CENTER FOR AMERICAN PROGRESS

THE NEED FOR A U.S. COMPETITIVENESS STRATEGY

INTRODUCTION: , PRESIDENT, CENTER FOR AMERICAN PROGRESS

MODERATOR: SARAH ROSEN WARTELL, EXECUTIVE VICE PRESIDENT, CENTER FOR AMERICAN PROGRESS

SPEAKERS: REPRESENTATIVE BARTON GORDON (D-TN)

MARK ANDERSON, EXECUTIVE VICE PRESIDENT, THE WESSEL GROUP, INC.

CHARLENE BARSHEFSKY, SENIOR INTERNATIONAL PARTNER, WILMHERHALE

WILLIAM DALEY, MIDWEST CHAIRMAN, JPMORGAN CHASE & CO

BRAD SMITH GENERAL COUNSEL, SENIOR VICE PRESIDENT, LEGAL AND CORPORATE AFFAIRS, MICROSOFT

TUESDAY, DECEMBER 1, 2010 WASHINGTON, D.C.

Transcript by Federal News Service Washington, D.C.

JOHN PODESTA: Good morning and welcome to the Center for American Progress. I’m John Podesta, the president of the center. I’m pleased that you’re all able to join us here today and that the topic of U.S. competitiveness did not get rained out. (Chuckles.)

So before we get started, I want to thank our panelists for participating in the discussion. I’m going to introduce them at the end of my remarks. Some of them have to – some of them had to make a special effort to get here – notwithstanding, even, the rain – and to squeeze this event into their schedule so I’m really appreciative of, particularly, of Bill making the trip. We’ll have Charlene Barshefsky here who is going to be a bit late but I think will be here by the time we begin our panel.

Over the past two years, policymakers have naturally and necessarily focused on how to pull the country out of the great recession and get the economy growing again. The swift actions of the Obama administration allowed us to avoid the calamity of a second Great Depression; domestic growth has since resumed although the rate of job creation remains far too low.

But even as we fight in the short term to restore jobs lost in the Bush recession, we must also turn our attention to the long-term challenge neglected by the previous administration, which is how to build a 21 st century competitive economy in which the American middle-class can succeed and prosper.

The U.S. has excelled at competing internationally in the past. We built an enviably number of high-quality universities, a base of sophisticated scientific knowledge and enterprise, a skilled manufacturing workforce, open capital markets and a nimble venture-capital and finance system. We opened our doors to immigrant families like mine who came across the world bringing their talents and ingenuity to power our growth, and our entrepreneurial culture and optimistic character helped to make America the strongest and most competitive economy in the world.

I don’t have to tell you that we are now at a critical juncture. On many key indicators from educational attainment to infrastructure to new inventions other countries are rapidly advancing while our own progress has faltered. Don’t get me wrong, I think we still enjoy significant competitive strengths but in this evolving economic landscape we must hone our competitive advantages more than ever in order to create the kind of good-paying jobs we need for the American worker to prosper.

The administration has already executed many initiatives to advance American competitiveness including those aimed at supporting innovation and manufacturing, increasing exports and achieving higher levels of educational attainment. But in our view, the full potential of these efforts is undermined by the lack of a coherent and overarching framework that looks beyond daily crisis to focus explicitly on longer-term challenges.

The first step to building such a framework is to move past the stale debates in which policy choices are denigrated as Soviet-style industrial policy that interferes with the market- picking winners. These alarmist arguments only distract from the reality. The United States always relied upon entrepreneurs, market discipline and the private sector to drive economic expansion and will always continue to do so.

As even our founders understood when they wrote Patent and Copyright Clause into the Constitution, it’s the government which has an essential role to play as a catalyst of innovation, creating the conditions for a kind of private investment that generates widely shared growth and stepping into carefully addressed market failures when they do occur.

But when it comes to competitiveness there’s no process by which the long-term goals are identified, catalytic role of government is defined and smart, responsible policies designed in its service. The responsibility for ensuring U.S. competitiveness is diffuse. The departments of Commerce, Treasury, Transportation, Energy, Labor, Education, the Office of U.S. Trade Rep. and dozens of other government agencies and departments all have some say in a competitiveness strategy. This is all in marked contrast to other leading nations which typically have a single, strong department responsible for championing competitiveness and interfacing with the business community.

I know well that the White House faces many day-to-day issues and crises – this administration more than any in recent memory. That makes it difficult to devote the time to look over the horizon. Even in the best of circumstances, preparing for a future well beyond the next election cycle is simply very difficult.

But the White House must have a U.S. competitiveness – must have U.S. competitiveness as a priority, develop a strategy and use every tool at its disposal to implement it. A coordinated, long-term planning just won’t happen without that kind of a strategy. Doing so will set us on a more solid economic path going forward. It will also create much needed immediate opportunities for the administration to engage substantively with the business and labor communities around policy priorities and specific initiatives on job creation and growth.

That’s why Sarah Wartell, Jitinder Kohli and I propose in a paper we’re releasing today a more rigorous and structured long-term planning process to precede in parallel to day-to-day economic policy.

A good planning process should include, first, an assessment of current conditions and future challenges. We propose asking the national academies to perform regular horizon scans so that as a nation we understand our long-term competitiveness challenges and opportunities.

Second, an articulation of an overriding approach from the president in the form of a biannual national-competitiveness strategy. Third, specific policies including goals and measures of performance. Fourth, an interagency committee of the NEC chaired by a new NEC deputy that would develop strategy and more importantly monitor policy implementation. And finally, the meaningful participation of business and labor throughout the strategy process.

We also suggest in the paper that this may be the right time to tackle the challenge of government reorganization. Our preliminary work shows a strong case for building a department for competitiveness perhaps by joining the Department of Commerce and the USTR and other trade-related agencies, perhaps, going further in including higher-education, workforce development and science. More work needs to be done in this area; we recommend that the president asks the national academies to take the lead.

I want to note, we have previously recommended in a report we released about a month ago on the power of the president – that the Obama administration create a virtual statistical agency. In this paper, we develop some ideas for consolidation of economic, environmental and other statistical functions across the government which will be a more cost-effective way of providing the important data needed to make sound decisions.

In sum, we argue that we have to put U.S. competitiveness at the top of the national agenda and begin taking immediate steps to ensure our long-term economic strength. And while good progress won’t guarantee – good process, I’m sorry, won’t guarantee our success, taking the strategic steps will go a long way toward creating an environment where success is far easier to achieve.

Now, I want to introduce our panel; I’m going to give brief introductions. Their bios are in your packets and they deserve longer introductions but I want to get the panel started so I’m going to be brief. First, we have chairman Bart Gordon, the chairman of the House Committee on Science and Technology.

I think no one deserves more credit than chairman Gordon for the America COMPETES Act and for focusing the Congress on the question of the competitive position of the United States. He saw that enacted and initially funded; the House passed its reauthorization earlier this year. The chairman, of course, is retiring after a long and distinguished career in the House. I think it would be a fitting capstone, Bart, to your tenure if the Senate would actually reauthorize this important legislation. (Laughter.)

Two of my former colleagues will be joining us from the Clinton Cabinet. Here with us now is Bill Daley, the current chairman of the Midwest region of JPMorgan Chase, the former secretary of Commerce under President Clinton. I was fortunate enough to work alongside Bill while I was in the Clinton White House and to see firsthand how focused leadership and coordination can pay big dividends. He’s a good friend of mine; I appreciate that you made the time to get to Washington and be with us here today.

