tv U.S. Senate CSPAN September 29, 2011 12:00pm-5:00pm EDT
former soviet union and also trying to promote democracy. and i think going forward that has the potential to be one of the most challenging issues to deal with. secondly, certainly the war in georgia is not so much in the headlines, but that remains a point of tension and disagreement in the relationship along with the other conflicts that there will be important for both sides to work together to avoid violence in the future. finally, the energy pipelines are clearly another area of tension that has already become an impacted serious issue.
russia's assertiveness in terms of its energy diplomacy i think subsided somewhat in recent years. that coincided in many ways with medvedev's leadership, but of course it also coincided with some changes in energy prices. so, i'm not sure that i would try to attribute that necessarily too much to one versus the other. finally, a very important american interests moving forward is not directly in the region, but right next to the former soviet region and that of course is afghanistan and the gradual u.s. withdrawal from afghanistan and afghanistan's post u.s. security and stability. and most immediately, it strikes
me that it is a very major priority for the united states to try to expand as much as possible our ability not only to transport people and supplies and materials into afghanistan, but also an old word. russia agreed to the to a transit at the lisbon council meeting that the definition of what is permitted is still fairly narrow and it seems after the last week in everything that's been discussed in pakistan that it would be highly desirable to be in a position to withdraw as much as we can through the former soviet region including central asia and russia, rather than having to go through pakistan.
just very briefly on putin and i sure this will be a topic of for more discussion during the questions, you know, we have at this point every reason to think that putin has been broadly supportive of medvedev's foreign policy approach, if we can even call it medvedev's foreign policy approach. putin made a medvedev approach or putin-medvedev approach, and if you look at a public statement that the two of them have made, i think there is relatively little difference in how they define russia's's interest. at the same time, putin clearly had a very different style. he may also give someone different weight to some russian interests versus others and tipping the balance on some
issues could make a difference to the united states. and finally, it's very clear that after having already been president once during a period when the u.s. russia relationship went through a lot of ups and downs putin returning to the kremlin as president would be bringing a lot of baggage with him, both in russia and in the united states, and in the united states i would say particularly in the congress, which becomes obviously quite important to converting u.s. officials, ratifying agreements in the legislation that may need to be passed. and my very last point i guess is that, you know, we are all assuming of course that putin will return to the presidency and medvedev will be the prime
minister, but it strikes me this is a time period that it's dangerous to make too many assumptions, and i think what happens with the criticism of medvedev and the subsequent firing, you know, it makes clear that there are a number of strains inside that system and inside that leadership that make it perhaps less predictable than in the past. thank you. >> thank you very much. it is quite remarkable in two respects. first of course he came to washington, talked of what would happen later and this development in the u.s. capitol which i guess partly would explain his response. but the second thing about
putin, and i think that is what paul was talking about, seems somewhat black-and-white it's not like liberals are not medvedev, it is a bit more complicated with more shades of gray. i think that it's very good in talking about the shades of gray the russia relationship. >> thank you for inviting me to contribute to the volume and present today. our paper tries to rethink the u.s. approaches to the region. what we call post-soviet eurasia, the team lead in the former soviet that are not members of the u.n. and nato. we start buy noting in assumption guided analysis of russian policies in the region within the u.s. and in russia, namely that the kind of russian behavior that many in the u.s.
find objectionable or rooted in the unalterable geographical and historical drivers. in other words, say the argument goes russia metals near abroad because the security and economic imperatives mimicking the similar behavior of the russian empire in the soviet union before it. and i think the argue that this core assumption of the cause of the conduct in the region is called because of the historical determinist of logic. it is this way now because it was this way before coming and more importantly because of the questionable linkage between the russian federation and the previous states with similar geographical cores. the neighbors by nature after all one was called the russian empire, and the other was found on the expansion of ideology that envisioned itself at the forefront of the global movement. the russian federation today is either an empire nor the front of world revolution. it is, however, one of the 15 successor states of the soviet union, and it also happens to be
the one where the union eletes, largely still control foreign and defense policy. and that is with relations to the successor, the other successor states with not pre-revolutionary russia or u.s. relationships with its neighbors, but we argue that it's the soviet era that inhibits the other former ss r has constituent said units of the same states continued after the soviet collapse. these manifest themselves institutionally until 2000 relations with the countries were handled by the separate ministry for the affairs and the foreign affairs. they were simply not made to deal with this part of the world. and in other words, we argue that when moscow metals in its neighborhood it does so not out of security imperatives that all of the soviet era had it. the relevance for the u.s. interest in the region while perhaps not direct, i think we are deutsch crucial because if
we assume an inherent fundamental clash of interest between the u.s. and russia in the post-soviet eurasia than the u.s. is presented with a stark choice either a realist bargain or neo conservative sort of roll back approach. but since that assumption is flawed, the u.s. interests and priorities can and should be examined in a different light, and what we argue is needed is a fundamental refashioning of the region itself. a more effective u.s. engagement strategy for the region we argue should be based on three principles. for some u.s. policy towards the countries should be predicated on the respective merits, not the value of bargaining chips or the relationships to other countries. policy makers and analysts should start with the question what american interests are at stake in the given bilateral relationship and that should also been paying little attention to leaders have pronouncements of geopolitical loyalty. second, the u.s. should broaden engagement with the states of the region using all the tools in the toolbox, not just in terms of security and natural resources but diplomatically,
economically and culturally. finally, the u.s. should emphasize transparency and when when opportunities while simultaneously rejecting the motion notions of the spirit of influence and the antiquated zero some arguments from the post-soviet eurasian governments themselves. such a strategy is more than a creative balancing of russia or a simple jettisoning great game and housing. it requires planning a new game which positions the u.s. with a potential for a partner of all the seats of the region without reference to hours or their relations with russia. it also asks us to fully agree imagine the region outside of the historical context of the baggage of the cold war and the great game before that. what would determine u.s. policy in this region which is comprised of numerous small states with varying degrees of development, resource, the government's problems and foreign policy sophistication? the legacy great power with serious development resource some of the government's problems of its own. a rising economic and geopolitical power to the east and unpredictable international
spoil to the south and connections to europe, saw the show and the middle east that hold the potential to bring trade and cooperation but also in stability and alienation. how would a decision maker in washington determine u.s. interest and action in the region? what with u.s. policy look like? how would the u.s. prioritize its relationships? and we conclude that they would in a number of cases look differently than they do today. in terms of which countries see the bulk of policy makers time and attention. we also argue that by taking a new look at the region we can more effectively facilitate space development. currently the debate seems polarized between russia is an anti-democratic force in the region and those that are due the u.s. should forget about its value as an engaging. our point is that our values and interests are consistent. democratic governors produce a great stability over time and the utter defeat could better enforcement of contract rights. we also note despite moscow's's heavy-handed tactics -- eurasia
themselves are largely responsible for shortcomings and space practices in their countries. outside of the zero some frame we can see these countries for what they are warts and all. and so this might flee on the deeper engagement with all of them to further all of our interests including that in furthering democratic confirmation. we also argue that a rematch and look at eurasia would allow for a more effective u.s. and get on the conflicts in the region. our focus on russia has distracted us from the underlining interethnic tensions that for mental part of the conflict. the rush of factors clearly an important one but not a sufficient one for the accounting to the status quo in places like south ossetia. and finally, we argue the real imagine the look of the region would help the u.s. deal with the coming challenge from china and it is here that the thought experiment conducted a little bit earlier becomes immediately applicable. clearly we should not get stuck again in a paradigm that prides in the world and external great power over the region domestic dynamic. in crafting china and eurasia strategy the first step must be
actually read imagining the region itself. a strategy based on one where the state and issues an assessment of its merits and and get rid of broad base and a long-lasting spheres of influence are rejected and the potential for cooperation across the region is emphasized. in short, the best china and eurasia strategy is a fully fledged active and independent in gate of the country of post-soviet eurasia themselves. by the imagining eurasia we can avoid repeating the mistakes of previous approaches to russia and eurasia and our approach to china, which of course, as emerging as the pivotal p.a. first century. i believe that. thank you. >> one question, when you talk about the less attention to the geopolitical implementation of the countries in the region, do you mean to suggest the country wants to move west to be a part of the constitution's as prepared to be independent of russia that this should not be a major consideration for american
policymakers? >> nope. what we argue is that pronouncements of geopolitical loyalty on their face as opposed to concrete actions towards moving forward institutional integration for example should be less of a determining factor. >> for instance if somebody is prepared to send troops to afghanistan, would it be important? >> institutional integration with the instructor is based on domestic reform and not sending troops abroad, so in the case of i think you are referring -- the decision should be made based on the merits of georgia's readiness for membership in the atlantic institutions and your atlantic institution determination whether it's in their interest the georgia become a member. >> thank you very much, dmitri and paul, thank you very much for inviting me to participate both in the mutual volume and in
this discussion. i want to make three brief points. about russia, united states and the week we are talking about today. first, the former soviet space doesn't exist. it doesn't exist as unified geopolitical space, despite the efforts of moscow in the 1890's. the research is certain common deal political environment. this is a depiction that moscow itself is increasingly abandoned and it focuses more on the the constituent parts of the region of central asia, the caucuses, the european parts of the region as opposed to anything like the former soviet space. this is also something that the united states needs to adapt in the way that it talks about this
part of the world. - and you look at the way american administrations that organize themselves over the past decade beginning with the bush administration is actually a recognition on this. so we put central asia with south asia in both the state department and for the pentagon was the head of this and putting in centcom long before the state department and nsc came to that conclusion. it includes ukraine and moldova but also russian and other states of western and eastern europe and we have the caucasus region that we really need to envision as including the north, the south caucasian states, and i would argue the neighboring region particularly turkey, iran and iraq. moving forward, we need to think about u.s.-russian relations, not in terms of what we've
always called the former soviet space, but in terms of these new geopolitical configurations. the second point is that i think it's quite clear that aggressive competition between the united states and russia, of russia's periphery in ukraine, in georgia and in central asia plays in the entire u.s.-russian relationship certainly during the bush administration. less so now because the efforts made by the obama added registration to care for some of that complication. now, the differences in the problems did not arise from a misunderstanding and a lack of communication or a lack of transparency and i'm not sure how far transparency goes in this region. it's a fairly transparent statement but it's not one that is conducive of building between the two parties involved. in part because the fundamental
conflict of interest in that situation and something similar a baez's when we talk about russia in the united states and all the regions around russia's proliferate. a fundamental conflict of interest. what i disagree with, really history is important. you can we imagine, you can read think about things that history plays an important role in the way that society's view their own interest and it takes time to change. and so, for russia this region has been not a sphere of influence certainly a privilege interest as president medvedev once put it. the reasons for this are obvious. what we call the former soviet space is also the former russian imperial states. it's this region that gave control of the region but gave russia's geopolitical for the past 300 years.
the russian elites rightly or wrongly still think it is critical to their own security, and i would argue today there is even a very deep psychological aspect to this. to russia's own sense of its role in the world of a great power because with the great powers do is not radiate power to the neighboring regions. so russia, moscow for the past two decades would look at any other powers into this part of the world as a challenge to russia's own sense of itself as a great power. for the united states clearly we look at this differently. we do not recognize a sphere of influence for any power in that part of the world. we prefer to what was called geopolitical pluralism. geopolitical pluralism that acts as a barrier to guard against
the reemergence in eurasia of the soviet dimensions. now it's clear for the past 20 years up to this moment that that has been directed against russia because the only power that could conceivably rebuild that of ret of that tension is russia. so we support it quite consistently the independence and sovereignty of all of the states that emerged in the soviet union as a way of blocking the re-emergence of that. we advocated multiple pipelines out of the caspian and central asia as a way of undermining the eroding russia's control of the energy resources of eurasia and quite frankly, dedicated to democracy and free markets because we thought that this would lead to the pro-western orientation and all the countries of this region, the
pro-western orientation would get a foothold on the ground in these countries in a place to monitor what we saw as inimical actions by the russian states. so what we have done for most of the past two decades particularly in the past decade as russia rebuild its power is to try to manage the conflict of interest between the countries along russia's's border so that they did as little damage as possible to the overall relationship in. this leads to the third point. the question about this region and going forward and that is is there a way that the united states and russia can move beyond what has been a history of competition to a cooperation in this area. can we do this, taking into account the new realities that
are emerging in a time of tremendous flux and the government. some axioms of this new emerging geopolitical environment covers, russia and the united states are no longer strategic. strategic rivals, they no longer pose strategic threats to one another as they did during the cold war. second, i think this is a point that needs to be stressed particularly given the rhetoric that's coming out of moscow and that is that russia is no longer the dynamic corev eurasia the way that it has been for the past 300 years. if you look around russia's periphery i think you could make a good argument that all of those regions, all of those states are more dynamic politically, economically, demographically than russia is itself and so we see the trainees, penetrating into central asia perhaps only commercially at the moment, but certainly if you are willing to take out a few years politically
and in the security role as well. we see the growth of the radicalization of the islamic movements that penetrate into central asia in the caucasus, and we think about the caucasus itself. russia doesn't reliably control the north caucasus, let alone speaking of the southern caucasian states. no matter where its military forces might be at the moment. and even despite the current disarray in europe and all the questions about the future of the european union it's quite interesting that ukraine is still towards europe, despite what moscow has earned over the past several years to push it in the other direction. so russia faces a period where what it really needs to do is to create stability along its entire border is to give it time to rebuild itself so that sometime in the future under the
best of circumstances it might become once again that dynamic for eurasia. so the united states, the challenge is somewhat different and in some ways simpler. we simply need in the current environment to adjust, rebuild, construct the security balances for the overall global equilibrium all along russia's perlo free starting with the northeast asia, and around afghanistan coming into the broad middle east, in europe, and even now in the arctic region, which has become a new frontier and will become the contested one because of the changes in the climate. i argue the united states is better off, will have a better chance of creating these types of balances if there is a strong russian partner to deal with. that is obviously not as a sole player but one treating these
regional balances. and by the same token, i think that russia would be better able to create instability along the borders if it recognizes the necessity of the robust american presence all along its polyphonies. and so the question now is whether one can persuade washington and moscow to move in the direction. if we can't, if moscow and washington accept this then i think you can save the u.s.-russian relationship is going to move towards what the bush administration would have called a qualitatively new relationship based on a common strategic purpose that has potential to last well into the future. if we can't persuade moscow and washington of this, then i would say reset basically where the relationship is. there is that qualitative improvement in what we are going to do is more or less, better or
worse on the margins. >> thank you. kanaby -- i found your presentation very persuasive. remember back in the 1990's there were a lot of the allusions in the united states about the involvement of the russian democracy. there was a very profound article by an american foreign service officer. i thought it really was courageous and profound about what was happening with the russian leadership, how instead of democracies they were getting several difference competing with each other and this article also appeared from the u.s. embassy in moscow. tallman graham was there also. if tom graham was in charge of american foreign policy, then
[inaudible] i guess we would be on the cusp of making it more substantial but while we are there let me make one observation. the difficulty we have with this region that most of russian neighbors are not real friends of russia with the notable exception of armenia and kazakhstan most russian neighbors do not need the united states to of close relations with moscow. that's not to say that russian-american conflict they don't want between at least most of them, but basically where the united states does not even need to create the post soviet region
with a lot of newly independent countries, some democratic, some not so space coming to the united states and asking for support again against what they perceive as russia meddling in their affairs, and this is a serious complicating factor in the u.s.-russian relationship in the region. your people would know more about that than the ambassador of kazakhstan, to ensure will be able to speak for himself. [laughter] >> fortunately for bulgaria, you are no longer a russian neighbor but ambassador, we are delighted to have you with us for this important perspective and are looking forward to your participation. we have a number of experienced and at knowledgeable people in
the audience. we want to enable everybody who wants to participate to do so and please, try to limit yourself to one question or comment. and when you do so, please identify yourself briefly. who would like to start? >> [inaudible] i would note more attention to -- the other table probably knows more about that than anybody on the other side of the atlantic. there's a book coming out on the kozak memorandum for anything you wanted to know about the kozak memorandum [inaudible] >> thank you for the promotion. [laughter]
>> marvin kalb with bookings. tom, you mentioned the rise of the islamic movement i think with the words that you used in central asia and the caucasus and you also mentioned the importance of 300 years of russian history. 100 years ago or thereabouts, there was a rise of the basmachi movement in central asia. the communists dealt with it by simply crossing it physically, destroying at. but the roots of that movement exist today according to the current reporting, and i'm wondering to what extent that has to be regarded as something serious and a threat to the existing governments in that region, and to what extent, if it is that kind of a threat, that might give rise to the idea of america and russia cooperating in trying to handle that kind of problem.
