Now, on cspan2, we bring you booktv. On this holiday weekend, booktv extended the programming until wednesday, january 2, at 8 a. M. Eastern. First in the program to watch for this weekend. A few events from International Summit of the books. Five panels look at the future of publishing. Sunday, watch a couple of interviews from the university of pennsylvania. Fishesz, at 1 p. M. , we talk with john l. Jackson, jr. , the unintended consequences of political correctness. At 1 30, we hear about after broadcast news media regime, democracy, and the new Media Information environment. Watch these programs and more all weekend long on booktv. Visit booktv. Org for a complete schedule. Next on booktv, the former Deputy Assistant secretary of commerce argues that the u. S. Is and will continue to be a leader in manufacturing and innovation. Its about 45 minutes. Thank you. Thank you for the very kind introduction. Its a real honor to be at politics and prose, such an institution to the city, and its really a pleasure to be here. Thank you to everyone for coming out on an august evening to hear me. I will try to be brief in my comments, and i would rather have more of an exchange of ideas and hear your perspective and so that we can have a conversation about manufacturing and what our country should do to be competitive. The book, the idea for the book came above when i was traveling around the country, and i would go, and i would see a successful manufacturer making blenders, making steel, making fire stones, making meats, and food, and i would say, you know, i thought all of our manufacturing had gone offshore, something didnt make sense. I started to wonder what were people missing in this story . It turns out that while a lot of consumer manufacturing has gone offshore, so if you go into a store, the toys there, apparel there, a lot of that has left america. We still are a world leader when it comes to complex, advanced manufacturing. We make almost 80 of our steel here. We make tremendous amount of planes here, and were neckandneck in manufacturing with china. Now, that is a staggering statistic. We make 20 of the worlds goods with about 10 of our economy. China makes about 20 of the worlds goods with 40 of its economy. We are neckandneck as a manufacturer, and its due to a sixtime productivity advantage that we enjoy over china when it comes to manufacturing, and we even have a productivity advantage over countries like japan and germany, countries thought of as manufacturing leaders. I wondered, and i started asking myself, well, what is it that gives us this productivity advantage . What is it that gives american manufacturers this ability to compete . I wanted to go and talk to rail manufacturers because one of the things that when youre in washington and in bureaucracies, you know, you have a lot of people pontificating about the state of American Manufacturing and what we need to do without actually engaging and talking to manufacturers, and, particularly, not talking to small and mediumsized manufacturers. The large manufacturers, the ceos, are often represented on policy think tanks, but the reality is almost half of the manufacturing jobs are with small and medium sized businesses. I decided that i wanted to talk to some of these small and medium sized businesses and figure out what it was that was givenning them a comparative advantage, and one of the arguments i made in the book is our entrepreneurial culture that allows us to have the advantage. I dont mean the entrepreneur at the top, the steve jobs model or the great industrialists. What i mean is that companies that do well in the manufacturing space listen to the ideas of their employees, and are encouraging employees to come up with efficiencies this production to figure out how to assemble things more efficiently or how to make products that are more innovative, and they are soliciting those ideas. Here is where i think a lot of the traditional critique on manufacturing misses the mark. Robert rice, who makes the argument that theres knowledge worth people like lawyers, my profession, doctors, bankers, who are knowledge workers, and then theres manufacturers, and they completely miss the idea of modern manufacturing. Modern manufacturing requires a lot of knowledge. These are people who are thinkers, who are innovating, and lawyers, i tell you, require a lot of repetitive work. People who say lawyers, you know, we draft documents, templates, and its repettive. Distinction is artificial, and the best manufacturers that i met were really listening to the ideas. Let me give you two concrete examples. I talked about 15 in the book, and one is blenders, and i was shocked to learn that the blenders that make your frappicinos, i drink of lot of frappicinos, are all made, for the most part in the United States. When i realized that, i realized why i paid four bucks for the frappicinos. I talked to jodi berg, a brilliant woman, about why is it youre able to make blenders in the United States and sell them to the specialty coffee shops . Jodi explained that the specialty coffee shops have very specified requirements for what nay want out much their blenders. One, they dont want any noise. Why . Because you go to a barnes and folk barnes noble, and theres a star bucks there, and if the blenders make noise, you dont linger there and go into the store, so they want to make sure theres absolutely no noise in the blender. Secondly, for those of you who enjoy frappicinos, you know, you dont want ice chips in there. They have to ensure the blenders crush the ice chips properly, and so what joy di was able to do was work for the specialty coffee shops on the design of the blenders that they wanted. That is a very difficult process to outsource. I mean, you can imagine if