Im richard haas haass. And he is the author of failure to adjust 80 of life is showing up. Maybe 81 life is timing and timing on this is painfully good. so, good for the author, if not good for the country, and so congratulations. Thank you. Books are an important part of what it is we do here. Their important in their own right but one reason we emphasize them is books require a depth of analysis and a commitment to a subject that in and of itself can produce something really worth whole and provides raw material for short are pieces and commentary and the rest, and ted has been the principal person the institution now for how many years . Almost ten you almost a decade. Deal wig the nexus of issues. Some ways actually expands what us have thought as a interrelations but he is over the years debt with issues like immigration, infrastructure, debt and so forth and here we are now doling with globalization and its discontents and the difficulties we as a society and as individuals and collectively have had in dealing with the row relentless pressures. So will talk about it and then ill open it up to yall. Its on the record, by the way. Ted and i will start what about tee titlety pail pure to joust they and the subtitle how americans got left behind in the global economy. Failure to adjust means exactly what . What has what judgment has not been made what adjustment has not been made. The title of 0 poke at economists actually. Economists talk about the adjustment costs of different sorts of shocks, and the u. S. Entry into a more competitive global economy, which has occurred over our lifetime. Gooding back 50ese, didnt trade that much with anybody. We didnt need to. We didnt. Everybody else. A continental exactly. So, this is really a modern experience to the United States and they is going to be adjustment costs associated with that. And what that really means in economic language is, people are going to lose their jobs, going to need to find other ones, need to acquire new skills to possess sir. We understand the idea of comparative advantage and if you happen to be someone working in an industry, say, textiles and apparel, one of the industries that high wage economy will lose in a more what is going to happen to those people . How are we going to deal with those dislocation and we have done a poor job of that. And we are aware this was coming. A category 4 huck and hurricane and we didnt batn down the hatches and didnt make the preparations we needed to make. All the order i have for conducting the conversation just greatblown out the window. I wont remember to ask the question i want to ask you no if i park it. If was category 4 hurricane, and the weatherman or woman was regarding and it saying its going hit news x amount of time, why didnt we prepare for its not as though it was a surprise. I think a lot of this really is a failure of American Leadership north just political leaders but Business Leader as well. We had a habit of mind that said, the end of the day were the most competitive economy in the world. In 1960s the labor unions supported globalization. They said American Workers are better, American Companies are better. We generally have low trade barriers other countried have hive trade barriers. This will open up new market. There was a fail our of imagination on the part of the people whose livelihoods really got most of disrupted, and this was a general kind of societywide problem. This memo i start the become if a has some association with this institution, trying to meet hearing the middle east all right. It was actually a slightly up fortunate co instance instance. It was written as a memo to to president nixon trying to take the president by the lapel and shake them and sake we moving into a different world. The germans and japanese are book. Were going to have toy peninsula us thin game differently than we have been accustomed to playing it for the last quarter century and if we dont there will be some severe consequences. The subtitle is holiday pow americans got left behind but we havent done so badly. Dont mean to be harsh but even if individuals in in some cases got left behind, its hard to make the argument that the United States collectively has gotten left behind. I wouldnt. Honestly i dispose if it were truth and advertising the subtitle would have been our some americans or Many Americans about left behind. Lot ofs of americans have done very well the mow. Com pelttive companies are googlele and facebook and intel, microsoft, we the lions sayre hoff the worldlet most competitive company. Our growth rates are stronger than in europe but there are significant parts of the country, and we learn that in november, that really have been left behind and were hit very hard, and that was not a surprise. Should not have been a surprise. If you read the economist they said trade has broad benefits and cop send arrest concentrated costs. Lets deal with issues. Trade has broad seven benefits and concentrated costs. Some people call its intensity and problem is that benefit are wide by felt but thin and the costs are narrowly located but felt with great intensity. Often theres smaller numbers with greater intensity, prevail in a society over larger numbers with preference but not great againstty. Is that the case here. I think thats not an unreasonable judgment but i wouldnt want to go from that to say, well, because generally as americans we have done well from trade. Were consumed. Family used spend 6 of their income on clothes and the poor dont have to spent as new moisture on clothing. Access to global markets, generally