>> certainly if you look at central asia and the centralization states now, that first of all, you the earlier movements didn't disappear and that had been reinforced by a certain development we had seen outside of the region throughout the broad middle east and afghanistan and so forth. problems that erupted, insurgencies in the period, but i think the question is slowly reemerging particularly as you look at the state of societies and central asia, the tremendous poverty, the great disparities and also important, the likelihood that the two key states in central asia both kazakhstan and uzbekistan are going to go through some sort of leadership transition over the
next decade. after that afghanistan and with the consequences of the u.s. drawdown come potential withdrawal would be over in the next couple of years. but i do the to do have a potential to fall told nixon that part of the world -- potential mix in that part of the world. it's also clear that russia in its current state doesn't have the resources to deal with a major uprising in central asia by the central asian states themselves without those resources. we certainly wouldn't want to do it on our own. we didn't have the domestic abounding but some time but collaboration between russia and the united states as well as with the states of the region is going to have to be the way that you will deal with this problem over the long term. so my sense is this is what we ought to be talking about now.
when we think about our own situation in afghanistan the major part of that shouldn't be just focused on afghanistan and pakistan and how important those are, but we really need a genuine regional to that and that is what has been lacking on the strategy that we have pursued over the past couple of years. >> the center for intelligence research and analysis. i want to ask a question about history. paul, you mentioned the reaction in moscow to our reaction and moldova and how pivotal that seems to be in the shaping perceptions of what we were attempting to do in russia periphery. and tom, you mentioned the approach that we took to
russia's periphery during the 1990's and beyond based on this concept of geopolitical pluralism. it strikes me that we ought to be thinking about on the u.s. side these events and that is containment there is a transition that u.s. policy went through in taking our soviet policy of containment and adapting it to this new situation and was aimed at containing russian influence on the periphery and there was intellectual justification for that at the time. it was uncertain whether the soviet union would be able to recreate an entity on the geographic space that might be threatening to us. but i wonder if we are now at the point we need to address explicitly to what degree we ought to be focused on
containing russian influence in these states and can we get beyond the almost instinctive pushback when there's some sort of russian and fulfillment, and i think that the kozak plan from russia's point of view spoke to an almost knee-jerk reaction that when russian troops are going to be on the ground and the u.s. interest to push back against that can we devise something that is more nuanced that takes into account the interest of russia's neighbors about the russian involvement that distinguishes between things that we can live with and might even be in the u.s. interest to support and things that really aren't in our interest? >> [inaudible] why would we start? >> during the entire bush administration as i say now we
are we creating the reconditions and the relationships so that is a great service to the obama administration. [laughter] you were in the vice president's office, weren't you? there was a knee-jerk reaction at that point. clear sensitivity to anything that would -- any action the united states would take that with legitimate russian actions or presence beyond the borders of the russian federation itself. we clearly saw that in central asia and also came out in the kozak memorandum and i think what the russians found particularly disturbing about this is we did this at the last
hour it is as if they saw this coming but at the moment the plan dropped on the desk of the people what washington and particularly the military aspects of it and were meeting on the phone to people in the region trying to reverse the decision to make sure the memorandum was not a signed or agreed to in any way. the point i would make looking for what is that russia simply isn't the threat that it was to us 20 years ago certainly, and with 20 years of experience we also have to realize that what we feared in the early post-soviet period is unlikely and then next decade or not. and so we need to rethink how we think about a russian presence in this part of the world. by the same token, we have our own interest and we need to
pursue our own interest in that part of the world but it doesn't have to be done in explicitly in an antirussian way building the commercial context, having the political presence all of these are legitimate. i think the russian government or even putin recognized it was a legitimate activity as long as they are not framed in the context of pushing back russian influence in that part of the world. and that type of policy creates the framework for a more productive relationship. i will make one additional point. we are in a somewhat more difficult position now than we would have been a decade ago. a decade ago we could have made this type were pursued this type of policy and challenge russia to demonstrate it was prepared to act in a cooperative and benevolent fashion beyond its borders and because of the
condition of our own country at that point the russians turned out to be not prepared to do that. we had many ways of pushing back our position very little in creating that challenge to russia. because of reasons i don't need to go into here we don't have the same sort of margin for error as we did before. so i think you've got to prepare the ground in conversation with moscow much more carefully than we would have ten years ago. >> there are inherent limits to how far the u.s.-russian relationship can really develop in an environment when we don't trust each other and maybe we are justified and not trusting, but we need to think about that and recognize that and to accept the fact that if we think it's necessary to pursue a variant on the containment policy that
there are limits to what we can expect from russia at the same time that we are taking that approach because they are going to react to that and it's going to affect how they view us. second, if we get past that then yes, russia has important interests in its part of the world and many of those interests are legitimate, but there is the question of how does russia tried to assert its interest and what are the specific tools and methods it uses and i don't think that russia has always made the best choices in that regard in what advances its own interests and
that creates reactions in those countries and also here. then finally -- and this is a little bit related to the previous point there's an issue of institutions in those countries and if the countries on russia's periphery had been independent for longer than 20 years and had only developed and consolidated political systems and institutions and procedures and, you know, operated in an open and transparent way, then many of the things russia tries to do now what it really work. but because of the particular
patrician those countries are in at this particular point, it gives russia with its particular system is a range of tools and options it might not have in trying to interact with others. >> thank you. paul was also a state department official in the bush administration and very insightful. [inaudible] >> i does want to comment -- thank you for that question. i think there's a distinction. i don't discount the value of history i just put more value on the history of the soviet history rather than pre-soviet or otherwise, so i think the point about the kozak memorandum, and i'm not saying i know everything to know about it brigading and manuscript of the book, but none the less about
the substance and the fact it went around to establish the multilateral process these it was long transparent or it appeared to be hammered out in secret or almost in a secret and it was negotiated in a heavy-handed way it was classic sort of soviet-style behavior as opposed to the merits of the document itself i think that is what in the end aroused the reaction that it did. the third point i agree with tom the basis of the u.s. policy in the 90's was countering the threat of the re-emergence of the threat of the soviet dimension or to put it another way the purpose of the policy was to bolster the sovereignty of the states to prevent the emergence of that threat. but my point and the point in the paper is that there was a time limit on that where you sort of reach the point now we can say that threat is apparent
and that containing russia as the motivation for policy is not effective nor would it serve u.s. interest. >> three brief comments and a question. number one, bulgaria was on the wrong side of yugoslavia but the membership later in the european union i think is somewhat remedied. number two, i think that the soviet union, soviet russia, russia has been and always will measure itself.
that's the way of proving the importance and the strategic geopolitical role that this is what my vision has been over the years. rick symbol russia would not have a talk to the united states of america rather than the nato bodies that have been established or nato as an organization. point number three, energy, you mentioned that obviously this is not a topic of today's panel and yet the reaction from the panelists on how they see russia as the federal and energy now and in the near future. mauney impression is that the energy goes with mr. putin in any job. so when he assumes the responsibilities and language on energy will become more.
and i leave it to you to describe the next phase of russia's energy policy. since we have representatives with different administrations of this country, i can say that for years now america has insisted on the diversification including my own country and the discussions with the bulgarian officials and get nothing much has been done on the american side of that. how do you see the american role in the energy diversification which is not just an intention but already a decision by the european union in other words there should be a kind of partnership between the u.s. this energy.
>> i guess that there are two energy parts. on the diversification, the u.s. talks about that a lot and it's remained in the realm of talks and there are other people here qualified to talk about that who work for or have worked for companies in the area and the government in that area but my own view would be the united states government as an institution doesn't really get that involved in what happens in the energy sector or any other sector of the economy the way that the united states system tends to operate based on what they're interested in or not
interested in the look of the market and the government occasionally tries to encourage particular decisions and the pipelines are pressed a great deal but i think that happens for particular reasons, and i am doubtful that anything like that is going to happen again anytime soon. somebody has to pay for these pipelines and this idea of diversification and the u.s. government isn't going to pay and companies aren't going to pay if it can't be done commercially and if you don't have companies or the government pay and when the government pay this it means that taxpayers pay
you can also try to have consumers pay who happen to be the same as taxpayers but in a love cases they are not very excited about that. so i don't really see very much happening on matt. >> as ambassador to kazakhstan promoting the very member. >> we spent a lot of time i think in the clinton administration, the bush administration and i presume the obama administration talking about energy pipeline, building a pipeline routes and so forth. the energy sector is one that you can't separate from the geopolitical institutes to consider read and what is obvious that companies in our system will make the final decision on whether they are going to invest or not the way that the united states comprises issues and talks about the strategic considerations i think
as a significant impact on that and certainly companies take into account the views are. let me just -- to quick responses. one on diversification. the u.s. strategic interest has always been i would argue russia, eroding's russia's monopoly on the export of energy resources out of central asia, the global markets. now, the big contribution in the united states made to that one is baku-ceyhan. we did nothing and could do nothing to prevent the chinese from building pipelines across central asia in the markets, and i think as the energy markets develop over the next few decades that you are going to see tremendous pressure interest in the pipelines going south to
see the growing markets in south asia, india in particular a lot of geopolitics, political security issues that have to be worked out but i think that's happening. i always thought the mistake the u.s. government made was putting this only in terms of europe, that the only goal we had was bringing the caspian resources in the european markets. but here i will make a couple of quick points. first you can solve your energy problems without russia long-term. second, you can reduce the role they play in the markets and this is happening already because the energy equation has changed dramatically over the past decade. we have lng copied with the shale gas in the united states which means the lng isn't coming to the u.n. markets the way that we thought a decade ago it can go into the european markets. there's also the potential for
the alternative energy sources inside of europe, potential for shale gas the would radically change now the level of dependence on russia but what change the geopolitical equation to a certain extent and i think the russians are aware of what is happening in the arab world right now in north africa also has a potential to reshape this as we think about what alternative resources are serious and will come back and try to use energy as one of the levers but i think it is weaker now than there was a decade ago. >> [inaudible] [inaudible] avoid stepping in.
thank you, ambassador. the whole topic of this discussion is about us, so but i'm not speaking on behalf -- i tried to position myself and speak for myself and i put myself as an observer, outside observer that took place to talk about what they do and what they should do. so it's interesting to come and first whether it would matter at all if there were not russia there. >> making that point strongly very diplomatic as i would put it but basically if russia
doesn't recall the former soviet union whether ukraine or even its energy resources we matter at all and i've come to the conclusion we wouldn't matter. that's the discussions we have to start their. the core of the discussion today and the book is whether there is a rivalry or something which can be managed and should be managed in our part of the world and the so-called interest. tom said any interests in the world but to speak of our part of the world for your interest of russia now part of the world we talk about the perceptions because you have to understand
that russia also has their own understanding about their pursuit or their perception in our part of the world. so there is a rivalry and both spoke about the cultural suspicion. what we observed as the externals of this culture did not diminish at all. so we believe that these are the starting points for the discussion [inaudible] three basic thoughts which would lead to a situation where in the end we will not be forced to choose. what we have until now was we are always forced to choose who is the good guy and who is the bad guy and both in washington and moscow the very simple idea keeps the demand of people that we are not pro-russian, we are
not pro-american or pro ukrainian corporal armenian and so and so. that doesn't take the mind of academics or political etc., etc.. this is something which makes us not very happy. what we saw until recently is a transactional approach by the united states. we matter of course when we had to deal with the nuclear arsenal we matter what caspian resources and even the pipeline it was a kind of sometimes very frustrating because we explain that our policy of share policies on the pipeline policy but when it came to the discretion of the others which is the traditional and chevron was happy about that and exxonmobil was happy about that we heard the grumbling year. what is that?
right here talking about this we heard the same grumbling. so we believe that what sam said and formulating a developing a new policy. bring it on the merits of having the relationship, strong engagement and looking for real situations. basically i would personally not be met with the concept of privilege record interest. we cannot compete with russia in that historic terms. in the economic market terms. russia will continue to be large market for us. it is much bigger than you and when we talk about the customs union whether you're a busy market for ukraine or kazakhstan
or u.s. is a market, meaningful market for years for ukraine it's always our immediate space there for it was our practical choice to expand for ourselves and for other reasons, for other merits and other privileged rights. so we support the concept where year up to the co -- we have to take into account, china would have to take into account india, iran and other countries. i'm afraid of something suspicious when i mention the name of iran in this room of of really with iraq in our part of the world, which has its own dynamics and we believe that everyone ought to have privileged rights. russia has history, russia has tomography, russia has
competitive edge. you have other images. you declare policy in our part of the world for 20 years is support for our sovereignty and independence and the promotion of market forms, then democracy and security, right? so, you have certain edges and all those areas and this should be your privilege rights and interest and russia should not see them as something endangering their privileged rights and you should not see their competitive edge as something in danger in your interest to estimate you can see this event in its entirety to go to our website at c-span.org. ..
>> a freelancer and she is with our book and author committee leadership. ron of the kuwait news agency by the he hails from the u.s. south -- he is a chair of our news maker committee and doing a great job as well. kristin grantham is our guest speaker. and we have a reporter from bloomberg news and our membership secretary on our board of governors. tim hughes is general council with spacex and guest of our speaker. skip over the podium melissa
scharbenoo and we'll skip over our speaker for just a moment and he's the speaker's committee member who organized today's event. thank you. george dewy a senior vice president with spacex a guest of our speaker, welcome. frank moring is deputy managing editor for space aviation week and space technology magazine. robert schlesinger is a reporter from u.s. news report. adam gcono is with tmp government broadcast chair here at the national press club please give them all a warm round of applause. [applause] >> one might be inclined to say our guest speaker is a renaissance man but it would be to set him back several hundred
years and that couldn't be fair with south african and canadian heritage he is an engineer whose passenger of solving problems necessitated that he become an inventor. we're told that he multitasks. we told he got in at 3:00 am here. he probably drives fast we're told but with a preference for energy efficient vehicles. he thinks a lot about life in space. from software businesses to the internet let's not forget about electric cars, energy and space rockets. his friends say our speaker today does everything with absolute conviction. even when he believes in something, when he believes in something he is unstoppable. he says fethinks the stakes are important enough he'll do it whether the odds of success are high or low. forbes magazine ranked him at one of the nation's 20 most powerful ceos 40 and under. last year, time listed him as one of the 100 people who most affect the world. esquire said that he's one of
the 75 most influential people of the 21st century. there have been many other awards and recognitions along the way. he bought his first computer at the age of 10. he taught himself how to program that and by the age of 12, sold his first commercial software, a space game for the commodore 64 platform for about $500. at age 17 in 1988, he left his native south africa for western canada to live and work with his mother's family. in 1992, he won a scholarship to the university of pennsylvania where he received an undergraduate degree in business from the wharton school, he got a second bachelor's degree in physics. he headed to stanford in a graduate program and applied physics in material science. his goal to connect capacitors with enough energy to apply electric cars but after two days he left to start a company for his brother which provided online content publishing software for news organizations and ka-ching in 1999, alta vista acquired that for $141 million.
next, our guest speaker cofounded an online financial services and email payment company. you probably have heard of it. in 2001 that became paypal which was acquired by ebay in 2002 for $1.5 billion in stock. so he used the proceeds to help start space exploration technologies in 2002 where he is ceo and cto. 2008, spacex won a nasa contract to replace the cargo transport function of the space shuttle to support the international space station without astronaut transport in mind. and in 2009, spacex's falcon one rocket became the first privately funded liquid fueled vehicle to put a satellite in liquid earth orbit. he's known as an original investor, chairman of the board and eventual decline where he led the design of the tesla roadsters and they sell systems to daimler. he's the nonexecutive chairman
of solar city. our guest speaker has been compared to henry ford, howard hughes and even the fictional tony stark, iron man. he has been described as the inspiration for robert downey junior's interpretation of the character and he had an cameo in ironman 2 appropriately enough the spacex factory was shown in the film and we hope he got some money. he's without critics and skeptics for those who thing spacex can sustain the low cost business model but he insists he is proving them wrong today. the founder of paypal, the world's largest internet payment system, ceo and product architect at tesla motors, manufacturer of the all electric tesla roadster automobile and sedan and executive center of solar city of solar powered systems in the u.s. and here today and we're grateful for that to talk about the future of human space flight as head of spacex, developer of rockets and vehicles for missions to earth
orbit and beyond. our guest views space exploration as a key next step in preserving and expanding human life and he's promoted making life multiplanetary with mars. all of this serving with proof you do not need to be a rocket scientists to be a pris club speaker but it helps. please give a national press club welcome to one of the most interesting entrepreneurs of our day. >> [applause] >> thank you for having me. it's really an honor to speak here before the national press club. i have an exciting announcement with respect to space. and i think one which should be -- provide some inspiration
and some belief that the innovation is alive and well in america and going in a really interesting direction. i'm going to get to that, but i'm going to preface that with the logic that explains why such thing is important. it may not be immediately obvious. so first of all, going back to why am i in space and electric cars and solar power and internet stuff? it goes back to when i was in college and i was trying to -- i think what were the most important things that would affect the future of humanity? what could have a significant positive effective in the future of humanity and the three things i came up with were the internet, sustainable energy both production and consumption and then space exploration but specifically making life
multiplanetary. and i didn't expect when i was in college to actually be involved in all three of those areas. but as a result of some success in the internet arena that gave me the capital to get involved in very high capital endeavors like cars and rockets, which really are very high capital. [laughter] >> so the reason for -- i'm mostly going to talk about space. so i want to explain why do i think space is really important? and what about space. but i believe it's from a rational sort of framework of logic and so you -- well, how do you decide that anything is important? and i think the lens of history is a helpful guide here. and that things that are -- that
may seem important in the moment, that actually aren't that important in the grand scheme -- you know, over time, if you look at things over a broad span of time things that are less important kind of fall away and if you look at things from the broadest possible span of time as it relates to life itself and the evolution of life has been started around 3.5 to 3.8 billion years ago, and what are the important steps in the evolution of life? and obviously there was the advent of saled cell life there was differentiation to plants and animals there was life going from ocean to land. there was mammals, consciousness and i would argue also on that scale should fit life becoming multiplanetary and, in fact, i think consciousness -- it's the next step actually because you really kind of need consciousness to design vehicles
that can transport life over hundreds of millions of miles of eradiated space to an environment that they did not evolve to exist in. it would be very convenient, of course, if there was another planet just like earth nearby. but that's unlikely and as it turns out, not the case. so i think you couldn't really -- there's no way for life to sort of just by natural selection just sort of get over to mars. so you need consciousness. so i think it is the natural step so i think if one could make a reasonable argument that something is important enough to fit on the scale of evolution, then it's important. and maybe worth a little bit of our resources.
and one could also think of it from the standpoint of life insurance. there's some chance either as a result of something humanity does or as a result of something natural like a giant asteroid hitting us or something and that life as we know it could be destroyed. there's clear evidence of life being destroyed multiple times in the possible record so you don't need to guess this is something that could occur. it has occurred. and the permanent extinction being a particularly interesting one because that destroyed between 90 and 95% of all species on earth which doesn't tell the full story because most of the remaining species were fungi. unless you're a mushroom, you're out of luck. so if we think it's worth buying
life insurance on an individual level or perhaps it's worth spending something so life insurance for life as we know it? and arguably that expenditure should be greater than zero. then we can just get well, what is an appropriate expenditure for life insurance? and, you know, i think if it's a quarter of 1% of gdp, that would be okay. i think most people would say, okay, that's not too bad, you know. but you don't -- you want it to be some sort of number that is much less than we spend on health care but maybe more than we spend on lipstick, you know, or something like that. and i like lipstick. it's not like i got anything against it. [laughter] >> so i can't wait for that comment to go out there.
