse other things. if you have bronchitis, your productivity goes down a lot. thingss a whole range of that makes you match innovation, and health is important to invest in as important as investing in education. a very important thing is flexibility on the labor market. thatries have understood if you say to someone who becomes unemployed, you'll have a generous unemployment benefits but you have good training and we will help you find a new job, not only does it create a good , and they can manage the process much more efficiently.

both good for inclusiveness, because everyone is part of the economy, they don't get out of the system, but for fiscal growth because people rebound into a new job. that is very good, it makes the process more efficient. i want to address two things. for social mobility, they look at it across zones in the u.s.. on the horizontal axis, you have schools, and on the vertical, you have upward mobility, the extent to which the child is likely to make it to the top income quintile. we see better scores, better success. that gives you more mobility. what is interesting is this one, that shows on the vertical axis, i have investment mobility, a difference in outcome of child

of rich and a child of poor. and job creation and job destruction. it is a measure of job market dynamism. -- it is using the technique by using the cross commuting zone. you can see were you have more job markets, you have more social mobility. there is hope for social mobility. that innovation base needs education and flexible labor markets. if you do the labor markets the way the danish do, serious training, generous benefits, and helping people find a job. there is help for more inclusive growth if you're able to do that so that everybody can feel part

of the process and no one is left out. you can reconcile. people will not be afraid of globalization, they will not be afraid of trade liberalization and they will move into the 21st century because they know they are not left out of the system. that inclusiveis growth is the best vaccine against populism. the u.s. should emulate northern europe in a making gross more inclusive. learn your lesson from exit and the donald trump victory and come up with ways to say, it is good to push innovation and do it in a way that does not discourage innovation and makes growth more inclusive. cite a finish, i want to quote, in 1835 in a book about democrats in america, was

written the following "i cannot help feeling that man may reach a point where they look on every adventure, on any innovation as trouble, and that they may absolutely refuse to move at all for fear of being carried off their feet. my hope is that the lessons the thise and u.s. will dispel apprehension by showing the way to a more inclusive and sustainable growth path." thank you very much. [applause] >> thank you for an engaging

discussion. i will not even attempt to be as witty or wave my hands around as much as you did. maybe i will, because i have been inspired. thank you. i also fear that i may be a little less optimistic. i've been trying to get out of now,ur mood for 6-8 weeks and i think a lot of my talk today reflects that. my sense is that what we are seeing in the united states is not a country or a population in thrall to with the creative destructive process because too many people feel they are being left behind, and their communities are part of what is being destroyed. not to start off on a downer, -- i think a lot of that is as i was listening, i realized my remarks are moving in quite a different direction. there is one statistic that i have come to time and time again

that is sticking with me. i think a lot of us should be thinking about this. hillary clinton one in the communities, i don't remember what the unit of analysis was, but in places where the economy was growing. donald trump one in places where it was not. we think about the economy in what we are supposed to be doing as economist in terms of economic policy, and the most important thing to most people out there in the united states is that the economy provides them with a good job, and that allows them to have a formal housing, health care, and excess to opportunities for self betterment. this is a part of the american dream and the idea that your children will do better than you do. this all hinges on that good job. in the many people united states, even though we have fairly strong growth, even

though we have fairly low unemployment, for too many people we are failing to meet those objectives. not poor,hose who are because i know there has been a lot of talk since the election, that a lot of folks voted for donald trump were poor, but there is a sense that part of what is happening in terms of our economy and why we need inclusive growth is that we are not doing as well as we think we should. i want to lay out a few comments and hopefully dialogue with what we have already heard and hopefully we can have an interesting conversation. i have two findings i want to start my remarks with. chattyst comes from ross , they've been looking at absolute income mobility. the probability that your child

does that a venue or you do better than your parents. what they have found, looking back to children born in 1940, there is a sharp decline in economic mobility. there has been a downward slope since the postwar era. 92%hildren born in 1940's, earned less than their parents adjusted for inflation. -- 92% earned more than their parents adjusted for inflation. in 1980, only 50% did. the people for whom this is been true for our the middle class. men are the ones who have experienced the largest declines. that seems like an important thing we need to be thinking about as we are thinking about

how we will have an inclusive economy. what is behind this mobility? in the analysis, they find that what is behind the lower mobility is higher inequality and the unequal distribution of economic growth. they find that higher growth alone is not going to solve the problem. in fact, the bigger issue is actually high inequality. even if some of those high wages the people are earning is because they are extremely talented and innovative, there is something pernicious going on in terms of the level of inequality in the united states, lisa in terms of affecting overall mobility. -- at least in terms of affecting overall mobility. economic growth i think is at the core and heart of economics or should be. it has been reverberating through politics. for a long time, economists and policymakers that we advise -- ased that the economy

the economy grows, gates will be distributed across society and we know now that has not happened. it was postulated that as the economy grew, there would be a period as you had higher inequality but it would dissipate. after reaching a certain level of development, that things would become more equal and we did not want to worry about equality. perhaps inequality is because of a good cause, and so we also don't need to worry about it. know, and i think the data changes is to bring into question, we need to rethink the dynamic between inequality and growth. this leads me to the second finding, also from new research from a week ago by thomas spaghetti and his colleagues. theory ontold a new

the distribution of national income. data thatp growth comes out every quarter. -- they have matched that information about information happening across families so you can account for all of the income. their data shows that the bottom half of the income distribution in the united states has been completely shut out from economic growth. it is striking. from 1980 until 2014, the average income per adult grew by 61%, yet the average pretax income of the bottom 50% after adjusted for inflation, grew by 1%. skyrocketed income at the top, benefiting the top 10% and top 1%.

incomes rising very much at the top. other groups are doing similar analysis, and this new way of looking at growth is one thing i hope policymakers will start considering in future years. adding this to our national statistics. i'm concerned we will be moving in the opposite direction. bls data inbout the your remarks, and one thing president elect trump has talked about on twitter is his disdain for the bls and the work it does. i have a lot of concern about the measurement we will be having about these issues. adding information on income distribution to our national income data would be a good place for us to start. findings i think require we focused new attention on what we know about the optimal growth path. , looking at about the role of inequality