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tv   Key Capitol Hill Hearings  CSPAN  August 31, 2016 10:03am-12:04pm EDT

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the impact of writing pessimism about the final u.s. relationship especially in light of summers -- the china ruling by tribunal. i think this kind of a relationship which is -- currently viewed as a peer rating shall not recoil an immediate aid or harsher approach to china or mistake of many. despite remain u.s. scholar or experts to that policy is required in order to respond china more and more of certain behaviors or actions. instead that policy of
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self-restraint or no action in the short-term. so in the following probably 20 minute or less -- 20 minutes i will go through the following four sections as you can see from this screen. the first is why the view of relation, the term i will explain later between american and china. the second i will go through is fulfill role in trust in the ability to cause harm in the third part, i will discuss whether a procedure and relationship can or cannot encourage a policy. finally, taiwan has important example of a state that is very much concern about u.s. relationship.
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so the question about whether taiwan can can benefit from a deteriorating u.s. relationship would be enter. regarding the relationship between china and united states, i can now have most of the experts i interviewed this summer express a strong concern perhaps the term of worry is the best term about concerns about the future relation between the two countries. especially on heels of china dogmatic response to assault. i heard different reasons for these concerns and different views for how washington should adjust china policy. in some cases, their views
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found, for example the recent article about u.s. china failed? they have commented on this pessimism and this illusion with china in washington. i'm sure, i'm very sure that you are aware for comments and therefore i will not repeat and going into details about those comments. but i will mention two important ideas that i took from my interviews for future and elite -- they're ideas of relation energy. this term is kind of a much more abstract term to describe how certain type of state
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relationship is constituted and connected. and recognize trust. go into that more later. we'll talk about two ideas first and then go through how these two ideas interact with each other. to inference the state of patient in u.s. china policy. as you can see i have a relation energy in two types so i need one -- you have a view on relation energy. and on the other hand you have chinese view of relation energies. so it can actually include -- kind of a code confrontation and different views with each other. let me look at this america and
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general view of relation energy. this is kind of relation energy i found among nation states. reflects the process in which each state attracts issue and in term this type of view which i call american view of the energy emphasize this practice, the degree of the relation energy that links certain groups of nation states in the wrong ground. and the education is tighter to community practices. a way that new comments in this case, china, interact with the established community and its rule. as someone points out between 1972 nixon visit to china an a
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the 1978 normalization of relations, that united states change is long standing policy of isolating china to one of engagement integration in assistance. in my view i think of these represented an effort from the u.s. side to bring china into an existing community of practices. within expectation that china would really accept both practices an act accordingly so as to maintain relationship with the entire community as well as the relationship with the united states. so that's about the income view of relation energy. so kind of keep this you might on one hand and on the other hand one point to two points is
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chinese view of relation energy is basically by lateral and issues. so different from american view of the entity it is the basic collateral in nature. so it has a more view from the chinese side. so actually chinese pertains to treat relation energy, a special turn to have a particular relationship and issues, that means that according to traditional chinese thinking, without going into details but you can find chinese scholar he is they founded into chinese in the nature. so this view from the chinese side is own issues about a known nation state are to relate with each other.
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therefore, it isn't necessary for them and therefore those nation states to be related through practice. it is not necessary in the modern times, china relations with all the based on sovereignty assistance with both china and the united states being part of a large or self it is called chinese -- what does that mean? it is close to a collective identity sense, shared by china and its counterparts because it is always bilateral so china approach attended to be talk bilateral instead of for a multilateral frame work. so that's a nonissue. but anyway you need to assume that, i mean, both china is called apart such as united states enjoy equal labor so
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southern power in these greater self or collective communities. therefore, the united states tried to interfere with china and sovereignty from the chinese view. that will become free i think to destroy a great or self in turn strong effect of the united states itself. so we see the two contrasting view i believe at that point american view on relation energy, and chinese view on the relation energy. or in current situation that prevents each side from showing patience because it is possible or in the short time to clarify such am ambiguity taking
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immediate action is generally all preferred policy. so let me give you one example. according to american view on relation energy or international view and values become internalized, the individual parties or power and maybe believe that it has the duty to involve international rule and devalues among those who -- have neither them or willingness to practice. but according to the chinese view of the relation energy, seems old nations are perceived at related with each other in the beginning. they must accept responsibility for maintaining large collective
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identity we think of sovereign system. how can can resolve to two views on energies? i will go into details later of this point. now we are moving to a section of this from the screen. into one u interviewee it's a remainder of how trade and war are hard to avoid when rising power threatened a status quo power. so you probably already know, however when my interviewees were asked to commend on the
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case most gave a nonpower reason why american people are concerned about chinese in asia. in my points of view, i think the answer to regarding the nonpower reason, that kind of reduce the potential for trust because chinese is viewed by some experts as honing the responsibility that a responsible state maintains regarding role expectations for china. so that's a reason why i wrote about real expectation for china is because from the answers we have the same to have a strong low expectations how china should behave. according to this idea that united states probably those
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interviewees that i conducted believe china should understand ons i own what kinds of decisions and actions it should check in support of good relations. the idea also is playing with unhappiness and most of my interviewees and objection of the leg. that is the example here of one of my u interviewers told me the reason why the united states is not happy about china -- responsibility to result china china -- is it because the behavior attitude of rejection and such attitude makes americans feel that china is that undemocratic.
