Currency wars . At some point we ask for, have a weak dollar, which active in the next country can buy the same machines and shop in barcelona, see the local market. Are we looking at that end of the equation in terms of the offtake as they say in biofuels . Well, theres a famous economist in the 1800s called Jean Baptiste say that man creates its own demand and that is certainly true, particularly in this case. As companies become more perfect is come at cheaper the kind cheaper. So we dont have the worry about somehow people will want things. We have about 45,000 in this country and i guarantee you the vast majority people would rather have a Median Income of 200,000 for 400,000 or a million and thats just us. In terms of currency, currency is a problem. Fundamentally we cannot become our project even innovative is a country, were not going to get access to these markets. Why is the german philosophy as manufacturing jobs . Not because productivity went down. The renovation went up understood the value chain and got access to great markets. Thats really what we need to do with the country. It establishments focused on high product dignity and high innovation and all that and then we looking Global Markets that began to cut the trade deficit. Okay, next squishing. Anybody else have one . Okay, create, over here. Hi, im sure chris, former hill staffer. We are earlier atlantic is involved in the Economic Issues because theyre important to National Security issues and we heard in this discussion how people produce valuable things for themselves at home and in the internet age weve had an instance where hundreds of millions of people have gained access to more information than weve ever had before creating tremendous value for all of them and a lot of it is missed in economic measurements in gdp. So before going to be taking some of the panelists have said, a lot of value from factories into our home, theyre going to be missed by traditional economic measurements. Are we going to reconcile that and how are we going to do with . [inaudible] i think theres no question theyre abruptly important measurement issues. If you have an economy that is still solely on material objects, its a lot easier to count things to say, do they make more widgets than we did last year . And what the production process is centralized. So if you have someone who is not able to get access to the worlds knowledge, much of which is freely available for the cost of 100 or 200 device, we are certainly not counting not in the statistics. People are caught wrestling with this, but these are just really hard questions. I really dont give a hard question. Its much more of a question that we have ignored individual production. Individual production is important in the sense that people cook meals, do home repairs, change their own oil. This will there solitaire bmv, people put people in the house, august the festival grow, people making more things. The census could have a sample with a sample of passing People Living on a say in a rather indepth sample, how many meals did you cook . How many things you should make with your added manufacturing and extrapolate up at the international and from accounts. Postmarketing out tidier measure consumer surplus for this incredibly large information. I think its a great thing. Im just saying from the point of view of making intertemporal comparisons about peoples standard of living, thats a difficult thing to capture. I agree, but we dont even try. We simply write that part of the economy off if its not real and that israel. Sounds like an opportunity to innovate. And bob hirschi. Im a consultant. What can be done in working through the internet to coordinate the various types were talking about, getting the funding together with the people of the various parts of the process and getting it all coordinated so everybody agrees on what theyre doing. One piece i would observe from the trenches is a pretty systemic failure of incumbent organizations any need to invent new ones. So we brought it to make her come a Hacker Community had to create entirely new educational platforms because distancelearning around a central site booster distributed learning which is illegal to a credit today, so we try to invent accreditation. They dont be speculative technical risk. Business dont do networks typically and so the answer one level up from their question is pretty largely the incumbent organizations in each of these vertical columns doesnt fit this road because technology slices across them. What has been hard if inventing this whole new family of organizations to match the type elegy. One question here. This is our last question. I have a suggestion to you. Very strange people, combined i. Q. Of a couple hundred. Anyway, the notion we have a deficit in china is wrong. We actually have a surplus. Why . San francisco in july of last year estimated 55 of chinese imports have american content. In other words, offshore. If you take that figure from the chinese figure, up goes the u. S. By 220 billion. A good example of that is apple. Iphone and ipod are made in china. However, 66 u. S. Content and 3 chinese or which im sure is taiwanese. So why are these figures not been taken into account . I think this story with all due respect is vastly overblown. Ken kramer at you see irvine has been the best research into that. The real issue is not u. S. Or china. Its japan and taiwan that they end up getting more valueadded. When you look at trade numbers, they trade system when apple sells ip or experts, thats included in the trade system. When we moved apart to china to dissemble, thats an exporter. The whole thing is included as an import. So i do think those numbers are anywhere near as for this you would suggest. Okay. I think we are going to end this panel here. [applause] i was just going to applaud your making chapters please stay where you