candidate have done well. A lot of benefits from trade but also are people, particularly the countrys manufacturing industrys got hit hard. We lost six Million Manufacturing jobs in the country in the 2000s. That is a big number. Six million. You have think what those jobs were for a lot of people. A lot of those were unionized jobs where people with modest levels of education could make good, solid, middle class salaries and when the jobs disappeared there was nothing to fall back on. Unemployment or Social Security differentable or job tide walmart. So the impact on third venezuela and more roadly on he communities when you lose the factually, its not just the factory jobs its the restaurant job and i boley alley and gas station and the local services that dont compete internationally but dependent on the paychecks got a to go to the men andwoman in the fact triple those are significant. To what extent was trade the culprit . To what extent were the jobs victims of trade or to what extent were the job losses much more the victims of productivity and increased that eliminated jobs full stop rather than necessarily because of cheaper imports coming flooding in across the border . I have three answers put short. First if you had to aid up, technology is obviously the bigger culprit. Maybe 75 . Maybe 65 . The majority of technology. Also changing consumer preferences. We dont buy as much stuff as we used to. We consume more services, restaurant meals. So thats one. My second point is, i sometimes think its a bit of a analysis die false dichotomy. Youre a u. S. Textile company, facing cheap imports from mexico, china, somewhere else. You have to two options. Just cant meet the competition so go out of business your employees use this are job. You have to get more productive. Bogey Vest Technology and machinery. Some of your employees lose their job but is that a jobless to technology or trade . Well, its a built of both. And then my third responseforthe people effected doesnt married and shouldnt matter. Doesnt matter and shouldnt matter. We shouldnt have a trade judgment assistance practice we should have an adjustment assays dance Assistance Program to help people relocated. Itself doesnt matter to individuals and well get back to trade adjustment asince stance, and matters to us as a country carrying out a Foreign Policy because the extent you have the causality or attribution to fine mostly trained when youre arguing its more technology. Our Public Policy is inconsistent with your conclusion. Thats one reason we are talking about that any council of foreign relations. Trade is more than an economic issue. Its a critical part of u. S. Foreign policy for decade, been a good thing for an awful lot of the world. More people have n brought out of poverty wold wilde in the what two deck todays than any other comparable period of human history. So trade has a lot of benefits for the United States. But again, getting back to where i started with the hurricane coming. People who were writing about this in the 0s and 80s and 90s said if we dont get on top of the tis problem people will blame trade. People look for something to blame and also look for things they can control. Hard to say you can control technology. Do we want to stop making better iphones . Probably not but people look at trade and say we could symptom stop importlands. A way the government can help us. So nye surprising trade is in the sight even if its not the primary cull pit. Youre saying culprit. Your saying today is being scapegoated. No question. I see steve in the audience. To extent are some of our problems selfinflicted. Not that others are better at introduces better took nothing or have lower wake cages, not necessarily that others are carry owl unfair trade practices but we have extraordinarily high, for example, healthcare costs, that have made us unincompetitive in manufacturing. I would say its both my book is half about the ruled. China in particular was an enormous shock to Global Trading system. Because of its size and because its an economy just constructed dislit. The wto, global trait rules were built for economies where the but bulk. Product was in private hands. In china the its in state hands and a lot of the companies are hey live subsidized and chinas into into the world tradings system for all the benefits of china, was very distorting for the world economy. The United States didnt push back hard. We let the currency problem go on too lodge the chinas are trying to prop up their money but it they were devalueing to taken advantage. There were rules against that. And be didnt do much to counter. Going back to peterson memo. He said, the biggest part of the healing leg at home, about infrastructure, education, worker rye retraining, and Health Care Costs is a component. Meant. Make sure were set up to the most competitive if i should to the corporation that taxes where we now have highest rate maybe not a lot of selfinflicted stuff. You have now mentioned several times adjustment assistance. And i cant remember but become when we did some work here on it, you did some, and my memory is probably failing me. If i remember we had Something Like 17 separate adjustment Assistance Programs at state and ferrell levels. I think its more than that. Whatever it is, its a lot. Wore were throw tens of billions of direlies are use at it. Are we tot knot getting a return on investment . To be clear on numbers elm weapon dote throw that much money at it. You look the category all active laker market program, which programs that help people train fortune new careers. Enut spends. 