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that has always had in mind -- that's the answer from my interviewee. another one from interviewee told me that why united states and china neighboring countries are pointed about is not -- by the how china has responded. now i think that's a low expectation for china -- so this is first type of a chapter. that's what i get from my interview. they are sick and tired of reviewed by my interviewees. this type of chapter actually as you can see one pointed to here. that involved one party's belief that another party has the
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ability to do harm to its interest. some interviewees commended on how the u.s. has treated china as a major threat in asia. china does not valley any immediate threat to united states and my interviewee -- told me that since i found china has behaviors or actions that actually challenge the nation. according to the so-called american national interest that u.s. cannot tolerate a power in asia perhaps china is not reaching that label of hostility.
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now, but no one knows if china will do so in the future. so this sum up, i think the question of whether china has enough power to challenge the united states is less important than how such capacity is integrated in the way the chapter between united states and china. so as you can see the second type is very different from the first type that based on law identities. and second one is based on one party's document about changes in the other parties material power. whether it is objective or subjective many my view
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regardless of which type of trust is involved in the u.s. relationship, i think that trust continues to be low on the u.s. side eventually retch a threshold as a perceived by those policymakers in washington, d.c. so that's about two types of chapter in my research partnership that i found. i would now move to a nonfiction, it's about the idea of patience that's what i'm working with. the visit in taiwan. after we review the relation hairage in the chapter i believe
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that i have self-restraint and no action on this issue -- same option. should be considered as equal as responses that most u.s., china experts suggest. in my view self-restraint and no action -- will affect different states of patience. so as you can see from here, table one, kind of make it for analytical purposes so a device, a different view about relation entity on left side and above side of the chapter. so you can get -- you see the gray area. that's kind of a current u.s. china policy we -- very low patient for example, a
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median patience integration or o engagement. an i think right now we need to plan u.s. china to also include the area to make adjustment or to have this narrative find and china policy but how should we do research and plan this gray area moving into the blue area. the first thing we need to do is go back to -- the first thing, 1.1 bsh first thing we need to do is build up this. that is a term to aspect term but tried to have process of the chart. it has a special type of bilaterally adjusted relay issue
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between china and the united states. that that assistance this relationship has to be bilateral and mutually constituted and formulate bit two who can either be independent. this is very close to chinese energy, that involves great self. that information about -- that means a collective community sense shared by these two great countries. however, quite different from chinese view is that this type of mutual relation energy allows a degree of incongruity to exist for the moment -- for the moment by the two later by each decision making process.
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good to build up, i think that good thing about this is such may not be either the result or understood in the short-term. therefore, a policy of patience is needed on to better conditions emerge that's the reason why we need a policy of patience in u.s. china policies. then, after 1.1 after we have mutual similarity between united states an china, now i think i want to say about the effect to promote -- to plan this u.s.-china apologize is to emphasize trust. rust is the most important aspect of producing a positive
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patient. it intels one expert's ability to tolerate uncertainties so as to prevent from increasing effecting a sense of mutual relation. so that i propose the first point. so as i mentioned earlier u.s. trust in its relations with china involved a certain role expectations. showing trust in china as we understand become the one way obligation who be very easily interpreted by chinese side as american society on chinese sovereignty. as long as the u.s. fails to maintain a high level of furs trust to what china. it is likely for the united states to emphasize.
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i don't think that will go back to this policy of your conscienceness. so i think we need to change one way chapter obligation toward one side to another side. or from china to u.s. so trust in the mutual relation must be a two-way direction. so that means this is a trust. that obligates both to exercise self-restraint on issues that seem unresolvable in the short-term. further more trust are between china an the united states has to be built upon personal relationship as that suggest for one point to two. this is the idea that i live for on my interviews who actually serve in the -- about [inaudible]
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administrations when launching straw toggic dialogue between china and a united states. finally the taiwan issue. i'm here to offer three part of the whole taiwan. generally speaking, i think taiwan only benefits in the first part only benefits in the first. but may lose its interest in the rest of two parts. how can i say that? in the first part -- taiwan is a small state. benefit that benefits from position for actually it's a precision equally although it is not a recognized state.
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the reason taiwan has such a status in the include led global community, is that traditional state attribute such as material power do not fully apply to taiwan. in my opinion that means taiwan benefits from its willingness to practice democracy, free market and stable society. this has why taiwan wants -- george bush quiet by journal w. bush as the beacon as democracy to asia and the world. so in my view i think taiwan will remane an example of how most state diplomacy can still
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walk where it is based on sheer rule known in the very. that's the first part for u.s.-taiwan story. the second part of the story is that it is the copower relationship. that gives -- it that gives the united states power to exert control over actions. to combine chinese government. one of my interviewees describe that u.s. appreciation for new president, new taiwan president is a promise to maintain the status quo in cross states reels. but he or she also mention to the livelihood of washington immediately asserting itself should have that status quo
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means as taiwan independence. and it is true in my view these kind of a view reestablish taiwan's status after small power to be used as part of americans great. and not as an equal. the last part of the whole story is the potential of u.s. policymakers to take harsher actions to what had taiwan should do so will prevent further damage to u.s.-china relationship. ...
