Good morning. Welcome to had 2017 National Competitiveness forum. I hope all of you that were with us last night had a lovely evening at the University Club for the annual dinner . I know we were all blown away by the fantastic talk that he gave on sustainability. Thank you again for that wonderful tour deforce of sustainability in our future. Allow me to recognize and thank our sponsors for their support and commitment to the counsels work. I want to recognize lockheed martin, our sponsors. And pepsico, snapon. Our chairman sponsors, university san diego. As well as our ben factors and patrons. University of michigan, Marquette University and white cap investment. Without your support we could not do it forum and we thank you very much for that. We have a full day of very exciting talks as well as the release of some of the critical annual policy work on the counsel of competitiveness. And i want to really just frame that in a few over arching facts about the good and the bad of our economy right now. The good news of course is that growth as been very strong. While productivity was flat through most of the year. Its rebounded recently and unemployment is low. In enact lowest since 2000. We know consumers and investors are optimistic and inflation remains tame. Were seeing action on longtime counsel priorities. Such as implementing a territorial tax cyst toom repatriot the off shore earnings of corporations as well as a much more balanced innovation friendly commitment to regulatory reform. The fed just recently raised its expectation for growth this year and next year on the economy expecting us to be about 2. 5 . Not at the level jim clifton says we need to be but nonetheless thats great news and unemployment is expected to continue to drop and we hope to see some gains in wages. But of course we know in competitiveness theres not a Silver Bullet and this is an ecosystem and theres still a myriad set of challenges facing the country as we face a continually increasing growing deficit and insuring the stability of our middle class families and the crown jewel of our Higher Education system does not have an unfortunate impact coming out of the new tax legislation and very poirmntaimy we want to work hard as basically our basic Research Continues to decline. Todays forum were going to really look at the issues that are vital to longterm competitiveness and prosperity. As we release it clairian call. We will hear from jim clifton of gallop with a look in the future. Were very excited we will hear from the ceo on the latest report on expenengsal technologies and advance manufacturing. We will have a discussion with it director of National Science foundation and two of our University President s on the work coming out of our exploring innovations Frontier Initiative that has laid the groundwork for a new commission on innovation frontiers we will release later today. We know of course that energy and manufacturing are inextricably linked and we will continue it work of our Great Steering Committee to look again at deep dives of our economy and bring to the forefront skills and challenges of educating our work force as we discuss manufacturing throughout the day. I think all of you are going to love our luncheon talk about human augmentation and that will be substantive and very entertaining. And then this afternoon were going to have a series of mini ted talks really looking at some of the disruptive frontiers from big data to automation to Cyber Attacks from the future of medicine and bitcoin and block chain and of course the rise of the robots and what that means for american workers. So i want to thank all of you for coming, for participating, supporting the counsel on competitiveness. I want to thank our tremendous leadership, the ceo chairman of deer. The global vice chair of pepsico. As well as all the members of the executive committee and of course the great staff on the counsel of competitiveness. So with that id like the invite the board and executive committee to come to the stage for the formal release of the call for competitiveness. Thank you. Im moderate this panel this morning and welcome. I understood there was a introduction that i was not in charge of. But we will go away from that. I think im the second longest member of the counsel. And i have to tell you almost 30 years i have been here the work on competitiveness probably could not be more important. The kind of challenges that were facing in almost every aspect of our leadership on the global basis are being tried every day. So today we have obviously deborah, we have sam allen. Mike crow from the Arizona State university and met hood from pepsi and i wanted to start with it first category of tax. Since when i woke up this morning that hotel that seems be to on the front of every newspaper and was in my smart phone. And maybe sam, ill start with you. One of the biggest ben factors of the tax reform is Corporate Tax going down to 21 . I guess the question is one, how do you see that as a ceo and chairman of one of our major corporations in the globe and how istality going to help you . And second how do you think it could hurt . In our competitiveness in any way and will it actually create more jobs or more innovation and competitiveness in our country . Well, thats the 100 question right now. Its interesting this week ive been out with our investors all over both coasts. Thats one of the first questions everybody asks and we start out by saying the devil is in the details, however they end up writing it. Its not, maybe from our perspective, our tax rate today is roughly 34 , normally what we pay. About 55 of our earnings come from the u. S. So our effective tax rate will go to 26 27 in total. And people have a tendency to lose sight at most multinational companies. Its not going to go down to 21 because they have earnings coming from other parts of the world. But if what everybody is writing, if it ends up being something similar to that. Thunalsis we done will be very, very positive. And thats