1 part of the gdp. The average in europe is five times that much. In denmark its 2 of gdp each enormous number. And i dont think we spend it very well. There have been some improvement inside recent years. This should be done in close coordination with private sector. We have this bizarre situation where despite the loss of 6 millionving jobs and the workers presumably looking for in one we have a kill shortage in manufacturing. The jobbed that canned be filled bus woe dont have employee with the rite set of skills. Thats a major fail and part of that involves much closer work between government and private sector which should happen the state level, not federal. The federal doesnt do those programs well. So some is a failing of the system but some i actually a money issue. Dont actually spend a whole lot on it. What else . You mentioned truck. We havent talk immigration. If you were designing besides spending more and spending it more wisely for adjustment assistance, what would be in your cookbook you recipes for making i for making this a less acute situation. I would argue we should compete more aggressively for investment. Why i wasnt entirely sorry to see the whole carrier thing with trump, where trump said we care about job heres in the United States and were going to fight for that and even if we have to pay a small price to carrier. All countries are doing this elm incentive game is worldwide. The commute needs to cop pete for investment and like to us try to negotiate rules that constrain the competition within reasonable bounds so countries arent bankrupt. Obviously infrastructure is hugely important and it is depressing were still talking bit. We have been talking built to for a decade or mow, and its not just a quality of life issue. Its a competitive issue. Deemening our ports, enpromming are the rail still. Can do the colonel pratt tax system is a problem on these investment front. Again, an overhaul is desperately overdue. On the trade policy front, and i could keep going on a big list but i would like to say much closer coordination between state and local Economic Development officials and our National Trade policy. We have this weird situation where trade policy is made the level of washington, the input is all basically comes from the corporate lobbyists elm led the unions sit the table. But if you actually look the entities inside the country tying to attraction investment. Its state and local Economic Development agency but have no voice in washington. If you trying to build a Solar Industry the state and local officials have a real prospect eye. If the chinese are dumping solar panels so theres no chance for an american industry to be an 0 level Playing Field that has to work its way up to washington. So i talk about mechanisms to give state and local authorities a bigger voice in the make of federal trait policy. Would you actually have states aloud to make more a state trade policy or better left to federal government, the great state influence . I wouldnt have states writing rules you. Cant do that. Congress under the constitution has the for. That sowy he have inningsel rules mace but in terms of investment promotion, export promotion, state does that and thats a good thing. Should do more. This is not a tis is not unique this incup through. Given breck sit, and given what were seeing in particular in eye developed countries and in europe, you mentioned for some European Countries spend much more on adjustment assistance per capita, whatever yardstick you want to use. But other things youre seeing elsewhere that either are better than what were doing or a pattern where others arent doing much better at it than we are. I in think some other places are doing bet. The germans clearly doing better. Think the canadian does better we often hear bet the socalled apprentice program. Works well for them. Im not saying we can imlate it, emlate it. Theres a commonality. Getting outside of the u. S. Experience. What is going 0 in europe is more of a reaction to immigration tom than a reaction to trade. If you look the european complaints about trade, has much more to do regulation. Dont want to eat american quicken batheness chlorine. Its a light wash to be clear and kill as lot of bacteria. Its a good with a touch of vinegar. I apologize to american poultry association. Theres less concern over the sort of wage and Economic Impact of trade but similar things on immigration. The commonality is the rapid change of trade. We want governments to slow this down a little bit. We want a little more sense of control. Like on the immigration throw down. Slow down the pace of change. We live in a era of very rapid change, eye levels of immigration. All of these are kind of dislocating forces. Very positive in terms generating growth, diversity, a lot of benefit, but it is people feel dislocated and i think what theyre saying is, we want a level of government control over this. We rafaelize government cant stop the word world but they can control the pace of change itch think thats commonnallity when here and europe. At what point does slowing the pace of change become protectionism or basically move almost like a specter between open and being closed. Dealing with immigration issues how do you how does one get the goldilocks position on the right speed. A its challenge youre sitting up here. The goldilocks position is called pollleelll tibbles. Politics says how we go about balance the different demand of society. You look the trade stuff. The vote on the tokeover grandma in 1979. The ohio vote was 359 in favor and