you were in china or in brazil trying to figure out how to design something with the customer and interacting with them would be very complicated so the customization of products that small and medium manufacturer les do is inherently possible to do in the United States, and it was not just joy di engaged in this, but her employees coming up with ideas about what to do to make the blender better. A second example is globe manufacturing. Globe was one of the most Inspiring Stories in the book. It is a manufacturing existing since 1887, and they make fire suits, and after 9 11 when the pentagon was attacked and they needed Fire Companies to put out that fire, they had Different Companies come from the Virginia Area and the dc area, and they noticed that only the companies that were wearing the fire suits were able to work through the night and deal with the pathogens and extremities that were in the pentagon building. One of the people, the commander in the pentagon, called up rob freeze, who was the owner of globe fire suits said we need 300 fire suits here tomorrow. Rob said, whats the sizes . I dont know, figure out how to get them here. Rob freeze, the Small Company in New Hampshire of about 300 people assembled fire suits, and rob was the only one allowed to take a mercy flight after 9 11, the only one allowed in the air space, delivered the fire suits, and the firefighters used them to put out the fire in the pentagon. Its a story about patriotism, but its more than that. I wanted to know, well, what is it that allowed globe fire suits to still have comparative advantages, and one of the biggest insights for globe fire suits came in a production efficiency. They are able to make fire suits much cheaper than a lot of their foreign competitors, and the idea, which i go into detail in the book came from one of the employees on the Assembly Line who said that if you use a smaller size needle than a larger sized needle, youre actually going to make smaller holes b and its going to save fabric which saves clothe. It was an idea submitted in a suggestion box that led to the innovation, and, again, showed this sort of culture of listening to the employees. The second part of the globe that was unique was the way they would innovate the sensors and type of equipment on fire suits that helped fight extremities didnt come from ph. D. Scientists. In fact, the guy who was doing a lot of the tinkering didnt have a College Degree so often theres a sense of, well, we need stem education, and, absolutely, i think we do, but we shouldnt underestimate this sense of practical skill that are often passed down from generation, the people of fire who actually are doing things on the factory floor that account for a lot of globes most successful innovation when it comes to fire suits. One of the pieces, as i said, is that our democratic culture in the Business World gives us this competitive advantage of o more authoritarian manufacturing structure, particularly small and medium sized businesses because that allows them to economize production, and that allows them to customize products. The second thesis in the book is tracing a support of manufacturing back in American History, and the idea theres always been a role for Government Support of private industry. Going all the way back to Alexander Hamilton. I tell people you dont have to read the world the flat to understand what we have to do in a Global Competitive world. Read alexander ham hamiltons rt on manufacturing, ten pages, and me makes the argument. He says in a world where we are competitive with other nations and other nations are setting up industries, we need to make sure that we have fair trade. We have to make sure that we are providing incentives, economic incentives for new industries, clean technology, could almost get the justification for funding for funding that through hamiltons argue. Hamilton makes the argument that we need infrastructure and roads to support manufacturers. He makes the argument that we need the right tax incentives, and that we need a right of work force that is educated. Jefferson has the view that the government needs to support manufacturing. Now, this becomes the American Economic system and influences henry, abraham lincoln, and is the governing philosophy of americas rise in industrialization. Herbert hoover, when i got to the commerce building, and why would your name be in the commerce building, the president responsible for the depression, theres a lot of republic for hoover. He was not the best president , but a great commerce secretary. He was the secretary of commerce and under secretary of everything else, and he was working for calvin coolidge, and you know what hoover did . He believed in the American Economic system, and he and calvin coolage, the apostle of limited government, poured in millions of dollars to the Aviation Industry which is still in wichita, kansas, funded the existence of infrastructure, and calvin coolidge, quoted in the book, talks about the importance of the investment in roads. Eisenhower, of course, with the highways, and even reagan invested in the semiconductor industry, and the Manufacturing Extension Partnership which now, some people think is irrelevant or bureaucratic was a brain child of reagan. What happened . In the last 30 years, theres a sense that government no longer should matter among some people with certain ideologies, and they argue that america should not make the mistake of becoming like europe. The information cited for their my philosophy for Great American thinkers like ayn rand. The great justification for free market absolutism is not found in American History because american Alexander Hamilton said while he believes in free markets, practical politicians need to realize there are