[laughter] >> so that's kind of the thing that i think is important that we give a little bit of our mind space towards. and i think it's also one of the most inspiring and interesting things that we can try to do. it's one of the greatest adventures that humanity could ever embark upon. and, you know, life has to be more than about solving problems. you know, if all that life is about is solving problems, why bother get up in the morning? there have to be things that inspire you -- you know, that make you proud to be a member of humanity. and, you know, the apollo program is certainly an example of that. only a handful of people went to the moon and yet actually we all went to the moon. we went with them vicariously. we shared in that adventure.
i don't think anyone would say that was a bad idea. that was great. so we need -- we need more of those things. we need some of those things. and even if someone is an completely different industry and a completely different walk of life, it's still something that's going to make you feel good about the world. and that's why -- that's another reason why we should try to do these great things. then let's get to the question of well, how do you do -- how do you make life more planetary? what are the fundamental obstacles to that? it's all well and good if everyone agrees that that's worth doing but if we can't do it, well, it doesn't matter. so the pivotal breakthrough that's necessary -- that some company tops come up with to
make life multipleasant -- multiplanetary rocket. that's fundamental to do because we live on a planet where that's just barely possible. if gravity was a little lower it would be easy. if it was a little more it would be impossible. even for an expendable launch vehicle, you know, where you don't attempt any recovery, a lot of smart people have done their best you optimize the weight of the vehicle and the efficiency of the engine and the guidance and everything you get maybe 2 to 3% of your liftoff weight to orbit. that's not a lot of room for error. so if your rocket ends up being just a little bit heavier, you get nothing to orbit and this is why only a few countries have ever reached orbit. now you say, okay, well, let's make it reusable. which means you got to strengthen the stages. you got to add a lot of weight. a lot of thermal protection.
you got to do a lot of things, that add weight to that vehicle and still have a useful payload to orbit. this is -- that meager 2 to 3%, maybe if you're really good, get it to 4. but you got to add all that's necessary to bring the rocket stages back to the launch pad and still have useful payload to orbit. a very difficult thing. this has been attempted many times in the past and generally what's happened in the past when people concluded success was not part of the possible outcomes, then the project has been abandoned. well, and some government projects have kept going even when success is not one of the possible outcomes, unfortunately, but eventually they get cancelled. so it's a very tough engineering problem. and it wasn't something that i thought -- i wasn't sure it could be solved for a while.
but then i think just relatively recently in the last 12 months or so i've come to the conclusion that it can be solved. and i think spacex is going to try to do it. we could fail. i'm not saying we're certain of success here. but we're going to try to do that and we have a design that on paper doing the calculations, doing the simulations, it does work. now, we need make sure there's some relations and reality agree. generally when they don't, reality wins. so that's to be determined. and the simulation that you may have seen in the lobby coming in, i hope to be posted on our website right around now will show you a simulation of what we
plan to do. so that simulation is mostly accurate but there are a few areas which are inaccurate, in some cases due to timing constraints we weren't able to work with the simulation people to get it completely accurate. and in some cases we're keeping some technical things under our cat but it gives you a good idea of what we intend to do, which is to land basically for the first stage, after stage separation, turn the stage around, relight the engines, boost back the launch pad and land on landing legs and with the upper stage after dropping off the satellite or the spacecraft then do the orbit burn, re-enter, you need quite a palpable heat shield. and back to the launch pad. you don't need wings. this is a common misconception.
you need some leftover drag member, lift factor and steer back to launch pad and land propulsively with landing gear. we'll see if it works. it will certainly be an exciting journey. and if it does work, it will be pretty huge. if you look at the cost of the falcon rocket. it's quite a big rocket, it has thrust and it's the lowest cost rocket in the world and even so it's about 50 to $60 million but the cost of the fuel and oxygen and so forth is only about $200,000. so, obviously, if we can reuse the rocket, say, 1,000 times, that would make the capital costs of the rocket to launch only about $50,000.
there would be maintenance and other things that would be factor in there and fixed cost and overhead cost but it would allow a 100 fold reduction in costs. and this is a pretty august thing if you think about it as any type of mode of transport. you can imagine if planes were not reusable, very few people would fly. 747 is about $300 million. you'd need two of them for a round trip. and yet i don't think anyone here has paid half a billion dollars to fly. and the reason is those planes can be used tens of thousands of times and so all you're really paying for is fuel and pilot costs and, you know, incidentals. the capital costs is relatively small. so that's why it's such a giant difference. or thought of another way, i mentioned we could probably
afford a quarter of a percent of our gdp for making our life multiplanetary. that's the cost if you have a fully useable rocket. the cost on the same barometer would be 100% out of gdp and that would mean no money for food, health care or anything. and obviously obviously that's impossible. so that's why i think a fully reusable system is fundamentally required for life to become multiplanetary for us to establish life on mars. mars is the only realistic option, venus being hot, mercury being way too hot. uranus being a gas giant and jupiter is a possibility and it's further out and hotter and the moon is too small and resource poor to make life
multiplanetary. not just to have a little base. a little base is not that interesting. but a self-sustaining human civilization on multiple planets where life could continue even in the event of a calamity on earth. that is the real thing. yeah, so i think this is -- this is pretty exciting. i think everyone -- everyone in america and arguably the rest of the world should be pretty fired up about what we're doing and hopefully wish us well. and we'll do our best to succeed in this regard and, yeah, it will be an adventure. and i'll say one final thing which is that some of the people say well, what is the business model for mars?
and sometimes i think well, you mine mars and bring things back that is not a realistic business model for mars. it's always going to be far cheaper to mine things on earth than mars but i do think the business model where if you can reduce the cost of a flight to mars or moving to mars, to around the cost of a middle class home in california, which does seem to be rising over time, maybe not recently but certainly pretty expensive, but maybe to around half a million dollars, then i think you'd have enough people would buy a ticket and move to mars to be part of creating a new planet and, you know, be part of the founding team of a new civilization. you don't have to be willing to be -- have quite an appetite for risk and adventure.
but 7 billion people on earth now it will probably be 8 billion by the midpoint of the century so even if 1 in a million people decided to do that, that's still 8,000 people. and i think probably 100 million people would, in fact, do that. that's what i think the mars business model and i think mars can transport intellectual property and things like that, if you can beam it back with photons and beam it back. so i'll be happy to answer any questions. [applause] >> well, thank you very much, well, obviously given the verse nature of your own pursuits and we'll ask you come back as soon as you get a drink of water which is required to earth. if you might go to the moon that might be more difficult so we're
going to start with the space piece and if you'll just stand up here right by my side and we'll just wing it one by one. talk about how you see the practical application of this technology sort of in the near and intermediate term if it's successful? >> well, in the near term, the technology will be applied to launching satellites and to going to the space station and taking cargo and crew up there. that's the near-term thing and that's what spacex's business is predicated on. we're doing okay in that regard. we've got about $3 billion of revenue under contract. >> that's better than okay. $3 billion. >> yeah. it's spread out over the next five years but it's not all at ones and we have to do lots of things to get that money but that's not bad. and so we have been profitable for the last four years, not
seriously profitable but moderately profitable and we expect to be the same this year. and i think that's somewhat necessary and if the money going out exceeds the amount of money coming in then we'll die. we'll to make sure we have more money coming in than going out but that seems to be going reasonably well. >> you described to me right now you're the leading essentially vendor for launching satellites in space right now? >> if measured by a launch contract thwarted, that's correct. so the united states has been uncompetitive in the international launch market for a long time. and russia has actually been the leader in that regard followed by europe and then to a lesser degree india and china, although china -- china is growing rapidly. and except in the last few years, where the united states has done the best.
and that's due entirely to spacex. >> so, obviously, you're a person very interested and performing in innovation? and that's something that seems the united states does well. in the space business, specifically, how can we maintain that competitive edge and are we maintaining it in the sector generally within our nation right now? >> well, as far as the launch is concerned, i think the united states has by far the most competitive launch capability with -- as a result of spacex. and the only realistic potential competitor is china. it's the easiest to compete with governments which is heavily subsidized and they have set their sightings on us and that's okay. i think we'll win.
but we have actually with respect to china we have a conscious strategy of filing the absolute minimum number of patents. we filed very few patents. on the rockets we were very careful about cybersecurity and we were very careful about physical security 'cause there's obviously a history of obconneding with -- absconding with intellectual property. and that's -- contrast that to tesla where tesla files a lot of patents because they are commercial companies and there is commercialibility. >> let me come back around a little bit in maintaining the national standard. as you know there's been an active debate in congress and washington about what is the appropriate role for government? of course, there was a different approach to that in times where cash was more.
>> right. >> and it seems to a great degree you're a beneficiary in that in the sense we're outsourcing some of this within our own country now. >> uh-huh. >> is the inability -- the apparent inability federal government to spend on this going to be an inherent problem for our country? >> well, we do spend a fair bit on space. i mean, much more any other country from a government standpoint. so i think we'll continue to be the biggest spender on space, the united states. but by the same token, i think the budgets will be increased just because of overall funding on the budget and we have a huge budget crisis. and largely have our head in the sand or ignoring the reality that we're spending far more than we're bringing in. and that chicken will come home
to roost. so i think we can expect massive compression from all budgets including space because we simply won't have any other choice. >> i want to get more to the spacex piece since you just talked about sort of the way you should do business as a government there's obviously a political issue right now that's out there about how -- what is the appropriate role of government in encouraging job creation? you have 1500 employees at spacex. you're having those jobs in the united states -- i guess you have a launch facility in the marshall islands. >> yeah. actually our primary launch facility is cape canaveral and then we're building a air force base in california. we're not currently using the martial islands launch site. we did use it initially but the logistics are just too difficult getting out there. what a world out there. it's miles away from anywhere. it's convenient in some ways but then inconvenient from a
logistic standpoint. our launch point is cape canaveral and we're planning on establishing a commercial launch site which would -- because it makes sense because vandenberg and the cape air force bases make sense to concentrate air force and nasa business at those two facilities and then concentrate commercial launch activity at a commercial launch site just as it occurs in aviation. >> so what's your sense in the political debate here in washington -- do you have trouble creating jobs within your company because of the way the federal government's operating currently? or what you envision as the way the policies are managed generally? >> well, there are -- i should say spacex would not be because of nasa and the great things that nasa has done and the
business that nasa gives us and the expert advice they give us and i should credit nasa in terms of how helpful they have been. we do have a bit of a challenge with the air force. and this is something where i'm sort of surprised that there's not more journalistic interest because the air force is currently proposing to extend these outsourcing of boeing and lockheed until 2014. and the reasoning given for that is preservation of the industrial base. although for some reason oddly enough we're not included in the industrial base. and this is doubly odd because the main rocket used by boeing lockheed is the altus 5 which has a russian engine and a
airframe in switzerland which base are we trying to preserve the one in russia. that doesn't make sense. >> you sense that's a political problem? >> you know, we have 1% of the lobbying power of boeing and lockheed. >> that's a political problem. [laughter] >> if this decision is made a function of lobbying power, we are screwed. [laughter] >> i think you just earned some journalistic attention. let's get more to the space business because we do have a lot of questions and i want to be fair of our audience to get in as many of those questions as time permits and, obviously, these are some far-flung questions, literally as well as figuratively. someone asked, what will today's announcement -- how you will today's announcement divert resources from sending humans to the international space station, and i would probably add, if at all? >> no, i wouldn't consider this to be a diversion. this is a parallel effort. and so it's not really impacting
our sending of cargo to the space station. nor is it affecting our human space flight development activities that we're doing in partnership with nasa which is going really well. so i think of this as sort of a parallel thing. it doesn't really affect the assent phase of the vehicle but we're really trying to have the assent phase not be hits the atmosphere and explodes. that's actually what happens to rockets, otherwise. >> that's a good goal to keep. given the grounding of russia's rocket fleet are you in discussing with nasa to accelerate launch dates for the international space station missions? what happens with your schedule november launch with the possibility that the iss may need to be evacuated? >> yeah, with the soyuz failure that could recently -- it actually will likely result in a
delay in our launch to the space station because that sort of pushes out the other mission. and nasa rightly wants to have the appropriate level of astronaut -- the right astronauts and a number of astronauts and with the right training on board on the space station when we arrive. so it looks like things will be more like january for the space station. and that is contingent upon the russians meeting the schedule that they currently stated. >> how do you evaluate the fact that we're using russia as an important partner in our space program right now. how do you feel about that? what are the risks and what are the benefits? >> i think despite the recent failure of the soyuz, i think it's actually a good vehicle. it has a good track record. i think there may be some concerns going in the future long-term with russia in that a
lot of their expert rocket engineers have retired. because it's much more compelling financially to go into the oil and gas industry in russia than it is to go to the rocket and gas industry. that expertise is tailing off and i think that may lead to decreased reliability for russian rockets in the future. hopefully it doesn't. >> that gives the advantage to china then? >> well, i think long-term -- like i said, i think china is the serious competitor long term. if you look at russian rocketry since the fall of the soviet union there's really been no significant development, the technology is -- has barely progressed. no new rockets have launched since the soviet union. so what that means as soon as that technology level is succeeded then they're rendered
redundant and they have nobody to compete and that's what will happen with the restitution agency. >> how long will they have unless they do some serious work as being a viable space program there? >> 5 to 10 years. >> how soon -- does that mean at that point china moves in? i mean, essentially in that space that they're occupying? >> i'm quite confident we can take on china. >> well, let's get to -- >> maybe i'm overconfident. i'd rather bet on us than china. >> well, you're on the record. i think you have a lot of people cheering for you so, obviously, we'll see what happens. we'll invite you back and check back. >> it will be the famous last words. [laughter] >> given the failed progressed launch in the risk of trusting the very survival of the international space station entirely to soyuz for years to come there's a state of emergency until u.s. crews begin. can you fast track development on human rating to result in crude launching beginning in about two years? and if not, can you speed up the
process by any amount? can you launch in an emergency as well? >> well, i think it's important to clarify what can the system do that we've done -- the system that we're launching today? what can it do? if the degree of safety was acquired in the shuttle we could launch astronauts on the next flight, on the one -- which will likely go up in january. the system is fully capable of carrying biological cargo, you know, which is, you know, people. so what it doesn't have is a launch escape system. and the shuttle also does not have a launch escape system but with nasa and we agree that it's a wise move. so we are -- it will take us about a few years. maybe at the outside three to
develop and qualify the launch escape system and the way we're doing launch escape system i think a significant innovation beyond what's done in the past with the escape thrusters bolted on the side wall of the spacecraft so you can actually use those same thrusters for propulsive landing, which is cool and we're actually talking with nasa about potentially doing missions to mars and other places using dragon as kind of a general test -- a general science delivery platform to various places in the solar system. so that's an important distinction. we could launch satellites next flight if the requirements of the shuttle or if we wanted to add a launch escape system two to three years. >> the questioner asked nasa has a legacy of openness and transparency unlike private
companies would. while you're flying private payloads, a private model will continue to work for you. however, once the american taxpayer starts footing the bill i guess the supposition more aggressively what assurances can you guarantee that spacex will be as open and transparent as nasa or other aerospace systems or need you be? >> well, you know, relatively speaking we're a transparent companies. there's some restrictions that are itar restriction -- >> you could do harm with those. >> right. we can't give -- we can't sort of just publish to the general public detailed -- a detailed analysis of a failed program that has details of a rocket. that's a violation of the law. all that information is available to nasa and to the faa
so our -- you know, for mission that is we do for nasa, nasa has quite a detailed oversight role and then the faa as well has an oversight role. so, you know, if you're comfortable flying commercial aircraft, then you should be pretty comfortable with what we're doing in commercial rocketry. >> and yet with nasa, there's obviously any number of project events that occurred where human life was lost. and in the sense, obviously, they're using private companies as partners. but essentially it was under the nasa and government brand. essentially flying the american flag, can a company like yours sustain a loss like that as a private enterprise? would people be willing to give you as much dare i say space in the event of a tragedy that they would be their own government? >> yeah. i think -- i think that will be okay. i mean, if you look at other modes of transport, aircraft,
boats, cars -- if you're familiar with cars, there's loss of life in any mode of transport. and if one set of standards -- you couldn't have loss of life, then there would be no transport. you wouldn't be allowed to walk. so you have to allow for some amount of risk. it needs to be reasonable and measured. but you have to allow for that but i don't think a commercial company. i think a commercial company arguably would be better to deal with that than a government entity because if it's government, then you have congressional hearings and it tends to become sometimes political football. >> congress has a willingness to investigate private companies as well. >> sure. but i think -- that certainly occurs where it seems like there's been sort of a violation of the rules or something.
>> from the national press club we're live to the u.s. senate for a brief pro forma session we plan to return to the press club following the senate. >> if for some reason nasa was in the picture or is that a concern at all? >> well, assuming nasa is our largest customer and our most important customer, but if you look at our launch manifest we have over 30 falcon 9 missions under contract, 13 of those are with nasa. so effectively we've got maybe 40% or so of our business with the government. but then if you consider -- let's say you made pencils, about 40% of your business would be with the government. so it's not -- it's not an
unreasonable number. >> fair enough. fair enough. we're getting to the workforce issue. someone writes in the audience today, my son, not me is a mission controller at houston's johnson space center, which obviously is relevant to the future of your business as well, many of his friends with the shuttle program have been let go and they're interviewing via video with jobs with your company. any suggestions on what you're looking for? [laughter] >> sure. well, you know, if you look at the amount of money that is allocated to commercial space relatively to overall nasa budget you'll see it's a pretty small number. you know, the last fiscal year it was $300 million but that was split over four competency. we got about 75, i think, or something like that. so that's about half a percent
of the nasa budget. it's important to bear in mind we'd love to hire a lot more people we currently hired but we also can't run out of money and die. >> uh-huh. >> so we can only hire a few people. in terms of what characteristics we look for, we generally -- we're quite engineering-centric so we're big fans what people have done from an engineering standpoint? yeah, what type of engineering problems have they solved, how they solved them, and we're sort of less interested if it's sort of been a paper-oriented role that they've had 'cause we try to minimize that at spacex. >> are you more demanding an employer than nasa would have been? >> well, it's a tough question to answer. >> give it a shot.
