>> charlie: welcome to the broadcast. tonight education, healthcare, china and more with the president of yale university, richard levin. >> china's progress toward liberalization, towards freedom of expression, towards rule of law is only going to be helped by our engagement, our example. the more students that come to the u.s. and experience freedom, better off we are. they're going to go home and they're going to have a taste of what a free society is. american universities are actually the best instrument of diplomacy that the united states has. >> charlie: the president of yale for the hour, next.

captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> charlie: rick levin is here the president of yale verts millions 1993. he has expanded yale abroad and at home. he's visited china 12 times in the last 8 years. he's established many joint ventures with their universities. the endowment has been hit hard. he serves on president obama's advisors of science and technology.

i am pleased to have him back at this table. welcome. >> thanks for having me. >> charlie: let me do a quick bio, you grew up in stanford and went to oxford. >> i lost the rhodes competition but i got a prize from the english speaking union. it was embarrassing because my wife had already won -- she was then my fiance. she had already one a fulbright and i came home empty from the rose competition along with other people. then i got this consolation prize and it's been two wonderful years. >> charlie: she had a fulbright and you had an english speaking union and you went to oxford and got a bachelors. >> what i got is now a master's degree. it was just a degree where you write an independent thesis. do an independent study. >> charlie: economics and philosophy. >> philosophy and politics. >> charlie: did you think of being an economist at this time. >> i was a history major in

stanford and i took a couple economics courses. but when i got to oxford i realized i didn't want to be an historian. so i went through a transition. i decided i want to be an economist, but oxford at that time was not the place to study economics. u.s. was definitely a place to study economics. i went to see isaiah berlin the great philosopher and asked him what to do. he looked at an essayed hey given him and he said you could write more clearly so why don't you start philosophy for a year and we'll tribe you up to write clearly. then do some thesis about the history of social science and hen go on and study economics. so i did a thesis on max, the great german social thinkerment my second year i had a fabulous time. meanwhile i taught myself mat to go to grad school and economics. >> charlie: did you think you would drift towards being an

administrator. >> it wasn't like i had a professional aspiration to do this but i had a natural gravitation to administrative tests. the day i left graduate school and joined the faculty they assigned me to run the introductory economics course which had 19 different sections thought independently. i had to coordinate 19 people some of whom were faculty members and some are graduate students. so i was doing administrative work from day one. >> charlie: i arrived at yale university as a freshman, let's say. >> yale should be so lucky. >> charlie: why should i study economics? >> well, it opens, it opens a different perspective on the world. i find it a great discipline. i'm not sure i would recommend it to every undergraduate because i think ... >> charlie: none. >> i wouldn't recommend it to every undergraduate because i think, i think that there are some who a broader subject like history forephilosophy might be a better way to start. but economics as an intellectual

elegance that's exciting, you learn to use mathematical tools for a practical end and it has an exciting blend to my taste of, you know, intellectual figure of structuralizing problems and i peer cull relevance. you can make theoretical models of factually important things in the world. so i like that interplay. it's to me very exciting. why indemnity political science. >> i studied history and then political science. i like the intellectual rigor of economics. at that time political science has become more mathematical since then. but i love the sort of elegance of the basic, of the basic micro economic theory. it all hung together beautifully. >> charlie: can anybody make the simplistic argument you came from the life of the mind and

you want to be the life of action and decisions. >> absolutely. >> charlie: and power. >> not so much the power because i see it more service than power. >> charlie: right. >> but, yes. from the life of the mind to life of of action. from the very beginning this was the choice to move from history to economics was conditioned by that. here we were, it was 1968 in oxford and i was sitting there at the instruction of my tutors at oxford, studying the roles of who are the soldiers in the hundred years war. in the 14th century and i'm thinking to myself, what does this have to do -- is this the life i want to lead. to i want to be monastic and squirreled away in a library. i have enormous respect four the great historians and the kind of work that goes into creating great history. but i that i'm more actionary.

