the united states is ready for the challenge. >> as we've discussed, the united states and china will continue to compete and as americans, we welcome competition it's part of our dna and propels our citizens to rise to the challenge. cooperation as you and i have spoken about, can only be mutually beneficial if the game is fair. >> perhaps we welcome competition, but are we ready for it? business professor peter navarro is the author of the book "death by china." peter vice president biden says the u.s. welcomes competition. you say china is using in your word, quote, weapons of job destruction against america. what is that and what needs to happen for the u.s. to at least compete fairly with china? >> we had ten years now since china joined the world trade organization of unfair trade. the weapons of job destruction are clear. there's five. start with currency manipulation. it acts as a huge subsidy for chinese goods coming in and huge tariff on our products to china. you have illegal export subsidies which are flat out banned by the wto. i p theft. intellectual property. counterfeiting is rampant. if an automobile or pharmaceutical company basically has its ip stolen that's a cost. the last two, environmental pollution and worker abuses. 16 hour days, seven day a week at the ipod factory and the horrific pollution in china that acts as a a huge cost advantage for chinese producers. it's unfair competition. we don't welcome that, mr. biden. what we welcome is fair trade. >> let me ask you this, if you addressed all of those five issues, if, would china still not have a wage advantage over america? >> wage advantage is really relevant because it's such a small part of the product. that's something that's really misunderstood. the fact of the matter is, the numbers are clear. we've lost over 50,000 factories to china, over 6 million jobs and over 15 million jobs total because of their unfair trade practice. people in america understand that we can compete with anybody in the world, we can compete with low wage countries, we're much higher productivity. we have the technology and the equipment to compete fairly. this is the single greatest problem facing america the white house and congress has misdiagnosed or economic problems and what we should be doing is trying to balance our trade and getting china to play fair. >> mohammed is the ceo of pimco. we have talked about the rise of china and here is a look at what we're talking about. growth and projections of growth. according to the international monetary fund show china growing rapidly, much faster than the u.s. economy, even though you see the chinese growth slowing down between now and 2013 and u.s. growth actually increasing. in terms of size of economy the u.s. is still number one, china is number two, depending on how you measure the european union. mohammed, you say the u.s. has to establish us sus stainable economic growth. what is this china effect on u.s. growth. >> what you've just shown and what peter spoke about, we're going to be talking about this for a long time. there's a simple reason. for the first time ever, ever, the world has to accommodate a systemically important country that is a low-income country. we haven't had this before. normally when you become systemically important, when you start influencing what happens elsewhere, you tend to be a high-income country. not this time. china is so large, it's getting there very early on and, therefore, there's a fundamental conflict between its domestic objectives and global responsibilities. and until that gets resolved china will have problems being accommodating in the global economy and we'll be talking ate this for a quite a long time. >> diane swonk, chief economist at mesereau financial. the u.s. lost 8.7 million jobs as a result of the recession and with the jobs recovery picking up steam we've gained 3.1 million jobs since the low point, but we've got a long way to go, 5.5 million americans have been out of work for six months or longer. and this persistently high unemployment is a threat to the american way of life and that goes from everyone from high school dropouts to college graduates. this problem, what's the connection between our jobs, our manufacturing, our recovery, and this issue of china. >> mohammed makes important points of china being a big country but poor country, even as they become the size of the united states in economic output they'll still have one-fifth per capita income and that's important because we've not had that sort of duality. what we're degree in the u.s. is -- seeing in the u.s. is a major shift related to what peter talked to. the wages don't matter as much. many companies i'm seeing come back into the united states now and a lot of companies from germany setting up in the united states now, in the manufacturing sector, particularly the auto sector, saying listen, we lost our intellectual property. if we've got an advantage and they set up a plant next door to us and steal that advantage overnight we want to come back. the cost of that loss of intellectual property are causing onshoring, people coming back to the united states. the volume of jobs are not there. as peter accurately pointed out, high productivity growth jobs and they're jobs we've not trained people for. this gets into the issues of community colleges working with the automakers to excel rate three-year apren tigship programs in germany and bring them to the united states. the last issue is most important and you alluded to it in your comments to me, because you know what i'm working on now, that's the cumulative effects of what we've gone through in this great recession. having so many people out for so long, the damages we're seeing to earnings potential not only of those people who lost their jobs, but to their children, and even college grads who get jobs in this economic environment is lower today than the earnings potential just a few years ago. >> this is important, which means -- >> generational. >> this means that a whole lot of people, even if things were to start going better right now, will end up over the course of their lifetime, and the course of the economy that they live in, putting less, earning less, saving less, investing less money, putting less into the economy, which