If i could have your attention,e program on Manufacturing Society in the 21st century here at the institute. I welcome you on behalf of the institute both in the audience and those viewing remotely. I wanted to ask our president , walter isaacson, just to say a few words. Its always dangerous when your boss knows as much or more about the subject matter. That is definitely not true and that is why it is a pleasure to have tom here at the Aspen Institute because the one thing we do know about the issue of manufacturing is how important it is to americas economy and how ridiculous it is to try to think of a great economy that doesnt always have a healthy Manufacturing Sector. And so, when we were looking at the Aspen Institute and all the things we do in terms of the creation of jobs and the economy, we felt there was a huge gap because people kind of understood the reduction of manufacturing jobs in america that was happening, but nobody was as focused as they should be even though they had been on the call for this and many other things. So, when tom and i and others talk, it was with a realization understanding how to make a healthy Manufacturing Sector in america was key to our economy and to the 21st century so thats why its great to have tom and this program here. Thanks. [applause] this is the seventh in the series of programs weve been doing. Our next one will be on november 28 here in this room. We will be exploring the impact of the Energy Renaissance from the u. S. Manufacturing. We will feature, this man do leave now the head of the American Chemistry Council and the Boston Consulting Group and tom peterson at the climate strategies each of which has recent reports on the importance of the subject. I want to thank you the supporters to make the Program Manufacturing program here possible. These include the apollo group, Madison Capital partners, Manufacturing Institute innovation the National Association of manufacturers, National Science foundation, to leo the motor, u. S. Chamber of commerce and william but danger. Todays Program Explores the policies needed to strike the u. S. Manufacturing in the near term. I note that the topic of manufacturing was mentioned 15 times in tuesdays president ial debate and the two panelists are fully able to elaborate on the candidates positions but also their deep knowledge of the subject. Our partner for this event is the conference on the renaissance of american manufacturers, manufacturing headed by gilbert kaplan. Like i am, he is an alumnus of the International Trade administration at the Commerce Department. Unlike me hes a distinguished trade lawyer responsible for many of the trade Enforcement Actions that we have seen in this town in recent years. I would like for you to introduce the panel. [applause] thank you, tom and all of you for coming today. When we started the conference on a renaissance of American Manufacturing about two years now country years ago now and 2010, and when the other group i work with in the kennedy for u. S. Trade law looked at these issues, we felt we really needed to focus more on manufacturing in the United States. We needed to make this a central feature of the policy debate in washington and a political debate in washington and that has been the goal so we are delighted to be given to have this debate with the Aspen Institute and focus on the manufacturing issues. We think they are critical to the National Security in the United States and critical to the Economic Security of the United States. We also think that the relationship between trade and Manufacturing Industry to have people that are knowledgeable i want to introduce brandt aldonas who is the director of split Rock International a washington, d. C. Consulting firm he founded in 2006. Mr. Aldonas served as an adjunct professor of law and member of the board of directors of the institute for International Economic law at Georgetown University law center. From 2001 to 2005, he was back u. S. Undersecretary of commerce for International Trade, and in that capacity according to his biography, he served as americas salesman and i hope he got the commission for all those sales because there are a lot of exports and he certainly deserved it. Before assuming his position as undersecretary of commerce, mr. Aldonas served as the chief International Trade counsel to the Senate Finance committee, and he is here on behalf of the mitt Romney Campaign. Our other speakers from the other side of the of his dr. Jared bernstein. Hes currently on leave from the center on budget and policy priorities where he was a senior fellow. From 2009 to 2011, he was the chief economic adviser to Vice President joe bidens executive director of the White House Task force on the middle class and a member of president obamas economic team. Dr. Speed bernstein and what economic policies, income inequality and mobility, trends and employment and earnings, International Comparison and the analysis of the financial housing market. And im also sure manufacturing. Prior to joining the Obama Administration, dr. Bernstein was a senior economist and the director of Living Standards at the Economic Policy institute in washington, d. C. Finally, we are very happy to have as our moderator, Hedrick Smith, who was one of the great commentators and authors in the United