i want a life that's more social interactionive, talk to more people and i want to be able to contribute something to the world around me. so the switch, just the switch of disciplines is already thinking i could have an academic life, the life of the mind at the same time be preparing myself for public service and a contribution to certain. >> charlie: did isaiah berlin ask if you were a hedge huge or a fox. >> he didn't at that time but that was a wonderful wonderful essay and i use that metaphor all the time. >> charlie: how do you use it. >> i gave once an entire speech to i think it was the graduating seniors about what kind of person are you. are you a hedge hog or a fox. >> charlie: do you have many ideas. >> exactly. >> charlie: and you. >> oh, i am definitely a fox. i like to think a fox with some vision, with some big ideas, but

not one big idea. >> charlie: now would someone like james watson be a perfect hedge hog. we need somebody who has one consuming economic idea, whether it was someone like milton friedman as -- >> as berlin argues very persuasively there's a real limitation on the true hedge hogs, on the people with the one big idea. >> charlie: i never quite know what the big idea was. that's my problem. >> a big idea in berlin of course is he talking about totalitarian conceptualism. he's thinking about comprehensive theories of society and nature. plato with the ideal form is a hedge hog. aristotle is a fox. tolstoy is a person who wanted a hedge hog. he wanted an over arching theory

of history but in truth he was a foxed as expressed in his writing in something like war and peace, it's such a beautiful interweaving, many complex people and personalities. >> charlie: exactly. make your short speech to me about someone who is just entering high school. then we'll go on to college. and perhaps graduate school. what they ought to get for themselves. >> get a rig rug foundation. we have altered high school curricula these days in such a way that students can escape actually getting rigorous foundation and still do very well. that's why yale insists on, you know, following subjects all the way through four years of english and writing, you know, of math essentially through calculus, at least two years, if not three of science. and some mastery of a foreign

language. i think you really, you really need those things if you want to move on to success. high school is the time to do that rigorous foundation. in my view, you don't need to take economics or psychology as a high school student, although many schools offer that. math, science, history literature. >> charlie: the only thing i would add to that is english. >> best, the basic five. that's math science history- >> literature and languages. >> charlie: make sure that you walk away because they'll serve you. >> absolutely. >> charlie: they will serve you. >> i feel very strongly about that in high school. i would personally love it if we had a little more structure in the undergraduate curriculum of our colleges. but -- >> charlie: it's moving that way or away from that. >> a little bit that way. >> charlie: having steered away and coming back. >> the elective system has

dominated higher education system since it was introduced in the 19th century. >> charlie: is that good. >> it's good in one way that sense that it allows students to really explore and find their passion. if you say what would i tell, entering freshman, that is what i tell them every year. i have to give a freshman address and i have to find a new historical example or some new discussion of the contemporary global issue as a lead-in to basically delivering the same message which is this place has abundantant resources, yale has great museums, fabulous faculty. you can make the most of this but the main point is sample, try things, take risks, try subjects you're not comfortable with and somewhere in that process you will find something you love. and go for what you love. you know we graduate 1300 student a year at yale. i wouldn't say all 1300 have that epiphany but a lot of them

do. a great majority come away with a couple passions. something it's learned in the classroom and they learn in the extra curricular -- >> charlie: passion what they want to do, passion for what they want to be or passion for what they want to accomplish. >> i'm thinking thinking what e thinking about, what they love doing. >> charlie: you should discover that at the university. >> yes. it doesn't mean you discover a career. you may decide you love music and it's a part of your life that doesn't mean you'll become a musician, you may not have the talent for it. find something that's going to deeper your soul, give you a richer life. >> charlie: is the university doing all it can and all it should and all it ought to to help us find those things. >> i think we are in the group of institutions in which yale sets have extraordinary resources. >> charlie: that's not the

issue. clearly. is the connect being made is my question. >> yes, i believe so. >> charlie: it's not an exercise in terms of that doesn't allow that thing to happen the flourishing of curiosity and connections. >> i think the students today are just extraordinarily able and extraordinarily curious and they -- >> charlie: and the university goes out of the way to make sure they avail themselves of everything there. >> very much so. yale's pretty good at this. i'm not sure every institution puts as much adult presence into the students lives. you go to a big state university and the resources, intellectual resources are just as good at yale's. it's a fabulous faculty and great opportunities but there's not as much mentoring on counseling. living with stackallity and advisors like we have at yale much. that matters, having people watch out for you. when you talk to yale steurts who graduate, they'll tell you, there were people, adults who

mattered to them who they would get to know, they have a close advisor they know their residential college dean, those people who played a role in their lives. that's very important. >> charlie: how has yaild changed over the last. you have the longest tenure of any ivy league college president. how has it changed since you started. >> well first the university. then the students. well the university has been able to do things because of the, you know, enormous grout of our endowment that have just made it a more attractive environment and a more environment capable of doing more for the students. for one, we've powered enormous resources into financial aid. probably most important accomplishment with those resources has been to make yale affordable for every family. >> charlie: anybody could get in yale could get an education free. >> not free, no no. well in our music school yes but in the college, anyone, any family with incomes under

