>> rose: welcome to the program. we begin "time" magazine's person of the year and we talk to nancy gibbs, managing editor of "time" magazine. >> i say people tend to have strong opinions about these things, although i've been struck at the response to naming pope francis. it does reflect what we -- one thing that motivated us which is people are just fascinated by him. and not just catholics. people who are lapsed catholics, who've never been anywhere near the church. who are members of all other faiths who are just very interested in what he is saying. >> rose: we conclude with larry summers, former president of harvard, former secretary of the treasury and former economic advisor to president obama talking about the budget, about economic growth, about debt, and about health care. even >> even in a place where i worked like harvard. if somebody didn't know the names of five shakespeare plays

and couldn't talk about shakespeare they'd be humiliated to admit it. but if they don't know what exponential growth is they would say "oh, that's a technical subject of mathematics." so we have a culture that treats mathematics as something that's okay not to know. that only geeks know. they don't have that culture in much of asia where they do much better. and it's a broad cultural thing that goes to an attitude towards science and mathematics. >> rose: nancy gibbs and larry summers when we continue.

captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: "time" magazine has named its person of the year for 2013 it is the individual-- who in the words of time's editors-- has most influenced the news of our lives for good or ill. their choice is pope francis. in his first nine months as pontiff, francis has reshaped the image of the church draw platally. as "time" magazine nancy gibbs

writes "for pulling the papacy out of the palaces and into the streets and confronting its deepest needs and for balancing judgment with mercy pope francis's "time's" 2013 person of the year." i'm pleased to have nancy gibbs at this table. welcome back. >> thank you. >> rose: this seems so obvious. >> well, the two finalists two people who the vast wrote majority of us have never heard of a year ago, the other being edward snowden, another man with a mission who also brought a crucial conversation, in his case about privacy, center stage and there was a great debate in our own offices and worldwide over which of them was the more important and so in a sense it was a surprise which one we would pick -- >> rose: was it close? >> it was close. to the extent that we talked about it quite a lot and -- and i would be the first to argue

that what snowden has done we are probably only beginning to see the impact of it. if you talk to -- quite apart from the national security issues raised he's been indicted for espionage by the united states government. he's a hero to privacy activists. but if you're a u.s. tech company who might be looking at losing millions, hundreds of millions of dollars in business because your servers are no longer going to be trusted, the implications of his leaks are huge. >> rose: but i just find that so inconsequential in terms of comparison. because it seems to me that he did exactly what you said. he started a conversation. whereas the pope is doing more than start a conversation. the pope is -- is engaged in a day by day process himself by his actions and his deeds in one of the most important institutions in the world. >> one of the most important,

one of the biggest. one of the oldest, one of the richest. >> rose: exactly. so this is no contest. but it was! well, it was. and i say people tend to have strong opinions about these things. although i've been struck at the response to naming pope francis. is it does reflect one thing that motivated chief justice is people are just fascinated by him. and not just catholics. people who are lapsed catholics, who've never been anywhere near the church, who are members of other faiths who are very interested in what he's saying and doing. >> count me one. count me one. you cannot -- i just find in every way -- i find in terms of what he says, the way he behaves how he takes on the roman curia, how he said "let's not get crazed by dogma, we have to focus on other things" without giving ground on doctrine. >> he talks about the church as a field hospital. he says the world is broken, we have to tend the wounded. you don't a bleeding man about

his cholesterol level and i think that's one of the thing that accounts for some of this. he doesn't talk the way we expect popes to talk. >> rose: you can feel and touch his language >> also when he gave up the red shoes and gilded cross, he wears an iron cross around his neck, he's not staying in the papal palace, he's staying in a guest house in vatican city. necessary every way signaling i am going to play by different rules and when i know he goes out into the crowd of st. peter's square-- and i was there last week and i watched this-- and he goes out and he hugs and he kisses the face of that terribly disfigured man, that picture goes around the world instantly. but he's using 2 1st century tools to perform a first century office and he's very aware of the power of those tools in the fact that what he says and down