even more important than it is for us, quite frankly. If we do well, theyll do well as well. Theres no doubt it will be stimulative. Some people say it will add to gdp 15 to 25 basis points. Other people say 50 plus. Im in the camp that it will add 50 basis points plus but feathered it it wont hapen the first year because there are some other provisions to it that in your first year are negative. From a company standpoint. A company like ours immediately if the tax rate goes down, you got to go in and all your provisions youve got to restate those. Now you got to write them back down to 21 . There are other sides to this that will have an impact. But in my opinion if this does go through, it will be very stimulative, stimulative over a longer period of time and yes it will help with competitiveness. But i think it stimulative part to the economy is even more important than the competitiveness part that it may help a company like ours. I tried to get through the 5 hp pages but they just delivered it yesterday to everyone. But one of the areas that doesnt look so promising, mike, is Higher Education. And the way that the tax reform seem fwes to be looking at some the restrictions. Thoughts from you and your colleagues on that . First, tax reform is positive. It needs to be constructive and think about the if had tire productivity of the country. But that same time many members of congress have become frustrated with universities for a lot of Different Reasons and so in my view theyre eking out punishments. No joke. The proposed now off the table but the taxation of tuition benefits to graduate students, a taxation of certain endowments which is still on the table, the change in the overall stattase of universities themselves. Basically viewing universities as problematic is all a sign of the fact that i think theres two things going on. One, theres concern about the responsiveness of the universities to the bigger advancement issues of the United States itself and for are some trat concerned that were fought doing what we need to be doing. Theyre using tax policy to send signals, basically their view of the culture wars that there going on. And so you take those two things together and its not well thought out tax design related to helping the universities do what the country needs most which is to contribute to the most fantastic Human Capital production that world has ever seen. Like i talked about last night as well as knowledge capital. Universities need to start rethinking what were doing, communicating to the general population about what the impact of the universities are all about and working towards. Were going to have this continuing ongoing argument where student loan policy, regulatory policy, governance policy are all going to be shaped by politicians. Many of whom are unhappy. Right now what we need is Business Community and other communities to also speak out to what they think the university should be doing. And largely not taxed entities as been a critical success variable in them being able to achieve the levels of success weve been able to achieve. If all it sudden they become just another taxed entity, thats a completely different kind of thing. We need be careful about that. Couldnt agree more. You know last year the counsel did a study on productivity. And id like the ask you to look at where we might be headed in the direction of productivity in the United States because the counsel had started seeing a longterm decline and where do you think that will end and what are the sort of levers we need to look at to get really productivity back moving in the right direction . Look, as we talked last year and as weve written productivity as been declining since 2008, 2007 for several years. Now there is some inhadcouraging data and that is the last quarter so were starting to see for the first time anproductivi. However, the question is that a blip or sustained . And the reality of it is that overall the trend, as you pointed out has been very, very either depressed or negative. Whats pepsi doing about their productivity . Were doing what all other large corporations. Were looking at the most efficient way dof deploying our capitol. What isnt generally discussed as much as it should be is with prodd productivity in automation, it is improving it output of our industries. But were not replacing those jobs. With new jobs. And so i think more important for my mind and not just productivity is what type of jobs and i touched on this last night, are we going to create and invest behind and educate people in order to have a work force that is engaged . And it biggest worry over the next decades to come is this mix match between the jobs were creatinging and the skillset of a work force that rr available. That gap is widening. This is the central issue. So productivity is accelerating at the fastest rate ever. The actual people who are working, creating, developing and so forth and then there are people displaced unable to reif hadter the work force because of the nature of their employment skills is insufficient to be engaged. Its creating part of the political response because we havent adjusted also to look at this problem on a different scale. If i can build on that point. As an employer people ask me what keeps you up at night . Im one of the hats i wear is chief technology officer. The average age of an american with a training in science and engineering and mathematics in any industry in this country is now oench the age of 50. So in the next decade half of the if tire countrys work force is going to anticipate retiring. Theres nowhere near enough students that are going to fill that pipeline coming out of inhad stugzs like mikes that were going to be able to hire and so the time periods taking to fill a position if i look back at my last 10 years its getting longer and longer and longer. Productivity cant continue if we cant fill that work force. So we have not only a mismatch but a diminishing pipeline of talent and particularly infields that take a long