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. Tra