is instantly shared and spread all over the world. >> rose: but here is a guy -- you know, who had no experience in terms of what was about to happen to him. he was, in fact, a cardinal in latin america who had been doing what he's doing now on that stage. yes? >> first non-european nope 1200 years. the first jesuit pope. and i think that's enormously important. the places where the church is growing, where its influence is spreading is outside of europe, it's outside of north america by and large and so he has among the things that he's doing institutionally in trying to stir up change in the vatican is he has this council of cardinals. they're not from rome. they fear from chile and congo and honduras and india and australia and boston. and it's a much broader reach. who he's will be to, who he's talking to. he feels like a global pope but

also a perish priest. the. >> rose: i've talked to certainly dolan and other cardinals because i was there at the time of the conclave they were surprised a bit. even though he came in second the previous time. the favorite was not him going in. >> he was also set to retire. he had picked out his retirement. he's 76. he had picked out his retirement home and people have known him for a long time are quite struck by the transformation in him personally this year he is animate bid joy. he seems younger. he seems to have a kind of energy. he has a kind of "i'm just going go for it." and that it's very clear to him what he's called to do and he's just writing his own rules and dosh do it. it's really striking to see that sense of liberation and joy and lack of self-consciousness and

this pro found humility. when he is photographed washing the feet of a female muslim prisoner, that's an incredible image to be seen. and, again, these are gestures that are right out of the gospels and yet there's something about seeing them reenacted in the modern age that has people watching and wondering and things. >> rose: did you get to see him? >> i met him briefly after the audience he does on wednesdays but what was most interesting to me was listening to him preach because, of course, he's going to deliver his lesson in italian and there are priests standing by to repeat in the german and french and english and spanish and portuguese but every so often he would just drop the script and start talking. seven the call and the response to get the crowd responding to him and i'm thinking this is a nightmare for the people who are having to translate and tweet and keep up with what he's doing because when he's just speaking extemporaneous think there's an energy that comes from him. and it was quite something to

see. obviously he's treated like a rock star. i think he attracted more people when he was in rio for world youth day. it was the rolling stones couldn't compete. >> rose: pretty soon people will be saying they treat him like a pope. >> that will be analogy. >> rose: it will be the ultimate kind of the worship. this comes right out of your publication. how do you practice hue mill friday the most exalted throne on earth? rarely has a new player on the world stage captured so much attention so quickly. >> rose: placed himself right at the center. he has a point of view on all of

that. >> and it's extraordinary. so the impact he's having political, economic, cultural, spiritual, all laid one on top of the other. >> rose: back to the interview business. there's a famous quote which you wrote said "once there was a boy so meek and modest. he was awarded a most humble badge." the next day it was taken away because he wore it. here endth the lesson. so they said we can't do an interview because what? >> well, it was funny, the vatican issued a statement today when after our announcement saying, of course, he is delighted at being person of the year. >> rose: but he doesn't seek honor. >> this will call attention to the message of the gospel but he is not looking for any personal honor or aclimb and so it's a line they walk where they understand that there is a fascination with him personally.

he wants the fascination and attention to be on his message and not on him and so he would not want to be seen as seeking out any kind of special attention or honor but he does obviously want the message to be heard far and wide. >> rose: the four runner-ups were edward snowden, edith windsor, the 84-year-old woman who became a matriarch for the gay rights movement after winning her case. bashar al-assad, president of syria and ted cruz. all of those people were on the list. congratulations. >> thank you. >> rose: for all the reasons, pope francis, "time" magazine's personal of the year for 2013. back in a moment. stay with us. >> the truth is that if we grow and actually accelerate the growth rate the debt will get itself managed. and if we don't we can do all these programs and all these cuts and the debt will not get itself managed.