Later, we’ll be joined by Charlene Barshefsky, the senior international partner at WilmerHale and former U.S. trade representative. While she’s probably best known as the architect and chief negotiator of ’s historic WTO agreement at the USTR; Charlene oversaw a steady growth in U.S. exports and was responsible for hundreds of negotiations and investment agreements with virtually every major country in the world.

Fourth, we have Brad Smith who’s the general counsel and senior vice president at Microsoft. I’m pleased to have Microsoft representing the business community here since Microsoft’s growth from a small start-up to today’s global computing leader showcases how the U.S. entrepreneurial culture and vibrant U.S. finance system are beneficial to growth.

And finally we have Mark Anderson, the former president of the Food and Allied Services Trades at the AFL-CIO and current executive vice president Wessel Group. While at the AFL-CIO, we worked together when I was in the White House and Mr. Anderson led the federation’s work on issues relating to international trade and investment, worked on major U.S. trade legislation and developed strategies for advancing worker’s interest through Congress and the executive branch.

So I want to thank all of you for joining us. I’m going to turn things over to Sarah Rosen Wartell, the executive vice president for policy here at the center, the former deputy director of the National Economic Council at the White House, my partner in creating CAP to moderate the discussion. Sarah has really devoted a tremendous amount of attention and energy to trying to figure out how to actually produce that strong strategy that can drive these ideas forward and along with Jitinder were the principal authors on this report. So Sarah, please take the podium and – (inaudible, off mic).

(Break.)

SARAH ROSEN WARTELL: Good morning everyone. Am I now mic’ed? Great, thanks. So we have a tremendous panel; we want to get right to a discussion that’s going to be a blend of discussion about the process and some of the structural recommendations that came out of CAPs report and also I hope an effort to focus on what are the priorities in – if we’re trying to advance competitiveness. What are the things that are the most important things that policymakers ought to take up in the next few months?

That’s a debate that we’re going to have today but it’s going to continue and this is really the beginning of a body of work for the center. For the next 10 days we have launched an online blog where another dozen or so prominent folks will be issuing short commentaries and then we’ll actually have an opportunity for others, including all of you if you like, to comment on those and start a dialogue.

We have people like AT&T CEO Randall Stephenson, we have Leo Gerard of the Steelworkers, we have governors Rendell and Granholm, we have Rob Atkinson from ITIF and Bruce Mehlman who served in the Bush administration and many others who are going to be providing their thoughts there. So this is the beginning of a conversation I really want to invite all of you to join us after today.

But let’s start with this tremendous panel we have here and, Congressman, I want to start with you if I could. So John mentioned your role in the COMPETES Act and that in putting that together and in trying to launch a focus on competitiveness you had to battle both, I think, with the Congress where responsibility for these kinds of issues are very diffuse, there are many different committees. The science committee that you chair obviously had the ability to authorize many of the science programs but the broader out notion of competitiveness touches on many other policy issues as well. And you had to deal with both, first, the Bush and then Obama administrations where the same responsibilities were diffusely spread across the government.

I’m curious on your thoughts about how that – how well that worked and is that challenging? And what we can do as a nation to lift up the importance of competitiveness.

REPRESENTATIVE BART GORDON (D-TN): Do you want anybody else to come up today? (Inaudible, laughter).

MS. ROSEN WARTELL: Four minutes – (laughter) – it’s all yours.

REP. GORDON: Well, first, Sarah, thank you and, John, thanks for those – your kind words. More importantly, thank you for the really good body of work that CAP continues to put out, including what you’ve done here.

Let me make a – you’ve got a very outstanding here so let me just make some quick, sort of, points and we can maybe fill them in later. The first is that there are approximately 7 billion people in the world and half of those that are working make less than $2 a day and so if your 9- year-old daughter and my 9-year-old daughter, and everyone else here kids and grandkids, if they have to compete where labor cost is a significant part of our trade than they are liking going to inherit a national standard of living less than their parents. A reversal of the American dream and something we all need to be concerned about.

And so which means that I think we’ve got to produce 10 widgets, you know, or 10 times the number of widgets that they produce elsewhere and they’ve got to be 10-times better which means we’ve got to be an innovative nation and I recognize, as Brad can tell you, a lot of it’s going to be stolen, a lot of it’s going to be copied but we’ve got to continue to knock it out and always be a generation ahead and we’ve got to have a workforce that can work at that level. So whether it’s products or processes so I think that’s going to be very important for us.

I guess, the main point that I want to make today is that we already know what to do. “Rising Above the Gathering Storm” – we laid out. You know, this blueprint has been laid out over and over. Let’s get on it with it. Now, I say, that’s not inconsistent with your report because I think you do recommend some of that and you also – we do need to do some longer- term planning but it can be done in parallel. We need to get on with it.

In terms of process, let me talk a little bit about what we did in not only in COMPETES but some other areas because you’re right, there are a tremendous amount of silos in the executive branch as well as in the legislative branch and how do you get around that?

One model that I would suggest is something that we did with the National Nanotechnology Initiative. There are 25 different agencies that deal with nanotechnology; 15 of those provide $1.8 billion of funding. So we created a coordinating council there; we set up an advisory – a private-sector advisory group, not only gives advice to what they need but whatever the workforce needs. And most importantly we put somebody in charge so we just didn’t wander.

Now, we have rolled that out with solar, with water and in a lot of other ways so I would suggest that, that would be a model in a way that really the president, through executive order, can move forward and start doing much of that. Now, there are other components as you mentioned. There’s immigration, there’s regulatory environment that we have to make, I think, better for the business sector here and for the innovative sector. We can’t have the second- highest corporate-income taxes in the world and still be competitive.

And so that’s where we’re going to need, I think, presidential leadership in bringing the private sector and outside together to really make these recommendations that we then can go in a bipartisan way so that Republicans, you know, feel an ownership and pass that kind of legislation that can help in that component.

MS. ROSEN WARTELL: Mr. Secretary, today you represent the financial sector in this conversation but as the Commerce secretary you were the voice of the American business community in the administration and because, in part, of your close relationship with the president. I think that was a 10-year period when people felt that the issues of competitiveness were very focused -got a high degree of focus from the president.

What’s your sense about what we need to do to lift up competitiveness now amidst the economic and financial crisis we’ve had? And is structural change part of the solution? What else is important, as well?

WILLIAM DALEY: First of all, thanks for having me, John and Sarah, and having this discussion and it’s not just the discussion and a great paper but it’s the beginning, hopefully, of some real changes. No question that unless you’ve been in the government – (chuckles) – you really can’t understand how screwed up it is – (laughter) – when it comes to these sort of discussions.

Let me just say that at the time – and it was very nice of you to say about Commerce – but really wrote – raised the Commerce Department to a level with and that was really when you take the top-four, sort of, cabinet people off – on the respect to my colleagues – when you take those four off Commerce really, kind of, was back at the top of the rest and I don’t think, not because of the personalities because everyone is very smart, I don’t think there’s been there sort of creation, again, or making Commerce the driving force around business issues.