four against. Overwhelmingly the American People and their representatives are in favor of liberalizing trade. In nafta the vote is 234 to 200. The majority of clintons democrats vote against him. By the time you get to Central American flee tree trade grandma the republicans have to hold to the vote open nor an hour, and then billing guys go big guyed bill date their republican men members dote on board. In order to get a single vote they needed to get the fast track through the house to allow them to do the Central American free trade agreement. Some would say we do not have broad societal support for full speed pedal to metal. Maybe we should listen to what people are saying. I was a n a meeting the other day and somebody said the problem isnt trade, trade agreements. You have to put through the political process and thats just too hard to win that debate. What about essentially structuring trade show to deals and arrangements are below the level where we have to introduce them and subject them to political process . I dont know. I think if it seep answer end run around the political process youre going to be in trouble. And i do think some of the debate over trade agreements is misleading. This would happen anyway. Contain are shipping, internet, modern air travel. A lot of these are far above politicked the u. S. Trade representative says regular people dont get to vote on thats stuff con tearer shipping or the internet, air travel. You do get to vote 0 on trade agreements to a lot of the anxiety gets focused on those agreements and thats the reality politics have to deal with. Okay. I as you seek you have someone who is al wellverse inside this as you get. Complex issue, important issue. Frustrating issue. It is ill ask one last question. Anything that you think can be done theres a frustration, which i tend to be one of those who actually things thinks on balance trade is better than not. Helps more people. Think you agree. Is this a debate that is lost or a debate that could be done if certain things were dub over time this is a debate that could ultimately be the eye ayes could once again have it. I do actually. Dont think this a debate thats lost but needs to be engage expelled recalibrate. If were honest in the oosthuizen never had in the United States we have never halved a debate over trade. I live in United States and canada. Captained in the 1980s, fought a National Election over the issue of pretrade. It was the issue. It was debated. The Consecutive Party won the canadian people gave them a mandate and canada never really looked back and is pro free trade country. Had a fundamental debate. With never never done that in the United States. The closest was in 92 with nafta and Pat Buchanans run for the republican nomination and ross perot third Party Challenge and then 2016. Never really had a debate so we have to debate it. One thing youll see happen, you talk about those affected, we have heard 0 a lot from those hurt by more open trade. Because the prevailing policies of openness and heard from he losers if we actually have a president who begins to slap tariffs on imports imports and t Global Supply trains youll hear from minimum odd folks whose jobs are dependent on trade and will see a different debate. Dont thinking this debate is done. Its just beginning. That it is one 0 the ironys of history. David . If people that wait for my microphone and just quickly identify themselves and keep their questions to the point. We approximately get as many as we can. Ive steve field. Heres the question bat adjustment. Over the years whether it was new england trade moving south, the guys in new york who unloaded ships. Adjustment has worked. For the first time in this election we begin to see a core of people who are not moving. Who are aging in place, with their kid with them. What are you going to do be these group odd payment who are locked outside of the chance of adjusting. Its real challenge. So, i think one thing we want to do is break down the barriers to mobility. I think we need to talk about things like we had in anywhere 0 Sim Zimmerman posum. Symposium. We had a consideration about the issue of creating jobs and where one big job engine are the cities. The cities are inshed credibly expensive, restrictive land policy that drivers up price its. Jobbing arecracy it and people cant get to them. The housing crisis, people got locked into their houses but a they were underwater. A lot of thingitude that slowed down laubor movement. When you that, one people moved to follow the jobs. Thats rally slowing down. One thing that came through in the same conversation, i was stunned by the licensing requirements for jobs that one would have thought were below a licensing thresh hold. If you want to move from state go state y wow have go through a timeconsuming procedure. We know that for teach eves and true for cosmetologists. Makeup. Hugely expensive and long state licensing requirements, really limiting moch. There are people who want to stay in miss. I would argue, and our colleague has made this argument forks generous premier of wage insurance, topping up people who move from high wage jobs to lower wage jobs rearching, communities that are hit hard a surprising number offed the middle aged moving works inned up on Social Security disable, lifetime welfare which is hugely expense if. Why not encourage them back into the lane labor market and you prop up their wage, cheaper for us, keeps people in the labor force and allows them to stay if the dont want to move. We need to be think can about Creative Solutions like that on a