>> rose: larry summers is here. he is the charles w. elliot university professor at harvard. he was harvard's president from 2001 to 2006. he served as treasury secretary under president clinton. he was director of the national economic council for president obama where he was integral in shaping the nation's response to the financial crisis. today the country appears to be on a rebound. the economy gained over 200,000 jobs last month. the unemployment rate is 7%. the lowest reading since president obama took office. the wave of good news comes ahead of a federal reserve meeting next week where the central bank may decide to begin rolling back on its bond-buying program known as quantitative easing. i am pleased to have larry summers back at this table. welcome. >> glad to be with you, charlie. >> rose: let me start with the budget. tell me how you see the budget agreement that was reached between paul ryan and patti murray. >> this wasn't a grand bargain. it was a little deal. >> rose: yes. >> but it was a good little

deal. it prevented some mindless cutting from taking place over the next year. it allows some reasonable choices to be made. it creates some grounds for stopping the federal budget from being a big drag on economic activity as it has been over the last several years. >> rose: because of sequestration. >> because of sequestration. and charlie it also takes the risk of another bit of foolish brinksmanship where we close the government or worry about whether we're going to pay the debt off the table there's not a lot of stuff in it to some level but relative to the budget deals in the past the stuff that's there is honest. very little accounting gimmickry it's a pretty straightforward

positive but small step. i'm glad to see it happen and i think the way you restore trust and functionality is bit by bit and this is a step on that road. >> rose: and bit by bit includes a level of bipartisanship. >> there was cooperation between the -- between both parties i think both parties are to be credited with that. and we're avoiding what could have been quite costly in terms of further deeper sequestration. now, make no mistake, make no mistake, this is a deal to stop digging deeper in the hole we're in. this duds not get us out of the hole. this does not provide for substantial economic activity in the short run. this does not do anything about the long run deficit issues that concern so many people.

but we were in a situation where we were continually digging ourselves deeper and weakening the economy and this puts a stop to that and that's something to be praised. >> rose: and it adds some level of certainty and expectation which has not been there, resulting in -- because of the political issue resulting in lack of credibility. >> i think that's right. i think that's what i was trying to get at in the same way when i talked about taking the risk of a shutdown or something like that off the table. look, i think there's another thing that's positive about this. i think we've exhausted the productivity of debating the budget in washington for a while. and this puts an end to those debates for the next couple of years and i think we can focus on more fundamental questions, frankly. more fundamental questions like how we're going to grow the

economy faster. more fundamental questions like what we're going to do about inequality. more fundamental questions like assuring the containment of health care costs or that we get to the energy independence that's now possible as rapidly as we can so i think this puts the budget in a box for a little while and while i'm sure that's disappointing to the people whose whole lives are around negotiating budget deals i think it's basically a positive thing. >> rose: you are constantly in speeches and columns looking forward to say what we need is growth. we need to stop obsessing over the debt, yes? >> that's right. >> rose: what makes you so sure you're right? >> in part it's a judgment that the the morality of future generations depends on many things. yes it would be better not to leave my karen lot of debt at a

2% interest rate. it would also be better not to have inferred all the maintenance on the infrastructure they inherit. it would also be better to assure them and their children an adequate education. it would also be better to preserve america's scientific leadership in the world. it would also be better to pay government employees in a way where there's an effective, is functioning, competent set of people running the government. so the first part of it is that there are actually multiple deficits that we as a country face and the financial deficit is only one of them and probably not the most serious. the second part of it is just simple arithmetic, charlie. whether you believe in keynesian stuff about demand and stimulus or all of that. i don't know of any economics class where they don't tell you that if you can borrow money at 2.5% or 3% or 1%, to invest in

something that will pay at a rate of 5% or 8% or 10% that that's not a good thing to do. and i look at our country right now and we can borrow money, if we borrow short at 0%, if we borrow long at less than 3% and it defies belief that we don't have projects to have a payoff return that's much greater than 3%. so that's the second thing that leads me to emphasize growth and the third thing is the simple knowledge that the most important determinant of what economists call debt dynamics, how debt moves relative to income, is going to be how fast the economy grows. and that if we can accelerate our growth rate by only.2%, that will be enough to eliminate what people -- what the congressional