$60,000 goes for free. families within say the 60 to $200,000 range get very substantial financial aid. so the average family that receives financial aid pays less than $10,000. >> charlie: if you're the boast brilliant kid in the world and you're father's a billionaire, you get no aid. >> that's right. no merit aid. >> charlie: just taking it away from someone else. >> exactly. it's entirely distributed on financial need. so you pay the full $47,500 if your parents can afford it. >> charlie: 47,5 is what it costs to yale for a year. >> yes, it does. >> charlie: 47,5. >> even the families are paying that 47,5 which is a lot of money are only paying about half of the cost of yale education. >> charlie: what have you learned on the ground about the achievement. >> well, you know, it's so hard

to measure these. assessing kids for admission and how to measure their likelihood of success at yale, it's very hard work. >> charlie: at the end of the hard work, what have you learned. >> we do our best. what do we learn? we do learn that test scores matter but not -- the difference between somebody who gets 1480 and 1680 out of 1600, you can't, that doesn't mean very much. i mean you know, above a certain threshold you're very capable of doing the work. but if you come to yale and your test scores are 1100, there are none at that level but you would struggle. it would be very hard. >> charlie: to make it. >> yes. you would have a hard time keeping up with your mass calculates. it's crude indicator of contest. >> charlie: how have the

students changed. >> it's amazing. because when we complain about secondary education and talk about all these statistics about how we're falling behind, most european countries, korea and japan. >> charlie: that's not just talk is it. >> the averages are clearly, are problematic but the top end, you know, the one half of 1% at the top, the kind of people we see in our applicant pool, they're spectacular. and they get better. >> charlie: so we do see stronger academic potential. >> i think we're seeing, it sort of goes in waves. but i think in the last few years, more interest in, you know, social contribution. >> charlie: less interest, for the lack of better word, wall street. >> yes, exactly. it's unfair to blame wall street. i mean, less interest in personal financial success, more interest in how can i make a

difference in the world. as a 60's brat, i find that very wonderful. >> charlie: let me turn to the endowment question. >> yes. >> charlie: you had one of the most successful spectacular event at this table, is spectacular at growth rates of over 16%. what's the decline in your endowment. >> our investment term this last year, preliminary estimates were down 25% and of course we spent 5%. so it means the value of the endowment is down 30. >> charlie: so if the endowment was at 100 million, it's down -- >> it would be at 70. so in fact the declines from almost 23 billion to 16. >> charlie: to 16. what impact did that have on the university. >> significant. >> charlie: in terms of hiring fact actually. >> it's a substantial amount of money. it's a bindi cline on the

endump. if you spend 5% in the long run, that's a $350 million a year hit to our operating budget which is about 2 point 8 billion dollars. necessary reduction and expenses we have to undertake over the next few years. >> where - >> charlie: where do you put that in terms of the changes for the university. >> it is a change. we made moves this past year that have eliminated about half of that gap, maybe a little more than half. >> charlie: what budget changes. >> we reduced the expenditures on nonfaculty personnel, on all of the administrative staff by 7.5%.