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effect u.s. relationships because the united states wants to make better relationship with china, with china. in summary, i think it would be dangerous for decision-makers in tapei to miss jobs. and i think it is in the best interest for taiwan to maintain autonomy by not claiming
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dependence upon any greater power and maintain predictable relations with both in china in order to remain flexibility on either side. to be honest, i know taiwan-u.s. relationship leading to -- but i will just stop here and take questions from the audience. thank you very much, thank you. [applause] >> questions to start with from the audience. we have a microphone so if you would come -- put your hand up. could you identify yourself,
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please and affiliation. [inaudible] >> thank you for your analysis. from your recommendation to the u.s. side, i just have a question. [inaudible] >> seems to be adopted for decades but it doesn't really change, you know, the trajection of policies. i'm just wondering will this make any difference if they follow -- [inaudible] >> that's something that we are talking about and doing for a long time. how do you -- the second is how do you evaluate the current taiwan and u.s. relations?
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do you think that the taiwan government is doing the right thing now? thank you. >> thank you very much. they have very good questions and very difficult to answer. i think the first question, you try today see you didn't see any in my analysis. i think my intention is to try to stop the perceiveed confrontation between united states and mainland china specially perception just occurred after 2010 because among some u.s.-china experts since the 2010 there certify -- perceived on the chinese side.
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no, they are not assertive or not being assertive. they are being assertive because the other part such as philippines or united states go first. so they know each other's justifications, but i mean you can see if the united states is still use its old way to understand chinese people, chinese government or chinese behaviors, that's kind of what you point out, is kind of nothing changed in u.s.-china policies, right, because same attitude as if united states treated with, for example, like policy such as japan in 1980's or not big enemy in the cold war.
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so that's kind of the continuities. you are right. we always try to find a rising power, united states because of theory or structural reason. but i kind of try to solve this confrontations to see actually the fundamental problems between the two countries are so hard to understand with each other. it's not about their explanations, it's not about language. they can speak english with each other, they can communicate with each other. they have a high level of communications between officials, but they still have ups and downs. if we go back to the past 40 years, it's always ups and downs, ups and downs. so i think i feel that most of
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the interviews i contacted, they tried to call for a tougher responses from washington, d.c. to china's assertive behavior in the south china sea or in eastern asia and i think that's kind of show losing patience among the china experts and also if party makers in washington, d.c. -- [inaudible] >> probably more aggressive response or harsher responses in the american government. i think the united states will go to tradition -- power strategies.
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so let me give you an example. i think to show if you have patience or you don't have patience, for example, i think united states have a good patience with cuba, right. i mean, united states wait for the conditions, good condition or better conditions emerge so the obama administration finally realized the conditions are being good, then we can deal with the cuba situation, to improve the relation between united states and cuba. but how about iraq? because the united states lose patience, united states try to respond immediately, so that's the reason cause the united states to intervene iraq and right now pushed the whole united states, you know, cannot lead the middle east. that's kind of an example of how u.s. policies losing patience on
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certain areas. so that i worry about. i hope i answered your first question. the second question you mentioned about how to think about taiwan relationship specially under this new government. i think so far so good. that's all i can say. it's only two months and we will know that until the new government, a popularity according to -- [inaudible] >> we understand that she need to deal with those deep green
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voices in taiwan and so that's the reason why she did not actually directly reject 92 consensus, but i know she wants to appease the united states. maybe that's a wrong better. i think she try to make between different ideologies. so far that's the good thing she can do to maintain good relationship not only with the united states but also mainland china. yeah. >> all right. microphone, please. >> thank you very much. i wonder if you have had a a valuation of the significance
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that it could share -- [inaudible] >> if hillary clinton is elected and if donald trump is elected what kind of impact in strategy? >> thank you so much. it's a very tough question. you give me two scenarios. the second one i really cannot say if trump gets elected. [laughter] >> i was told by my interviewers that under two conditions. i think he's not here today. under two conditions mr. trump will win the election. one is mrs. clinton was assassinated by someone and the
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second situation is there is going another 9/11 tragedy in new york. so that's two conditions to mr. trump to win the election. i don't talk about the second scenario but i hope the first scenario -- i think mrs. clinton looking quite good right now according to public poll rise so i think she's doing well, a very good chance to win the election. so, i mean, we probably have consensus, not only me, i think amongst those think tanks here. if mrs. clinton won the elections, it's very -- highly likely that she will improve, enforce to asia policy.
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so that means i think that's kind of -- i think in theory increase taiwan political or dip lomatical relations in asia pacific. taiwan play active role in the regime, what does that mean constructive in active role. in my own opinion it's better for the taiwan government, try to emphasize. first of all, the new government should put more -- put much on
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economic issues. it will give mandate to deal with taiwan's relationship with neighboring countries including mainland china. i don't think they will have any voice or inference in the region . taiwan need to focus on about economic issues, economic performance in society. and the second in terms of policy of foreign policy, i think poverty should better in my opinion learn from previous
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-- [inaudible] >> peace policy. we know that, two different types of policies. one is eastern china sea and now in south china sea but probably there's not so much -- not sufficient theoretical support for theories. i think taiwan can still pursue this peace policy but the new government need to think more about how to -- peace policy in the region or the region can play in relations. my answer is probably abstract. that's kind of the direction i suggest for the new government in taiwan. they can think about it peace policy in the regime but need to figure out how to formulate it,
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how to articulate it. domestically, they need to emphasize economic performance. that's the two common things. >> it's coming to you. >> hi, what kind of development do you predict in the future of current government -- [inaudible] >> the second question is what kind of action --
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[inaudible] >> thank you very much. two very good questions. i think the second one is much difficult for me to answer but let's think about what will happen. i feel that mostly people i interview, agree that the south china sea disputes is just a one small part of china-u.s. relationship. i think that's one of the reasons -- that's reason actually the united states -- [inaudible] >> respond and criticize china's behavior. that's kind of good thing to show patience.