budget office estimates is the fiscal gap over the next 75 years and growth is also what's most important for middle-income families, is what's most important for american competitiveness, it's what's most important for america's example in the world. that's why i keep coming back to growth. >> rose: you also emphasize the deficit is declining a bit on its own. >> the deficit, according to the congressional budget office and the best forecasts we have is projected to decline as a share of g.d.p. for the next ten years. after that it is expected to increase but the truth is that the c.b.o. admits this-- although maybe not as clearly as they could-- that we don't -- our ability to estimate deficits 10 or 20 years out is frankly non-existent. >> rose: if you look at the predictions that were made ten years ago by japan or whatever just turns out not to be true. >> not close. if you look at the budget

forecast just five years out and you look for a confidence interval, that confidence interval is 10% of g.d.p. wide. and so we don't know where these numbers are going to be. and there's a question as to how much and how aggressively you should pretzel yourself over something you can't forecast with any accuracy at all. of course we should be trying to control health care costs because that's the right thing to do whatever exactly budget picture is going to be. but i worry about those who would make austerity and -- a focus on the 2030 budget deficit the driving preoccupation of american politics rather than raising middle-class incomes today which seems to me to be at the root of what it is zens want at the root of restoring citizens' faith in our country

and its government. i come back any economic question and try to relate it to what can we best do to raise middle income families -- >> rose: and what you come up with is investment in the future? >> the right public investment, the right movable barriers to private investment, the right promotion of exports, the right steps to increase business confidence. look, we had a -- harvard has a football stadium. it's in the middle of an urban area. it was built a hundred years ago. they didn't have bulldozers then but still it took 18 months from the time the stadium was conceived until the time the first game was played. can one conceive of anything like that happening in the

united states today? we've got to regulate wisely, there are all kinds of protections we need to make but we need to make our decisions much more quickly and in much more streamlined ways that reduce uncertainty than we have >> i want to come to dodd-frank and the volcker rule in a moment but staying with this idea, is it possible when you look at the growth of the u.s. economy that we have lost some of our productivity potential? in other words, have people been out of the labor force not going to have the skills for the jobs that come up in 2013, 2014, 2015? >> i think there's no question that there are what economists call historesis effects. that refers to history dependence. people who have been unemployed for two years often have a very hard time going back to work.

that's why it's very interesting if you look at what the congressional budget office thought the american economy's potential was in 2014 as of 2007 and you look at their estimate today it's declined by close to a trillion dollars. that are trillion dollars, that's more than $3,000 for every american. and that's not what we are producing. that's what they think our potential is to produce. and that's because we haven't invested in capital. that's because workers' skills have atrophyed and that's why it so urgent to promote growth in the short run because growth in the short run also raises the level of long run potential. >> rose: when you look at the unemployment and the budget deal that will be voted on by assume next week what happens-- and i was struck by this-- what

happens to people who can't get unemployment insurance? who can not get it extended and have no possibility of a job? what happens to those lives? >> it's tragic and there's increasing evidence that the children of those people and of being much less successful in school having less chance to complete college. having lesser careers as well. and so it's visited across the generations. some people go on disability insurance. some people are able to rely on some familial support. some people have an ability to draw down savings. but social scientists are

increasingly confirming what common sense would suggest-- that for a child having a parent who is confident about their vocation, their work, their task is a very important and positive thing and that's part of what we're losing as long as we allow this unemployment and this non-employment to continue. you know, 7% unemployment is too high. but 7% unemployment makes it seem much better than it is because so many people have given up working and have dropped out of the labor force and aren't counted. if all of them were counted, all of the people who withdrew were counted we'd be up towards the 10% range of unemployment. >> rose: it's a terrible cycle. you're not only a historian but

you're also an educator in your life and there is a series of articles in the "new york times" called "missing from science class." it basically goes on to say a big reason america is falling behind other countries in science and math is the that we have effectively written off a huge chunk of our population as uninterested in those fields or incapable of succeeding them. that's one point. larger point is why are we continuing to slide back in terms of math and science. is it because we as a society make less of an investment in those kinds of educational skills so when we fall behind we're now 18th and lower or is there some other reason? you're an educator. >> i think it's three things, charlie. first, we don't get the quality of people going into teaching that many other people do in many other parts of the world. in finland where they do the best they get students from the top of the classes at the best