we reduced spendure on nonsalary items, materials and supplies by 7.5%. we froze the salaries of all people making more than $75,000 and increased salaries of those below $75,000 by only 2 percent %. >> charlie: let me go to awe broad. >> i feel very strongly america has been too insular society. every day you read the newspaper, if you hiccup in china or if there's a problem in brussels, you feel it in the united states and vice versa. so these things are, careers are going, for students today are going to involve global experience. whatever your profession, business, you need to know about the world. i believe, i think it's partly

personal, a product of my own study abroad, i spent six months in italy as an undergraduate, two years in britain. i think there's a learning skill beyond reading or oral expression, mathematics that's capacity to understand people with different values. cross culture, the capacity for cross cultural. >> charlie: isn't it in part to understand the culture and the people of china. >> and to facilitate our students getting that kind of capacity to understand the world. china has been the leading case, really invested heavily there but actually we're developing global experiences for all our students. we are now providing opportunities for about 1200 of our under graduates a year to go abroad and we cover their costs if they're on financial aid. this is a way to make sure that

students get some kind of serious exposure to another society and begin their values. we have a number of foreign students at yale what was about 3 percent piss when i started to 10% today. >> charlie: most of them come from asia or latin america, europe. >> china is the most heavily represented foreign country, but you know, they're only a small percentage of the class, 1%. we have, they are all over, europe and eastern europe and asia, latin american and some from africa. the major move there was to give international students the same kind of need-based financial aid that we give american students. american universities were not doing before we took this move in 1999. that's made a big difference because now the students we get from abroad are not only the children of wealthy families who know about ivy league schools but we're starting to get

fabulous students from eastern europe or russia or china where parents don't have economic means at all, in fact they're getting full financial aid. >> charlie: and your biggest university relationship beyond china is where? >> well, we're developing a lot in india right now. we have historically quite a bit of strength in the study of japan. we have a lot of strength this say latin america and of course western europe. but our focus now having built a really strong network of relationships in china and partnerships has been india. we're building up our faculty in that area. we hired the noble laureate, he's going to serve on a half time basis. we're building ties with his institute in delhi which focuses on environment sustainability. and we are looking to build up

partnerships. we're running like our chinese government leadership programs where we educate chinese prime american stirs on contemporary issues we're doing the same for a group of parliament tainers loving to come to yale in two years. do you get financial support from these countries when you go there. >> limited. we have a lot of these programs abroad juices partly from our donors and foundation support. we've not gotten a lot of support directly from the foreign governments although we've got some partial support. >> charlie: what about the mid east and the arab world? >> we are hoping to get more action going to the middle east. we've got a number of interesting programs, our divinity school has some terrific involvements with

muslim clerics. we've built a fabulous enterprise called the common word which is a christian dialogue. then of course on faith and globalization, where it is looking worldwide at religious conflict and how can you use religion for a force for grin in the world as opposed for force for -- christian muslim conflict and of course he's deeply involved in the middle east. and he's, you know, he's helping us push the envelope in the middle east as well. we're talking with several universities in the middle east about potentially partnerships too in the sciences and engineers. >> charlie: and africa? >> africa we've got quite a lot of capacity building programs going on. we have a program, we have some programs that work with developing capacity to treat aids in south africa, freedland

has run for years, medical researchers in ghana, in our public health schools doing great work, training medical clinical administrators, people -- i would say hospital administrators but more small field health clinics. and there's a fabulous course for these people that's used in ethiopia and a number of other countries in africa. we're thinking of digitizing that course and making it much more widely available as a health management teaching tool around the whole developing world. >> charlie: because you frafl so much, because you talk to everybody, because you have access to everything, how is it the perception of america different today? >> well i think there's no doubt that the kind of unilateralism of the resent bush administration did hurt america's standing in many countries. i mean people didn't understand

the rationale for the iraqi war, they didn't understand the signing of the accords. they think america was a little too confident of its own judgment and not willing to consult and work with its allies sufficiently. i think it's very clear that president obama has sent signals that he wants to reverse that perception. as far as i understand there are really quite serious conversations going on between the united states and other countries working towards achieving a deal. i mean, we're serious about it. and we're taking seriously the needs of other countries and we're not, we're not dictating to the chinese or the indians here's what you got to do, we're trying to find out what are they willing to do. and show what we're willing to do and come to an understanding. i think that's a great step forward. >> charlie: what is your -- looking at education in china which you've seen first hand,

certainly at the university level, at the higher education. how is it different than american higher education? and how are they changing to compete with american higher education? >> this is a subject that i've been intimately involved with. i've been working with a group of chinese university presidents and their leadership teams for the last five years, we get together in the summer. first year we did it, it was really a training session, you know, we gave them a course on how american universies work. and each year since the sort of sus pattern has shifted away from, you know, us conveying to them how we run undergraduate education or how we organize the university to listening to the reforms this have under way. it is quite amazing. in america, it takes a long time to move a university, to reorganize it and change its curriculum. >> charlie: in curricula. >> they're moving in light speed. >> charlie: it's a stimulus program. >> exactly.