are. The next discussion is moderated by mcauley, Derek Thompson from the atlantic who is arriving onstage now. At Harvard Business go professor says the u. S. Needs to reverse negative attitude some students have chris manufacturing jobs. Part of the discussion on the future of manufacturing. This is just under an hour. [inaudible conversations] [inaudible] [inaudible] id like to get into it if that all right. [inaudible] i have two questions about this book title. To your main American Labor or American Capital . What makes it so special that most people dont make things, they read and write and talk to people. Lets help the Service Economy and vice manufacturing me to be better . First of all, great friend of the Service Economy. Theres an enormous amount of value created there. We talk about americas, we think about the world we inhabit at the longterm hope of the country as a place to do innovation. The principal thesis in the book that comes out of our research is unlike the reputation that a lot of people associate manufacturing, we think the ability to make things as fundamental to the ability to sustain innovation over the longerterm, especially when your products or processes and i i think it is referred to earlier when that are not really matured, theres an enormous amount of value add that have been, especially in the early stages of commercialization. When you give up making products, uses a lot of that knowledge and overtime that is going to impact your ability to do innovation. Rate, thanks. Bruce, i followed your work for a long time. When we talk about American Economy, it doesnt make so much sense in africa because were not an American Economy. We are a network of state economies and more specifically, city economies. Similarly we talk about manufacturing as a category, thats a little overbroad because manufacturing is a million subcategories that added to this pos or ble category. So the same way you broke down and said heres the specific cities do well and can have lessons for the American Economy in the aggregate, what are some subset is right now that is a leadingedge the rest of the super sector came learn from . Just a pretty fine point on your initial comment, top mattress in the United States said on 12 of land ask him a two of population, three quarters of gdp and on every asset that matters, 75, 80, 85 national share. So its really hard to talk about an American Economy. You really have to talk about network throughout the rest of the world. For a long time we focused a lot on the consumption economy in a walmart is that walmart is a walmart about whether phoenix, pittsburgh, denver, detroit. Same footprint, seem designed, same price as, wages. When you start looking at advanced manufacturing, what you see is the effective cost areas of the conglomeration of fact of manufacturing and this obviously goes back for some period of time, locating your advanced r d institutions, locating your skilled labor, whether Community College are going back to high school. So automotive, southeast michigan, tennessee, under this out. Lucy seattle, hartford, wichita. Computer and electronics go see in san jose come the Silicon Forest dr. Austin. I think what is happening postrecession is every city in Accra Metropolis got hit hard and construction in particular in Home Building in retail began to look at their treated sectors and begin to look at advanced manufacturing sectors and basically say, why to these factors need to survive and prosper . Do we have a skills problem . Do we have an infrastructure problem . Do we have an innovation break down between r d institutions prototyping a product. The answer from a city matcher perspective will basically follow the health of their cluster and small and mediumsize firms we can come back to, what are they doing to essentially help these relatively small firm, some part of supplychain, some not basically thriving. John, you said if anything in the green room. No matter how badly washington screws everything up, caltech will be contacted at m. I. T. List of the m. I. T. From that vantage point, its impossible to not see everything through dc10 two classes. When youre out there in the real world, theres a different reality and he talked about the importance of partnerships for made, public and private at a local level. Tell us about my partnerships are so key and maybe share a story from her time in the private sector on how you seem the partnerships. I dont mind referring to the real world versus the nonrealworld. I spend most of my time at the larger macroeconomic level seeing what kinds of problems theyre having, what theyre struggling with. In the same way chess sad hes not so worried about ge. Ge will be fine. I think we do have to worry about. Im not worried look of that behind us a nation in terms of developing wonderful to allergies previous panelist talking about. That will all have been. It is taken to the next step is how to Work Together to bring that to bear family have jobs. That has been my concern and continues to do so. There is a large discussion of partnerships. I think we learned about her except the community that will. The importance of being successful was so very true and something you necessarily always so good at. We have to find ways to bring that technology and combine the social technology. The large corporate level, National Community level and also Value Creation model as well. I first got involved in this and thinking about policies 30 samaj years ago. I saviors working for toyota before they brought their system to the United States. They hired me to be the person to help transfer the system to the u. S. I could learn what they add it and share it here with my country and i did that over the years. As we went through a process of determining skills necessary, one of the items i came up as we need education. The basic skills is so very, very important. The