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but, however, i know that the united states have a strong argument about freedom of navigation. but on the chinese's side, i think they are still waiting for the new election results and in theory, i think, in my theory i think the chinese government, they are more patience than that of united states, u.s. government. that's kind of my observations. so i i don't think they try to deal with this issue immediately. i think nothing about 2020 but at least kind of a construct good atmosphere between china and those major policy in the world. that's a good starting point but
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fundamental disputes cannot be involved overnight, right. so i think according to my observations, i think that's kind of -- the chinese approach is to go back to bilateral dialogue between china and the disputed counterparts such as philippines or vietnam. not directly to be negotiating with united states. so i think that they will wait for a new government on the u.s. side. [inaudible] >> because right now we have the new government in taiwan, we have this new south china policy. i don't know how to translate it. new south china policy. that means that the new government in taiwan tried to
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avoid direct dealing with chinese government and directly to make good relationship with those in southeast asia countries. i'm not optimistic about the results actually because i think of those south asia countries, they are very sensitive to the confrontations between mainland china and the taiwan. so even if those southeast asia countries, such as philippines and vietnam, they have the south china sea disputes with mainland china, that does not mean that they will have more willingness to cooperate with the new government in taiwan. it's different thing. that's kind of the conclusion of my presentation today. taiwan can benefit from its role in practicing universal but if
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taiwan tried to take advantage of the perceived, deteriorating relationship between mainland china and the united states, it will be miscalculations, very dangerous. i know some people here disagree about the conclusion but that's kind of my -- my observations. it's very hard. if you don't try to maintain a staple or constructive relationship with maybeland china -- mainland china. it's hard to play constructive role in asia pacific region, but please i'm not saying that it
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should rely on mainland china but a new way to try to improve between taiwan and the mainland china. thank you. >> thank you. [inaudible] >> so you mentioned a new wave. [inaudible] >> china will -- [inaudible] >> should we take some action?
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>> thank you very much. if i have any suggestion for president, if not -- i mean, if i were put in the same positions, i think -- it's very hard, right, because he need to kind of listen to those supporters of the proindependence people within the party. for me i think of better strategy to not to admit but at least you need to be perceived by the chinese government. you are willing to talk about
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the '92 consensus. at least that's the starting point. that was between governments, the chinese government. you cannot just say that. i don't think that's fair for the press government because right now you are the president of the republic of china, you know. i thought that you accepted the position so you need to take even burden from the press government and after you accept the 1992 consensus, i think there's room for you to negotiate with those people from mainland china, right, because
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taiwan lay -- labeled her as exportation. she labeled herself or competent in his negotiations skills. so i don't think she should be afraid of negotiation with people who mainland china. even the framework from '92 consensus. for your second question, the chinese scholar from university mainland university, the chinese strategy to use military force to take taiwan by 2021. i think usually the chinese scholars, they can't help this, they have much room to talk about the opinions. they can show more positions on
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taiwan issues but i think because he has this -- he has very close relationship with the party, so i think that's kind of a -- i don't know if he was -- professor was told to talk about or not but tries to push new government in taiwan to go back to the so-called relationship between mainland china and taiwan, not a means to accept the '92 consensus. i think that's to warn her to go back to perceive bilateral relationship. so maybe you can take it as a joke because some people say
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it's impossible for mainland china to take taiwan by force in a short time, but i think -- the people in the new government should take it seriously and they need to find a way to have people in mainland china to try to have more information, what does that mean because this person is not alone, he actually has very close connections with the parties. >> sorry. >> i don't think people take it as a joke, we take it seriously. >> they don't take it as a joke, most people ignore. that's my opinion. >> so my second question was should taiwan take some action
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instead of being patient and speaking of taking action, does it mean china-taiwan relations -- [inaudible] >> i know what you are talking about. you tried to encourage me to say that taiwan probably need to improve taiwan-u.s. relationship, no dialogue with the issue between taiwan -- mainland china and taiwan.