But in addition to that there’s no question there has to be some reorganization around these issues because it is ridiculous. When you look at the Commerce Department we all – those of us who have been there you often wonder why knows there – everyone has always heard the story, is half the department is there because Nixon got ticked off at Wally Hickel because his kid came out against the war or something and so he said don’t give it to Interior put it over there which is logical, I guess, for the early ‘70s – (laughter) – but not very logical for this century, at least politically logical at the time, you know.

But the reality is, you know, we face a reorganization. Moving the boxes around is not going to address – these are difficult issues, whether it’s taxes, entitlements, spending, trade – an issue that we spend a lot of time on and is very divisive. Mark reminded me of a discussion we had 17 years ago around NAFTA and that discussion continues – (chuckles) – today. But these are really tough issues and unless we get, hopefully, a consensus building we can move all the boxes around which I think we have to do. has tried it and it began to wane. Everyone’s got a special interest.

But I do believe at some point relatively soon, around the economic issues, there’s got to be a better focus by the government and get rid a lot of clutter. I think it also adds to the perception by the public that we just can’t function well and you go to other countries, they’re very focused whether it’s happening in a department that includes trade, the negotiations and the sort of export development, promotion and competitiveness issues.

Yes, you run into the issue of industrial policy but most other countries in the world that doesn’t seem to bother them and we back up, all of us who are great, pure free traders or pure capitalists seem and market believers seem to back up whenever the question of industrial policy begins to be discussed but I think in this new world we’ve got to change some of the processes, some of the boxes but the reality is that the difficulties – the whole we’ve put ourselves in is not going to be solved by just moving the boxes. It’s going to be addressing taxes, spending, trade, entitlements to be competitive and the rest of the world, surely, is not waiting for us to get our act together.

MS. ROSEN WARTELL: So Brad, the – from the business-community’s point of view the set of issues that are necessary for the – America to continue to be the leader that Bart referred to in innovation policy, in innovation and in creating; how do we – what is the government’s role in making that happen? What more can they do? And is there – from your perspective dealing right now with the government, what would help make sure that there is, sort of, the kind of robust conversation that needs to happen to make sure that the business community and the worker community and the administration feel like they’re in partnership together?

BRAD SMITH: Well, first of all, thank you for inviting me here. It’s great to come from Seattle and see the rain; I feel at home. (Laughter.)

I would absolutely echo what has been said already. I mean, first of all, it is of fundamental importance that we elevate this as an issue for the country if we want to create jobs, and not just new jobs but high-paying jobs; we need to put more energy behind this topic.

We need to understand what the topic is. I think from, certainly, the technology sector, you know, it’s about education and immigration so we have great people, it’s about R&D and IP so our people can innovate, and it’s about trade so we can export our products around the world.

If we’re going to be effective in advancing those kinds of opportunities, then organization does matter. I absolutely agree. In part, because the issues are so varied, that in order to raise them up effectively and give real clarity for the country, we need the kinds of leadership from the executive branch in the White House that your paper calls for.

I think we need much better understanding of actually what’s going on statistically. I think that is a really important point that the paper makes that is often overlooked. No business would be comfortable running its business the way we as a country try to run the country given our current state of data, including around exports.

If we double exports, as the president wants us to do, will we know? I don’t know that – (laughter) – we have sufficient statistics today to really figure that out.

And finally, I think that Secretary Daley makes a really good point about organization. I will say, not having been in the government, I cannot imagine how screwed up it is, but I know that organization is a big challenge for any large entity.

And having spent 20 years often talking with and negotiating with the agencies overseas – some great agencies, by the way, like the Department of Creative Industry in the U.K.; like the Department of Enterprise in Commerce in Ireland; like the way the government comes together in Singapore. I’ve seen how effective they can be. I see how they have caused us as a company to change where we invest and create jobs. And I’ve seen how they have not only influenced the investment decisions of individual companies, but they’ve actually built new industries for their economy. And if we’re going to aspire to do the same thing, it does make sense to focus on how we organize ourselves as a government.

MS. ROSEN WARTELL: Well, we should spend some time today or later hearing from you about some of those things that they were able to do because that’s really interesting. Madame Ambassador, thank you for joining us, good to have you. You led in the trade portfolio for the administration.

You were there for a long period of time in that agency. How is trade a part of this larger conversation? As the secretary said, it was obviously very contentious. And also, it’s always been important to USTR that it be part of the Executive Office of the President, that it feels it had a sort of special stature.

What is your reaction to some of these ideas about combination and a larger a competitiveness department? Is that an elevation? Would it be perceived as such? And is that helpful to making trade a more central part of our economic conversation?

CHARLENE BARSHEFSKY: First of all, thank you, also, for having me here and very nice to see so many people who I’ve known for a long time. John, thank you. I think the question is, what are we trying to fix?

If there are specific functions of government that are important, on which there is agreement, if those functions are completed and every metric tells you they’re successful or not – is that a function that needs to be changed in some way by reorganization or moving or – and my reaction would be no. If it ain’t broke, don’t fix it. And I think that’s true for almost every area.

If we look at trade policy, in particular, is the gap a USTR problem or a Commerce problem? I don’t think so. The gap is that there is no policy and that’s because it is contentious. It’s a difficult issue. It is divisive now among both parties. The old coalitions that could be built are much more difficult to build.

And the business community itself, which would just as soon remain in the business of being in business and not in the business of creating policy, has shown less and less interest in the larger trade initiatives of the day. That speaks to a larger problem. And I think it is indicative of why there are so many studies on competitiveness and why we’re in the position that we are. And certainly in the CAP paper, when you look at where we rank among the OECD, this is inexcusable now. This is completely inexcusable.

And to my mind, the issue is an absolute absence of common purpose. There is simply no common purpose in this country. And until there is common agreement, A, that there is a problem, B, what that problem or set of problems is, and C, the policies for turning those problems into something more positive, I don’t see reorganization altering the deck chairs, right? Altering the deck.

Trade, of course, is highly contentious, for reasons that are – I believe – as political as they are potentially factual, fact-based, particularly for the lowest quintile or the lowest two quintiles of the income distribution.

But having said that, for me the real point is – and I think the great value of the CAP study – is that if we did move to a kind of quadrennial format, where you had a study done by the academies, which would be terrific, that really looked at a four-or five-year period indicating the problems, where we’re behind, where we absolutely need to excel.

And that was something – a single, unitary piece around which policymakers could coalesce – that, from my mind, would be much more important than any particular reorganization. And then have, and I think that this is important, White House leadership through perhaps an elite force within the White House drawn from the agencies to articulate the specific policies.

And some of that may come from – an academies study to articulate the specific policies that need to be undertaken. Then maybe you have a chance to turn things around. And that’s where I would focus my energy.

MS. ROSEN WARTELL: So Mark, I like the ambassador’s use of the phrase “common purpose.” Workers and the business community have not, on many of these issues, always felt like there was a sense of common purpose. What does it take to create – I mean, ultimately, if we have firms that are doing well in the United States, that is our only hope for opportunity for American workers.

But that, as we saw during much of the Bush administration, you can have a growing economy and not necessarily rising wages and rising standards of living for workers. How do we create the sense of common purpose? And is competitiveness a frame that can actually create some shared vision between the business and labor community?

MARK ANDERSON: Thank you, Sarah. I agree. Common purpose is a very good – is a very good phrase. I mean, that’s what I do. That’s what we in the labor movement – that’s what we do every day. We try to organize, select our common interests, to try to better ourselves in a collective fashion.