universities to go into teaching and staying in it and they do it because of how they pay and they do it because teaching is a valued and honored profession. and we don't make it a valued and honored profession. and there's a lot to cop plain about about american education but when people go teacher-bashing,-- which there's a lot of out there-- there's things to criticize certainly. but when they go teacher bashing they are making the problem worse sometimes not better. so we've got to make teaching valued and honored. >> rose: and compensated. >> compensated. about that's going to be particularly important for people who are physicists, are mathematicians who have a whole set of attractive alternatives in the private sector. so that's the first part. second part, charlie, is cultural. even in the place where i work like harvard, if somebody didn't know the names of five shakespeare plays and couldn't talk about shakespeare they'd be

humiliated to ited admit it. but if they don't know what exponential growth is they would say "oh, that's a technical subject of mathematics." and so we have a culture that treats mathematics as something that's okay not to know, that only geeks know. they don't that culture in much of asia where they do much better. and it's a broad cultural thing that goes to an attitude towards science and mathematics. >> rose: let me speak to what the president made a significant call -- in one of those fundamental speeches he would make about the disparity in income, income inequality. what did you think of that speech and how it was phrased and what it can accomplish and what it says about this president.

>> i thought it was an excellent speech. i think if you look until some date-- some people would say it was 15 years ago, some people would say it was 30 years ago. but for some long time period after the second world war if you looked at a graph of the nation's productivity or the nation's g.d.p. and then you looked at a growth of the average guy's income, the two moved completely together. >> rose: right. >> that stopped at some point and they obtained to be a substantial divergence. it's still true that increasing economic growth will raise everybody's income and it's hugely important but it's also true that rising inequality has meant that a higher share of the income is going to a smaller and smaller group in the population. some of that have is probably

unavoidable and not to be resisted. if our best performing artists now have a chance to perform for a world market they're going earn more and that's not coming at the expense of any other americans. and we shouldn't condemn it. to condemn it would be class warfare. but if and when we allow the progressivety of our tax system to be eroded, if and when who don't make investments that would give everybody a chance to have equal opportunity we are increasing inequality, hurting incomes and doing something very costly to the country's future and that's what the president was trying to-- and i think very effectively-- argue in his speech.

what i think we're going need to find-- and it's a balance-- is a kind of middle way in this country. america -- americans don't like-- and they shouldn't like-- class warfare. there's nothing to be gained from tearing down the rich for the sake of tearing down the rich and the dream of great success is what propels a great deal in america. on the other hand, to be concerned about inequality is not to be engaged in class warfare. you know, i was struck, frankly, by the incoming mayor here in new york >> bill de blasio. >> he's proposed, as i understand it, to raise tax rates on people like you and me by one half of one percent in order to provide for universal

pre-school. i think that's a good, powerful and important idea and people who call that class warfare don't get it. they don't get in the terms of their short run, their long run interests in the country staying together and they don't get it as a matter of morality. that doesn't mean that everything's that's proposed in the name of redistribution is the right thing. >> rose: redistribution is a pregnant term in its own. >> exactly. exactly, charlie. but we need to find a vocabulary and with that vocabulary a set of policies. >> so this is what i think the president was reaching towards that find a way that is opportunity preserving, that is not class warfaring but at the

same time recognizes that how the pie is cut matters as as well. and in many ways often as much as how big the pie is. that's going to be a central defining feature of our politics. it's going to be something that's going to go very importantly to how much respect there is for american institutions. because in many ways i think it's an even deeper problem than the economic problem. it's the lack of respect that so many people have for so many institutions. and i think a sense that the world is delivering for people is right. john kennedy could legitimately ask in 1960 after the tremendous