larger scale. Susan from miami. Im in town. Couldnt you argue can you make an argument that what trump is proposing, its a strategic effort to end up setting at the groundwork fob an for an ability or more welcoming attitude temperature free trade in the sense that from his peoples point of view, the United States is not that competitive. Weve got immigration, which drives down the wages, you could make tarring argue. Whether you agree with it or not of the people who have the multitude of those who are dispossessed. You have a tax structure that does not at this point make our economy very attractive for investment, thereby making able to generate fewer jobs than usual, and youve got a horrendous regulatory increase over the last decade or two which make us its very difficult for a business to prosper to tell you the truth. So maybe its possible to look more positive on what his trying is to do, make america more competitive and then we can say, all right, now we can tar pace it in inner trade agreements bus were able to compete. We havent gotten around of our difference of disfunkal policies. I disagree on immigration. You see awage lowering impact but more broadly i wouldnt disagree with you. Had an article that essentially paid the same argument that if trump can move from kind of just bluster and tweets to thinking about National Competitiveness that would be good. And that includes thinking about os costs on the sack side tax side, input, which i havent heart much. Do we the hey skilled work force we need to be attract perspective identity knock sorry i can see the danger and a lot of my colleagues would probably disagree but the kind of shot across the bow to carrier, didnt bother me all that much because used to be that American Companies had a pretty strong sense of their obligations the little. What the meant for the United Stateses theyre in. The broad sore obligations apart from returns to the shareholder and we have loss that. I would argue even in theyre i made this argument talking to companies that invest a lot in china. Your concern is expand thing china and taking advantage of the opportunity in that big marketment fine, but when you run into problems, when you run into difficulties with the chinese stealing your technology or investment discrimination, who has your back . Its the u. S. Government. Car factories can completely change the politics. Somebody needs to be thinking about what is our state in the United States. I wasnt sorry to see trump knocked them on the head a little bit. You made a point about local changes that could be state or even more local to the city. In the 19 fifties, the Community Around boston realize they were exporting all of their lowwage manufacturing jobs overseas. There responded by very thoughtful program, to use their intellectual capital they built infrastructure, they created the Venture Capital business. That is created a thriving economy that is blooming in an amazing way today. Why did it happen there or not and many other places . It it happened a few other places, capitol hill, the bay area, very few, but it it did happen. Why was it restricted . Thats a good question. Theres probably another book and that. I can suggest a fascinating story by my friend bob davis at the wall street journal. I think it was yesterday think it was taken the data set of places hit hard with manufacturing competition and what happened afterward. The economists broke down the data and discovered that manufacturing dependent communities that have college or university in the did far better. That was an intellectual center around which it was possible to attract more businesses and spinoff other positive things for the community. In places without universities really got whacked. He mentioned those places, the bay area, boston, places with really good and strong universities. Often this was an inheritance, not just something he created from scratch. It does tell you the intellectual capital is probably the most important asset for any community in any way you can nurture that is going to pay dividends. I wish i had a broader answer. First of all, let me just congratulate you. I read your book. The council sent it to me and it was a terrific book, by the the way. Was it cod, or what . [laughter] somebody else was getting it so i took it from the mailbox. The check is in the mail. So my question is, it has to do two parts with trade deals. The whole idea of all of these trade agreements we have had, when he think about this it comes in part in your book theres a symmetry in trade deal. The the people who make them our corporate lobbyist, but their interest are not just the United States. They have plans all over the world. Theyre figuring out what is in there, and by the way they should, but what is in their corporate interest as opposed to just who is sitting on the side in terms of the consumer and what we argue. Walmart is were just getting somebody things cheaper. But the reality is were not. Their not. There big pockets of people that paid a big price im only adjusts that costs, it is and is balanced as we think it is. So the first first part is, trade deals and how they are done. Meaning who the lobbyists are, what the corporations are, what happened . What happened . Second part of trade deals, tariffs. Meaning coming from what is happening there is a 25 tariff tariff and everything we sent to china in terms of cars. Our tariffs are to have percent. There is a symmetry in all of these deals that we have done. How do you reconcile that . I would argue thats a bit of an overstatement for the record. We