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but as i just mentioned, taiwan can benefit a lot from practicing those international barriers, democracy, human rights, liberal societies. that's effect from the united states, the role the united states expects taiwan to play in strategies. so i thought -- as long as the new federal government is doing it well in those democratic issues, that's the -- makes a good example for the united states to talk to people in mainland china and tell them that you see, can be a good combination, can be a good combination with markets. so that's kind of -- that's kind
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of the united states -- what united states is expects. that's what most of taiwan can do in order to keep practicing right now, yeah. you need to have different parties. >> hi, thank you. [inaudible] >> thank you so much for this very thorough presentation of the framework. i'm particularly fascinated by your description of the views relationalty between u.s. and china but there's different
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views about how the relationship and patients on taiwan's parts as well and building time to build mutuality. [inaudible] >> i look at how the neighbors in the region -- and what is the status of trust between china and its neighbors in the region? >> yeah. [inaudible]
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>> we also found that it is kind of ridiculous because -- the china has tried many efforts to show its goodness towards neighboring countries even for taiwan during the administrations. very traditional approach or strategy for chinese government. what does that mean? it's always use bilateral relationships and in this bilateral relationship with china you need -- [inaudible] >> make consensus. >> good morning, welcome to the
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heritage foundation in our auditorium. we welcome those who join us on the heritage website and in-house, we ask that you make last courtesy check that our mobile devices have been silenced and as well for those watching online, you're welcome to send questions or comments at any time today or in the future presentations. simply e-mailing speaker at posing our discussion embassador miller. he serves as director in our center for analysis and trade and economics. he also oversees the publication of index of economic freedom which we copublish with the wall street journal. copies are available if you have not seen one. prior to joining us here at heritage he was a diplomat and public servant, please join me
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in welcoming embassador terry miller. terry. [applause] >> thank you, john. good morning and welcome to the roll-out of 2017 global agenda for economic freedom. it looks like this if you didn't manage to pick one up yet. the global agenda is a product inspired by the heritage foundation's index of economic freedom. it's a joint production of the institute for economic freedom and opportunity and the davis institute for national security and foreign policy. it's basic premise is promotion of economic freedom, it's essential not only for the sustained revitalization of the u.s. economy but also to
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strength u.s. national security. in 2010 the united states fell from the category of economically free countries in our index of economic freedom. it's been stuck in the ranks for the mostly free ever since. that's the second tier category of countries whose governments interfere in significant ways in their citizens economic freedom. that's caused the u.s. decline, mainly the growth of government which has become not only more expensive but which is intrutded more significant and that washington knows best. for a country founded on the principal of limited government with a constitution that's filled with checks and balances
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on government power, the influence on our daily lives is an irony with tragic consequences. other factors have derailed economic freedom and my expert colleagues at the heritage foundation delve into many of them in this collection of essays, the message for americans is to support policies that will avoid further decline and committed to creating conditions for more economic freedom at home and abroad. this addition to heritage foundation for economic freedom layed out a broad series of actions for the u.s. to make in 2017, mostly at home but also oversees.
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it offers a blueprint for practical and effective strategy to end stagnation and restart meaningful worldwide economic growth and anticorruption measures and other countries. we can start by taking high-profile steps at home to strengthen rights here while incorporating key objectives of foreign aide abroad and the global agenda urges the u.s. government to reject and pursue agreements that eliminate barriers to trade in investment in an even-handed way while efforts to create additional regulatory hurdles to doing business but i'm getting ahead of the story here, to present highlights of the 2017 global
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agenda today i'm delighted to be joined by two of my heritage colleagues who coedited this year's edition, index editor for the rule of law and monetary freedom and analysis economic issues in latin america in europe as well as economic development issues worldwide. before joining heritage in 2007 jim was a career foreign officer, the u.s. state department and completed tours of duty at us embassies in méxico, portugal, france, panaáa and haiti. jim earned a master's degree in international economics from yale and holds mba from the university of pittsburgh. william t. wilson is a senior research fellow in the asian study center. before joining heritage in 2014, dr. wilson headed economic and financial research for the
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earnest&young institution studies and spent three years in beijing before starting office in moscow where he lived for two years. prior to that, bill was executive vice president and head of economic research for the national bank of kuwait. he holds ma and ph.d degree in economics from perdue university. after jim and pill present this year's global agenda we will be honor today hear comments about it from steven moore, distinguished visiting fellow for the project for economic growth. steve is very familiar to americans for long career writing about economics, wall street journal and is frequent appearances on cnbc with larry, earlier steve founded the club for growth which helps select conservative members of congress including heritage foundation president jim when he first ran for congress.