times to intervene, and we have been a nation when it comes to manufacturing that has rejected the ideologies of both the left and the right and has really dean what works, and that is really through the book. I try to advance that argument, and i think the person who sums it up the best is a columnist, Richmond Mcgregor from the financial times, and theres a quote saying americas problem is not that it does not work like china. Americas problem is that it no longer works like america. I think what he means by that is we dont need to copy a system of government in china or brazil that has accepted state intervention, but we do need to remember what policies helped make us a great industrial power, and those policies, hopefully, can be adopted on a bipartisan basis like they were until our most recent history and most recent turn to what i would say is free market absolutism. I think there is a practical middle ground. The question then, and then we can get into the policy during q a, the question that often comes up is, well, whats the hope for the future . What is the sense of america and American Manufacturing, americas economy with the rise of china, with the rise of brazil, with the rise of other developing nations . One of the points i make is our nation has consistently been underestimated when it comes to our economy. In the 1950s and Larry Summers had made this point in the article, the Paul Samuelson. How many people are familiar with Paul Samuelson . He wrote the standard textbook in the where he argued that if the growth rates continue as they were, the soviet union would overtake the United States by 1985. This is one of the nobel prize did a lot of other things that were brilliant, but that turned out to be incorrect; then, cover article after cover article in the Harvard Business review predicted that america wins the cold war, but japan and germany are going to be the dominant post cold war economies. Those predictions seemed rather silly in retrospect, but it is not to diminish the contribution of the skeptics. I think what the greatness of the nation is that at times of crisis, at times where things may not be fully on track, it is the skeptics who speak up and say we may lose and force us to reexamine our policies that allow us to adapt and continue to lead, and i think the same thing same principle is true right now. We are our manufacturers, particularly, small and medium sized manufacturers, are doing extraordinarily innovative things. They are customizing products. They are economizing on production. They are competing. We are neckandneck with china, but the growth rates are not promising. Chinas growing at 6 or 7 . Were growing at 1 . The last nation that lost the lead in manufacturing, can anyone guess who that was . Great britain, and things didnt work out well for them afterwards. We are faced with a challenge, and the challenge is not are the american entrepreneurs and manufacturers up for it, but the challenge is are they going to get on a bipartisan basis to support their government that has existed for 200 year tradition, and the argument is we need to come together as a nation on a National Security basis and on a sense of our economic competitiveness to put together a manufacturing agenda that is going to help the medium sized manufacturers make ends meet and continue to thrive in the environment where they are not getting the assistance of their government, and other foreign competitors are getting extraordinary assistance from their government. Let me end on the note where i think which im most optimistic about, and i dont talk about this fully and develop it fully in the book, but coming from silicon valley, and you see the existence of Technology Companies in our Technology Advantage in which is still the case that twitter, facebook, linkedin, all the companies emerging in the United States, and what they represent, and i think the technology, the future of the United States represents is the ability to not just export and export our products and our technology, but to export our ideals, democracy democratic dialogue of the free flow of information, and the ability of these Technology Companies which are still based in the United States to have a global impact, i think, bodes well, not just for our economic future, but also for the ability of america to continue to project its ideals across the world to hopefully democracytize the flow of information which ultimately, i argue, is fundamental to the productivity and comparative advantage. Thank you. With that, happy to answer questions. [applause] i wanted to is you what you foresee in the future of manufacturing as manufacturing changes. There could be changes with computer manufacturing, and how will the entrepreneurial advantage continue to thrive in that environment . Excellent question. What will the role of technology be for American Manufacturing. The first thing i caution people about is i dont think technology is going to replace workers, fully replace workers. John maynard keens had an article in the 1930s saying technology is progressing at such a great rate that in 20 years, were all going to be working 15hour workweeks. Now, that turned out to be completely false because what happened what he didnt account for is that the demand for goods would increase. I mean who would have thought back in the 1930s anyone would need an iphone . While automation reduced the need of workers on particular goods, the output increased so much that we were were able to have we have more need for workers. That said, i think what Technology Enables when you have things like additive printing and robotics is an ability to continue to have a productivity advantage and efficiency advantage over other competitors, and the challenge, in my judgmen