growth of middle-class incomes and opportunity in 1960, he could legitimately ask what people should think not about what their country should do for them but what they could do for their country. but that's because standards of living have gone most of the way towards doubling in the short period since the second world war. it's much harder for a president to ask that today given what's happened to middle-class standards of living. and yet it's also very important that presidents be able and leaders be able to ask those kinds of questions. and that's why these issues of ini quality together with growth to affect middle incomes are so very important. >> rose: i think it's going to be a theme in the presidential campaign, the idea of inequality of income and the impact on it. politicians will by nature bring in the middle-class and put those words front and center. the interesting thing about my observation-- and i may know a different group of wealthy people-- most of them that i

know-- and they've said it-- would not mind a tax increase if they had some real sense of where it would make a difference and if it meant investments in programs like bill de blasio is saying so that it would make the country better and make the lives of people better they'd be for it and they wouldn't be bogged down and words like redistribution of wealth would not be part of the dialogue. on the other hand, i know lots of people who object to tax cuts would very much be in favor of tax cuts if, in fact, and perhaps as a stimulus to the economy and corporate income tax if, in fact, that i realized and could believe that a whole range of deductions which a money class has an opportunity to influence were eliminated. do you disagree with anything i just said? >> to a point i'm very much in agreement with you.

particularly i'd be in agreement with you on what you sid about tax reform. i think there are many people who would certainly support taxation and have concerns about how the money is used. there are other people who just want lower taxes for the sake of lower taxes. i think if you look at most of the people who are in the house republican caucus, i think they're pretty reflexive on the side of low taxes. >> rose: it's an ideology with them in some way >> and proudly so. but they're a governing block of our country whether it's ideology or not. and i think in some other cases it's more elegant to oppose a tax increase by suggesting that the government will waste money. and some of them might not be satisfyable ever that the money was being used. having said that, i think the deep tragedy in the challenges that obamacare has had over the

last few months are not that people can't sign up for the web site. that will get fixed. they're not even that there are various issues? the distribution of the program, that will work itself out if you look at medicare part "b", the prescription drugs benefits a few months in, that was looking like chaos and nobody remembers the chaos and now everybody's just used to the programs. i think that will work its way through. i think that the greatest cost is that when you have moments like katrina, moments like the inability to construct the web site, there is a loss of confidence in the capacity of government to do things. and that can be debilitating. two, since government is, to a very substantial extent, the instrument through which we come together, that loss of confidence in government has

important elements of loss of confidence in the society. >> rose: you've been in government. let me just take that for a second. you know health care as well. everyday there's another indication of somebody who tried to warn them, those people who were shaping the web site, that this is -- you can't-- this is not going to work. it's not ready. it's all of that. whether it got to the level of the president, i don't know. you would know. but in all these cases with hindsight you see thousands of people saying, you know, in memo after memo and everybody looks for some self-justification and to cover their own performance all the things you're familiar with. but you wonder where was some guiding intelligence to say stop >> i guess i'd say two things about that. i think the first is, and i've said this before, it was an epic

managerial failure. there's no excuse. no excuse for it. i think there's one other perspective which doesn't mitigate the first but is worth saying. one of the books i read in college that had the greatest -- made a big impact on me was a book by a scholar named roberta wolstader about pearl harbor. and what she showed was there were a lot of warnings that pearl harbor was coming. there really were. she also showed that there were a lot of warnings that an attack was coming in virtually every month for the previous three years that turned out to be false. and so i think one of the things you have to recognize about the people people in the white house is there are always and at any moment dozens of people running around like chickens with their heads cut off saying the world is going to end about some problem.