means we need structural shifts and that brings me back to you, peter. while you articulate the issues clearly, i have heard those issues enunciated by the president, by corporate leaders, all sorts of people, the issues specifically that you talk about. what is the solution? what is preventing us from dealing with those five problems with china that would make it a fairer place to business with? >> ali, let's start with the corporations, the multinational corporations, ge, apple, caterpillar. these are the companies making money hand over fist in china, the same companies that provide the campaign contributions to the white house, to the congress, and so we get the rhetoric of change from our politicians but don't get any action. for example, the currency manipulation bill, the house passed, but boehner in the senate said no. these are the kinds of things that are going on. now, i think it's time now for consumers and citizens to take control of this situation because the politicians have refused. what we need to do is stop buying made in china. i'm not saying stop buying foreign goods. stop buying made in china until they play fair. >> what do you mean when you say that? because i would be standing here stark naked with no electronics if i were to do that. >> that's a scary thought. >> it is a scary thought. >> as much as we all love you. >> when we walk into a walmart or a target or whatever store we do, we need to -- we need to look at the label first. when we see that it's made in china, we have to first of all think about our job. because they're not playing fair. they're costing us our job. we also have to think about product safety. a high percentage of the products that are bad from china. the third thing we haven't talked about, which is really important, is that the money that we are paying at walmart right now is going to finance -- is financing one of the most rapid military buildups we've seen in a long time, by a totalitarian country. consumers, i know it will be hard, but consumers have to take control of this. the white house, if it's inse insincere need to brand china currency. >> it's a good conversation and we will have this. we'll have to have it separately. because consumers also like the fact that walmart has given them some of the cheapest goods they have had in decades. let's continue this conversation. i want to talk about that other conversation you were having a little later. diane mohammed, peter, stay where you are, there is despite this conversation about china, there is a true rise in optimism in the united states. is it justified? i think it is. we'll take a closer look and discuss it with this great panel next on "your money." 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[ kyle ] it's like we're connected. no we're not. yeah, we are. no...we're not. ♪ the allstate value plan. dollar for dollar, nobody protects you like allstate. from economists to voters the message to washington is clear. don't mess up the recovery. we've seen markets and jobs in particular on the rise. the number of americans who think things are going well in this country has steadily risen as well. from 25% in november, look at that, to 40% today. that's a big deal. mohammed i know you are worried about a return to what you call, quote, harmful and dysfunctional congressional economic debates, the kind we saw last summer. i think we are all with you on this. that was a low point for all of us. we saw the harmful effect of that debate on america's standing with credit rating agencies but in a contentious election year how important is it for the recovery that politicians do not further erode the public's growing sense of optimism? >> it's very important, ali. the good news is, that we have momentum. you see it in the labor market, in the housing market, in the manufacturing number, in the confidence number, so we must not do anything that slows this momentum. what could slow this momentum? first, more political dysfunctionalty. please, congress, don't do it again. second, problems in syria and iran that continue to put pressure on oil prices. third and most importantly, we need this policy handoff so what we are talking about earlier it's not just about china, housing market isn't functioning properly. as diane said, our labor market isn't functioning properly, our credit markets aren't functioning properly. these are all steps we can take today to fix. it's not an enduring problem. we need this momentum to continue to build and we need to reduce the head winds that are coming from outside, including the head winds that's created in washington, d.c. >> yeah. i think we're all -- we'd almost -- >> we know there's a lot of hot air in washington, d.c. >> your oil comment is well taken because we saw -- while we've seen markets do particularly well in the last weekend for several weeks we've seen oil prices start to sustain above $100 a barrel which major oil producers said they they'd rather keep it at $100 or lower. america's debt is on the rise, so is america's interest in tackling the year to year deficits that add to that debt. a research survey found that the economy remains the public's top priority. that's been the case for some years now. 69% of americans specifically citing the deficit as a top concern. that is the red line that you're looking at. you can see that the other line, the yellow line, is terrorism, but the economy in general is the most important thing. the big rise in the deficit is a top policy concern has coincided with that big drop in those focusing on terrorism, the yellow line as you can see is headed down a little bit. diane, you say deficit reduction is a great long-term solution. you think short term, the focus should be on more stimulus. tell me what you mean. >> well, it's something i'm borrowing a tag from, peter orszag, who i was on the congressional budget office advisory committee when he was at the congressional budget office and his use he's really into long term covered deficit reduction, but near term, you don't want naked stimulus. you don't want to just put out stimulus without thinking about how we're going to pay for things down the road. i think that's important. there's an opportunity and a severe challenge at the end of the year, the trifecta of the tax cuts