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steve has a master's in economic from george mason university. after steve's comments, we should have excellenty -- plenty of time for questions. jim, take it away. >> thank you, terry. we have a lot of material to go through so i will have to try to be quick, starting off with trade and bryan riley is here with us and my colleague in producing the index economic freedom and bryan has done a great job, let's get this to move, yeah, has done a great job explaining the benefits to american workers and consumers from the efforts of really generations of u.s. presidents from both parties to improve the free flow of trade and investment around the world and he notes that tariff rates have dropped but also notes the developments during the obama years of increases in nontariff
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barriers and nontransparent investment regimes and that's something he is calling the next administration to fight against and reduce barriers and open new markets. next our colleague brett shaffer has an interesting piece of u.s. taxpayer money and calls for an update of the 1961 foreign assistance act, calls for an independent evaluation, calls for the placing of the u.s. international development directly under the state department and also to emphasize aster ri -- as terry said emphasize. one of those areas, of course, is corruption and our colleague
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writes a piece -- i'm sorry, corruption in sub-saharan, africa, it is linked with all kinds of bad things like increases in violence, homicide and the next administration should do what, in fact, the bush administration did was create a whole new assistance mechanism that had a really hard emphasis on corruption and we want to see a return to that in a promotion of civil society. next our other index colleague writes about another aspect of development assistance policy with regard to world bank and again calling for an esmción -- emphasis on economic freedom as core principles and to use privet sector role modeling for
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programs that they do specially for idea that will be finalized quickly after the next administration takes office. briefly about the three essays i wrote for this collection. the first dealt with coordination policy and we have g-7 that dates from the cold era that need to be updated and after the 2008 crisis really calls for using the g-20 because they wanted to have a place where china could be included. we think that's been a mistake that the g-20 has been a time-waisting, series of photo-opts and all subgroups that meet with it. we are calling for the g-20 to be downgraded and for the g-9 to be created, top nine economies
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particularly including the tenth biggest economy, russia, specially with the behavior of russia under putin that does not merit inclusion in that group. but the g-9 could be very informal, you don't need a whole other bureaucracy that's been in place for the submit and could have views. we talked about the world bank. we will talk about imf. we want to see return from the basics and that was, fability -- by in fact, be imposed when they approve it had reform package at the end of last year. we want to see that sort of approach of rules base policy making and advise followed through next year in the next administration. we don't want to have imf
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bureaucrats with a wink in a nod saying if you break these rules we will be there to break you out. the imf should not be the first responder. finally lengthy set of introductions, socialist, environmentalists, cultural cronism expanded through the obama years. next president should cut off the food supplies to all the groupings. at the end of the day what this comes down to is rent seeking, powerful seeking carve-outs so what we say and is cut the rent
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off, cut off the partnerships, end corporate welfare, which is another essay that my colleague bill will talk about. bill, i think it's time for you to take over, thank you. >> excellent. thanks. greetings, welcome. in terms of economics we live in very interesting times, don't we ? only a short time ago the so-called brit countries, were flying high and they were cocky. i lived over the past six years in china and russia before i returned to washington, d.c. and
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they were gloating. high-level official were gloating over the state of the u.s. economy. how much has changed in four or five years. brazil is in its worst recession in at least half century. today brazil will impeach its president. in russia the economy is contracted for two consecutive years, essentially nothing more than a failed petro state. and china which will i talk in a second where i lived for three and a half years. economic growth was approximately 10% as recently as four years ago. we suspect now it's running around 5%. i will give more detail on that. the only bright light would be india, india is growing at 7% but it's a fertility rate at 7%, it's working-age population is
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growing enormously by 230 million people by the middle of the century so it has to create an enormous number of jobs. i'm sorry, 7% won't do it. in the first two years they have not done enough. as my mentor when i was a very young man used to tell me when things were bad, i worked in detroit. yeah, i can pick them. [laughter] >> cheer up, bill, things are getting worse. it was our thesis that nation states don't make economic reforms until they hit rock bottom. we may be in the early or immediate stages of a lot of economies of hitting rock bottom, this may be a good time to get into the stock market.
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in the first chapter i want to talk about in the global agenda for economic freedom where i lived for three and a half years is the chinese model past its experration -- expiration date. it has now more than doubled the size. more than doubled the size by 2016. the answer is it has past expiration date. in short, yes, it is. it's relied on exports for 30 years. there's enormous excess capacity in an industry but more importantly i work as a banker for ten years, i understand the credit cycle and total debt in
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china 150% of domestic product in 2007, today it's, you know, we don't know the exact number but it's roughly 300% gross domestic product. in other words, it's growing. by the way, they say they are growing 6 and a half, 7%, that is nonsense, they're not. they're not contracting but they're not growing at 6 and a half, 7%. the chinese released -- china has a pop swlición of -- population 1.4 billion people. there are no revisions. no revisions. they always fall within the target. exactly how fast are they growing, i don't know. if they were still growing at
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10%, the debt load would be more manageable but they're not, they're growing one half the rate they were four or five years ago. the u.s. response should to prepare a hard landing. there will be a financial crisis in china. i'm not saying china is going away. the question is how they respond to this financial crisis, whether it occurs next year or two or three years from now. there's still room to expand credit so i don't see it happening next year. so much lower growth would cause the ccp, the chinese communist party to become more aggressive in foreign policy in order to retain authority at home. again, i can give much more details in question and answer period. one more thing in terms of u.s. policy, you know what, i think we should -- we've been talking about this for ten years. we just signed a bilateral
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investment agreement with the chinese. chinese are the second largest net exporter of credit in the world despite their debt, they export a lot of credit. let them invest in u.s. infrastructure, why not take their money? so we advocate here at heritage signing the bia. next slide. the importance of global energy markets. i was living in the middle east in 2007 -- [laughter] >> it was crazy when oil reached $150 a barrel. they were all high. i mean, this could never stop. and my reactions were that markets worked and three to five years from now prices would come way down.
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these levels were not a sustainable equilibrium. it was 9.4 million-barrels a day. that's a revolution. that's a revolution. and our -- unlike abroad, most oil companies are owned by the state, are all privately owned. private shareholders. , private money went in, went into pipeline and we doubled production over relatively a short period of time. the good news congress removed the export ban on oil, that was a very good sign but advocate that the department of energy be removed from the decision-making process in improving liquid
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liquid natural gas products. right now we can't do projects. l&g products with countries we don't have an fta, free trade agreement with. i mean, this is just stupid. i have to move on. i'm running out of time. eliminating export subsidies, this was not authored by me but diane who is a subject matter expert but i was shock that had the level of export subsidies last year was $280 billion. now, i've worked in the private sector my entire life. i've worked in the private sector for 25 years, we have the best private companies in the world in terms of return on equity and efficiency.