they've concluded at the highest levels that they need more creativity and innovation from the next generation. >> charlie: traditional argument conventional wisdom was yes they were really smart but they did not have, that america would always do better with the chinese but always do well because it had somehow in its education, it taught or created an ability to think creatively. >> exactly. and you know, the classroom methods we use, the drawing -- >> charlie: dialogue and everything else. >> the kind of exams we give, which aren't what the textbook says, we ask, you know, here are two interpretations of the causes of world war i, which one would you favor and why. >> charlie: exactly. >> so we get people to think for themselves. the chinese realize they have to do that. >> charlie: how did they. >> everything in china is so

different from here. it comes from the top down. they have a lot of very smart people in government, and i think this is right from the top. tao enunciated his five year plan which is about creativity and innovation. we don't want to get to the point in our economic development where we're exhausted our surplus labor supply, what they have now. they have low cost labor migrating from country side to cities that's why they have a big scrang. some day they'll call that labor up, have full employment in high playing industry and wages will start to rise and just like any country that develops, it happened to japan, when they develop the only way you can compete is not through manufacturing cost but through knowledge and innovation. they realize that day will come in china 20 years from now. >> charlie: manufacturing is then shipped to somewhere else. >> so we'll be manufacturing in indonesia or africa. >> charlie: exactly. >> the development process will

really get on track. >> charlie: does that all have to do with the cost of labor. >> no, but it has to do with how to mobilize resources, how societies are organized how the right infrastructure is built. chinese is brilliant at building infra structure and really facilitating the growth. >> charlie: how do you explain their security reflected in the current crises and also in tibet. >> the current weaker crises. >> charlie: yes. >> do you know, it's a very complex society. it spans a big geographic area. there are these ethnic tensions the chinese have historically, at least for many years, been the majority. the chinese would like to bring up, they would like to lift all boats with their economic progress but like in america the effects of their economic development is distributed unevenly. that's a source of great tension.

and in the society. that's why you see these demonstrations and things happening all over china. in the minority groups and in the regions that are in far northwest, the far northeast and areas that are less developed. chinese are very concerned about this because they talk about harmonious development. they want to bring all of the elements of society along but the development process is the growth is going to take place in the urbanized area. and so they are building infrastructure, they're building highways, they're creating cities in these remote regions that will be -- >> charlie: the ends justifies the means philosophy, ie, look, we got to build this thing so whatever we have stood to maintain our power in order to make this economic prosperity to continue, you'll just to the rest of the world live to it, is that the attitude. >> that's a blunt way of putting

it but that's not far from the truth because they do feel that china is such a complex desperate society that they don't exert a lot of social control, they can't keep the progress moving forward. >> charlie: you talk this to the university people. >> you bet. the interesting thing in china i think is there's a lot of freedom of dialogue in intellectual community. in the universities, you can talk politics. you can be critical of the government, you just don't write about it very much. you don't demonstrate on the streets. >> charlie: what do you think of that, a man who comes from, you know, the academy that is what makes the academy what it is. the ability toward free expeace. >> china's progress towards liberalization, towards freedom of expression towards rule of law is only going to be helped by our engagement and our

example. the more students that come to the u.s. and experience freedom, better off we are. so they're going to be home and they're going to have a taste of what a free society is. american universities are actually the best instrument of diplomacy that u.s. has. students who come here and live here go home deeply respectful of american values because they see what it's like. they see what a marvelous thing it is to be able to say whatever you like, to be able to, you know, criticize anyone. >> charlie: and not have the internet censored. >> absolutely. i think engagement is the best hope for the liberalization of china. >> charlie: and the change of the political system. >> eventually. >> charlie: not just -- . >> well there's freedom of expression. there's rule of law. are transactions going to be