expiring from the bush-era tax cuts, payroll tax cuts they barely were able to agree upon to extend and the sequestration coming through and on the other side we could likely hit another debt limit which if we don't deal with these things in tandem during the lame duck congress we could get downgraded again in our nation's country and in our credit rating which brings up this political instability that mohammed refers to that can be the thread that unravels much of the progress we've made at weaving a more sustainable recovery going forward. >> peter, i have to say, i'm glad that americans are concerned about debt. public debt is one issue. household debt is another issue. politics allowed that to become so central to the discussion that it really waylaid us last summer. the public said cutting the deficit is a top priority but can we address this without taking the legs out from this recovery, peter? >> i think it's really important to understand that this decade for ten years we've grown at a rate of 1.6% annually. in the five decades prior to that we grew at a rate of 3.5%. we've lost 2% of gdp growth a year for ten years. that's 20 million jobs. the best way to solve our deficit problem is not to raise taxes or cut spending. it's to have those two percentage gdp growth back and to do that, what we really need to do is solve our structural problems. forgive me but i think diane is wrong. we do not need more fiscal stimulus. that's keynesian solution. we have a strushl problem. we need to raise the investment segment of our gdp and reduce our trade deficit. we don't have to worry about the deficit if we do that. >> in terms of fiscal stimulus more in terms of what ali is talking about fixing problems in housing. deal with our foreclosure laws in housing, change some laws in housing to make it easier for the market to clear. we have a market that's over shooting in the housing market. i do not support -- i do support changes to the tax laws that make them simpler and eliminate many of the high-end deductions for second homes and things like that. that's just not productive for our economy. i think it's important to understand part of the reason that we had slower growth because we had rising deficits which were crowding out investment in our future. among a lot of other structural problems. i think our structural problems with china are a mere reflection of our own structural problems at home. we let the consumer try to dominate on debt when they no longer could and not invest in our own future through the private sector and export. our solutions on getting there, getting the deficit under control over the long haul is an easier process than having what europe is going through now and having financial markets determine how they make those decisions and when they make those decisions. a sharp tax hike with a sharp decline in spending, which is what we're set up for right now at the beginning of 2013 is not the solution for sustainable recovery. >> what a fantastic discussion. i would like to continue this with the three of you when you are next available. what a smart and helpful conversation for our viewers. diane swong, chief economist at mesereau financial, mohammed el arian ceo of pemco and peter author of "death by china" and a professor at uc irvine. thanks very much. president obama wants to manufacture a recovery bringing back manufacturing jobs to america. but is that really the way to solve the unemployment crisis? let's talk about that next on "your money." ♪ [ woman ] when i grow up, i want to take him on his first flight. i want to run a marathon. i'm going to own my own restaurant. when i grow up, i'm going to start a band. 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[ female announcer ] discover what's next in your life. get this free travel bag when you join at aarp.org/jointoday. over a million people have discovered how easy it is to use legalzoom for important legal documents. so start your business, protect your family, launch your dreams. at legalzoom.com, we put the law on your side. ...we inspected his brakes for free. free is good. free is very good. my money. my choice. my meineke. american manufacturers are hiring again but the role of manufacturing plays and will play in america's future is in question. since 1990 the u.s. shed a third of its manufacturing jobs. in the last two years, however, american manufacturers have added 400,000 jobs. but look at that steep dropoff. you first see it in 2001. you see it again right around when we had the economic crisis. president obama made manufacturing a key point in the state of the union address. this week he took his made in america message to milwaukee. >> we've got to seize this moment of opportunity. we can't let it slip away. we've got an opportunity to create new american jobs and american manufacturing, put that back where it needs to be. >> will cane is my good friend and cnn contributor and conservative and i want to ask him why you wouldn't agree with what the president wants to do, bring back manufacturing jobs to america. >> perfect. bring it back. he's the deal. in the big picture in the long run, my argument is when we talk about bringing back manufacturing, we're insinuating we're bringing it back from china, vietnam or mexico and trying to bring it back from the dead. i would ask the viewer one quiz. do you think we made more steel, put out more steel in 1970 or 2007? in 1970, we put out 91 million tons of steel and took 531,000 workers to do that. in 2007, we put out 106 million tons and only took 150,000 workers to do that. we're making things in the united states, we're just not making manufacturing jobs. >> all right. scott paul is the executive directors of the appliance for american manufacturing. what will did and we've got other charts to show it make the argument for an increase in productivity. there are two reasons we've lost jobs in america. one of them what is will says. we make more stuff with less, fewer people because we use more machines and the second one we have outsourced jobs to places where either rules or wages make it cheaper to make goods like in china. what's your take? >> well, a couple things. we've always had productivity, technolo technology increases. only in the last decade we've seen the steep