and most of the time they turn out to be wrong. and you can't let yourself be completely hijacked every time somebody gives a warning where you don't do anything. and so it's easy with hindsight having seen what happened to say oh, well, those warnings should have been heeded. but from the perspective of the people who were there, there were always a lot of warnings. now, all of that said, this one seemed very clear and predictable so the president said that there aren't any excuses and i think he's right but just in terms of understanding the context, i think people after one of these things always look and say "why weren't the warnings heeded?" that's what stats stations would call the false positives. >> rose: exactly. but as you said this was a giant fiasco. also, i mean, when you look at

what the president said in terms of you -- if you like your insurance policy, it will be fine. are you as generous in understanding that as well? >> i don't think the president and the administration handled the description of the program in the way that they should. >> rose: he shouldn't have said it? >> it shouldn't have been said in the way that it was said and the president -- as the president has recognized. >> rose: finally, there's this about health care. will health care as a percentage of the economy and in percentage of the -- as a contributor to the economy be rising or declining in terms of the cost of health care over the next ten years? >> oh, my guess would be that

health as a share of g.d.p. will rise. >> rose: will rise. >> but over the past four decades it's been skyrocketing. >> rose: so -- >> and the rise will be much smaller relative to g.d.p. over the next decade that it has been historically. so historically-- i don't remember the numbers precisely-- health care has been rising on the order of 3% a year faster than g.d.p. and i think it's going to be more like 1% a year faster over the next decade. are so nobody really knows but the best guess right now would be that the curve has been unambiguously and sharply bent for the last three years. that that means that you're starting on a lower level and you're going to stay at a lower level and the very great likelihood is that not only the the level lower but the growth is going to be lower going

forward. so i do think when we in the united states get down on ourselves-- and there's plenty, we've been talking about it to get down on-- we do need to recognize that somehow we've had two pretty unsung triumphs in the last few years. we bent the curve on health care costs, which is something people have been trying to do for 40 years. and we're now on a viable path to being an energy exporter, which people have been talking about for 50 years. and those are two big things that american society has managed to do. they didn't come because of some single major master stroke piece of legislation from washington but they are things that have happened and they're really powerful things. >> rose: and the consequences of it would be that we are a net energy exporter? >> we're a net energy exporter. it means we're more secure. it means we're richer.

richer and a little more secure and we're going to have a lot more jobs and the jobs are going to be in places like western pennsylvania. >> rose: (laughs) exactly. north dakota. >> which need sqlobs. and they're going to be physical labor jobs of a kind that are going to work for the people who have been hardest hit in the economy. so there's an element of luck in it but there's also an element of the american system working. >> rose: should people have seen it ten years ago? and did they no? >> oh, i think almost nobody saw it ten years ago. it's one of those things -- you know, bill clinton campaigned for president with no awareness of the internet. the internet took off during his presidency and six to eight years ago the idea that -- look, to take one classic business situation there was a lot of entrepreneurial activity seven years ago directed at figuring out how the united states could be a natural gas importer.

>> rose: right. right. >> now it's all directed at how we can be an exporter. that's a big clang. >> rose: speaking of global health and the cost of health care and all of that. you chaired a commission that looked into-- and this is good news, as i read it-- the cost of health care around the world. and found out -- well, you tell me. >> we found one thing that transcends all the others. the history of man was that life expectancy everywhere were kind of the same, they were short and kids died young. a man over the last 200 years. there was a huge divergence between some societies and others. >> rose: and it was quality of health care? >> health care, science, application of science. people in some countries lived to be 75, people in other countries lived to be 35. in some countries 1 in 100 kids died. in other countries 1 in 5 died.

>> rose: so the disparity in terms of what you would expect in terms of your health if you lived here versus if you lived here. >> it's now within reach for the world as a whole to have over the next generation a child mortality rate like the one the united states did in 1980. it is now within reach for the world as a whole to have infectious disease rates that were like the infectious disease rates that have characterized the industrial world during our lifetime. there's only one time in all of history when there's going to be the prospect for convergence. for bringing it back. only this time at a high and favorable level rather than at the low and unfavorable level of the past. >> rose: why has this happened? >> it's happened because science has made -- we have drugs that treat aids. we have vaccines in a way we