[laughter] >> i think probably more demanding -- i guess nasa is a large organization, so i think the level of demand that people face different parts of nasa very considerably and i'm sure there are parts of nasa which is just as demanding, maybe more demanding than spacex. but spacex is an extremely demanding organization and we expect people to work super hard and be very good at their job. >> given the tesla and solar city in your response to climate change, what do you say to politicians who actually say it's not happening? >> okay. well, i think -- you know, boy, the climate debate is an interesting one. if you ask any scientist, are you sure that human activity is
causing global warming, any scientist should say no because you cannot be sure. on the other hand, if you said, do you think we should put an arbitrary trillions of c02 in the atmosphere and just keep doing it until something bad happens, they'd probably say no, too. we essentially are running an experiment and that experiment is to test the carbon capacity of the oceans and atmosphere. now that experiment may turn out to be fine. if may also turn out to be really bad. and i just don't understand why we'd run that experiment. particularly, when you consider at some point we have to get to something that is sustainable. we have to have sustainable production of energy and consumption of energy. it's unsustainable. you'll run out of it and you can simply say well, well, let's say
hypotheticalcally call02 was g the environment and let's hypothetically u.s. has all the oil. there would be a scarcity and cause an economic collapse. and i'm not saying that it needs to be a radical or immediate change that people need to inject a great deal of misery in their lives to, you know, avoid c02 but we should lean in that direction. we should lean in the direction of supporting technologies that are sustainable and lean slightly against technologies that are unsustainable. that just seems pretty sensible. even if the environment is the factor. and, in fact, my interest in
electric vehicles predates the current climate issue. i mean, i was interested in electric vehicles 20 years ago when nobody was really talking about global warming because i just thought it was the obvious means of transport. but i do think the climate thing does add urgency to things and i do think we will see quite a significant increase in the cost of oil just from a demographic standpoint you got china and india and a few other countries that represent almost half the world's population and have very few cars in the road but are rapidly adding cars to the road so you can expect a doubling of demand, and i think it's going to be difficult to achieve a double of supply. >> have you changed anything in the wake of the federal cylindra supervision do any governments and contracts will tessly's government loans and contracts
withstand government scrutiny? >> yeah, so in the case of cylindra which has become a political football here, you know, the d.o.e. programs are portfolio programs where some number of the things that are founded there are going to fail. that should be assumed. you should for the assume 100% success. and in the case of cylindra forget private investors lost twice as much as the federal government did. and there was some fairly first rate venture capitalists in them. it's not as if there were suckers. so if you've got first rate venture capitalists who lost twice as much money as the federal government, you've got to say, okay, it was a bet. the bet didn't work.
but that doesn't mean, you know, something really terrible happened. the most you could say that cylindra executives were too optimistic. you know, they presented a better face to the situation than should have been presented in the final few months. but then if they didn't do that, it would have become a self-fulfilling prophesy of -- you know, as soon as the chief ceo doesn't know that we're going to survive, we're dead. i think people are making too much of the cylindra thing. i mean, and do i think we're powerless from tesla, you have to look at it from the d.o.e. in our case we have significant capital reserves and we have more money at tesla than we need to complete the program in question and we don't face the same issue that cylindra faced
which is extreme competition from china on a commodity product that drove the price from $4 a panel to $1. that's the fundamental reason why cylindra went down is it would have been okay at $2 but not 1. and that's it. and here's the other thing which is not getting enough press which is how much money do you think the chinese government put into solar? estimates are about 40 billion, okay? so our team operating on a pittance, we got china operating on 40 billion, that should not be no surprise. >> do you view it has tarnished the united states? >> there's probably a little bit of tarnish but, you know -- you
know, it's unwarranted tarnish. now, the story that occurred with the cost per watt of solar was something that i expected would occur. so if somebody asked me is cylindra a good investment, i would have said, no, you're going to get your ass. solar city works on a balanced system where they do everything except the panel. and they own the end customer relationship. they're kind of like bell or apple. bell or apple don't make the cpu or the memory or the hard drives and they drive the system and they provide it to the customers through the sales and marketing service. and that's what solar city did. solar city is doing super well. and they're growing at 50 to 100% a year with positive cash flow which is incredible. and, yeah, i just show up at board meetings to hear the good news. it's really great.
[laughter] >> more credit to those guys. so for them, the more rapacious the competition on solar panels, the better. >> well, if you wouldn't mind, we'll do some finishing business here so if i can just step up there for a second and then we'll get more questions in if you'll just stand by. as many of you know we're almost out of time before asking the last question of the day, a couple of housekeeping matters to take care of. first among those is just reminding about some immediately upcoming lunchons. ken burns, the documentarian filmmaker will be here on monday to talk about his new film "prohibition." on october 5th, ron paul, a candidate for the gop presidential nomination. that's the 5th of october and that event is sold out. we just announced october 24th, tmz harvey levin will talk about changing landscape in entertainment news. before i get to the last question, if you'll just come right over here. we present our speakers on a
routine basis with our token of our appreciation and thank you very much, our national press club coffee mug. [applause] >> so we'll see if we have time for more than one question here at the end but these are on the lighter side as many of you know in the audience. let me ask you first of all, what's the one great idea that you've seen from somebody else and as the slogan goes i could have had a v8. why didn't i think of that? there's probably more than one. which of those loom largest in your mind? please stand up to the microphone. a great idea that someone else had and you wish you had it yourself? or expressed that idea? >> well, there's lots of great ideas that we come up necessarily all the time i don't wish i had them myself but certainly, you know, what larry and sergi came up with google
was really smart, you know, with the backward links to pages. obviously, what facebook has done. twitter. i mean, there's great examples on the internet and, yeah -- >> those are american companies. >> yeah, ipad, you know, obviously, iphone. i think apple google, facebook. those are examples where it's like -- you're sort of like who's their competition? you're not even sure. [laughter] >> how is it that america is able to innovate so well given all the challenges when we have great companies like that performing so well? in other words, in many ways the nation continues to be a great innovator. >> yes, absolutely. >> how do you explain that? how does that continue to happen? why is that? >> it's kind of like the statement about democracy, you know, it's sort of a bad system but it's the least bad.
well, the united states is the least bad at encouraging innovation. [laughter] >> and silicon valley i'd say is particularly good at encouraging innovation. silicon valley is just, you know, orders of magnitude better than any place in the world for creating new companies and fostering innovation. they're quite remarkable. so i don't think we need to worry about some other country outinnovating us. like almost all innovation from. it's true. a ridiculous percentage. but that doesn't mean it couldn't be better and i think we need to be concerned about, you know, excess regulation. a tax structure that doesn't promote innovation. 'cause you need to remember when companies are little they're like tadpoles.
they just die very easily. they need to have an environment which tries to protect little companies and help them get bigger. and america does that very well as well as other countries but most other countries tend to foster -- or they tend to protect the big company. the big companies don't need protection. >> how about a round of applause for our guest speaker today. [applause] >> thank you for all of you for coming today. i'd like to thank the national press club and you can find more information on the website, get a copy of the program and please check that out at www.press.org. thank you and we're adjourned. [applause]
the relationship between the u.s. and china has improved but still requires work according to the founding chairman of the china united states exchange foundation. the talk with former u.s. trade representative carla hills, the visa restrictions on chinese citizens three rest of china progress. this discussion took place tuesday at the united states institute of peace global summit on china. this lasts about one hour and 15 minutes. >> welcome back. i am mary jordan, the editor of "washington post" live, the division of the media company that puts out forms and debates about the most important issues of the day. today the topic is the economic might of china and what it means for the rest of us. and along with the audience here at the stunning u.s. institute of peace building that's on the national mall in washington, very close to the lincoln memorial, we have a whole online audience watching and welcome to them as well.
i encourage them to tweet at - tag globalchina or e-mail. i have my ipad and i will be asking the panelists online questions, too. now, let's dive into the next discussion. there's a marvelous chinese expression "same bed different dream" and it's been used to describe the u.s.-china relations. so even the most successful u.s.-chinese business partnership, where they are in bed together so to speak, there are disconnect some between partners from the two countries with very different cultures and different languages, and as more and more chinese and american companies join together to do businesses, partnerships from the first and second biggest economies in the world we hear more and more tales from the
board room come from the airport lounge, and we want to talk about some of those today. what's it like for an american to do business in china? and what's it like for those here on the panel who are the chinese and doing business in america? what are the challenges? the u.s. is in great need of capital of new jobs and are they doing enough to attract all these investments that were talked about this morning? we have an amazing panel here to talk about these things coming and i'm going to start right here with ambassador charlene barsefsky. she's the senior international partner at wilmerhale in washington, d.c. where she does multinational and private equity firms on their global market access investment and acquisition strategies. she served, as everyone knows, as president clinton's chief of cabinet as the u.s. trade representative from 1997-2001. among her many accomplishments,
she was the architect and negotiator of china's wto agreement, opening chinese economy as a worldwide market. next to her is lixin cheng, president of north american region zte corporation. zte is one of the leading global provider of telecommunications equipment and devices, handset devices. it has 85,000 employees and is booming. he is also the ceo of zte usa and has been with american now for ten years. lixin cheng is the general manager north america for air china. air china is the world's largest carrier by market capitalization with a net worth of $20 billion. born in china, he is a naturalized u.s. citizen and holds a u.s. passport. and i found this interesting that he is the only top-level executives at any chinese
carrier to be considered a forerunner. -- foreigner. [laughter] john russell is with north had a strategic communications public affairs consultancy with the china focus. he helped set forth in companies facing challenges of working in china as well as chinese companies working abroad. and he has lived in beijing now for six years. ming sung as the chief representative for asia pacific for the clean air task force and he too just arrived from beijing. the task force is a nonprofit dedicated to reducing atmospheric pollution. he has facilitated clean energy with chinese and american companies and works for many of the world's leading energy companies. thank you all for coming. we are going to begin with charlene barsefsky's opening remarks and then just jump in and talk about we have chinese executives working in america. we have the view from the ground
from beijing. so you are in for a treat. charlene. >> thank you. it's a pleasure to be here today. i thought i would kickoff on the last panel and talk briefly about china's innovation policies and what that might mean for business operating in china. there are a number of challenges to do business in any developing country particularly moving toward middle market developing country status. typically internal competition. loss of transparency, idiosyncratic government decision making, corruption, state meddling, red tape, so on and so forth. each of these challenges is magnified in china because of its size and its importance to business generally. but if you add to those generic challenges a specific series of interventionist actions by the chinese government, particularly
for businesses that have a lot of intellectual property or a lot of technology, these challenges become magnified. it isn't just the extraordinary opportunities and many situations in china of course there are. but the challenges are also greater. much higher risk. as a policy backdrop and this is important for business to appreciate, policy in the developing countries matters. it often splits the difference between the success venture an unsuccessful venture whether you are competing against a state or whether you actually have an even chance the market. china has as the core national objective as we heard this morning to become an innovation economy. why is that? because it accelerates domestic growth. it provides china's value added.
it's missing in the chain right now as dan pointed out. the manufacturer is needed least on the front and and on the back and. it will lead to a sustainable improvement in living standards and in the view of the chinese support helps secure chinese national security but accelerated development in china is also critical to stability. china creates every year net ten to 13 million new jobs. in the decades of the 90's and the united states, we created net 22 million new jobs a hand over a decade imagine the burden of ten to 13 million net new jobs every single year just what the labour force. but at the same time as that challenge exists, 6 million college graduates are emerging from china, and china. there's no intention of working
in the factories in the province for a living particularly when we think of the war on the policy and pressures on those kids to succeed. and you add to that the importance of china moving up the value chain not only because the land manufacturing has become more expensive but also because if you are going to move towards a consumption based model of courage, people have to earn more money so they can spend. how do you earn more money? by increasing productivity. how do you increase productivity? innovation, innovation, innovation. so innovation is a core national object if the veto. multinationals have been cheated china's growth so far with the single largest contributor to china's gdp even today. they still export 60% of everything produced in china. 88% even in this case, and they provide technology and managerial expertise and so on. but what china sea is now is the
levels of wealth are held by multinationals, not indigenously in which china or by chinese firms typically potentially retarding and this is a common complaint, retarding indigenous innovation of technology and capability and therefore keeping a less developed country less developed. china's innovation policies have invested for many years now different scientific plans, the battle line is if china wants to lead the second industrial revolution. it wants to be what america abbas in the first industrial revolution and that is first outside the box. this is extremely ambitious and certainly merited in the case of china. but the execution german jews.
china is not fundamentally a highly innovative first out of the box science country. it has become that. it had been that 600 years ago, but it would become that again i believe but it isn't right now. so there is a significant gap between china's's desperation and what it can indigenously produced inside fast enough with respect to innovation so as not to slow economic growth as the transition is happening. and what does that mean? who fills the gap on innovation, technology, on intellectual property, the multinationals who hold it. and so what you see in addition to the robust going out strategy to china's purchased technologies, branding, the high value-added components is that china that has imposed a series of domestic policy measures make
it much more challenging to do business. mandatory standards, coercive technology, transfer. a certain level improving but still relatively speaking less intellectual property protection a variety of measures including their indigenous in addition program which is shorthand for what mine is mine and what is yours is mine purveyed the sectors that have a lot of intellectual property, content, and a lot of technology content. what does that mean for foreign businesses operating in china? it means not that you shouldn't do business in china. you most certainly should. not that you shouldn't find partners in china, of course you should. but you have to be smart, you have to understand the underlying political necessities, state necessity for
bridging the innovation divide and what that might mean for your business in the context of any particular deal you might do. >> thank you, charlene. the tens of thousands of students at harvard and oxford are on the path towards working to innovation and neglected to get vantage of the fact that we have to chinese business leaders here who work in america to talk about tails on the road of working here. there's a lot of discussion about the challenges of working in china. how is it to work in america? and do you think that america is taking fuller advantage of the economic investments that could come our way? >> air china, the company that i
represent has been in the united states for 30 years. we first flew to jfk new york in january of 1981 and in april of 1982 we started out service to los angeles. back then it was maybe two or three times a week. today we have many flights to jfk, daily flights to san francisco and double daily i just doubled it september 1st. so that gives you an idea of how much we have grown in this country. i must say in the last 30 years or so i wouldn't say that we have mastered the way of doing business here but we have learned quite a bit through our mistakes and i think today in terms of navigating the
regulatory landscape and the commercial landscape, operational landscape, i think we are -- we find this to be shall we say easy to do business. we have twinges and a lot of it is about learning especially on the marketing side especially. >> was the biggest challenge? >> the biggest challenge for me is we don't have enough people we don't have enough passengers, and that actually is not a problem of our own making and also it's not a problem of our partners here in the united
states but actually is a problem with the united states government. to be exact, we don't have enough people who can travel from china to the united states. >> because? >> because of the visa problem. to put it in perspective, i will give you some stark numbers. in 2010, we got about three-quarters of a million of chinese and other words 750,000 chinese who came to the united states to visit. 1,000,003 income to this country, but if you put in perspective, chinese population is 27 times as korea's population. >> the difference with the visa is it takes 120 days to get a visa in china and in korea -- >> korea is a weisel waiver program. you don't need a visa to come to the united states.