You know, I want to first say I’m stepping in here – I should acknowledge – for my friend and brother, Leo Gerard, president of the Steelworkers Union, who couldn’t be here – who couldn’t be here this morning. And I want to commend CAP for this effort because I think it does a couple of things.

One, it is an acknowledgement that we have our problems in the country, one. Two, that we don’t have a national strategy. And three, that we need one. And fourth, that other countries – and this has been suggested by my fellow panelists – other countries somehow seem to manage our trade and investment flows to their own national advantage in a better fashion than we do.

Now, this is something that is very welcome in the labor community. This is something that organized labor has been suggesting, has been proposing, has been arguing for, for decades. And so I hope this is a catalyst to move that discussion along.

And whether you call it a manufacturing strategy, a competitiveness strategy, an industrial policy, it really doesn’t matter. But at the core of this issue is, what are our goals and what indeed are our interests? And I must say, listening to this most distinguished group here with me, I was reminded of a story told by Robert Benchley, the American humorist from the first part of the last century.

While, as a student at Harvard, he was asked on an exam to analyze and describe the competing interests between Canada and the U.S. concerning the U.S.-Canada fisheries treaty of 18-something or other. And Benchley sat for a moment and thought, well, you know, I think those interests are fairly well known, but I’d like to take this opportunity to put in a word for the fish. (Laughter.)

And so that’s what I think I want to try to do here, is put in a word for the fish, for workers –

MS. ROSEN WARTELL: Not the Noah fish (ph), this is – (laughter).

MR. ANDERSON: For workers. I love the Noah fish. (Laughter.) For workers who are buffeted by the global economy that we find ourselves in. And two quick things and I’d be remiss if I didn’t say it. I mean, John alluded to this in his opening remarks, but I think we sort of have to think about where we are today.

Over the last two, two-and-a-half decades of increasing trade liberalization, of reliance on market fundamentalism, on financial deregulation that brought the world to the brink of a depression, the fate of American workers has not been too good.

Real income is stagnant or declining for large segments of the American workforce in real terms over the last 25 years. We have historically high unemployment today, as we all know. And sadly, you know, extended unemployment insurance benefits for workers expires today. It’s a simple tragic, tragic act. Income distribution is more skewed today than it has been at any time since the Gilded Age.

The country is in deep trouble and it is – and it gets to what Charlene said. What is our common purpose? And so as we talk about this, we need to think about that clearly as to how do we measure success. How do we measure success? I mean, a couple of weeks ago, I think it was the Commerce Department came out with statistics saying that corporate profits in the last quarter were the highest ever recorded.

Now, for some people, that’s a measure of great success, I guess. But it is not a measure of success for the people that I represent, for the people who’ve had their wages driven down in bargaining because of the global economy, who’ve lost their health care, who’ve lost their retirement benefits. And so we need to make it very clear what indeed our goals are as we go forward in this process.

MS. ROSEN WARTELL: So I want to turn to a discussion of this question of goals and I want to talk a little bit about how we define those goals. I think there’s, sort of, two slices or two ways to look at that. One is presumably about the quality of life that we can offer to Americans, the – both the availability of work and its importance to human life as well as the standard of living it affords.

Another is about the attractiveness of the United States to firms to locate here. Because without that – and the availability to firms of capital so that they can invest and grow – because without that, the former is not a reasonable prospect. If you start to think about those as the overriding goals, you then achieve that through, sort of, this is what a strategy would articulate. What’s the layer of goals one level below?

Some have said – and there’s been a lot of reference to how Europe and others do this. There are countries that think very consciously about their sectors and what they want to do. For example, to grow their role in technology and innovation or in manufacturing, or even some countries, even in particular types of services or manufacturing.

And we, as a country, are a little allergic to that. We get uncomfortable thinking about picking winners and losers. And it seems to us there’s a place somewhere in between that you can be, where you can recognize – and there’s a very interesting McKinsey study that came out in March 2010 that talks – looking at countries around the globe – that different policy intervention may be important in different kinds of tradable versus nontradable services and goods and in different parts of the economy.

I’m curious if – I’m going to open this up to anyone who wants to comment. How do we think about those goals and to what extent is looking at sort of a differentiated approach by sector – something trade is a little more comfortable with doing than other parts of our economy are. Does that make sense? Anyone want to start? Congressman?

REP. GORDON: I think you laid out our – the fundamental goal is a better quality of life and standard of living. And I think we get there by having a better business climate that allows, you know, those opportunities to be developed. Then you go into, to like – if you want to get more sector-wise, I think that there’s a misconnection in terms of picking winners and losers and R&D.

Let’s take a model, and that is the semiconductor industry. A few years ago, there was a public-private sector investment in the semiconductor industry to get, again, that base research which then is in the public domain – and let them have at it, you know? Everybody, you know, let’s try to get the best. Well, because of that investment, you know, we – for many years, we led the world. We still do, barely. But I guess something like 75 percent of semiconductor chips are sold overseas, but they’re still made here by and large.

And so I think that we have to distinguish between where do you pick winners and losers. Early research is – that’s for everybody. And we ought not to try to determine, maybe – energy, for example – where we wind up, but we need to be looking at transformational types of energy research. And then we put it into the public sector and let the entrepreneurs take it and compete here.

MR. SMITH: Well, I completely agree. And one thing I would add is that we’ve – from a business perspective, I always find it helpful to ask, if we could only pursue one goal, what would the one goal be? And I think, in this case, it is absolutely clear; it’s about jobs. And it’s about creating high-paying jobs that are going to be sustainable long into the future. And if you define the goal in that way, then, I think, as a country we need two things when it comes to policy.

One is a general, overarching policy that addresses things like education, for example. Things like the right kind of generalized intellectual property and trade policy. We do need that to be informed by an understanding of key sectors that we believe are vital to the country’s competitiveness, even if it results in a generalized policy.

And then underlying that, I think there do need to be certain pillars that actually do focus on specific industry sectors and what they need, both with respect to how that generalized policy can then best be implemented and also with respect to any sector-specific policies, as well. I think as a country we’ll always be most effective if we get the generalized policies and strategies right, but then look at the sector interest to follow.

MS. WARTELL: Charlene.

MS. BARSHEFSKY: Yeah, no, I absolutely agree with that approach. The tech sector doesn’t actually need what the banking sector needs, which doesn’t actually need what the auto sector needs – except in a very broad sense, if you think about tax policy or pension policy, things of that sort.

But what those sectors need to be highly competitive – while there may be overlaps in some situations, are also quite distinctive. And that distinction needs to be taken into account with respect to how one attacks a sector – a given sector – and then the metrics by which success are measured.

I do think that the over-arching policies is where government is most effective – tends to be somewhat less effective when it comes to individual sectors. If the over-arching policies are right, usually businesses and sectors can take care of themselves pretty well. And I think that was demonstrated in the ‘90s where we did have an over-arching tech policy, over-arching additional policies in terms of worker training skills, training two-year institutions and so on.

But I do think that there needs to be a series of over-arching policies. I think that is White House-driven. I don’t think that’s real-world driven. And I agree that for my money, the single most important thing for this country, I believe, still remains the basic sciences and R&D.