States on policy and manufacturing and other issues. He is a pulitzer prizewinning former New York Times reporter and editor and any Award Winning producer and correspondent. For 26 years mr. Smith served as a correspondent for the New York Times and washington, cairo, saigon, paris and the American South more Foreign Countries than any of us. [laughter] in 1971 as the chief diplomatic correspondent, he was a member of the to the surprise when team that produced the pentagon papers series. He went to the surprise for International Reporting from Eastern Europe and he was formerly the New York TimesWashington Bureau chief and chief correspondent. The most exciting thing is hes written this great book, who stole the American Dream which goes over whats going on in the middle class, whats going on in the problems we are facing in America Today and how manufacturing relates to those and we have about 53 copies. There used to be copies. But they are out on the table. I hope he will take them and if you dont get one, im sure mr. Smith will not mind if you go to a amazon and buy a copy of this book. So, with that i will turn it over to Hedrick Smith. Thank you tom for the introduction. Quickly to let you know what the ground rules of the object or to cover as much territory as we can, so ive asked each of the speakers to hold their initial answers until the questions are posed to each of them to 90 seconds and then if somebody wants to rebut the other side, 62nd rebuttal. [laughter] i was going to save we are not here to learn about body language and smiling and frowning and how you look when the other guy is seeking what we are here to talk of substance. This is a roomful of people who know a lot about trade and an audience around the country and i hope that we will talk in america speak and not washington speak today, both of you, and we are also a room full of people who believe very much in the importance of the Manufacturing Sector but there are those, believe it or not to say manufacturing is passe and its been over the hill on manufacturing and that we need to move to be a Service Economy to be globally competitive. So i want to ask you, mr. Aldonas to begin with, a similar question to dr. Bernstein. Is manufacturing really important for the economic future, if so, why come and what we want from mfg. . Is it jobs, provinces, jobs overseas, jobs at home . Should we have a secretary of manufacturing to go along with the secretary of the agriculture and secretary of wall street . What we need to do . Why is it important . Short answers are critical. The reason it is critical was the patents that are produced every year come out of manufacturing, so the longterm Economic Growth to raise the productivity and what drives that is the investment that comes out of the Manufacturing Sector is what we want as the productivity gain. That also spends of Employment Opportunities that in terms of growth this is where it starts. Dr. Bernstein, vice fast answer. Terrific. I would add 70 of r d. But its very easy to say get productivity and therefore you get all these other benefits, but we have seen an awful lot of manufacturing jobs disappeared while we are gaining in productivity for the mint factory jobs. Weve seen an awful lot of manufacturing jobs show up in other places in china in particular but lots of other places, so why is meant by a train automatically a good deal for america, for the country . Its obviously a good deal for the companies they are involved in but what is it going to do for the american middle class . I had to do this with lou dobbs over and over again. To point out that some of what we have seen with respect to the decline of the labor employment is an artifact of on a recall when for example motorola outsourced its logistics and customs operation to ups those jobs overnight stay in america but they were shifted on the service sector. They were registered as a decline in the manufacture and employment when the reality was the boundary of motorola had softened and is now incorporated the supply of ups. We didnt lose in a factory jobs simply by shifting into dubious. So, when you say that you are in manufacturing and you copies of the boundaries, what are you actually talking about . Is it production jobs youre talking about or an Engineering Design john . When i think that many factors and implement i think actually of the entire value chain including the suppliers and i want to ensure that we have investment on both sides of that in the United States. Some things id love to see is making sure we have the best investment in the environment across other things because when ive gone and talked with manufacturers surprising how they recognize that in the world that we live in the suppliers again i dont have an answer to the question. I dont have an answer to the question. My question is what kind of jobs are you talking about or the soft jobs that are breeding of into service and what is it going to for the american middle class the american middle class is still losing jobs that you say theyve been been redefined . Those are jobs that have been paying wages and got support a global value chains would means we need both. Its not exclusively focused on manufacturing. Let me jump in and by the way, it is a pleasure to talk about this. We actually find a lot