>> and you don't need a personal interview? this is a huge issue. >> it's huge. it's gigantic. and we are missing out. by we i mean the u.s. because i am a u.s. citizen. [laughter] we are missing out big. ambassador locke's former department publishes this data every year. it's the visa's to lists. imagine two lists. the countries that per most believe could produce the most visitors to the united states, and the countries that whose visitors spent the most money in the united states when they visit. on the number of visitors you can't find china. by the way, korea is number eight. on the other list, china is number seven and you cannot find
korea. [laughter] what did i say? >> you're blasting u.s. government. [laughter] >> it's a business issue actually. because the chinese visitor is the biggest spender about $6,500 per person, per trip, followed by australia and about 4700, followed by the japanese at about 4500. so what about 750,000 visitors, they put $5 billion into this economy. >> we have to bring this up this afternoon with kurt cambone at the state department. i want to hear what do you hear is the biggest challenge? you've worked here now a long time. what do you see as -- what makes
it hard and maybe even deters investment from china? >> the biggest challenge we have at zte 26 years ago with seven engineers to now we have 85 employees worldwide doing business in 40 countries and more than 50% of the revenue is actually coming from outside of china. so it seems we have now become multi-billion, multinational companies. and so my biggest challenge it seems we've figured out during the past 26 years held a successful and effective competing global stage and how we can also be successful in this market, one of the largest in the world. so how can we bring our creative
competitive at high quality products at a very low-cost to the united states? so i think that is the biggest challenge i have. so zte has been doing business in the united states since 98. until now, we have spent about 10 billion u.s. dollars on american soil, including 4 billion pay in the u.s. technology companies including royalties for the rpr and high-tech chip sets. so zte as a business model -- >> did you find it easy to compete here? do you feel like america is welcoming the chinese investment? >> i would go back to the report that the american open-door policy, and i feel like the u.s. particularly in the sector we are competing in is closer than
china. >> how close? >> for civil china and the telecom sector accumulated market share for the infrastructure is more than 60% still today. so for the foreign vendors, they have 90% market share to negotiate the agreement with china, as you know that is one area and for 3g, foreign companies still have about 50% market share. so, with that can china benefit from this kind of competition? so now today china has 1.23 billion telephone users including wireline and wireless in china.
one of the biggest user base and china. so actually be at zte have a model called acw. we leverage our americans in the region. so we pay technology and biotechnology from the high-tech companies like intel, microsoft and texas instrument. so when c stands for china. we leverage the chinese effective engineering, resources and low-cost manufacturing base. then we integrate this into the w, worldwide market. so i think this is a win-win-win situation. until recently the cannot bring these kind of products into the u.s. and the u.s. market. >> you can or you cannot? >> we cannot. >> what is stopping it? what is the block? >> the key thing is this .2% as
mentioned is the so-called national security. so, i think there is a lot of media coverage about this very interesting product we are building for spring nextel. if you go back to "the wall street journal" last november -- >> and washington post. [laughter] >> expecting more policies coming from "washington post." [laughter] so, i think that's a typical example. zte was proven number one and technology and number one in commercial and also in the financing. but we couldn't get the project for different reasons. >> different reasons and in what political that it was a chinese company? >> yes, and we understand the sensitivity of the chinese, the
u.s. relationship impact on the business. that zte is a company traded in the stock exchange. and we have no government influence so our ownership structure is on most companies we have about 80% share owned by european and u.s. institutional investors such as fidelity, morgan stanley and we also have most of them independent also sitting on the board. >> does anyone want to jump in about this issue because this is a big one. on the one hand, many states need foreign investment. on the other hand you have politicians and others not wanting china to go into much of
america. very similar to the 80's when they were worried about japan buying up america and that went away and there was billions of dollars worth of investment that followed. and do you see it -- >> i would pick up on the point on investment. in brussels and canada and also dealing with the challenges of the business -- there are challenges. but the simple thing is it's pretty prickly here because china is moving into you have the competitive situations and
the united steelworkers and all these groups come out of the woodwork with the interest group politics to initiate the drive and in the countervailing cases. it's charting the course and i think china will go through a lot more to grief in trying to invest. to give you one fact, despite all of the media, china has less bond nonequity, most competitive investors here than a comparison. there's more chinese investment in real economic activity in australia with 21 million. it's a mid-level economy.
it has as much as all of europe and 25% more than the u.s.. and actually, china is not even in the top ten investors in australia. americans, japanese, koreans. so until china can produce jobs in the country, the japanese, the koreans, that is the issue. >> that's very interesting what do you think, the ceo of coca-cola had an interview and he said in many respects it is easier to do business in china, which he likened to a well-managed company. easier than the states. he said you have a one-stop shop in terms of the chinese foreign investments and local governments fighting for the investment. does that surprise you? you work and live in beijing now. you've worked for american international companies.
how do you see the issue? >> that really doesn't surprise me because from my viewpoint that is a personal experience as well. it's open, transparent process i would really beg to differ because it is not from my experience. it's very difficult to understand how they think, and they don't have to justify process investment? >> right. and for chinese investment into the united states, many times he's singing it's not related to national defense, and yet it takes place in the committee and that kind of thing is very difficult for chinese to understand. very difficult for the markets to understand why is it that way. whereby in china, even though many of the process these are
now open to it on non-chinese but if you have non-chinese employees, you have people to understand how -- >> this is a pretty big if isn't it? >> it's not that difficult. looking at -- here you have one sitting there, chinese citizen and she can put a lot of insight. i myself as american, but i feel like understand quite a lot of chinese business and a lot of times i've put these business executives together. on one of the few that i happen to advise, so for the u.s. company by advise their executives, and adviser to chinese companies. >> let's hear the advice. so what is the advice here?
first tell us how you would advise the americans. >> the first advice i would give to americans would be when you are looking at china, their system is back in texas in 20 or 30 years ago to understand and forget about the legal system is still only worth of the piece of paper written it's that you trust the people that you are dealing with off the table. so normally advise american executives to sit down with your counterpart, look them straight in the eye as you can trust each other, you like each other, let's go.
the second advice i would give is trousseaus repeatable companies you want to deal with. and there are some doubt don't. there are plenty of companies out there that you can work together. those would be the beginning. and you do want to have somebody on the ground in china if let's say american companies do business in china, you want somebody on the ground because the situation changes very fast. so as in the united states. there's lots of changes. >> so there's been good and bad chinese partners and american companies to look them in the eye and i presume they are more transparent and there's a lot of talk about corruption this morning. there's good actors and bad actors. is that what you're basically
saying? >> the corruption in the laws in china it's very strange and you'll see in the news many of them get caught and are kept punishment. >> like texas. [laughter] >> economic crime -- [laughter] >> why we would keep somebody a lifetime in jail than get rid of them. >> just briefly then and then we will move on, your advice for chinese doing business here were doing business with americans. >> i also advise chinese companies working in the united states, so i --
that the chinese business people can't get a visa here and the chinese officials can't readily get a visa here but if we have taken a principled development after the unfortunate event of 9/11 and expanded it to cover situations to which it should not pertain and does not pertain. >> i think if i were to change one thing about doing business in china or the chinese doing business here, i think that the vast bulk of chinese investment in the u.s. is easy and requires no filings for the national security even those that are filed for that reason for the purpose of the transactions under this process for the last
five years, fortunately some of these have been chinese and i think the lesson for china is and first of all are not huge. i think second of all to understand the regulatory process in the u.s. and most chinese companies do i think third come to be flexible to find solutions for investment problems which can be with regulators and the executive branch, and last, to partner more often with american companies, which then help provide additional credibility to the chinese entity and also some greater comfort with respect to national security. >> get to you think john is right that when the investment is followed by actable creation of jobs that there will be a more welcome the?
>> i think that's always very, very important and as we invest and create jobs abroad it ought to be creating jobs abroad for those national workers as is often the case in africa and other places where china invests. i think if i can change one thing on the chinese side of investment, it would be further liberalization of its investment catalog. china classifies all investment opportunities in one of three ways, permitted, restricted, which may mean yes or no, and prohibited. the prohibited category has shrunk over the years or the restricted category has shrunk over the years and has moved to the category just as their u.s. has with respect to certain areas, china has many sensitivities with respect to
certain areas. we are investment prospects much more uncertain, and so a further liberalizing of that regime, moving the rest of the restricted and prohibited towards the permitted category would be very welcome. >> i would like to come back to win this tales of the road idea about the same bed different dream when we were talking backstage several of you are talking about how there are cultural differences and i just wanted to hear from a couple of few who work with americans about what is it like and kind of do you have any little stories you can tell to kind of show how there are challenges of these ventures that we would be seeing more and more of. >> i would first follow up on your comment that you quoted
from, and i will make a general comment that i think in general china is getting easier and easier in terms of doing business. china has become more open for business. i think the u.s. has a tendency of becoming less and less open for business. 30 years ago -- >> in general or to china? >> i think in general, especially when we talk about chinese companies experience. they will find well actually we thought all this would be so easy, everybody would welcome us and when we invest money they welcome that we found that is not the case. there are so many regulations and there are so many hoops you need to jump through. and there are all of these, you know come on business, noncommercial related issues.
if you look at china 30 years ago when it opened up the was a very ideological society. the was a very ideological. today very practical, and getting back to the issue of getting a visa, when i came to the united states, my challenge was to get a chinese passport getting a u.s. visa is nothing. but today is the opposite. it is so easy to e-file a piece of paper, you get it into our three days. whereas back then it took two months to get my passport and why, it is open for business. >> you had said that even ten years ago there wouldn't be chinese analysts in a forum like this. things are changing quite rapidly in china. >> very rapidly. if you think about it, i am
sitting here -- and yet they put americans in charge and that is to the causes a lot about chinese companies. it really has changed quite a bit. in terms of creating jobs come to your point, ambassador of course we create jobs. today we have the american mayor plan. we have 15 of the 787 on water, and we want to fly them to the united states if with a visa and today the top job china has in this country in america and i
bought a building of like right by the airport of los angeles and with that the opening resolution and north america i added 30 people. >> americans? >> americans. the writing is on the wall. >> since i took this job about a year ago, so i have about 186 new employees in the u.s.a., and 83% of them are americans, so of course we have to send experts from china. bonuses tied to this rate. i have to achieve about 70%
otherwise i will not get bonuses for my job. with regard to the culture and also to the policy of the comments the chinese government and the shopping the of too many different organizations to deal with and i think the key is also the culture in that in china the common levels from central level they have dedicated organizations to focus on those regions of for the chinese companies in china when they come to the u.s. to get lost because on one side they have no where to go. someone comes, holding your hand, there is no such thing.
so fundamentally because of the two systems are different. probably. >> the business opportunity for someone to initiate that. >> yes. >> i think that is very important. another is also the different role of practice. for example, when i was moved from china to california so when i come here they gave me training. does the u.s. remember -- when you have a meeting with a female employee you would never close, so why?
because there is a risk for yourself of sexual harassment which is a big thing in the united states. understand this now after working in the united states. there is a lot of this kind of flaw in the united states. [laughter] and so of course when how we are going to adopt the local practice and that's important. our founder and chairman of zte has to think globally and act locally. i think that's very important. it is also my advice to many who want to be successful here. i have talked about our challenge in the united states. but the key things for me i think still is communication. we have to make sure, you know,
the u.s. government from the business community, political community, and everybody in the united states about our intelligence comes here. why we come here, you know. we as zte company, we come here for business, for market share to create jobs. part of the local community are part of the local economy. some and how do you think that communication could be better? is there a better message coming out and should be coming out for the businesses were the chinese government? >> more meetings like this. [laughter] >> this is very good because why we make the effort to come here also to meet new friends here. this is very personal for me because we are operating in the united states in offices so my
family is in san diego, california so i make the effort to join this event and because it's important to we are, what we want and what we are doing here. i think it's very important. that is also might advice to the chinese companies when you come here don't just come to the united states government because they are doing nothing. compared with the china government doing everything. so you have to to achieve that. so, as i said, since last year our business in the u.s. has been doubled, more than doubled and will continue for this year and the couple of years past. as we speak if you go today you will find that the smart one has come from zte [inaudible] who can do that? we will see that. this will bring the value
gradually we will recognize although it's not fast enough and we should more focus on the state level, the local level in the united states rather than the federal government because when you talk with them they will be more business oriented rather than since the federal government is more politically oriented because they appear about a tax allowed jobs. so that is otherwise given to the chinese company who come here which is also our experience in the united states. >> that's really interesting. john wanted to say something here. >> on the issue of the discussions tend to be about the external challenges of american companies and as the government manages them. i would like to just raise the
internal issues of the company. just looking at the resources or through technology and the consumer goods we tend to see what works and what doesn't work and an old friend is working in one of the companies and said you know, with the challenges of managing a company in china the average age for our company in europe is 44-45. the average age of time in the company is 14 years. go to china and the asia pacific the average age is 29 and the
average time in the company is less than two years because they are going up 40%. so those companies have the same vision and values and all this but they are different organizations. they tend to be more prone to crisis. the of compliance issues and a whole range of issues. and then the operating in the market which is rapidly changing the environment and activists industrial policy. if you look at the role of the chinese government it puts pressure on companies and we get the most out of the economy and the opportunity. to give you an example, three weeks ago there were in the food
sector [inaudible] there were 1700 food companies in china. as it was down 600 in the last three years and there's the companies now in the descended market share. so you were dealing with a whole different beast in how that market operates. you should go through paper, even the car companies. we have 82 car company produced in china. that's coming down in the next five or ten years in the government in 1012 to read and there's a big discussion of the 18.65 million last year, 67% growth. how will it run shot in the next ten years?
dealing with the rate of change which has its own challenges which are not seen certainly hear about the change in the economy. >> i suppose the profit will drop everything but i'm very interested to talk about -- it's not just age differences in the company's bid to get there but they have a -- i forget who said this to me on the panel, but they were saying that it all goes back to the pacifier, the baby's pacifier. in america they make a big deal it's a little baby, they slowly say just one hour and put the baby to bed and they go over many days to try to get rid of it. and in which china would do they do in china they just put something that tastes horrible, stick it in the mouth and that's it. very different approach. so there's friction come there's
age differences, approach differences and i suppose in the and if you're making a lot of money in the future. >> that isn't saying the chinese don't love child. one child policy, attention, i think when we talk about this story because i hear both sides. i have this kind of comparison every day with these kind of small claims. to the child it's different. in the united states and in china. i think that's very important. it's come to that model of how coming from different cultural backgrounds, companies from different backgrounds or a country you are doing business with in your home country. so when you are looking at the surface there is a flow of red
and white. it's going to go in different directions and flowing overseas. a lot of people didn't see that under the sea level you actually have a floating with an anchor which is on the floor of the sea and i see the flow is a behavior of individuals or the company, all of the country and the rope connecting the flow into the anchor is the attitude and the openness of the region, the company. the anchor is the belief of the culture indeed of the region. >> so are we anchor for ever? are we anchor for ever in these very divergent cultures? >> welcome my feeling is that we are emphasizing more on the differences.
we really need to look at what is in common. the parental love is universal. behavior may be a little more different and the system may be a little more different and the same with businesses. if we look at okay we are in this together. let's go make money, that is universal. and then how we behave in the certain market? i use the word for the company operating in the country, and that in the united states of your body feels that is an american company. it is not. and they behave such that by all laws of the local and you just don't think about it. >> the international company? >> the shell oil company. not american but in the united states most people think that it
is as american as any. for those companies doing business together whether it's two countries together or multiple countries together just behavior -- we have the same goals but the av locally. don't try to change the country. it isn't going to happen. >> what do we have in common with to say? >> what is in common is if you look at let's work together, the two companies added together and is usually more than some other to and you go to get a business either in the individual marketplace for the global marketplace and it is a win-win-win solution and that is
usually the best way. i've been nonprofit when i first came to china. they always look at me how do you make money? ayman nonprofit. it takes a while to overcome that kind of barrier for the united states. common wisdom says common is going to steal our technology, steal our jobs, steal our money. post conventional wisdom is not true. many of the companies put together for example going back and working on providing microbiology, technology on the microalgae eating some of the
pollutants that go to the air one is co2 and it is a win-win-win on both ends. we are taking that technology if it works well to conquer the world with. that is good for the world. i think that has been hard to put more together and we are here to exfil our organization to these technologies. and a lot of people in the world feel that technology competition is the ball zero sum game it's not. the market is so large. there's so much that you can get. let's work together and multiply these technologies to be used and the whole world would be better off. ..
>> how many business leaders tell me to bring their laptops, blackberries to china because electronics snooping it's all right. they are apparently particularly good in china about some of stealing her contacts, e-mails and information by doctor ipad and phone. they quoted as saying the constant fear of electronic snooping is a trusted. we go over there trying to
establish a working relationship, but the kind of paranoid you have to go in with and the thing you have to worry about poisons this relationship we are trying to establish. any thoughts about that? >> i think this is a very difficult issue. i think it's very difficult to handle in china. and i think it's very difficult for the u.s. government to handle. i think is a very high level of paranoid with respect to digital surveillance. it partly emanates from internet surveillance, from china's censorship regime and the ferocity with which it is carried out in terms of numbers of sensors which are hundreds of thousands. in terms of police action with respect to activists and so on and so forth, and much of that has been quite well documented. i think for most businesses you take precautionary measures where ever you go in the world.
>> as you point out in today's story, it's not just china. >> it's not just china. it's common sense. if you go to your hotel room and if you don't want anyone to read, take it with you. i do that if i'm in time and i do that in france. it doesn't matter to me. it's simply precautionary. but the paranoia of general surveillance is quite high. >> from the pr point of view, we are the largest pr company before leaving on good terms. but it's remarkable dealing with media there because it's the wild east in many ways. you've got this very definite sensitive, running alongside that, parallel, is an incredible
vibrant free and easy media that is tough at the business level to get a grip of an handle, particularly when you're dealing with social media. and i typify it as being like working in an envelope. and if you're at the edge and you want to write issues of human rights, tibet, taiwan, role with the party, then be very careful. you're going to have difficulties. but if you're operating in the center, and its normal business, and the nature of the media is, they are strapped for money. the government has cut off their subsidies at all different levels, and then you've got these guys, and in the is coming down, still huge, two and a half
thousand tvs, but they are desperate for money. so they think content for with advertising revenues, and you also get this print where they come if you are operating in the center and you are a journalist who's got to get copy and so on come if you can't write about all those items, you can't criticize the vice minister of and so on, then the fair game at the multinationals who are operating in there. so you have to have a very sensitive and a well oiled machine to deal with reputation issues in china, at this point in time spent this sounds like it is changing. we will take some, thanks, take some questions from the audien audience.