If you think about our success as a country – apart from the fact we were the only major economy living – I mean, sort of, standing after World War II – much of our success emanated from the great labs that the U.S. had, some of which are gone now. The percent of spending as against GDP on basic sciences and – and I’ll never forget this – the direct encouragement and inspiration that John Kennedy gave to kids in my generation, which was, go into science, go into math, go into the hard subjects, that’s where you’re needed. And that created an enormous bubble in people who are now of our age who went into the basic sciences who account for why the U.S. still has the highest number of Nobel laureates in the world, by far.

And so to my mind, those policies – which tie into education, as well – are the most important for government.

(Audio break.)

MS. WARTELL: (In progress) – Those chart – those John Kennedy admonitions, I thinks relate back to your point about common purpose. There was set at the national level, a set of societal goals, challenges, grand challenges that we as a nation had to address, whether it was our national security during the Cold War – led to the creation of the Interstate Highway system – Sputnik and the race with the – also with the Soviets that led to that. That was what drove the science investments.

What are those challenges now? Mr. Secretary?

MR. DALEY: Well, I don’t think there’s any doubt that the – we’re at a point where that – a similar sort of challenge has got to be laid out by the president at some point over the next number of months or years – the year.

I think the country is yearning for an energy to be brought back into the – look it, we have gone through an incredibly difficult period. Mark talked, and he’s absolutely right about the difficulties of people when you’ve got unemployment where it’s at, the challenges. But yet, you know, we are in an incredible position as a nation and we all – we have a great ability to beat ourselves up like no one else in the world.

And we are still the envy of the world. Our lifestyle is unparalleled in the world. We’ve got the innovation, we’ve got the talent. We have the best higher education institutions in the world. And I think we’ve got to get a little bit of our, sort of a, swagger back. Back to a point on the investments – we did do in the ‘90s and we had a program in the Commerce Department, and I know there’s some colleagues from the old days there. I think it was called the – I’m trying to remember what it was, but it was a battle every budget season – “advanced research program” – I think it was the ARP.

Look – the truth is, President Bush 41 started – didn’t really fund it, but started it. And we invested in very high-risk projects, private investments – investments in private companies that were doing high-risk research and development. And it was very successful. Now, there were lots of controversies around whether we were investing money with big companies, and that was wrong, we should have invested with – and then it became very political, and you know, everybody wanted a piece of it sent to their school or their university.

But it was a very good example of a public-private partnership with real direct investments into companies and into projects that we prioritized – not we, the administration along with outside experts – prioritized where we wanted to put those investments. I assume it’s been done away with, by now. But – (laughter) – and we’re back. Even though there’s a lot of money floating around to invest in high-risk things, I think the government can use a similar program to – set up a similar program and make a judgment as to what the priorities are, and get it into a more – everybody knows the story, we wouldn’t have the computer if it wasn’t for DARPA; we wouldn’t have the – so many things based upon – if it wasn’t for federal dollars, taxpayers’ dollars to do the original research.

And I – so I think we’ve got to push back on this idea that it’s all got to be private sectors.

MS. WARTELL: Yeah, Mark. Go ahead.

MR. ANDERSON: Yeah, no – I was – I was taken in by your allusion to President Kennedy. You know, I think in the post-war period, America grew rapidly and it grew together. There was a common purpose. And it was done through government expenditures – we talked about the Interstate Highway system – but we made public investments and we expected that we would all grow together.

And I think what’s happened in the last 15, 20 years is that we have now been growing apart. And so oftentimes when I hear the word “competitiveness”, I hear it across a bargaining table, saying, Mark, your people are going to have to pay higher co-pays for health care. Oh, and your defined benefit pension plan is going to have to go by the by. That for on a day-to-day basis, oftentimes competitiveness is reducing people’s wages. Now, that ultimately will not be successful. We will fail if that is how we are going to compete.

And so I think government here – and I think, you know, your paper, again, begins with that discussion – you know, government can begin to try to describe again what our common purpose is and that how we can all grow together.

MR. SMITH: I think building on that, I’d like to go back to something that one of Charlene’s comments sparked. She talked about the differences between the needs, for example, of financial services and tech. I think another really interesting question comes out of the areas where we actually have needs that are very similar.

Two issues on which J.P. Morgan and Microsoft have worked very closely over the last year or two: one is around immigration – because the truth is, in both sectors we are creating high-paying, $100,000-a-year jobs that we cannot fill because the country is not producing enough college graduates with math degrees or with engineering and technical backgrounds.

And we’ve, therefore, had to focus on immigration so that we can at least create the jobs, whether it’s in the tri-state area, New York or Washington state or California or the Midwest or elsewhere. And that points to the opportunity we have to grow together that we are not pursuing as a country.

The second issue actually is around patents. And it’s probably no surprise that a company like Microsoft is focused on patents, but you might ask, well, why is the financial- services sector focused on it? And the answer in part is, they’re a technology-driven business just as they’re a people-driven business. And that’s part of their competitive edge. And it really does point to the fact that there are over-arching needs that, I think, are being lost amid the cacophony of other issues in Washington, D.C.

And if we really want to focus the government on helping the private sector create jobs, there actually is a lot of common purpose we can find – not across the board, but there’s a lot of common purpose – and if we can just elevate these issues and focus on them this way.

MS. WARTELL: Mr. Chairman, you are trying to get in?

REP. GORDON: If we’re trying to put some of those various pieces together – I’m going back to John Kennedy, it was in 1982 (sic) that John Kennedy said that we were going to go to the Moon, and we were going to go there before the end of the year – I mean, before the end of the decade. And we were going to do it not because it was easy, but because it was hard. It was going to challenge us. And it was going to help us take measure of ourself.

I think that we need that same kind of challenge again. And I would say that challenge is energy independence. We’re sending hundreds of billions of dollars overseas for energy that we could be using here in this country to create good jobs. And as Bill pointed out – DARPA – I think a role for that is within the COMPETES bill we created something called ARPA-E, which is the DARPA model used within the Energy Department: high risk, high reward, very thin management level. That’s up and going. I think that if we took – you know, if we challenged ourself to energy independence, it’s going to take math and science – STEM education – to help us get there.

We can, once again, hopefully make ourself the magnet – we want the best and brightest from around the world. It will inspire people, as Charlene says, to get into those – into those areas. And that can be the challenge. And sometimes, you know, when we talk about public policy and communicating – you see, you got to put a face on it.

You know, I think one way here to put a face on this idea of competitiveness is to say, energy independence. We can understand that.

MS. WARTELL: Those – the bodies that you are leaving in a few weeks are probably going to be – have more difference on some of the issues that we’ve talked about – whether it is trade, the level of investment in public programs – than we’ve had even over the last two years. And it’s not like there’s been unanimity on many issues over the last two years.

CAP released a report two years ago – two weeks ago called “The Power of the President.” It was talking about things that the executive branch can do using executive branch authority. I’m curious for all of you – where are the opportunities – what are the things to – obviously, the vision – articulating the vision is something that only the president can really do, in some ways.

But beyond that, what are the things that the executive can do to help advance this vision of competitiveness? And where are the things in your mind that it might be possible in the Congress to find common ground between the executive branch and the two chambers of Congress? Anyone have good thoughts there?

MR. DALEY: I would just say that I think the need to try – not to re-org, but to streamline some of this decision-making – and whether it’s with the NEC driving the process and making it, you know, the priority, is probably what’s necessary.