have a 25 tariff on all light trucks we import. It is left over from a trade war war with europe in the 1960s. There places where the United States has high tariffs, too. I understand from the corporate perspective there responsibility of their interested in doing business globally. They want the deals to make it possible to do business globally. Im not sure thats necessarily a bad thing. We live in a global world and people source from all over the world. Thats just the way things operate now. The gig gets back to what we do as a country to make sure we have a reasonable share of that. A a lot of that is outside the trade deals. Nothing the trade deals have been perfect. One of the ironies is the one thats winter diets a result of what we see in the ballot box is a transpacific partnership. One of the better ones weve ever negotiated. It helped in particular Digital Industry where the United States is a world leader and created a good jobs in the United States. I dont want to be an apologist for the trade agreements, i think too much focus is put on them. Probably because we are a nation of lawyers. We think the rules can solve everything. That if we just write to the right to rules everything will work out. Im more critical of the failure to enforce those rules in a consistent, effective and serious way. And the failure to think about what we need to do as a nation to make sure that we prosper within the rules we created. Not to say theyre perfect but theyre far from the biggest problem. Thank you richard and ted. Good discussion. One group of dislocated workers that are being retrained are people in the military who theres been a lot of effort in the last two years focused on working with the private sector to bring that training into the military environment so youre getting ready for your new career before you leave the military career. What would be some advice on how to maximize that program which has a strong bipartisan support . Im not sure my knowledge is granular enough. The challenge they do is you get down to certain level i feel like you have to talk to someone who understands how to do Training Programs effectively. My general recommendation would be to work closely with the private sector. Talk to the folks creating jobs in the communities where the created jobs and find out what they need. Structure the program in close discussion. If you look at volkswagen in tennessee, the state set up Training Programs around volkswagens investment in tennessee. They said anything anyone whos coming through working a hire because we need them. Anywhere that you can get that close relationship between the companies that are hiring in the Community College or other trading programs, think you will be a step ahead of the game, as opposed to look at Labor Market Forecast i think that theres going to be a certain number of jobs. How do you feel about guaranteed income . Im still wrestling with this is my honest answer. Andy stern who is part of the trade task force has a book out arguing for universal basic income. I think its the wrong way to go. I think its extremely expensive for one. If you cut a whole range of other programs you might be able to do it in some reasonable budgetary fashion. I also think our work is essential part of what makes us kick as human beings. I think its the way we advance as a society. If i were to spend my money theyre trying to advance their careers i think that was one of the best programs created bad rebates im still wrestling with it. So basically your preferences for programs that are related to work as opposed to working. Is a post everybody getting thousand dollars years even if they cant find work they have a 70 again. I read your book on amazon. I have two questions. The first question is, how much of a difference to the economy belmar services and thats changing. How much difference difference in a generally manufacturing good base trade deal and forcing those rules actually do help. The second question and he talked about this in the opening remarks is people have gains. Under a Trump Administration things have closed down in tears are up. How to those actors respond . I worry very much about some of things trump talked about. In the Peterson Institute the Peterson Institute had a study looking at the Economic Impact of trump did it was hugely negative. Its gonna hurt employees and people layoff and that is definitely not the way to go. I think the cost would be high. Was your first question . You have seen in the last five or ten years you have seen a popping out of the traded parts of the economy. Services are growing faster. I dont think dont think well see that reverse. I think manufacturing remains it extremely important in the economies. The innovation that drives the economy continues to play take place. Services, particularly highend services are in support of manufacturing industry. Look at the work of out of the Harvard Business school. I am a believer the portraits of manufacturing. Its. Its like a to be the bulk of employment in our economy. Numbers will probably continue to decline. As a society for not successful in those treated sectors we will be as prosperous as we would be. I think will be important. You can have a book called the failure to adjust and confuse that as a failure to end on time. So ive been thinking about it for minutes. So i am going to shut it down. I want to do a few things. I wanted the award will books are being sold here. But what what i want to do is congratulate, what if you got is a glimpse and taste of how fluid c is and the issues that of come to the floor