>> hello. my name is jane. i'm from the johns hopkins university. i think elizabeth, pointed out in the previous panel that there has been a lack of willingness on the chinese company to bring past practice of one egg overseas. i wanted to ask especially what your thoughts are on this but i know zte is also visible in africa and some the other emerging markets. internally does zte so that universal approach to overseas markets, or in terms of law abiding or is it very much depend on that market you're talking about? thank you. >> yes. as i said zte has large globalization. as we say, think globally and act locally. i think this fundamental guiding
principle doing business here in the united states also. actually, you know, i was hired locally here, you know. i have lived in united states for more than 10 years, and i just joined zte about a year ago. so that is effort. they try to do differently in the united states. but if you're looking at global basis most of different country measures for zte is all from headquarters. still today majority of the chinese company going overseas is similarly. so this is significant, you know, to hire a local people to run the local business here. as i said, the intention is good, but it does not necessarily guarantee all practice is local yet. because it goes a long way. i talk about in challenges which
is competition which is market side to the community, outside. the result was challenge we have to communicate internally, you know, to make sure the guys in the headquarters and who are supporting you also understand that. so this kind of practice will go into the overall process, you know, the way of walking, the way of communicating internally. for example, since i joined zte i have said the walking limit in the united states is english, not chinese. okay? so it's very hard to implement it, but now it's going better. and also it's good impact back and headquartered. now, headquartered said -- >> are there any penalties if you hear them speaking chinese? >> but we were -- you know, very interesting. mary, you sound like you really
are inside e-mail. [laughter] we do have some surveillance. we do have some ways that if there is an e-mail or is american does not in mandarin or he or she received e-mail only in mandarin or in chinese, he or she can complain. and then the guy generated, you know, has to improve that next time. so i think that's good things. we also the good impact at quarter now. and all the documentations, you know, english is must. i think that's good way, you know, we doing first step. but in general speaking yes, there's a long way for the chinese company to go, to do that. but this no different compare chinese company or european companies. because where i joined european company in 1982 in china, and most of the language is not even
english, right? so different language which i don't understand the i happened to be only guy sitting on the management team does know that particular language. but i fast learned the reason i can join conversation. >> i can tell. we're running short on time pledges want to take a couple quick questions and then will head into a brick. does anyone have a quick question? >> my name is mark perl. mine might be a little more narrow, but broader. the whole nature of this panel and the seminar is about economic development and technology, as opposed to something in the alternative, looking at issues. so being very micro, issues like private public partnerships in security, not along the lines of what the panel was talking about, but response to natural disasters, aviation security,
things that you can, not just from best practices, but go to the issues of lessons learned. can to be an exchange between what united states has gone through our what china has gone through with regard to border or aviation or natural disasters, these mudslides of years ago when first responders were killed in china, didn't learn from what we went through in 9/11 with a first responders having died in terms of communication. we focus on the tee of i.t. and not the eye, the information. can to be a sense of lessons learned between the two countries to form a different alternative way of looking at investments and involvements between the two countries? >> i think that's an extraordinary amount of dialogue between the u.s. government and the chinese government, and between state governments and their counterpart chinese government. and as an extraordinary amount of information exchange, working groups, including on things like
natural disasters, disaster response, things we're cooperation makes sense, lessons learned makes sense. and that's ongoing work, something actually the u.s. has with many countries around the world, and many countries have with each other. some of them are through the u.n. and other organizations -- some bilateral or plural lateral among groups of countries. so what you're talking about, there are lessons learned that our exchange. they may not be followed, which may well be what we saw in china, unfortunately. or in the u.s. come in the reverse. between is a good example. but that kind of information exchange occurs routinely. >> one more question. >> i am with chinese agency. this year also marks 10th year anniversary or china's entry into the wto. so my question is, what our
losses and gains for china, the united states and the u.s.-china businesses over the past decade? thank you. >> i think you just look at the growth rate of china and you see in the media, debbie t.o. accession, broadened it, deepened it. and the beneficiaries of that growth have not only been to the chinese people with respect to living standards generally, but the businesses that you see here and around the world. you see much higher degrees of interregional trade now with china's wto abstraction. that's a good thing when you consider the concentration risk that was always faced. by asia on undo a lines, on the u.s. market as the market of last resort. that reliance has diminished somewhat, given the state ideas economy, that's a good thing for global growth, not a bad thing for global growth.
i think you see a china that has become far wealthier certainly at national levels, 3 trillion plus in foreign exchange reserves which is a third of the global total, which is an indication of extraordinary transfers of wealth from the west to the east. so i think that for china this is been very positive. i think for global growth it's been very positive. i think as a backstop in recession at times, we all receive the importance china plays, stabilizing. i think the challenges are many, including the country that is rooted not in a global system, but rooted also in a system that is much more china focused, less globally focused in terms of overall responsibility and agenda setting. and you see that in issues like the exchange rate, and so on.
but i think there can be no question but that china's secession has been a very substantial net positive for all the parties involved. >> i just want to in now with asking each of you very briefly, look 10 years from now, just want you just describe what you think the u.s.-chinese economic relationship is going to be like. very briefly. will it be very different from now? will be better? will it be worse? what do you think? >> i would say it's probably increased collaboration, and shortly we will make more money. -- and jointly we will make more money. i think we've got to learn more from each other and become a really a global company, together. >> so china and america inc.? >> yap. >> okay. >> i would put and aspirations
aspect on a. is good policymakers on both sides of the pacific. that it moves to a much more integrated relationship. at the moment the trade deficit is too high on one side, trade -- >> but from -- but 10 years from now will it be better? >> i think if it opens up the right way. compare it to the european relationship where each employs about the same number of jobs in each part of, they have a push-pull effect on each other, or have until the latest downturn. there is a kind of culture factor on both sides with investing, operating. each side has national interest. but those national interest kind of narrow it down. and that you can get that integration of investment,
trade, and jobs more imbalance. because they are not imbalance at the moment spent but they will be in 10 years? >> it will take a bit longer. heading that way. >> i am entirely optimistic. i think 10 years from now the u.s.-china relationship will be better, much better. and i say that because fundamentally i think the two people naturally get along. americans and chinese generally like each other. we never miss out on an opportunity to sit down and avondale and have a drink. we both care, we both care for our families. we both worked very hard. we both want to get things done yesterday. and, you know, we all want, we all like educations we have a lot in common. surprisingly actually. so i'm very, very optimistic. >> i agree, we are very optimistic about the future,
u.s. and china relationship. and also the business between the two great countries. and i will say for zte, our market share indiana states will be a part with market share in other part of all. i also expecting more and more companies were dodging this worldwide. and i'd to believe that this will be a win-win-win situation for the u.s., for china, and also for worldwide economy. >> last word? >> i think that at national levels both governments will continue to do what they do now, which is managed each others' expectations and manage tension. i think it's important for china to increase transparency, particularly on security issues and to let its intentions be more transparently known. i think when it comes to
business they will be intensified competition as china moves up the value chain. and that means they will be intensified friction. you would expect that. the trading relationship is very large now and it's going to be much larger 10 years from now. and i think that chinese and americans will continue to share one common feature, and that is being pragmatic, being extremely practical, and that will hopefully form a foundation for a strong underlying relationship as these tensions are managed. >> well, thank you very much. [applause] >> there's a lot more to say here and we will pick up the threads of this conversation after this afternoons, of course henry kissinger will be are talking at lunch. the bulk of his time will be spent taking questions from the audience, and then at 2:00 we have former treasury secretary bob rubin. 3:00 we are managing director of the world bank am a kurt
permanent residency. this event is just over 90 minutes. >> let's go ahead and get started. we do have a great panel thisavl morning, and some which have flown all the way across the country. you can guess who those are. th. i think panels like this are great greatthese are following general speakers, and his honor as a tough act to follow, but we will try to take the big picture, move it down. our panelists are going to try to fill in the slices of the pie from their companies and their personal experiences about the beneficial effects of immigrants into the personal situations. i think it helps americans take the abstract and down and understand what they're talking about today.
the mayor said the stage already, but a few comments did not want to go away. we are at 9% unemployment, but we are facing a shortage of workers for certain kinds of jobs. you don't have to take my word for it. a couple of studies have come out recently, the mckinsey global institute on june 11. the united states will not have enough workers with the right education to fill the profiles of jobs likely to be created. united states will not have enough workers with the right education and training for the jobs likely to be created. our analysis suggests that a shortage of 1.5 million workers with a bachelor's degrees had higher in 2020. 6 million americans without a high-school diploma are likely to be without a job. americans that attend college and vocational schools choose a
field of study that will give them specific skills that employers are seeking. this points to potential shortages in many occupations such as nutrition, welders, nurse's aide. in addition to the often predicted shortfall of computer specialists in engineering. a new one came out of georgetown. america was slow coming out of recession in 2007, only to find itself on a collision course with the future. not enough americans are completing college. by 2018, we will need 22 million new college degrees but will fall short of that number by at least 3 million. whinnied 4.7 million new workers with certificates. you can't throw a stick without finding articles on this issue.
a new york times, factory jobs return but employers find skills shortages. giving a lift to the fragile economy. because they laid off so many workers, manufacturers have a vast pool of people to choose from. employers complain that they can't fill their openings. the problem is a mismatch between the kind of skills needed and to the ranks of the unemployed. 2 million open jobs, i can go on. the point is, in a world with 9% unemployment, it is hard to believe that this is the case. it is worth mentioning that we look at the 9% figure, but among those with college degrees, the unemployment rate is 4.3%. 0% unemployment is what we
prefer, but as we're talking today about what the companies faced, we need to keep those statistics in mind. -- ifkers can't find companies can't find the workers they need, it will not create jobs. you don't need an economics degree to say that if companies can't find workers, they are not going to grow and that will hurt everyone including americans looking for jobs. it allows you to put things in perspective. right now, in this country, we have three separate worker programs. as we talk about trying to expand the program and the various ways, we're talking about a small drop in an ocean and a drop that is very
important to drive economic growth. those are basically the three programs that drive immigration in the temporary worker area. if you look at a charge of 165 million and you put the level of the numbers included in the temporary worker programs, it is flatter than a pancake. i am not going to go through the various statistics that the mayor went through on graduates from universities, 50% with ph.d. and a master's coming from immigrants from overseas. we have a hard time keeping them even if they want to stay. a lot of them say i will go back to my home country and compete against -- it is sort of a
ludicrous position we are in, one of those areas that over the years we keep struggling with. maybe the next year-and-a-half or less we have a shot at making some progress. certainly there are some economic studies that say that immigration has a slight adverse effect on americans with very low wage levels. there are more economic studies anyone to shake a stick at. at the high end, economic studies are clear. it has a positive effect on the american economy, generally. it is not even a debate among that. that is where we are. the mayor touched on all of these subjects. we have an excellent panel here, and i will introduce them quickly.
there bios are in your material. i will go down the list, then we will shake it up a little bit. senior counsel of global migration at microsoft, came in three days ago to get ready. as a senior management level of migration services, microsoft u.s. immigration department consists of a team of 17 professionals responsible for the handling of all u.s. immigration matters for microsoft. to her right, manager of a global immigration services. the company diversified with 57,000 employes worldwide and directs the company's emigration and international visa function to facilitate the transfer of personnel worldwide for regulatory compliance and
associated travel issues. i have known elizabeth for over a decade. she chairs the subcommittee, and always comes to the table well prepared and whenever we needed somebody to testify, let's live up elizabeth. she will fly down and do what needs to be done. executive director of enterprise innovation, stephen has 10 years of private equity experience. a graduate of georgia tech, he returned to his of water as chief commercialization officer. it was led to streamline the licensing of technology have to make the institute's resources more accessible to business and industry. i think he and our next speaker will have a different perspective on emigration, all
in agreement, but sort of a different take. he said i introduced him as a doctor q. even though i took four years of spanish. he is a neuroscience for cellular and molecular medicine. at john hopkins at the bayview medical center. that just about does it right there. he is an internationally renowned neurosurgeon that leaves cutting edge research to cure brain cancer, and as we have talked on the phone earlier, he has quite a story to tell about his inexperience. i think most of you know her, a research officer for the federal reserve bank of dallas. she has done a lot of great writing on immigration.
she wrote the book, u.s. immigration reform and a new era of globalization in 2010. do we have copies in the back of the room? she will provide a look back as we go through the specifics. elizabeth, since you're the chair of the immigration subcommittee, let's start with you. >> while i chaired the subcommittee on immigration, i hear from a lot of other companies that are having the same kind of problems, attracting and retaining high skilled talent. but so we can get a little snapshot of companies that use highly skilled workers, i will talk mostly about my company and what we do. it is a $14 billion diversified
industrial company. we employ 58,000 worldwide. we have 83 manufacturing facilities, 47 of them in the united states. we operate in every global region. our strategic and branch, trained air-conditioning, transport refrigeration, locks and everybody knows our golf carts. it does a lot to sustain productivity for industrial production. they are all the no. 1 or no. 2 brands in their market. a lot of that is because we have a very innovative product. we employ 3000 engineers globally. 700 are lead accredited engineers, who recognized green
building certification. we are committed to sustainable energy solutions, we have a center for energy efficiency and sustainability. it is a dedicated global team that is increasing the pace of environmentally sustainable innovation of the product that we manufacture and sell. while it really only uses less than 1% of h1b workers, their highly specialized knowledge and skills driving innovation that supports a very complex global platform of products that are sold in every country around the world. our engineering managers recruit at top universities in the united states.
when they go out to recruit, they're looking for candidates that have attained at least a master's degree, and they're looking for candidates with a very highly specialized in jerry specialties that relate to a product line. like integrated electronics. most universities now that are really at the top echelons throughout the country have a lot of cross-disciplinary degrees. which are really amazing because you will take somebody that has maybe a business degree in engineering degree. they're very good at creating the business system because they understand the business aspect of it as well as having the capability of being able to create global platforms for itt business solutions. this year, we recruited the three ph.d. candidates that are
working on product development. when we went out to look for engineers, one of them that we hired, in his doctoral thesis was on design optimization, a renewable energy system. a commitment to innovation and sustainable energy. as i said, he completed a ph.d. at a u.s. university and had opposed completion employment experiments -- experience, a close connection to one of our product lines. with his employment experience, he was uniquely qualified to identify breakthroughs in energy from home air-conditioning, heating, and ventilation systems. not only is he doing a wonderful job for the company creating innovative products, but he is also doing research that is
supporting our commitment to energy efficiency. that will help everybody. as i said, these people have a lot of opportunities now. because i do global immigration, i see other countries were also interested in small talent pools and a lot of other countries make it much easier for these highly qualified individuals. mayor bloomberg talked about canada. i have someone down who is concerned we will not be able to get a green card for him and he is applying for canadian citizenship. it is a pretty easy process. it is a skill-based thing. i'm afraid we will lose him. that is a simple fact. if we cannot come through the labor certification and get him a green card, because he is an
indian national, he has to wait eight years to get a green card, he will go elsewhere. and now they're wonderful opportunities for them in their home countries. there are great opportunities in the european bloc for i.t. services. this is our competition. we're not just competing against other u.s. companies. we are competing on a global platform with other countries looking to attract the same talent that we are trying to keep here. if we keep this talent here and redo the product innovation here and we do the manufacturing of these products here, this creates jobs for americans.