You know, but we’ve talked a lot about the administration, but from experience we’ve – those of us who have been in the government understand the tentacles that hold you as a department. I had, I think, at the time 70-some or seven – I forgot how many – of committees and subcommittees that basically ran the department.

I mean, you know, the reality is you come in there and think you’re going to run a department of 45,000 people and $5 billion dollars and you’re playing on the margins with a few discretionary dollars that they give you or the White House that – (inaudible) – would say, okay, here, here’s some money, go figure out what to do with it.

And you are constantly overseen by – both in appropriations but in authorizing and telling you what you to do – by the Hill and you can’t really talk about a redoing of the executive branch without Congress actually addressing their oversight of some of these agencies, it is ridiculous. And it’s all for good purpose, all good – yada, yada over the years – (laughter) – and Democrats are as guilty as the Republicans but the reality of life is, it’s a miserable way to run a company.

MS. ROSEN WARTELL: A rebuttal? (Laughter.)

REP. GORDON: Well, first of all, when you have the worst economy in 80 years, everything is harder. This is just a very tough time. And I will echo, having seen firsthand the difficulties in the legislative process, the siloing, the just unfortunate hyper-partisanism now. I mean, the model is that if you want to become in power again, in terms of the party, than you have to do whatever you can to stop – if you’re in the minority, you have to do whatever you can to stop the majority from being successful. It’s just not a good thing.

But to go more back to specifics, and I’ll try to – again, I like models, things that have worked in the past and things you can scale out or franchise. And if you look at John Kennedy, once again, I think it’s going to be necessary for the president to put forth the vision, put forth the challenge. The president, through executive orders, can do some things internally, needs to do that, needs to make it very important.

And then when you get to the legislative sector, the way that we were successful and everything that we did was bipartisan, you really have to go outside the legislative process and outside parties. You’ve got to the business sector, to the academics, to other groups like CAP. They have to be your third-party verifiers whether it’s – if it’s “Rising Above the Gathering Storm,” you know, they brought that to us and I put it into legislative form. And then you really have to reach out to the minority party and make them a part of it early on so that they have editorial pride, and you’ll find they have pretty good ideas, too.

And then, once again, we’ve got to back to the private sector to give that third-party verification and push it on forward. But it’s going to start, you know, with the president, get the ball rolling and then – and then I think that the legislature, if done properly, will do their part afterwards.

MR. ANDERSON: Let me bump up something you said earlier, Bart, about energy independence, and I think this is something that we in the Steelworkers would be in total agreement with you on. But it also poses a dilemma, it seems to me, in terms of how we go forward.

You know, the steelworkers supported legislation to limit carbon emissions. And let me tell you, if you want to have a tough audience some time, go into a steel mill and tell a bunch of workers that we’re going to try to limit carbon emissions. This is a very, very difficult political as opposed to economic question. Yet, steelworkers stood up because they think it was the right thing to do. But it is done in the promise that we’re going to move to a cleaner, greener energy future whether that be wind power, geothermal, solar what have you.

The question for us then is, where are we going to make the inputs for those windmills? Where are we going to make the inputs for those solar panels? And if indeed we move to a more carbon-free environment yet at the same time merely important the components to that end, we will lose on all kinds of fronts. We will lose not only economically, but you’re going to lose politically, because you’re not going to have my members supporting this any longer.

And so I think that’s the dilemma we’re facing and we need to think about what is indeed – or how do we define our national interest in that regard. And we define it as making stuff here.

REP. GORDON: Well, and that means you have to start with the R&D here –

MR. ANDERSON: Correct.

REP. GORDON: – you have to have the STEM education, K to 14, so that we can work – again, we don’t want to compete on wages; we want to compete on quality and being a step ahead in terms of, again, whatever the product might be.

And we have to be more productive, which means, again, making more widgets, which means that we want to be – have a sophisticated-enough product that – and a sophisticated- enough workforce – and when I say sophisticated, I’m talking about high-school graduates, junior-college graduates, whatever it might be – that can work at a higher skill level that can’t be used somewhere else, that can use equipment and process.

I mean, that’s again, the reason that the semiconductor industry, by and large, has kept most of their business here is because of that workforce and that’s how, I think, you know, it’s the value added.

We want to be – you know, and again, the Chinese show us very well, you don’t want to be just taking components. You know, we want to be value added; we want to be, you know, putting those components together.

MS. ROSEN WARTELL: So we’ve been talking about manufacturing. About 80 percent of the jobs in our economy today at this point are services. How can we be competitive in services in a way that results in good, high-quality value-added jobs? I guess, Microsoft, still – you’re kind of on the edge. You’re mostly products at this point. Do you provide services their – as part of your –

MR. SMITH: Absolutely, and not only that, but the products that we offer today are increasingly being used as services and will be used as services tomorrow as people run software that’s located in the Cloud or in a data center. And in a way, you sort of have to, I think, approach this from both ends of spectrum. At one end of the spectrum you have the creation of products and their protection, you know, once they’re finished and that really goes to ensuring that we have access to open markets overseas and our inventions are protected.

I mean, you can look at the losses to the economy from software piracy around the world, and they’re quite substantial. You know, we estimate that just as one company, the jobs we lose in the United States due to piracy in one country, China, approach 60,000. So that’s 60,000 high-paying jobs in the United States we could create if we could figure out how as a country to better protect intellectual property there, so that’s one end.

The other end though, I think, from a long-term perspective goes back to the beginning and that’s education. I mean, if you want to find common purpose ask, what’s the one thing we all have in common across every state and every industry? We all have kids.

And you know, when we’re creating jobs that we cannot fill, you know, the education system of the country is falling down. And if you ask, what’s the one thing that maybe people could get done here – which, by the way, you know, if you look at Washington, D.C., from Washington state most of the time people scratch their heads and ask, does anybody there ever agree on anything?

And let’s take the opportunity to recognize that the Bush administration did a good thing by asking that we create a country where no child is left behind and the Obama administration has done a good thing that has transformed the education debate in state after state with Race to the Top. And John Boehner has a history of working with somebody like Ted Kennedy on education and we have a bill next year about elementary and secondary education in this country. Let’s get together and do something on it, because that’s what is going to ensure that we come through for our kids.

MS. ROSEN WARTELL: Bill, I want to just talk briefly about financial services and the role of finance. We certainly have jobs in this country that we can’t fill, but we also have a lot of people who can’t find jobs, right? And part of the ability to find jobs is for businesses to find capital. In the energy sector isn’t – the large financial institutions are doing a great deal of finance of renewable energy, but a lot of that is not on deals in the United States, it’s on deals around the world.

Policy matters to where capital is directed and if we care about competitiveness, what are the policy frameworks that are important to help think about how we make sure there’s investment capital and finance for job creation here?

MR. DALEY: Look, there’s – there’s lots of common criticism of the financial-service industry – well deserved – and lots of concern as to whether or not we’re lending enough to lead a recovery. The truth is, there is a tremendous amount of lending going on, no doubt about it. We all took enormous body blows not that long ago to an industry and specific companies that have got us all still very much, shall we say, hesitant to, you know, kind of to be as aggressive as we were. And in many ways we shouldn’t get as aggressive as we were.