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here at heritage we recommend that the inport-export bank be eliminated. shutdown. it causes all sorts of distortions, disadvantages to domestic nonexporters who don't receive the subsidies, small businesses don't receive subsidies. if they did have the power, they would lobby, they're too small like ge. u.s. per capita is $55,000. they're subsidizing blue chips. we have a fraction of the per capita gdp.
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only 2% of u.s. companies receive subsidies from the import-export bank. so we have -- it's one of the few areas where we disagree with the u.s. chamber of congress. usually agree on 90% of issues and this one we disagree that we should eliminate the import-export bank. last thing, eliminate state-owned enterprises which i hate. simply dephoned when the state owns more than 50% of the outstanding shares. 10% of the world largest firms are in enterprises. 96% of the shares of china's top 10 firms belong to the state. in russia it's 81%.
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russia was largely a private economy ten years ago. even in malaysia 70% of the top firms are state-owned enterprises. free trade and economic growth and i know for a fact they invite corporation. corruption is discouraged, discouraged of the emerging markets. so what we advocate, eliminating form of protectionism should be a top priority for international trade deals. with that, i will leave you to our star steve moore, make some comments. steve. >> good morning, folks, it is a privilege to be asked to speak of this james congratulations, i
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read a lot of it last night and learned a lot from it including things that suspected were true and you documented this so well about the proliferation of cronyism and the fact that we see protectionism on the rise, the fact that we see more and more government involvement in energy markets. i would add to that another -- i think you guys made a strong point about how impotent foreign aid is and rather allowing free exchange of goods and services. so i thought it was pessimistic actually. i was discouraged of the direction of things and actually that's what i want to touch on just a few minutes and turn it open to some questions. i want to give some personal
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reflections on some of these ideas that are layed out in this excellent report. i travel around the country quite a bit and sometimes internationally and i'm shocked by the fact that when you talk to real people out there, cab drivers, veterans, construction workers, there's a real sense in the united states that things will going on. you see this reflected in the polls that two out of three thing that america is on the wrong track and americans are cranky right now. it's interesting because i've been reading a lot of articles recently from people inside the washington, why is everybody so angry, everything is so good in america, look, there's a divide that's going on. if you look at what is happening outside here, you know, in the neighborhood here in washington, d.c., i look at my window cranes going up, the most prosperous
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place in america today is probably washington, d.c. and i think that mass that you get to political center that is growing like wild fires but that isn't happening across america except some other areas like san francisco, they're doing very well in silicon valley. and this is obviously reflected in the economic growth numbers that have been in my opinion just dismal over the last several years, you all know this has been the slowest recovery from a recession since the great depression. we got the news last week that the u.s. economy has grown 1%. that's pathetic. that's barely staying out of recession and i would make the case that in the business sector if you look at business spending, business confidence, what's happening with business process, in my opinion the business sector is what i call a soft recession. these are dangerous times and the economy is way underperforming and i laugh when i hear people like larry summers
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and grate scholars, well, 1 or 2% is about the best we can do. this is the new normal. the secular stagnation, that is what we are going to have to live with in the next 20 years. there's no reason that the economy can't grow much faster than it should be growing. and the voters are right to say what's going on, why aren't we growing? median, you know, family income has not grown at all in this recovery. this is the first recovery in 50 years that the average family hasn't felt it in their pocketbook. they're more financially strain than ever before. so what's going on, why is this happening? i would make the case this is also happening abroad. this explains in my opinion why brexit people passed. people are angry and they feel that the government is unresponsive to economic and political needs. and so to answer that question,
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i wanted to mention the fact that there was a -- one of the most important articles in an economic journal came out a number -- three to four years ago in the journal of economic literature and it was called the age of milton freedman and talked about a period from 1980 to 2005 which probably is the greatest period of economic growth in the u.s. history. there's no question about it. in large part i would say in no small part that heritage promotes all of the time, the spread of economic freedom, and what the journal of economic literature was saying was that they called it the age of milton freedman because milton freedman's ideas were ascended in that period from 1980 to 2005. we saw the ball of the berlin wall and we saw what happened in china. and just to give you one statistic that tells you about
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the amazing progress that was made in that 25-year period when for the most part countries moved toward economic freedom that are talked about in the publication and index of economic freedom. over 1 billion people, over 1 billion people in 25 years, by the way 25 years is like a nano second. we moved people out of poverty. that is an amazing accomplishment. and yet i would make the case and i would love your reflections on this, that age of milton freedman unfortunately has come to a halt, maybe not a screeching halt but slowing down as some of the ideas that took hold in the 1980's and 1990's are now in retreat. we so that, for example, in the united states, we saw half of the american voters in the democratic party voting for a
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socialist. that tells you a lot that some of the ideas that we are talking about have lost favor. as the ideas lose favor, people will become poorer. our creed -- the heritage foundation's ideas have consequences. good ideas have good consequences an bad ideas have bad consequences. i've always believed that in this world economy the united states is the hub and every other count roy -- country is the spoke. if we don't get them right in the united states, the rest of the world doesn't get them right. that's the lesson we learned over regan. that's why i think regan was one of the best presidents.