arbitrary or based on law. and then there's choice of leadership. there's democracy. those are separate things and obviously they're related in our country. but you can imagine more free speech without necessarily having -- >> charlie: respecting intellectual property. >> i put that under the rule of law rule. but i think there's been some progress in all these fronts. i'll tell you, i really started going to china only in 2001, only eight years ago. but i have seen just in that brief time very much liberalization of the press and media. the kind of things that are talked about now, now grant it i only can hear the english language tv and read the chinese english language press. but the quhoi -- but the china daily which is the english language paper, years ago there

was no government criticism. remember the foot safety crises a year or two ago. there were critical articles, self critical articles about the response to the earthquake disaster. >> charlie: in an interesting way you say higher education but also technology will clearly change in time. >> the truth is suppression of free speech is very -- >> charlie: very difficult. >> these kids in the universities, they know how to get around the censorship. they know, they got ways of doing it. so they go to some, the director out to get to google and things are blocked. they kind an indirect route and they get there. >> charlie: the economy today. you're an economist. >> yes. >> charlie: for a while there, there seemed to be hope that the economic recovery was at a certain place. that at least the fall had stopped, the contraction had

stopped and that there were green shoots in all of the expressions used, you and i both know. >> right. >> charlie: where are we now. >> well the fall never stopped. the rate of decline abated. so, you know, it was not the, it was not that we stopped falling, it's that the change from month to month with a not as awe veer before. everybody applauded when the unemployment rate went up by 2/10ths of a percent or only 300,000 jobs lost instead of 500,000 in that month. 300,000 lost is a lot of jobs to lose in a month. so we are still on the decline. unemployment is still rising and it will continue to rise in my view for some time. >> charlie: are the banks lending money. >> apparently more. there was an encouraging news on the mortgage lending front in

today's papers. apparently there's been some improvement. i talked to some people who said that financing for small and medium size businesses is now starting to improve. >> and corporations are willing to invest that money in terms of capital improvements. >> you know, one of the great things about american entrepreneurship is there are people with ideas propping up every minute. >> charlie: -- goldman sachs. >> i'm not an optimist. i think we'll be in the trough for a while. >> charlie: how long. what's a while. >> another year, at least. so don't expect any real progress from now until the end of 2010. >> yes. i think the turn around is, you know. >> charlie: i realize nobody

likes to be to be pinned down. you have expectation on the part of the administration on a certain growth level. is that changing? then comes out of wall street a different sort of the projection of gdp. >> i think the sort of conconveniences -- >> charlie: what's the for cast -- >> for next year, no. for 2010, they're still talking about the hopeful forecasts are 1% or 1.2. the pessimistic forecasts are 7/10ths of a point. it will be a while. >> charlie: i've had people come to this program and they expressed two ideas. paul kruggen. we need another stimulus don't we. >> sign me up.

everybody touched by noble laureate. he was a great economist of the great depression. he formulated mise theory based on depression and said economic theory tells you there can't be unemployment. no such thing as involuntary unemployment. he developed a theory that explained it. >> charlie: that was to invest or stimulate the economy in order to deal with it. >> under certain conditions, such as we're in now, such as we were in in the 1930's. monetary policy alone, lowering interest rates, raising money supply would not be sufficient to induce the investment in the private sector so the government had to make direct investment itself in order to create jobs. that was the number one insight. and i think it was as valid

today as it was there. that's why last time we spoke informally, i was critical of the stimulus package because i thought the original stimulus package because i thought it made too many concessions to congressional politics in the sense that it was half tax abatement and only about half direct creation. i think we need more creation and we need it soon. >> charlie: how should we do it. >> i have a way of doing it that nobody seems to like. again, congressional politics. the simplest way to start and get the economy moving is to take not shovel-ready projects that will in truth need six months to get moving, take the projects that are already being funded by state and local governments. there's a school being built right on my block. there's a bridge over the river being built. these are projects under way. double the employment on those projects tomorrow. go tell people go hire more subcontractors. give them the money to

accelerate the rate of these construction projects. that would work. i mean it's much easier to administer. you already got the contracts you've got these things going, just give these people more money and make them put more people to work. that's just a start in the construction sector. government procurement. buy more stuff. >> charlie: the congress -- >> why? i'll tell you why congress. if you look at how the money is being spent on, i can't remember, more than a thousand individual projects earmarked. those are new projects bethe congress can take them in their local district. obama said to congress essentially the request we need this much in job creation. he let the congress design it. basically said you pick the projects. and what we got effectively was a whole hodgepodge of new products, many of which haven't