one criteria we had as we started working with uaw, General Motors and a spacetime with teambased problems skills. This isnt something thats new. I dont think the equation has changed, for bringing a lot of manufacturing back. As a matter of how we understand all the implications. So how we can have people working together with technology is key to how well we can be successful. Rate, thanks. Also the power of teambuilding and characteristics with the current employee. Theres two other things that i want to push to you now that youre his lawyer. When he said that [laughter] the future of manufacturing the planet looks great and they would he not only nominal growth, but also manufacturing growth had a chance of increasing as a shared of total employment as a labor force. He also said he was extremely bullish on technology e. When i look at the sink sidebyside, on the one hand theres more manufacturing work and where they were to the United States because theres more work done here. At the same time, theres new cuttingedge technology that is labor and time saving, that doesnt assert will replace jobs. So when youre again about this impossible and also concentrate off between manufacturing productivity growth, what are the some of the best ways to think about problems theyre facing quite theres a chance was on employment growth. Be that strong and growth. In the 1990s we had productivity growth averaged 4 of the year and a plan that manufacturing was roughly stable. They last about 2 of total jobs in that decade. In the last decade, weve lost 5. 7 Million Manufacturing jobs. In fact its been a little bit slower in the past decade. Whats different in the last decade weve seen an enormous increase in the trade deficit with the rest of the world, especially countries like china and today i really support they looks at the effect of currency manipulation, perhaps the single most important factor that explains the growth of trade deficit and matt schaub eliminated the trade deficit could reduce the trade deficit by roughly 190 or 400 billion create between 2. 2 m. 4. 7 million jobs. Doing that would increase manufacturing back to 11 million jobs. Thats a big down payment, so i think one of the things we need to do is create demand. As we did in 1990s and didnt do in the last decade. Just went to foreign sources. We need to shift the demand to domestically produced goods and the voters vote in the hiring of the mystic workers. Manufacturing jobs are amongst the best, especially those without a College Degree. High wages, good tendency, compared especially to other work in the economy. Great, thanks. Bruce, you work in washington d. C. At dupont. I mostly on a plane though. Im just going to say in washington d. C. , industrial policy is a dirty word, but if you go many other domestic way, while managing a city that practice is something that looks to me like industrial policy. Theyre picking and winners and losers in giving tax credits to specific companies and trying to build clusters. Whats the best way of thinking about industrial policy in the best way . One shot at the capital, which is we do have industrial policy in washington d. C. Its called real estate for your mortgage Interest Deduction and they decided to pick winners in the parley describes the consumption we had. But when you get to the local level on the question is, what is your choice of Economic Development policy . Some cities over a period of time practice what i would call starbucks stadiums doing business. How quickly do we build the next Convention Center performing arts facility or sports stadium or do we try to throw money to bring across the border in many cases . Or other alternative, can we strengthen our strength entreated sectors . A portion of our economy, 20, 25, 30 as Everything Else and thats whats been happening postrecession, particularly as we see if it is shell gas, the sense that an ipo to have a manufacturing moment. More importantly, business leaders, firms, universities and this goes intermediaries together is the network, saying what do we have and what do they need. The biggest response they get for most of these firms is facing industrial worker retirement to some extent and we have neither system and arbakai with your metropolis because we got rid of it for a large extent. What were basically working on his race to the shop, where we can bring back surgery the 21st century kind of Technical Training customized to these very differentiated special clusters in particular places. About five minutes ago i said there is a tension between productivity growth in manufacturing, competitiveness and job creation here in the United States. As i was saying it, wanted to correct myself releaser on a couple caveats. Pretend the kodak spent seven and a half years suggesting maybe there isnt such a clear tradeoff. Maybe it is possible to everything competitiveness in the United States advice and job creation and lessons from some companies have outsourced too quickly, less competitiveness. Can you tell us about the kodak story and how they kodak themselves . I spent 28 years in industry that the hbs for six years now. In industry you have these problems every day, especially when i went to kodak, every day was a crisis. Since coming to hbs had been working through that list of problems. One of my colleagues had you been in academic. You just did a 28 year field experiment in your notes are putting data. My addition is hes a little slow, but one of the things we found as i walked in the kodak and they said we want to build digital cameras in the United States of another labor cost differential is tied permissible study this fact we rebuilt. Its magnificent except all the proponents have to come from japan and in those days he was relatively early, theres still a lot of that tacit knowledge that you needed in reviewing history and the problem, in the 1960