for example, our centrifugal air tracked business has an almost 90% of the products exported, mostly to underdeveloped countries. these are products that sell from $500,000 to over $1 million. they harm manufactured here in north carolina. right now, we are going through a number projects to develop new cutting edge product enhancements for this particular product line, which creates energy and is also energy efficient. it is an international competition for this very small pool of highly skilled talent. i think we have to look at the immigration system in the united states that is in keeping our ability not allowed to hire these people initially as an h1b
worker -- we do run out of them each year. by january, we will be out of h1b numbers for fiscal year 2012. so our recruitment people will not be able to hire a farmworker who requires an h1b visa. how do we get green cards for them? why do they have to be stuffed in a job for eight years to 10 years because there is such an incredible backlog in immigrant visa numbers? again, a lot of the candidates that i am looking at, because we are and engineering engineering company, come from those classifications. that is something that mayor bloomberg brought up. if we had some mechanism to
retain these people, it will drive business. it will keep manufacturing in the united states. in the end, it will support our economy and our gross national product. thank you. >> you mentioned high tech. in the past, you have also mentioned a shortage of skills. for example, welders and such. >> yes. there are manufacturing jobs as well as high skilled jobs that are shortage occupations. precision machinists, that this kind of a skill that you do not see much in the united states anymore. again, it is essential for certain of our product lines that you are putting together. putting together to -- tool and die people, they are less
skilled workers and there is no mechanism to bring them into the country. we spend a lot of kind -- a long time with that, looking for welders. the attrition -- the people who are retiring now who have those skills and the young people are not going into that at all. young people do not want to be welders in america. foreigners will come in and do welding. but that is not something that attracts good and we do have our own welding school. we still cannot get the appropriate candidates. my engineering manager tells me that there is a skill to welding. it is not just being willing to do it. it is a highly skilled profession. as is precision machining and tool and die stuff. they do not require a college
degree, but they are highly skilled jobs as well. >> first novel, i want to thank you for organizing the event and inviting me to join. it is an honor to be part of the panel and the conversation and i am grateful for the opportunity to be here today. i am senior counsel for global migration at microsoft. microsoft global migration group is one of the largest in house immigration programs in the country and is responsible for helping to enable microsoft to lead the industry in its ability to hire and retain talent by delivering timely, effective, and measurable immigration solutions. in simple terms, i like to say that we help microsoft hire the best and brightest talent. once on board, we helped insert them into the microsoft family by allowing them to focus on their jobs and their personal
lives while we handled their immigration matters. having them focus on their jobs and their lives and not worrying about their immigration matters is a really big task. between tom, randy, the mayor, and elizabeth, we have covered a lot of ground here. i want to spend a lot of -- in the the time covering what we see on the street level and giving you some specific examples of what we're facing in the competitive marketplace. i would like to focus my remarks around three main issues. number one, why do we need to hire foreign nationals in the first place and what would be the detrimental effect if it could not bring them into the u.s.? no. 2, what is our experience when we are able to bring it in the foreign nationals that we need? is it right? that is often argued in for rick professional hired, there is an american professional who is
not. or is there another more positive creation affected? number three, what are we doing because of the broken immigration system? do we have to operate at a deficit until things change? why does microsoft need to hire foreign nationals and the first place? what would be the detrimental effect if we did not bring the four national mini into the u.s.? what lost opportunities which we face? for us, when we look at lost opportunities, it is really hard. we're focused on innovation. we're focused on being the next great thing. we want to come out with the next best technology that you all want to use. so we cannot just identify the sites -- those opportunities. we have to create environments where we allow that innovation two floors. that will allow certain ideas to force and then see what opportunities present themselves. like most major companies, microsoft competes in the global
economy. part of that intel's having operations around the world. that being said, we have been firmly -- part of that entails having operations around the world. while we have more than 90,000 employees worldwide, more than half of them live and work in the united states. our research and development efforts have always been led in primarily conducted at our headquarters in washington can and we fully expect this to continue. and fat, 83% of our nine points $6 billion in research and development activities -- $9.6 billion in research and development activities occur in the u.s.. microsoft is a company whose entire basis is ideas and innovation. sure, we need to make sure that we stay on target with our development schedule. but we also want to make sure that we encourage -- that we trade increased opportunities for innovation. we want to be able to be a game
changer. we want to create that hot technology. this means having access to the best minds in the field. star talent acquisition strategies are absolutely critical. finding the right talent is not as simple as substituting one person for another. for our business, it comes down to having the right technical skill set for our core technology jobs. we focused our recruiting for core technology jobs at u.s. universities, which continue to be among the best in the world for computer science and engineering graduates. so there is a serious shortage of u.s. students with expertise in the fields we need. we have found through our expansive recruitment records that u.s. universities -- at u.s. universities, how of the small pool of graduates, the majorities are for national students. randy mentioned the georgetown
university study that projects jobs and education requirements in 2018. we will need 22 million new college degrees. but the country is on course to fall short of that number by at least 3 million. moreover, we're falling short in many of the field we need the most feared computer-related bachelor's degrees awarded in the u.s. dropped from 60,000 in 2004 to cut 38,000 in 2008. nor are these shortfalls limited to the bassos degree level. last year, only about 1600 computer science ph.d.'s graduated from u.s. universities. of these, some 60% were foreign nationals. as well, for instance turn 50% of the computer engineering degrees at the u.s. masters level. this is poor employment for
recruitment. one of the stumbling blocks in this debate is that people often ask how you can talk about a shortfall of talent when the unemployment rate is hovering around 9%, and increasingly, however, the unemployment problem in the u.s. is also skills problem. we see this in a unemployment rate for the different groups of americans. we see a 9.6% unemployment rate for individuals with only a high-school diploma. in contrast, unemployment for individuals with a college degree or more is only 4.3%. this education-based difference in the unemployment rate is mirrored in the i.t. environment. the unemployment rate for computer and mathematical operations hovered around 3.7%. it was under half the overall unemployment rate. what is clear is that our
country is operating with a dual the unemployment rate, one for those with strong post secondary education and another starkly different one for those without it. to promote the country's long- term competitiveness and from -- and create -- the u.s. must produce more university graduates in these fields. our first priority should be to elevate and enhance the skills of american citizens so they can compete for the higher skilled jobs in this economy. we need to bring more americans up to a secondary level. that makes such a major difference in employability. we also must make sure that students are focused in the fields that the economy needs pin it does not just start at the post secondary level. we need to do more to spark the interest of american students of all ages and to help build the educational environment for our own students to survive. for us, this is about addressing
the issue at its record microsoft approaches its u.s. education strategy with the same level of thoroughness and creativity and resources that we bring to software development. microsoft contributes tens of millions of dollars annually to support organizations and programs designed to encourage students and workers in america to pursue stem field and to increase the skill level of the u.s. work force with a wide variety of free and reduced-cost online digital literacy training. i can spend a lot of time going through the programs, the educational programs, but i will save time and just mention a few. we have elevate america and elevate america veterans initiative. we looked at a community-based efforts to provide free jobs and -- to provide free job training
opportunities and other transitional services for returning iraq and afghanistan veteran service people and their spouses. a new privately funded program to improve teaching and learning in sun's technology, engineering, and math. our $6 million commitment over three years will make this program focused on investments that will improve student learning and make -- in the crucial infield out in her home state. we have a washington opportunities scholarship for we pledged $25 million over the next five years. as well, microsoft education announced a new $15 million investment in research and development for merc of learning technologies, including game- based construction and the creation of a lifelong learning digital archive. i have to tell you, just as i have a child who just entered kindergarten, by e-mail came in yesterday. i saw that we just once a new
program where we actually bring an elementary school student on tour campus and have them experience in the technology that we create and spend time with them really just trying to spark their interest in technology and the idea that they can be the next greatest thing, that they can be an innovator. if they just focus on the math and science and technology field, who knows what they may become. i think it is really exciting as i look at my son. i hope you will go down that road could i look to companies like my own and others to really sparked the interest of our young students. but skilling the population is not the solution near term coul. part of the solution means access to foreign professionals. i need to be clear that our need for high-skilled foreign talent
is not just a shortage issue. we will always want and americans should always welcome those who are the very best at what they do no matter what country they come from. we should want this sort of impact talent on our team, not on someone else's. i can list the number of microsoft leaders who are foreign-born. but in the interest of time, i will just focus on one. -his name is alex to mentor and he came from brazil where he was enthralled with software developed when he started playing begins at the age of five. he strutted at the rochester institute of technology in the u.s. from the time he graduated and joined microsoft in 2001, he has been the primary inventor for 60 patent filings, 14 that have been granted this year alone. he is one of the fathers of connect and is responsible for incubating the project. he took the business and drove it through proof and execution
good if you're not familiar with it now, it is the device that allows people to control through voice and gestures the fault -- the software and games for microsoft and xbox. it is very cool. other than being just a game, kinnect is a good example how often innovators from abroad help to promote jobs and growth and opportunity in the american economykinnect holds -- in the american economy. kinnect holds the world record of sales after it launched in november. it has been a key revenue driver, generating more than $1.2 billion in revenue in its short life so far. it has been a huge job creator at microsoft. but there is an important downstream economic expectation good packaging, transportation,
buyers, stock clerks, persons in the stores who sell it and the list goes on. beyond that, there are also avenues of innovation not yet even imagined that this revolutionary technology will open for others. kinnect is a game, but we have read articles where it is being used in operating rooms by surgeons. the list of innovation is on and on. we are very passionate about it and we are passionate about the fact that it creates as a job creator in the u.s. economy. companies and developers can allies on the technology, whether through games or the technologies such as health care and robotics and more. as a country, we should be doing everything we can to make sure ideas like this one bloom here in the united states. this means making sure that people like alex, who sits near the top of past company magazine
as the creative people in business for 2011, are attracted to study in this country and bring their talents to the american workplace with a ready pass to permanent residence in the u.s. so what is their expense -- what is our experience when we are able to bring in the foreign nationals that we need? there are no serious studies. microsoft's consistent growth has letters to increase employment every year since the company's founding in 1975. this growth means more jobs for u.s. workers. over the last five years, our u.s. work force has increased by 22%. although microsoft has directly created u.s. jobs with a significant rate, this is not where the economic effects and been in 2010 from a study by the university of washington
illustrates the powerful downstream economic effect of high technology jobs. the study found that the nine but 16 -- that the $9.16 billion in turn created job opportunities for other state businesses for a multiplier effect amounting to 267,611 jobs that year. through this multiplier, every job at microsoft supported 5.81 jobs elsewhere in the state economy. contributions have been possible by combining american brainpower with some of the talents of some of the brightest professionals from around the world gripped the u.s. work force is made up overwhelmingly of u.s. workers. but part of the recipe also relies on our ability to attract an essential complement of the best minds from other countries.
microsoft is innovating and innovative department. because of shortages and intense competition, filling our talent needs remains a serious challenge. we currently have thousands of unfilled job openings with over half being computer science positions did our continued ability to help fuel the american economy depends highly on access to the best possible talent. this can be achieved exclusively through educational improvement. we need to be able to attract and have adequate access through the immigration system to skilled workers from abroad. so what are we doing because of a broken system? do we just have to operate at a deficit until things change? certainly, there are times when we have looked at work-arounds.
when we could not bring in the talent that we needed, we look to canada and we moved jobs to canada. we opened up our development center did today, we are facing different challenges and our most pressing immigration problem is the profound shortage of green cards. as previously discussed, we have employees, indian and chinese nationals mainly, who are looking at a 10-year wait for more to obtain their green card. these are individuals who have master's degrees, ph.d. boss from u.s. universities, who have gone through the process. we have looked for an american worker through the american labor process. we have shown that there's not one available. we have been certified and they have gone through the petition process. they have been approved.
immigrant visa available due to the restrictions of numbers to allow them to obtain permanent residence in the u.s.. that is really difficult to persuade the best and the brightest talent in the world to come here if we cannot offer them permanent residence here. if they will have trouble obtaining a mortgage, even buying a car because they are seen as only being here temporarily, they cannot put down roots. they are worried about their children going to school and then having to transition them back to a different country. it is really difficult. these are bright people. they could get high wages in other countries. we have talked about the wages in canada. we have seen wages in india and china and brazil skyrocket. the jobs will go to where the talent is. we need to make sure that the talent is here in the west.
-- in the u.s. we look forward to legislative reform any meaningful way that will benefit the country, encourage investment, retain and attract high skilled talent and create jobs. a lot of thinking clearly has already been done in defining clear policies that congress can take. i think mayor blubber went through -- mayor bloomberg went through changes that we shall look to. which certainly recommend that congress ensures that the supply of employment-based green cards acknowledge the economy. after they graduate, rather than a tawnies abroad. again, we need to welcome these people in and we need to show
them a path to permanent residency here in the united states. we need to welcome these people with open arms, not kind of let the men and then tell them, maybe, if you're a really long wait, maybe then we will allow you to reside here and planned your ribs. and while we await legislative reform, microsoft will continue to do what it has done for years, to be a positive participant in the process through collaboratives with the u.s. government. -- wouldple would be st thee be the stem obpt. it would give graduates with more of an opportunity to remain in the u.s. and contributory economy.
there are still plenty of good ideas out there. employers have already gone through the department deliver process and received certification, who have already gone through the sts process and received an improved emigrant visas position and would have their green cards today if not for there were not enough visas to go around. we cannot make mistakes with our economy. it is a mistake to not allow an innovative economy to hire the best talent. we need to help keep our position as the global innovation leaders. to do that, we need a system that does not work as a detriment to our innovation. thank you. >> as you're talking, was making a list of senators for you and elizabeth to meet with. [laughter] a compelling case. let's go to the other side of the country, ga. -- i know you have a different angle on some of these issues.
>> thank you for having me here. i was laughing in the brick that i could probably replace my prepared remarks with what mike bloomberg said. he hit a lot of the right points. he did a great job. i think my role is coming from academia. i am not personally and academic. but i would like to discuss what emigration means to us as a research university and what some of the policy's main toward where students can do after they graduate. for those of you who are not familiar with it, we are the largest school in the nine states. there are some people who think we're pretty good. we are ranked as the force -- the fourth best engineering school in the u.s. that is not a plaid place to be. it ranks as the seventh best university of all types in the country. and we are broad. we're not just good at one thing. we have 12 different disciplines
in engineering. we are actually top 10 in 11 of those categories. we do not offer the 12th one, which is agricultural. we do not have any cows. i think we're strong across the board. and we are in atlanta appeared as you might expect, ever since the civil rights era, we have a strong record of graduating minorities, initially african- americans, and now binaries' all types. -- and now minorities of all types. we are usually numbered two or three in any of us and we're top 10 in all of them. we have a very diverse campus. part of that is that we have a lot of foreign students. right now, 7% of our undergraduate body is. we get more applications than we .an take goo
40% -- the national average for stem students is 50%. in computer science, it is over 60%. we are at about 40%. those come from india, china, and korea. but we represent 115 countries, including iceland. i do not think that i can name 115 countries if you asked me to. but that is our latest list. and overall student body, 18% of our total enrollment of 21,000 students. so 2000 foreign students on our campus. it is hard to get into georgia tech. we're pretty picky. we get nine applications for reese loft in our freshman class. the 3800 students have made it
through the process are the best of the best. at that point, everybody is smart. they're hard-working, dedicated, and flexible. you cannot ask for better students, either at the undergraduate or the graduate level. companies could not ask for better workers per hospitals cannot ask for better physicians. as a country, we cannot ask better citizens than these kids. but as a country, we have put a bill of barriers and we're making it very difficult for these bright kids to build careers in this country first, just getting their student visa approved, never mind residents say, has turned into a nightmare. we have created a whole department since 9/11 to help these students. we are not doing joint programs in other countries. so the chinese nationals and indian--- international's cannot get to georgia tech students to their countries. is a nightmare.
it did not used to be that way. look back at history. 100 years ago, the united states had a mediocre set of colleges and universities in 1911. harvard was pretty good. but it fell off pretty fast after that. by 1950, unchallenged and unquestioned -- we have the finest higher education system on the planet. 60 years later, we still do. other people are working on it, but we still have the best. what happened to change that higher education system between 1910 and 1950? immigration. the higher education system in this country was built on immigration. it was triggered, unfortunately, by adolf hitler. he took power in 1933. he basically destroyed the german university system, which was unchallenged at that time, the best university system in the world. he ran off that talent.
because talent family. it is tough to move factories real people get on airplanes. at that time, on boats. and most of the german professors and many of the students went to britain and increasingly to the united states. among other things, that won the war could imagine the manhattan project without jewish scientists could imagine even worse, manhattan project with those jewish scientists working on the bone. that would not have been a good outcome all over europe, both sides, brainpower started moving, mostly at that point to the united states from all over the continent. then from latin america and asia. basically, we sought in the best brains from all over the world into our colleges and universities over 20 years. that led to more than half a century of really unchallenged economic dominance for the united states.
we are now seeing challenges to that. it is interesting to reflect that, if we had had current immigration law back then, that migration of brain power would not have happened and we probably would not have had the dominant economy or the dominant military on this planet for the past 60 years. let me give you a current example. a couple of months ago, i was judging a georgia tech students event. it was about doing mostly master students with some undergrad, mostly in computer science and electrical engineering. i was incredibly impressed by the quality of the student teams. it was a mobile app thing. it was really impressive. these were commercial-grade apps or you could see how they would get there from here.
i spent about a decade as a working venture-capital is before getting to academia. i was pretty impressed. these were class projects that felt like a venture capital event where people were coming to pitch ideas for investment. i started acting -- would you like to start a company? i have friends in the business. i think i can get some of these projects funded. usually, i cannot. i am kind of slow, but i figured out -- i started asking where are you from? 28 competitors in this student project, 26 of them were from overseas. there is no way that a -- the 26 students can get their degrees at georgia tech and start companies. they want to, but they cannot. there's only one thing that i will say that you must remember
we educate kids and they want to start companies here and they have to go home. they want to stay here. they can afford an h1b. they do not have $21,000. and the immigration service does not recognize self employment. there is no path for them to create company. so there trusses are to fight -- so their choices are to find a great company that will sponsor them for h1b and a green card and they can have a very successful career that way, but they cannot create companies and create jobs. or they can go home. and they are doing very well in china and india and brazil and they can compete with us from there. i built the carrier building entrepreneurs. entrepreneurship is very hard.
most people who try it fail. figuring out who will succeed is really one of the key skills sets in the venture capital business. i submit that being able to pack your bags and moved to another country where you may not speak the language for graduate school is a pretty good indicator if a young person has what it takes to start a successful company. over half the start-ups in silicon valley have a founder from either india or china. these are the people we want. the kauffman foundation found young companies less than five years old have accounted for essentially all the job growth in new -- in the united states in the last five years. all of the job growth, from young companies. but our policy does not allow them to come here to participate in that job creation either get a job with the company or go
home. at georgia tech, we have seen the impact of this every year. we are dealing with multiple students with these issues. last year, we had a spinoff company created by a graduate student from another country. master's in electrical engineering. a brilliant kid. he went through all the hoops and did his mpt, but then he ran out of options and could not stay and he gave up. apple snapped him up instantly and he is now working. the kid is brilliant. but it delayed the formation of a company based on the technology until we could bring in new founders the did not have immigration issues and we wasted about a year. in the wireless space, a year is a lot. there was economic growth that did not happen.
and this is creating value as an apple employee, but he would treated more as the founder of a company that could hire people in the next year or so. john door for is one of the most successful venture capitalists in the silicon valley. these students will create value. they will create jobs. they will pay taxes. why would we not want them to stay here? they will get married. there will raise kids. they will buy a house. they will buy two 0.3 cars. there is huge amounts of economic benefits to this. but as we heard this morning, the challenge is that they're taking jobs away from real americans. the mayor already addressed this. that is just not true.
entrepreneurs do not take jobs. they make jobs. and we need to give them a chance to make jobs. first for themselves and their co-founders and for hundreds and even thousands of employees. but this is not a zero-sum game. if these immigrants or one of the immigrants are not allowed to create jobs, those jobs and not magically go to american- born natives. those jobs simply do not exist. they exist somewhere else on the planet, but not here. and the mayor touched on the agriculture issues. these are not jobs growing crops or flipping burgers pared their high-paying jobs that your kids would like to have some day. there are two million jobs, internet jobs in the united states. 20 years ago, none of them existed. much of the companies did not exist 20 years ago.