time to train people in. You cant train a scientist or engineer in any of these fields overnight. So somehow this discussion thats going on has got to take into account what are we going to invest behind the institutions. I dont train scientists, engineers, mathematicians. I actually pick them up from there and apply their skills. We got mismatch and somehow were going to have to fill it. We used to fill it from outside the United States. That pipeline is filling for a lots of reasons. Ill go to you deborah. It counsel has been about many things but science and technology disruption, computing have been topics of deep interest and impact productivity, education, everything. Were also seeing, in my opinion, the recapitalization of the economy where youve got five companies basically worth 4 1 2 trillion. Apple, google, facebook. And wondering, you know, where is our leadership right now in science and technology and where does it need to go . And were seeing all these words like artificial intelligence, machine learning. Which, by the way mit the ai lab started in 1981. But maybe you could frame a little about that and it rest of the panel sam, i know you guys just bought quite a large a. I. Company. And how you see that from a competitiveness point of view and in general science, technology, education, prodd k productivity and disrupgds in the next five to 10 years. When had the counsel was for it was one of the driving forces for the creation of this organization. And we have always made the case that our nation has to if vest in the forefront of new knowledge creation and deploy the technology of the future to our companies that can compete globally. So weve been very concerned and this is reflected in the clarion call with the longterm investment in basic research and research and development as a percentage of gdp. Other nations are surpassing us, japan, others. We still, as a country, perform about 1 3 of all Global Research but china is on a track very soon to surpass us on that. So the investment matters and it matters because through the National Science foundation, through it department of if had aerj, through it department of defense our universities and National Labs and companies actually come together in these strategic partnerships. Thats one of our real core advantages. And others continue to come and really want to understand how we can have that ecosystem that moves so quickly. Those companies you mentioned at it top of the s p, they were enabled by huge investments in the things that enabled the facebooks and googles and amazons to create the value that they have. Looking to the future, which of course is what our group of chief Technology Officers do. We are really working hard at the counsel and in the country to really focus on how all these science and Technology Frontiers come together in multidisciplinary ways and i think well hear when we release our report that this is the greatest time in the world with the digital, the bio tech, the nano tech and the cognitive revolutions all coming together and colliding. And i think these are really going to be it drivers of productivity in our standard of living. But we have to invest in the people. Without the people that drive this we will be it ones who do a lot of the core initial research but other countries in the world will create the jobs and the wealth for their countries. So this is a big challenge and a great opportunity for our country. Sam. Some thoughts . I guess ive been on the counsel long enough im aligned with deborah. But i put it in a couple different categories. From our standpoint next five to 10 years next five years some of the innovations that there going toing come in are just phenomenal. And whether it be in artificial intelligence, augmented learning, whatever you want to call it, that whole area, digatization, theres going to be tremendous productivity improvements. I agree with everyone that it issue we have today everybody has today is attracting the human talent and its just going to get worse. But as a company youll find a way to attract the talent to work on whatever it is youre working on that drives value for your company. Free market enterprise will allow that to happen. You dont fund the basic research and that arer the concerning part of my perspective. Companies will find a way to get the people they need to do what theyre doing. But the basic research that creates the platform upon which all of us build our businesses on, thats where the funding needs to again be invested in so that the country itself can stay very, very competitive. And if you had you only have so much water in a bucket and if you have to say how youre going to divide the water up between companies and free market enterprise, universities and basic research i would be putting a lot of that water in the basic Research Category whether it is at universities or in other areas like the labs. Because thats the platform that lets all of us in grow upon it. And well find a way to get what we need but we dont develop that platform and that platform you keep got to get better and better. With digatization and everything else. The platform that weve invested in the past is no longer the platform we need for the future. That would be the area that i would really, really think we ought to try to really focus on. Clarion talks about that as well. But these are very, very exciting times. Ive reinforced what others have said. And i from our standpoint i can tell you just as an example we had Autonomous Vehicles 20 years ago but they werent Cost Effective. We will, inside of five years we will have Autonomous Vehicles that are Cost Effective and the critical neighbor beyond technology, senlsers, vision, etc. The big difference issia will also have the a. I. Capability that epihad helps y that vehicle determine when youre going down a field, for us for example, thats a goefer i keep going. Thats the farmers dog. I stop. The poor gopher. That difference i heard gophers are an if had dangered species. They will be m