I do believe, though, and you see the health of the industry coming back – what the industry needs and what the economy needs – we’ve said it repeatedly – is certainty, whether it’s on taxes, is there a program? You know, at some point, in my opinion relatively soon, people will realize that the worst is over and we aren’t going to slump back, so therefore and this, kind of, creeping for improvement will begin to pick up its – pick up pace.

In the financial-service sector, we’re already seeing it. Lots of deals coming in, lots of competitive – it’s a good sign, a lot of banks are back doing stupid things – (laughter) – so that’s a good sign because –

MR. : (Off mic) – feel good. (Laughter.)

MR. DALEY: Yeah, we see it on the ground. Not as stupid as we did a few years ago but – and we should not go back to that. But I think you are seeing investments in this country beginning to grow and you’re seeing the entrepreneurs coming back in; you’re seeing the basic manufacturing companies – I’m talking about small companies in the Midwest coming in, talking about new equipment, talking about upgrading their plans.

Are they ready to pull the trigger? No. The really innovative, smart ones are; they’re taking a big risk; they’ll be rewarded quicker than the one who waits till the end. But we’re seeing a lot of what would be considered more normal, sort of, discussions with clients. That is a very good sign. So I think the money is that – we all know it, there’s an enormous, enormous amount of money waiting to be unleashed into creative, new ideas and I think that’s coming.

MS. ROSEN WARTELL: Great.

MS. BARSHEFSKY: Can I make a –

MS. ROSEN WARTELL: Yes, please.

MS. BARSHEFSKY: – comment if I could? And that is, I sometimes – (chuckles) – walk around my house thinking, what is wrong with this country? (Laughter.) So Jimmy Carter put solar panels on the White House; he was derided at the time, right? Kooky, nutty. So imagine, instead of those panels having been removed in a succeeding administration, but imagine had the country remained focused on solar, on wind, on alternative energy coming out of the worst oil crisis, right? The gas crisis, we all remember that in the early ‘70s.

We may identify the issues but we most assuredly don’t follow through and it is, to my mind, a question, first off, of what is the vision for the country? Are we actually satisfied with where we are and where we’re going? Because I will tell you having – and I still do travel relentlessly around the world now for more than 20 years, well for more than 35 years – the perception of us from abroad is that we’re moving in one direction and one direction only and that’s down and that is the absolute perception if you look at opinion polls in Europe, if you look at opinion polls in Asia, in almost every country the inevitably of American dominance is gone, gone.

So to my mind you need to say, what is the goal for the country? Where is it that we need to be? We need to formulate policies around those goals and my guess is not a lot of policies, not so much and then third, absolute focus and determination to see them through. Had John Kennedy just said, let’s send a man to the Moon that might have been great but he said two things and that was, I want to send a man to the Moon and return him safely to Earth. (Laughter.) And that requires a long-term dedication and focus and that’s what we need here.

MS. ROSEN WARTELL: Well, that’s a perfect way to end this part of that conversation. I couldn’t have asked for a better resounding call. So we’re now going to turn it open to folks in the audience. Let me just lay out the ground rules: Please wait till the mic comes to you after you’ve been called upon, if you would identify yourself and your organization and if you can indicate if there’s a particular person you’d like to answer a question. So oh we got – let’s start with Ralph Gomroy right here. Thank you.

Q: I’m Ralph Gomroy. I’m a research professor at New York University. For 20 years or so I was in charge of research at IBM so I have some exposure to these issues. I applaud the notion of a common purpose. It is necessary; we don’t have it right now and we should acknowledge that this is reality. The purpose of our corporations, my old corporation, IBM, Microsoft, is not aligned with what is good for America, all right, even if we were lucky enough to do the R&D in the United States.

And increasingly, both of those companies and all the companies I know are expanding that abroad. So that won’t necessarily give us an inch but even if we did all the technical jobs in the country are 2 (percent) to 3 percent of the workforce. Most of the workforce works either creating the things or using the things, not doing the research and the development, all right. Today, the motivation of a profit-making corporation – and I still serve on the board – is profit. And to do that we’re going to move most of the jobs overseas right now. This is not long term, all right, and you won’t meet this with education.

The disparity in wages is too great to be overcome, all right. And not only on its wages, a country like China gives such incentives to our corporations that builds a plant there not because of low wages, which are not significant, but because the plant is paid for. So at the moment –

MS. ROSEN WARTELL: Do you have a question for our panel?

Q: Yes.

MS. ROSEN WARTELL: Thank you.

Q: We need – I applaud the notion of common purpose but we need things that will unify the purpose of the corporation with that of the country. They are divergent and they could be through taxes, they could be tariff-like barriers or the creation of a meaningful department of industry that has a wide ability to do those things. And I hope that these are some of the things that this group has in mind. Thank you.

MS. ROSEN WARTELL: Anyone want to comment?

MR. SMITH: Well, let me first say while I definitely appreciate a little bit about where IBM has been going I think Microsoft is – let me tell you where Microsoft has been going – we have 90,000 employees in the world. We do business through subsidiaries in 112 countries and 40,000 of our 90,000 employees are not just in one country, they’re in one state: Washington state. That’s quite a high percentage of total employment and if you look at the wages that we pay in that state they’re attractive to anybody anywhere in the world and while it’s absolutely true that every company is a global company, it has no choice but to act as a rational economic actor.

This country still has major advantages when it comes to the ability to innovate and there – we should not sell short, for a moment, the opportunity to create more innovation-based jobs in the United States. And we should, among other things, make sure that we are doing as good a job as the British government, the Singaporean government, the Irish government, the Chinese government, the Indian government and 25 other governments around the world in making it more attractive for companies to put more innovation-based jobs in the United States.

MS. ROSEN WARTELL: Okay, Christy (sp), let’s go right over there, please, if you would? On the right-hand side; we’ll go back and forth.

Q: Okay, thank you. Joel Yudken, High Road Strategies. I wanted to – I was also like Charlene, and I came of age during the Kennedy era and – but it wasn’t about science and technology, per se, there’s nothing wrong with being – pursuing science but I – Sputnik was shot up when I was in high school and I got drawn in to it and eventually became an aerospace engineer, at least the first part of my career design, and it was really the driving force on that. I wasn’t science and technology, per se. As I think has been pointed out, it was their larger national goal – not just going to space but also we were concerned about the Soviets having a lead on putting up rockets and the concerns about missiles and all of that.

So there was a bigger picture that was a big force field that drew – you know, drew us up there and there was a ton of money thrown at the educational system down to the high schools; I know because I was a beneficiary of that. And so I mean, I was – I saw – you know, so that kind of helped create a workforce and it basically it was driven by the desire and a need for developing a powerful industrial base and technology base that was competitive so that we can achieve certain goals.

So the question – one of the questions I have, though, is, is the competitiveness issue of sufficient, you know, national goal to drive that? I mean, in some ways competitiveness is a means to an end. I see it’s very important, don’t get me wrong and I think we need to focus on that but I’m concerned that it needs to be tied to something that’s even more of a broader national goal like I think has been mentioned. Energy, moving towards – how do we transform our whole industrial base to low carbon? And how do we do that and remain competitive and produce good jobs not being – forcing work to go things – to go – more production to go offshore?

The second thing, I wanted to tie that to workforce. I think we need to build up a larger emphasis on how we manage and develop the workforce. This is not just K to 12; this is how do we utilize and reutilize the capacity in our (incumbent ?) workforce and so that they can be in those jobs? I don’t think enough is being done there. Our workforce-investment program is not adequate for that job. That’s what I think so I’m wondering if that needs to be beefed up in any discussion and any program of competitiveness?