subtract all of those companies that had foreign-born founders and take half of those two million jobs away. that is like the manhattan project without the jewish scientists. it is not pretty. silicon valley gets the press, but it is deeper and broader than that. it is not just who will and it is not just intel. pfizer, dupont, u.s. steel, proctor and gamble -- back when they were founded, there were founded by immigrants. those are a lot of jobs coming from immigration. to start off with alejandra, i will start with to the cliche -- we are a country of immigrants. we encourage immigrants to come to the world's best graduate schools. other countries are trying to catch up, but it turns out that it is hard to create a network of post -- schools and we started out way ahead. we have a history of risk
taking. we have a history of capital for would be. we have a culture that kaulitz failure more than anywhere else in the world. it made the u.s. -- culture that accepts failure more than anywhere else in the world. it made the u.s. the best in the world. our cultural history has given us an edge, even with the global the economic troubles. i think we're still the entrepreneurialism a cup of the world. we have to make sure -- the entrepreneurial mecca of the world. we have to make sure that they have that opportunity, whether they were born here or not. this is like saying that my baseball team has enough talent to and i do not need any more talented players. but the other teams get talented players, too. that is not tell the yankees play the game and that is not with the united states should play the game either. i look forward to the rest of
the panel. >> thank you. that was great. >> first of all, i want to thank everybody for listening to what i have to say. i am not an expert in economics or immigration. as i said over the phone, i am a simple brain surgeon and scientists working at the number one hospital the united states, johns hopkins, the no. 1 department in the united states, neera surgery -- neurosurgery for little kids. i was told that education was the best provision for old age. as i listen to the speakers, i have to think about the way to solve this problem. it is probably no different way than solving the problem of brain cancer. it will not be one solution. it will probably be multi-
factorial. there are several issues. number one, there is the issue of education. we have millions people in our education system that are not being properly prepared so that they can face the challenges of higher education and the numbers have been going back and forth. if you look at johns hopkins, of but the numbers that reflect -- the numbers reflect those of georgia tech did the numbers are stunning in the sense that we have great people coming from all over the world to take advantage of the best education in the world. but in our own backyard and i can tell you myself, living in baltimore, in our own backyard, we're failing to educate our natives. i can tell you about my story. i will illustrate with my
laboratory. i will sit with my operating room some of the numbers you see here. i came to this country as an immigrant when those 19 years old in the late 1980's. i have to say that, if i ran out of work as a brain surgeon, i am probably the only bring surgeon who is also certified as a welder in california. [laughter] i could get a job as a welder. i am probably the only brain surgeon who can say that i was also a certified as an official farmworker in the state of california when i was working there from 1986 to 1988. so i do not see a lot of people running their to get those jobs. so i have job security for right now. i will not be able to compete with many of these other jobs that people have mentioned. but at least those are two. i i was given an opportunity
through the legislation to immigration reform of the late 1980's. by 1991, i was a permanent resident. that is when i started at uc berkeley, taking advantage of one of these places that was mentioned earlier. by 1994, i became a student at harvard medical school. before i graduated, i became a u.s. citizen. i went back to san francisco to take advantage of one of the best places to train as a brain surgeon, add uc san francisco. for anybody who understands language, you will understand that i was beginning to understand. my process was moving forward very fast. i came to hopkins six years ago. i mentioned the other day that, within six years, i was promoted to being nominated to full professor. in my department, it takes an average of 18 years. i took advantage of the
inortunities that were put front of me. people say it was it a chance? was it good looks? i am reminded of what a very humble scientists said in 1906 who won the nobel prize in medicine. he told us how the brain was organized. thank you to his contributions, we can now do brain surgery. he said that chance and good luck do not come to those who wanted. it comes to those who look for it. many immigrants are looking for those opportunities coming to the united states. i echo a lot of the comments that have been said before. let me tell you about my laboratory. i lead an effort in my lab to find a cure for brain cancer. i have a group of 23 scientists. i can count with both of my hands the number of brain surgeons that have federal
funding, the most distinguished funding to do research on any type of brain-related work. i am one of them. i lead this multimillion-dollar effort. as i look to my scientists, 23 of them, only two of them are from the united states. the other ones are either immigrants, first generation, or people who are coming to my laboratory to try to help. an article was published a couple of weeks ago that give me a lot of heat. the requested 10 scientists and nobody wants to look like the bad guy. after 10 scientists declined, they came to me. i said, sure, i would be delighted to tell you the truth. availability, affability, ability, and accountability -- i got a lot of heat when the article was published because my
scientists work seven days a week, 24 hours a day. we are losing in our country the fundamental things that made this country the most beautiful country in the world. that is too simple words. hard work. no one wants to hear that. i am here to tell you -- i look like the bad guy. sure enough, a lot of heat has been going back and forth and i had to meet with the dean at one point. my operating room, all right? an s and -- an anesthesiologist, 60% of foreign graduates. the others are first or second generation graduation-- from thd states. the people who help me monitor the brain as i am taking out complex brain tumors from the part of the brain where, if i may go an extra mm, that person will wake of mute or not able to move his arm or leg. half of them are foreign
graduates. nurses, 50/50. my residence, 23 residents that are in the no. 1 program in neuro surgery, 60% are for an aunt 40% are u.s.-born. that tells you what we're going through. -- 60% are foreign and 40% are u.s.-born. that tells you what we're going through. those are my remarks. thank you. [applause] >> thank you. do you want to wrap up the macro looked? >> who do not know what there is left for me to talk about. as an economist, i thought i should go over a couple of things. let me talk generally about immigration and economic growth could then let me talk about the
difference between low-skilled and high skilled immigration and competitiveness. then i will talk about policy and reform at the end pin in terms of economic growth, immigration is an extremely important component. they make up about half of the labor force over the last decade. the numbers for stem occupations are much higher in terms of the contributions of immigrants. when you introduce emigrants into the labor force, you get specialization. it increases efficiency. it is efficiency that leads to higher productivity. hire a tip -- higher productivity is what makes us competitive. the other really important factor about the immigrant labor
force is that it is more mobile geographically than the native labor force. that has an economic payout could immigrants tend to flow to growing areas more readily than native workers tur. we saw that, if you want to give a lower-skilled immigration example, in louisiana, in the wake of hurricane katrina, a tremendous influx of hispanic workers to the gulf area to restore and rebuild. or to give high-skilled immigration examples, in dallas and other inter-city school districts, we have an influx of teachers teaching math and science. also, the doctors, for example, medical doctors who served in rural areas and inner cities as
well, in fact, my mother who came from sweden in the late 1970's, she is a surgeon could she went to work in gary, indiana. there were not many american educated doctors who were where it -- who were willing to work in gary, indiana in the late 1970's. the economy was collapsing and it was a very poor and crime- ridden area. employer contributions, then and now, they are disproportionate for foreign doctors. u.s.-born doctors will not go there. different studies -- let me remarks briefly on immigration
and economic growth. when it comes to high skilled immigration, there really is consensus among labor economists on the benefits of high skilled immigration could there probably is not with regard -- skilled immigration. there probably is not with regard to lower skilled immigration. in terms of fiscal effect coming terms of high skills contributed vs. what they use in public services, they actually pay off over their lifetime over $100,000 in net benefits to u.s. taxpayers in terms of what they contribute more vs. what they use up in services. on competitiveness, we first mentioned higher productivity. but there is another aspect,
which is even more compelling. it is not just a one time change in productivity. but they contribute to productivity growth. if you can contribute to productivity growth, you can set the national economy on a higher growth path. that is not a one time change, but a continuous increase in output that is sustained over time. that is really because high skilled immigrants contribute to innovation, mostly being stem immigrants. when they patent, the patent at twice the rate of native one- time scientists. they are not substituting for native one-time native scientists innovation. that is another important result. i entrepreneurship is another area. it leads to higher innovation.
another benefit that can spillover to higher productivity growth. there are other a fax. there is less research done so far, but it looks promising. there is research that suggests that more high school the immigration attracts physical capital as well, investments. it seems reasonable in this room. but documenting it as good research is harder. but there is a correlation between capital flow and investment and immigration. and there is to research that suggests that more high school the immigration can flow out sourcing. in terms of policy, it is surprising. mayor bloomberg says it is crazy. it is crazy. the benefits of high skilled immigration is so well documented that it is surprising
when you look at immigration policy and say that we have fallen short at taking advantage of something that looks like a free lunch. economists say that there is no such thing as free lunch, but this comes pretty close. i was talking about my book a while ago at an event at the urban institute. how do you set up quotas and high skill arrogance? what is the best way and how big should they be? and a person from the australian embassy said why would you have any quotas on high skilled immigration at all? if all of these benefits are true, why would you limit them? i am so used to thinking in u.s. immigration policy and quotas that i had not considered the fact that you would not have a limit. i thought about that a little bit. the one where i draw the line is that there has to be demand. as it is, we know it is
difficult to bring in foreign workers. it is expensive for companies to bring them in. there's preference for native- born workers. i think we have a built-in priority for native-born workers as it is paired and the second condition should be to maintain that -- as it is. and the second condition should be to maintain those conditions. like a stable policy that is even worth mentioning, having a job being a basic requirement or even a plan, starting a business. i think there bloomberg and others have mentioned -- i think mayor bloomberg and others have mentioned the 7% that i have been talking about. this compared to other o.c. the countries, nocd
one else puts that kind of barrier to immigration. we fill the gap with temporary visas. we have been talking about them today. they have plug the gap. but at the end of the day, you end up with a dysfunctional ring card program where lawmakers have passed legislation allowing more temporary visas than green cards to allow those people to stay. the employer wants them to stay as well. queues.e a growing cue they can extend 10 years plus. people from china and india, even mexicans and latinos. there is 1.1 million approved and waiting in the employment- based queue. considering all of the
contributions you can make to the economy and the competitiveness. in terms of reform, along the lines of american lumber, you have a policy that needs to put a priority on skill-based immigration instead of a permanent visas. grow with the economy rather than be fixed over time which does not make a lot of sense. they are allocated in a strange well -- way as well. first,, first serve -- first come, first-served leads to long queues. the concludes my remarks. >> just a couple of -- i just want to get it on the table. i still hear a lot on the hill that -- sometimes company's port
arthur and bridging immigrants from overseas. they are not working the domestic labor market. they are not searching it carefully enough to fight the people they need. -- find the people they need. i would like to ask you what you do. why would you go overseas if you could find somebody here? sometimes i sit here that these positions in these colleges are being set aside for immigrants because they can pay full tuition. it is a cash cow for universities. elizabeth, d wants to -- >> first of all, we do well of our recruitment. every job is posted online. we go through a whole system
that trickles into our system. all of our jobs are posted on time. there are tons of engineering jobs. when our talent acquisition team actually does the resonates -- gets the resumes, when they actually start searching for the candidates, it is unbelievable how many of them qualify for the job and are foreign nationals. the first thing they do is call me. what to using about this? sometimes i'm telling them to turn down the top foreign talent because they have already used up four or five years in that status. we would immediately have to jump into sponsoring them for a
green card. in some cases i am not telling the hiring managers, do not hire that person. all the jobs are posted up there. everybody has an equal opportunity to apply for a job. we are not going out and recruiting. we would not recruit for a new job somebody who is living in china and would go to the expense of bringing them in. most of the foreign nationals we are recruiting are being educated here in the united states. we have an active leadership development program that every year goes out and hires people, recent graduates from u.s. universities. most of the applicants -- some to come from canada. it is pretty easy for them. we do not necessarily offer
international relocation. to lee -- relocate somebody from another country is anywhere from a $30,000 to bring somebody in. not to mention the cost of going through the petition. just to the application fee is $2,000. if you want premium processing, at another $1,200 to that. both of us to do immigration in house. i'm not an attorney. i started out as a human- resources professional. when it comes to doing the labor certification and an -- we use outside counsel. i can tell you my legal bills are tremendous. i get a lot of pressure -- why
are we spending so much money? you try to explain that it is more and more difficult, particularly in an economy with high unemployment. when you're going to a labor certification and you are testing the u.s. labor market and against a specific skill sets, we do not find u.s. workers with the appropriate skill set. remember, when you are doing a petition, you were looking at the minimum requirements for the position. it is kind of a reverse of how everybody hires. when you were trying to hire the best person for the job when you're testing the labour market to sponsor somebody, the
mandatory retirement is against the minimum qualifications to do the job. that is not the best and brightest. even in those situations we are usually successful in disqualifying candidates who do not meet the still set to sponsor the foreign worker. the first person we are looking for, if we can get an american who can do the job, that is who we will hire. it is cheaper. >> as i think i mentioned, microsoft looks to hire and retain the best and brightest talent from wherever they come in the world. refocus our recruitment efforts in individuals who are in the workforce and university hires. our primary for -- focus is at
u.s. universities. they are the best in the world. we are looking for graduates from those universities. there is a shortage. there is a shortage of individuals coming out of those universities with a stem degrees. there is a shortage of u.s. citizens coming out of those universities with them. we cannot compromise. we are not going to not attempt to hire the best and brightest. we are in a competitive market. we are competing with other u.s.-based companies. and we are competing with companies outside of the u.s. we want the innovation to take place here. we would like it to be at microsoft. if not, at least in the u.s. we do spend all lot of time and
energy in terms of our recruitments looking for the best and the price -- brightest of -- regardless of nationality. we will continue to put effort into building a pipeline of students coming out of u.s. universities with stan degrees. we have a robust in turn -- intern program. we of students who worked in the summer with teams on our campus -- campus hoping to spur their interesting get them excited about working in the high-tech field so they will remain in the u.s. and go to universities and attain those degrees and come back to work with us later on once they have graduated. there are high school students, we have a robust university program.
many of the u.s. students to come through our program that do come and work on our campus at microsoft. we focus on u.s. universities. we are looking to hire the best and brightest. it is not easy to bring in foreign talent or to go through the process. we hope they can focus on their jobs and their lives and we focus on bringing our talent in as quickly as possible and getting them up to speed and helping them with their immigration process. we struggle with the cap. it is not as bad as it was a few years ago. that being said, that a man to that of from january until october, we're not able to bring in any foreign national hires on
the program. it does not mean we can stop hiring the best and brightest. we there have to delay their on boarding or higher than elsewhere. if we want to be competitive, into what that great technology to develop here and the economy the comes along with it, we need to work on the system. >> an innovative product, as i say we are basically a manufacturing company. over the last several years under our ceo, we have become a service business. a lot of the technical products that are manufactured and produced at our plants in the united states increases jobs for
manufacturing. it also serves a whole industry. we do not just service our own products. our industrial technologies group -- we have a whole service industry matter at a lower level but they have jobs as well. the company is growing. it is not limited just to our products but also to other people, other competitors. >> i am sitting here doing that. that pulled up our website to attack current enrollments. the question was about we're just carving out seeds for overseas students because they pay more. they do. we are a state school. we are less and less state
supported as time goes by. we charge of georgia students one-third of the tuition that we charge students from elsewhere. we make no distinction between what we charge from the other states in the united states and the rest of the world. it is still the same rate whether you are from alabama or albania. we will chars the same amount. we are looking at nine applications for every slot we have. i pulled up the numbers. overall, we get 54% of graduate. 54% of our students are from georgia. they have to prove a history. 27% from other states and 18% foreign. guaranteed if something stupid happens and you get no more
student visas, we would manage the same ratios. 54% within the state of georgia, we would have the exact same a dollar figure in tuition. we would get no economic benefit. we would wind up with lower quality student body. there's no financial incentive to us. >> let me throw it up and -- to the audience. i have done this for a while. i thought this was a good panel. i was doing a little math on the country, yes ma'am. >> i am a reporter from reuters. i would like to ask elizabeth a question. i would like to know what you
would like to see from congress. do you want to see a piecemeal legislation or would you like to see a much larger comprehensive legislation? >> i will go first. as chairman of the subcommittee our goal has always been a comprehensive immigration reform. that being said, we of seen a tough road. we have backed comprehensive immigration reform. i was very involved in the kennedy-mccain bill in 1996. trust me, i have been fighting the fight for a long time. uic that happening in congress? i do not think so. judging from the type of highly skilled workers we need and the fact that these people will be such a contribution to our
economy, if we end up with some of piecemeal measures, we would support them. >> i would agree with that. we support comprehensive immigration reform. in the meantime we would support a peaceful legislation. we focus on and trying to work toward administrative reform. we want to look at areas where we can work with the government to make some slight changes that will have a larger impact on the folks who are waiting for their green cards. >> the chamber was a very involved in getting the stem. that was done through regulations with the agency. in a couple years when we're hitting the cap on the very first day, the stem extension
was critical. there may be other things like that we cannot act. if your suggestions, we are always looking for them. >> we do a lot of work on immigration. he noticed with the absence of comprehensive reform, a lot of states have taken their own initiatives. have you seen or do you expect to see certain stakes to become more economically competitive? do you think that could push a case for reform on the federal level? >> arizona hurt their economy when they did some of their draconian measures. the individual states acting in loops -- in liueu of the federal
government is a troubling, especially for companies like mind who have operations in every state. it is a complex set of rules. these states are starting to do this. we are a federal contractor. we are enrolled in e-verify. i think utah has come up with a strange plan to do their own immigration system. immigration is a federal issue. i do not think it belongs at a state level. whether each individual state is being hurt economically, and do not know. arizona was the biggest. i think it hurt them economically. >> i see a lot of states going
that way even though we have this fuzzy law in the supreme court. >> i think we have time for one more. if not, that is fine. i think this has been a great panel. i have the commitment from our partners on this. this will not be an agent -- and we are going to follow up with this on a report. we will take advantage from all of the information we have gathered today. i think that will help us in our challenges ahead in the senate and house. i want to thank our panelists. [applause] the panels tosk stay here for one minute. let me make some closing remarks.
i am the executive vice president of the u.s. foreign for policy innovation. we'll receive the -- i wanted to thank the director for his great remarks this morning and for his tremendous flexibility. a special thanks to mayor bloomberg. i appreciate the comments about the yankees. i want to thank the panel. we really got some great insight. we often talk about the fact that we talk theory and theory is easy and cheap. this is practice. this is where the rubber meets the road. we talked earlier that we are about engaging in dialogue on issues.
he might not think of immigration as an emerging issue. we cannot seem to get there and figure it out. i am a cuban refugee myself. i have a lot of feelings and personal convictions about this. i appreciate it. my father would often say the, as he can to this country, people would say, you have been fortunate. i said yes, the harder i work, the luckier i get. hard work is something that immigrants bring to this country. and all other successful people in this country. i wanted to thank everyone. especially the partnership for the new american economy for the role they played in making this happen. in founding the partnership, which brought together -- prostie other mayors to make a
case for a streamlining and modernizing and rationalizing the immigration system. what a novel idea. i also want to thank my colleague randy johnson. it is a team. in listening to the remarks, i wanted to make two points i think are important. we are in a global market. this is not about a closed circuit. it is important. the second part, which is a question, we do not need to fix it all. it would be ideal to get comprehensive immigration. to do nothing is not acceptable. we are falling behind economically. it is affecting the business we do. as we look ahead, which planned to write some things. i thought i would end on a light
and out. i have to thank for being reminded of a joke. a very famous brain surgeon heard some water running in the bathroom. the toilet was overflowing. he could not stop the water. so he called a plumber. he fixed the water and it's 15 minutes was out the door and handed him in $950 bill. the doctor said, i am one of them a leading surgeons in baltimore. i do nats make $950 for 15 minutes of work. >> he said yes, i used to be a brain surgeon. but this job is better. >> there are all sort of jobs available. with that, we will end. thank you for your patience.
thanks again to our panel. [applause] [captioning performed by national captioning institute] [inaudible conversations] [inaudible conversations] >> join us tonight on our companion network, c-span, for more from road to the white house. coming up at 8 p.m. eastern, we'll feature former house speaker newt gingrich. he's in des moines, iowa, today announcing his campaign platform. he's calling it his 21st century contract with america. the former house speaker and georgia congressman was one of the architects of the 1994 house republican contract with america. it's a detailed list of congressional reforms which included a balanced budget amendment and term limits for