started yet. the money's are authorized and we don't have all that money. >> was there a mistake on the part of the obama administration to take that apart. >> look i understand why they made the decision because they wanted congressional buy-in. they initially wanted the tax cuts because they wanted republican votes, they didn't get republican votes, they had to buy three votes with other measures. you know, i would have taken the greater risk and gone directly to people and said i was elected with a mandate to fix this crises and here's the way i see it and write to your congressman because i need your support. i would have done that at the beginning of the administration. >> charlie: do you think that is his style. >> my friends by the way in the administration were great economists whom i greatly respect. they don't think i'm politically naive. >> charlie: they always say that. they say if you knew politic like i knew politics you would understand. >> i know it's true. it's not my profession and i have great respect for for the

people. >> charlie: you know these people. some are your good friends. what are they saying now, like they made mistakes or they can do things now to fix the economy or are they wringing their hands saying we don't know what to do. >> i'm actually a huge fab of larry summers and ben bernanke and i think they are honestly trying -- those are the only people i know personally. i think these people are working hard to do things as they best see them subject to what they see as the political -- >> charlie: who should be the next chairman of the federal reserve. bernanke or larry summers. >> i'm not going to vote on that. i think they're both extremely capable people. [laughter] >> charlie: so yale president trained as an economy sist says i have no opinion. >> i'm not going to express one. [laughter] >> charlie: okay. so you have a program already, how you would stimulate the

economy. build existing projects state and local and double the money and say go hire more people and get it done faster. >> exactly. and the government procurement contracts, yes. >> charlie: what else should we do in terms of the stimulus? you need a new stimulus program. here is an argument made against what you know much better than i do. people come to this table and say there's a basic ride on this question. and the administration knows that. and the divide says we can't take more debt. we can't take more debt. >> yes. it's a serious problem. and it does mean you have to have a stimulus package and you're going to have to follow it with a period of serious fiscal discipline as the economy recovers. the biggest fiscal policy mistake of the most resent administration was to not use the time of economic, robust economic growth to build up a government surplus. clinton did it. the tail end of the clinton administration, do you remember when clinton left office, we

were looking at $300 billion surplus. >> charlie: they did that by the decisions they made in the beginning of 92, 93. budget deficit hawks that bob ruben was, right or wrong. >> right, that's right. >> charlie: do it at the last minute, the republicans are arguing that, the republicans will argue now, they'll come in here and argue that yes they presented a surplus but the yes they presented an economy that was losing steam. and all of a sudden, you know -- >> in 2001. >> charlie: yes, in 2001. that's what they argued. >> we have the internet. >> charlie: your friend the president argues that. he does. come on. he sought your council, president bush. >> he is a good honest man. >> charlie: you know that better than i do. the republicans made the

argument when presented with the argument of surplus yes, there was a surplus, yes, we had a war, choice and they argued, on the other hand they argued the economy as presented had the seeds of its own decline on it. you reject that. >> i do reject that. >> charlie: any republican said they inherited an economy it was not all they made how the to be, you say they're flat wrong. >> there was the weakness in this internet asset bubble. but as it turned out, that was a very transitory thing that didn't last long and didn't take the economy into a deep recession. >> charlie: it was the choice they made given what they were given -- choices they made rather than what they were given by the clinton economy. >> that's right. and they cut taxes not for fiscal stimulus but for it logical reasons, they wanted to cut taxes. >> charlie: they were elected in fact. >> i wouldn't have cut taxes at

that point in the economy. i would have used the surplus -- the -- i would not have dissipated the growing surplus i would have used it to sort of fix healthcare and social security. >> charlie: how would you have fixed healthcare. >> many of the same ways that obama's looking at now. >> charlie: do you know the choices he's going to make. >> no. >> charlie: they're going to be written -- >> these are tuf choices. >> charlie: you're an economist. do you believe healthcare reform can be budget -- can be deficit neutral. >> i think if one of the goals is major expansion of coverage, it's going to be very hard to make it cost neutral. i do think that we need to think about how we can reduce the cost of healthcare. but the real truth is, the only way that's really going to happen is if the habits and norms of how we spend money in the last year of life change.