MS. ROSEN WARTELL: Education goals, workforce – anyone want to respond on one of those?

MR. ANDERSON: Yeah I mean, I think, look, education by definition is a good thing. I mean, I don’t think anyone disagrees with this, right? We all have children, it’s a good thing. That in itself, at least in the medium term is not going to be sufficient to address the kind of economic problems the country is facing.

I always sort of remark, you know, when you think about lies, damn lies and statistics I always think about when we, often times in the past – and apologies to you, Charlene – did trade agreements and we had analysis from the International Trade Commission that said, well, this is only, you know, this will harm low-skilled workers but everybody else will be all right and then you sort of start reading it and you read the footnotes. Well, low-skilled workers under this definition, is everyone with less than a college education which is about 70 percent of the workforce and so we need to do more to develop demand, I think, at least in the short term here in the United States so that we can get some of our production back online that has left.

Q: Just one comment with respect to what you were saying about, you know, is sort of the term or the phrase “competitiveness” enough to get people to do stuff? I think the answer is clearly no. And I think the reason – look, I keep waiting for Sputnik. I’ve been saying this for many, many years now because the galvanizing event that that presented when the U.S. thought it was on top and here this country sends Sputnik up was stunning. It was stunning. This was – talk about pouring cold water on the party.

And we responded to the call but not because Kennedy said, let’s get competitive. It was because he set forth in extraordinary prose what that actually meant, what it would mean for you and what that meant you had to do. And that’s a totally different ballgame. And I think that’s what we need now.

MR. SMITH: I think there’s an important insight there, and the real challenge is how to build on it because in the 20 th century, the United States won the war and secured the peace and secured the peace by defining it as another war. And while the phrase “competitiveness” does not resonate in the way that it needs to, the reality is that the reason President Kennedy gave his speech was because of the competition. There was something clear to respond to.

And yet we all look around and we know that the challenges we have to respond to today are equally, if not more, vital. I often wonder – I wonder what it was like if in London in 1910 when this kind of group got together as the sort of economic sun was shifting westward across the Atlantic – we live in a time where the economic sun is starting to shift westward across the Pacific. And we need to figure how we’re going to be more successful. And we need to find a rallying cry to bring us together.

MS. ROSEN WARTELL: I said to go back here in the pink, if you would –

Q: This has been an extraordinary conversation. Thank you all. I’m Mitzi Wertheim with the Naval Postgraduate School. I was at a meeting a couple of months ago with Ralph Gomroy which was about how do we create American jobs.

And Andy Grove had done the cover story for Bloomberg Businessweek, the July issue, on how to make an American job. And it was a four-page article. And I knew very few people who ended reading the whole article because at the end he said there’s no question that capitalism or the free market outdid a planned economy. But neither system is working well for us now.

And the question is can we find something that is sort of a moderate middle ground? And finally went on to say, what if we had a jobs economy? That would totally, totally shift our value base which would say it’s more important to make sure people are employed because if they’re not employed it’s very corrosive to society than having this 1 percent of gazillionnaires (ph).

And I don’t know how we get people to think in those terms. McGovern got smashed because he raised this whole question of taxing the rich. And all the folks said, my god, if I won the lottery, I don’t want that taxed. I mean, it’s very hard to figure out how we get there. And do any of you have any ideas on this? (Laughter.)

MS. ROSEN WARTELL: The ultimate to make sure it’s a statement is a question.

MR. DALEY: You’ve done a great job of summing up the problem. And I – whether there’s a – ever coming together, a common purpose, and Barton talks about the difficulties, but – there is going to be a – whether it’s this crisis right now and the lingering of it that we’ve been in with the unemployment at a level that none of us in this room have seen in our lifetimes. Maybe there are – our parents did. Obviously our parents did. Many of our parents did. Some of the young people here, they didn’t.

Whether that’s enough to galvanize something or whether it has to be a Sputnik – let’s hope it – I don’t think the analogy to Sputnik is realistic in this discussion and – because I don’t – in the sense of that there being an event that happens, I think it’s just a – if it’s a continuing bleeding – that’s not a good thing.

REP. GORDON: The beginning – you know – go back to what we had said earlier and that is going to the moon was more than just going to the moon. It had all the kind of byproducts. Energy independence has a number of byproducts. If you’re concerned climate change, it can help save the world in that regard. If you’re concerned about the hundreds of billions of dollars that’s going overseas that can be used here, then you can be concerned about that. If you’re concerned about economic security but national security, energy independence has a number of reasons that we should do that.

And as we move forward, again, with the STEM education – that’s going to help us get there. With the ARPA-E R&D – that will help us get there. There’ll be byproducts that spring from that. And so if you want, you know – everybody wants a silver bullet. There’s not really a silver bullet. But I think that is the horse that we can ride. And there could be common purpose. And again, whether it’s for a variety of different ways – and that’s what I would suggest we do.

MS. ROSE WARTELL: One-minute response – last comment?

MR. ANDERSON: Yeah, I would agree completely with Barton. Just to add one thing that I think the nation needs to think about more is how do we better empower workers? I mean, think about it. How do we better empower workers so that they can better share in the wealth that they are producing?

Now, you know, other countries do this. I mean, not all of them, obviously. But some do. Germany is probably the principle example where for workers who are not even in unions have seats on the board of directors of companies. It brings about a shared purpose, a common purpose that we talked about before.

MS ROSEN WARTELL: Brad?

MS. SMITH: Well, I just say if we have to wait for the next Sputnik we may wait too long. And the reality is, did Congress wait for a common purpose to emerge nationally before passing health-care reform? Maybe we should just try to get some things done and be prepared to start small and then maybe the common purpose will emerge out of what we do rather than what we face.

MS. ROSEN WARTELL: Any other final comments?

MS. BARSHEFSKY: I like what you said. (Laughter.)

MS. ROSEN WARTELL: I’m afraid we’re going to have to close with this. Let me just make one closing observation. In doing the research for this study, we looked at the national security apparatus of the federal government where Congress has required that the president periodically report on a national security strategy that the Defense Department and now the State Department create what they call the Quadrennial Defense Reviews where they look at the particular – essentially, not strategies but tactics they have and whether they are prepared to implement those and what it’ll take.

And those models, interestingly, when you actually look at those reports, what we were – was so surprising – us economic policy people aren’t always reading national security reports – how much they’re talking about the economy right now that when they’re talking about what it takes for us to be globally strong, it is all about our economic strength. So in that sense, maybe we ultimately don’t need a competitiveness strategy but we need a national strategy.

When the president talks about the – America will not be second, very few other things he says get the same kind of response. I think the next question is defining: We will be first at what – and having Charlene’s sense of common purpose.

This is a continuing dialogue for us. We actually will be hosting with the Hamilton Project on Friday a conference on the future of American jobs. We encourage everyone – I think we are at 600 people there but we – it’ll be broadcast live online. And please, I failed to provide the URL, so let me says it’s http-compete.americanprogress.org (sic) for the online dialogue. We please encourage you to come and look and share your own views and comments there.

Let me close by saying thank you. This is a tremendous panel and we were so pleased to have you all here. Thanks.

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