didn't before. science, resources. we're richer than we were before. globalization. it's possible to spread the good news. and awareness. governments in the age of the internet and age of communication are -- have to be much more dedicated to the interests of their people. >> rose: finally this. this is december 6 in washington, d.c. an annual meeting in the american studies association, on november 21 through 24, 2013. the national council of the s.a.s.a., american studies association voted to endorse the call from palestinian civil society for an academic boycott of israel. and you say? >> the charlie, i thinking a d.e.m.ic boycotts on principal are abhorrent if you believe in

academic freedom. the idea that scholars from anywhere should be isolated. the way to change the behavior if you don't like it is to talk to people, not isolate them. and this particular academic boycott is much worse. it is much worse because the idea that of all the countries in the world that might be thought to have human rights abuses, it might be thought to have inappropriate foreign policies, that might be thought to be doing things wrong, the idea that there's only one that is worthy of boycott and that is israel, one of the very few countries whose neighbors regularly vow its annihilation, that that would be the one chosen is, i think, beyond

outrageous as a suggestion. >> rose: let he read it. citing a united nations report that outlines how the israeli occupation of palestine has impacted students whose development is deformed by pervasive deprivation affects health, education and overall security, the a.s.a. resolution resolves to honor the call for a boycott of israeli universities as a means of showing solidarity with palestinians." >> charlie, i said some time ago with respect to a similar set of efforts that i regarded them as being anti-smet nick their effect if not necessarily there their intent. and i think that's the right thing to say about singling out israel. if there was an academic boycott against a whole set of countries that stunted their populations in some way i would oppose that

because i think academic boycotts are abhorrent but the choice of only israel at a moment when israel face this is kind of existential threat i think takes how wrong this is to a different level and my hope would be that responsible university leaders will become very reluctant to see their universities funds use to finance faculty membership and faculty travel to an association that is showing itself not to be a scholarly association but really more of a political tool. >> rose: back to you and your background. there is some talk that stanley fisher may be -- go back to the fed. do you think that might happen? >> i have no idea. stanley fisher has done a magnificent job in everything he has done. he was enormously influential

and effective as the deputy managing director of the i.m.f. and then he has really been a first-rate central banker and an important presence in the international financial community as the governor of the bank of -- >> rose: did he teach a course at m.i.t.? >> he did, indeed. >> rose: it has some influence on you? >> he taught a course which i was a student and which bernanke was a student at just about the same time, that ken rogoff was a student. the olivier blanchard, now the chief economist of the i.m.f.. 14.462 graduate monetary economics. >> rose: why is that numberd? >> it was m.i.t., they gave the courses numbers as much as names. >> rose: what happened in that course that made you decide maybe you would become an economist and then the youngest

tenured professor at harvard? >> well, by that time i was already on the way to becoming an economist but what i -- what i learned -- >> rose: as a graduate? >> this was a graduate koushsz. but what i learned in that course or saw more clearly in that course was that these decisions that people make, like that quantitative easing decision, liked a justing the federal funds rate aren't just abstractions that affect finance but when those decisions are made well, tens of millions of people live well and when those decisions are made poorly, tens of millions of people have their lives disrupted by forces they can't begin to understand or relate to and so it seemed to me there was nothing more important one could do than try to contribute in some way to making those decisions in more wise ways. whether those were exactly

decisions about monetary policy or fiscal policy. but we -- my conviction, charlie was that while a doctor has the satisfaction of seeing an individual patient before them and seeing what their impact is the impact of economic thinking and better economic thinking while the puzzle chain is longer and you don't immediately see and experience the result is pervasive in its impact. whether it's better-designed approaches to promoting research and development on vaccines that have contributed to the miracle in survival we were talking about a few minutes ago or whether it's wiser macroeconomic policies that avoid the kind of squeeze on middle-class incomes

and deledge myization of institutions. i came to think that the work of economics was profoundly important and stan's course helped me to see that and helped me to see that various kinds of mathematical formulations for that seemed very abstract to me when applied were ultimately very, very important. >> rose: could i sum up what you just said that economics has a human dimension? >> absolutely. >> rose: (laughs) thank you, larry. >> thank you. >> rose: larry summers from harvard, charles elliot professor there. thank you for joining us. see you next time.

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