of areas of agreement and some good disagreement as well but substantively and thank you for hosting today. So, here is an area where i think we disagree regarding what we are talking about right now in this country. I used to think as an economist cardcarrying basis that offshore was actually kindht. Ive come to feel differently about that particularly in this anecdotal data. We are talking there is starting to be pretty compelling evidence that of shoring and a benefactor of this were talking about our enemies, but theyre actually negatively and the actual proximity of the manufacturing process and to the technology involved in that production is really important, and again a couple guys at harvard did this, a compelling case study on this very issue showing that we are starting to suffer innovation externalities because we are separating production and the technology. One area where you havent seen that so much is in computer chips, and that is turning out to be partly to exception to the rule and we are actually seeing that now have been there as well and some have fallen behind for example in the solar area because we have outsourced too much computer chip production and the technology they are in. In economies like say taiwan theres an example of the heavily subsidized initiative to bring that kind of linkage between production and research together. Its very important. We cant afford to offshore that. Im going to give you a chance. But i want to go beyond the commerce because its interesting to me as a guide like the former ceo of intel on the point i just made. I was actually going to quote them on the point. Hes saving move the production overseas him personally to enervate which is what you are talking of. Correct quote. The have heard abandoning todays manufacturing can lock you out in tomorrows emerging industry. Can we do the kind of rebuilding of manufacturing and innovation that you are talking about and continue the heavy trend that we had over the last decade or so . The answer is yes because the reality is that lets take the hardest case they supply apples and the final assembly. The reality is they dictate the Machine Tools used on the shop floor and the chemistry that is produced. The idea is that we are somehow losing the industrial misunderstands what those manufacturers like apple are doing and they dont think that is manufacturing valueadded so in that sense there is a difference but im not sure at the end of the day it makes a difference policy why is because when china adopt policies the are explicitly designed to pull manufacturing jobs into china by subsidies and currency and things like that, we would agree that that is a distortion that is inconsistent with the way the trading system will operate and deeply and consistent with our interest so when you see countries adopting outside of policies, i dont think we may have a difference about whether offshore or on the margins is good or bad that it would alter what we would do and when ive heard him speak it suggests that it comes to a different conclusion about trying to make this the best place to invest because i think we want the clusters of innovation to be taking place in the United States and we want an educational system producing people very capable of participating in that process. Both identify the public innovation and expanding access to universities. I think that grant is making me feel a little bit like the president may be felt in the last debate. The other guys are agreeing with you wait too much. [laughter] a lot of what you said i think is exactly right. You have to look at part of what we want to do here today, and in an agreeable way, sure, is to highlight some differences between the candidates obviously, and i dont speak for the campaign, led the way. I speak as someone whos independent of that clearly supportive of those policies. That said, on two issues that you just mentioned both on training of which the president as an 8 billiondollar initiative focus on the Community Colleges working with employers and emphasizing the advanced manufacturing is a really Good Initiative i think that he himself talked about this stuff. He talks about a minute for a drink, doesnt dhaka that the policy i should have on the book or in proposals and then another one on these manufacturing cultures, the Commerce Department has numerous policies to incentivize innovation and specifically focused on clustering, and i can go into greater detail to what they are. In fact, the Innovation Centers of which i believe there is now one of and running in youngstown ohio. There will be 14 more. This is a project that is actually a band running. This is the classic kind of innovation coordination to help get from the factory floor, and in the economy that fails to do that typically finds a valley of death between the very important institutions. Unfortunately, i think the trend on the republican side of the aisle and havent heard anywhere near these kind of deals from the Romney Campaign is the other way. One thing is to give up on china and they certainly say that, but i think that you have to get down to the sort of details that actually operationalize the kind of i want to move to another question. We deutsch to become both thought about the candidates. We are going to crisscross and you will ha