i mean, the great expenditure in healthcare has to do with, you know, how much we do in the, you know, at the end. that's a social and moral and ethical question. >> charlie: there's much bigger cost. >> this recent article in the new yorker about disparities in healthcare in regions just by the norms of physicians, in the town of texas, mcdown texas he talks about. >> charlie: hawaii. >> where physicians prescribe many many many more tests because of the way they are organized and they get the economic benefit from it. in contrast to let's say the mayo clinic, one third the cost of getting the same health. >> charlie: the argument that everybody's up in arms over, the public sector of healthcare reform. and people like joe califano will say we have half the health

care in america is public. it is medicare and medicaid. >> that's right, that's right. >> charlie: others will step forward to say medicare is a disaster in terms of its efficiency. >> i don't know that. >> charlie: efficiency. >> i'm not confident that that's true. i mean, it's not, it's in some areas difficult for the healthcare providers because it's not really fully compensatory. >> charlie: let me close this conversation with this point. >> sure. >> charlie: you're on the president's adviser-yierks i'm science and technology. >> science and technology. >> charlie: are there any women in this group. >> of course. we have some very able women scientists including one yale ph.d. >> charlie: great. i know you do. >> the purpose is to give advice

to john holder as the science advisers and through him to the president. >> charlie: what kind of advice do you want to give to him. >> we're looking at a whole lot of areas. they want advice on, you know, where it's scientific advice is helpful, they'd like to have it. what new areas of technology that they pursue. what shall they do about creating conditions for the next area of industrial growth. what investments do you need to take full advantage of green technologies or what infrastructures -- electric cars. >> charlie: maybe these are big environmental issues. are you going to weigh in on stem cell and issues like that. >> i kind of doubt that. i think they'll come to us when they want scientific and technical advice. it's kind of a two-way thing. >> charlie: how about funding for nih and places like that. >> well, i think it's a little

bit of a bias the committee because it's almost all scientist and one university president. we're going to be strong for science funding but the president is already there. he gave a fabulous speech to the national academy of science. >> charlie: i think i've said this on this program because i heard it this week. the thing that amazes him is how we don't recognize how much people like the president and bob gates and others, they set forth what they believe and their agenda in a much more sophisticated way in their speeches than we realize. speeches have tended to be ignored in a sense. but this president and this administration and perhaps others, understand that that's the place that you define, who you are, what you want, where you want to go. whether it's new nuclear nonproliferation, whether it's a man on the moon, whatever it is, you set the national agenda in the way you set the aspiration

and then you set the action agenda by the way you propose to the congress. >> it's not by accident that lincoln is obama's favorite president. lincoln's speeches are the most brunt example we have in american political history of speeches that deal with substance and deals with it in a sophisticated way and 1e9ing an agenda. he is modeling himself after lincoln. >> charlie: is there a risk we will lose, this is back to science and technology that we may just lose the lead we v not so much because we don't intend to do it, because everybody else especially china and india, they're very smart about what it delivers. we still have some things that those countries don't have. >> charlie: what. >> we still have the greatest

research universities. >> charlie: that's part of their agenda. by the year 2025 china says it wants two of the top 20 great universities in the world. >> leaving 18 for the u.s. [laughter] >> charlie: >> charlie: looks bad now. we've got 20 of them now. you optimistic about america. >> i'm always optimistic about america. >> charlie: because. >> because it's a great country. we have -- [laughter] >> i mean, it is more than any society in history, a land of opportunity. people can go from the bottom to the top in this country more easy than anywhere else. >> charlie: the best way to do that is education as the president will tell you, as the president of yale will tell you and the president of the neighborhood -- >> your odds of leaving the bottom quintile, the bottom 20% of the income distribution are tripled if you go to college.

your odds of getting out of the bottom is 20%. >> charlie: are tripled. >> even if you go to community college. >> charlie: that's a bet i would make. rick levin president of yale university, a great great university. i hope we have somehow shared the enthusiasm and the responsibilities of the university president as well as the sense of excitement that universities ought to be doing about learning, tools of learning and the joy of learning. and finally some sense of how education's becoming increasingly global and universities are spreading all over the place as are other cultural institutions we are letting. times are-changing as mr. dillon says. thanks for joining us. see you next time.