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they became -- they flourished around the world. and i would submit that because the united states in the last ten years and i'm not going oh to be partisan here the second term of the bush administration was mostly bad ideas and, of course, the last seven and a half years under obama has almost every idea that's come out of the obama administration with a few exceptions has been the wrong thing to do starting with the bail-outs, obamacare, and every day we are seeing consequences. if you want to see real-world consequences of ideas, look at obamacare. it's a perfect example. everything that we predicted is happening with obamacare, the only thing we predicted that it would fall apart as quickly as it has so it is. bad ideas do have consequences. that's why publications like this are so vitally important to get people. in my opinion, it wouldn't be that hard to get for for the united states and countries to start growing again at a very rapid pace.
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i believe if you have to change regime and policy, i said on fox news, we could grow at 4% in five years, 4% for five years, that's like adding another texas to the economy. that's a big deal. it's interesting that everybody says -- hillary clinton saying, well, look, sure the economy is growing 1% but we are growing faster than everybody else and we should be applauding that. the reason the rest of the world isn't growing is because we are not growing. it's difficult for the other countries to get it right as well. that's point number one. the second point i want to make is about globalization and this is really one of the themes of your book but there's some reflection and second-thinking about globalization right now, whether it's a good thing. you know, when brexit didn't pas
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s -- i mean, when brexit did pass -- i think there's a big difference between a global economic -- global economy globalization that horm onizes the world economy which is a good thing versus globalization of government. we need to separate out those two ideas. globalization, everything you talk about in the book about the importance of economic immigration is obviously so important. i mean, trade, specially. if they voluntarily trade, they are both better off. the idea, one of the things that worries me is that we are seeing a trend towards the left wanting global government. this isn't the black helicopter stuff. there's no question that the left's agenda to globalize a lot of policies. we see with really dangerous
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climate change deal. this is an an assault against self-governing. this is one area -- i don't know if i disagree with you or not. you talk about reforming imf and institutions and in ways that would improve organizations but i want to throw out this idea that maybe the world would be better without them altogether. do we really united nations, we've written about that in heritage for 30 years. it's certainly worthying about. i guess what i'm challenging you to -- again, i want your answer to this. are these reformable organizations. i was thinking about the other day. i was listening to npr and they had a long interview, i think it was the president of the world bank bull might have been one of the chief economist, here we are
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with world economy that's sinking into a world recession and one of them spent the entire conversation talking about global warming, no, look, there's something insane about that. i mean, there are a lot of problems in the world and maybe global warming is a problem but i think most people wouldn't say that you have so many people living in poverty, more and more sinking into poverty and the world is teetering on the verge of a world recession. and soy just wonder whether we are better or worse off. and the final point i will make is with respect to energy markets and i love what you guys wrote in this booklet about the energy issue. and i just think that it's so important and near and dear to my heart and you said it very well, though, about the massive increases but there's a war on energy in the world today.
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they're trying to decapitate energy markets right now whether it's energy gas, nuclear power, coal where we put so many coal miners out of work and we need to privatize these energy markets. so you're exactly right because if we do -- everything that we have this microphone i'm talking to, everything is derivative of energy. there's still something like a billion and a half people living in the world according to economist that don't have access to the most basic thing of the last 200 years which is electricity. if we want to reduce poverty in the world make electricity less expensive, the green left agenda is to make electricity more expensive. i don't know.
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i guess i am pessimistic right now about the way things are going. this is a great guide book that says how to get us back on track and i'm with the optimistic message that i think if the united states starts getting these things right that they will spread like a virus around the world and could have a 25-year period of unbelievable prosperity. >> great, thank you. >> you want me to lead the -- why don't you -- could you guys -- >> let me respond to a couple of points. in terms of the imf, at least for a start we should put traceable ankle bracelet on them so the parole officers know what they're doing at all times. we have our colleagues here at heritage in the center who have written extensively on brexit and their point was that brexit was a vote against not globalization per say against
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top down undemocratic protectionist leaders from brussels and they reject that including having european courts telling british citizens what to do in regard to their own legal system. we have in our audience dr. david and i might ask the microphone to go to him for a minute to respond briefly about your climate change and green points and that was another area where we talk about rent-seeking environmentalist cronyism. i think that's part of it. those would be a couple of my reactions. >> it is a quick couple points. you know, in terms of steve's comments, are you aware that the usa economy is growing less than 3%, less than 3% for nine consecutive years, go into the website and data goes back to 1930's -- >> never been above 3%.
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>> never been above 3% in nine consecutive years. national income accounting that's ever happened before. in terms of imf and things like that, i got my start -- i quick academia -- quit academia at an early age and was fortunate to work with mentor in detroit, it's interesting in working detroit because it's like working in the developing country. but whenever bad news came out about the city of detroit, he would look at me and say, cheer up, bill, things are getting worse. it was thesis that nation states don't reform, simply -- whether developing or rich unless they hit rock bottom. and i think the imf and world bank -- the imf and world bank i think at one point played a role.
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they were created in 1944 in the early post war history. a massive shortage of dollars and europeans couldn't purchase imports. that was the purpose of the imf but i don't think they serve a useful purpose anymore, which is why i'm a little more hopeful. things that don't work eventually die. >> i would say on the point -- i also worked worked in detroit as a young man, just by the way. my perspective is i worked at ford motor company and now we have many better automobiles and trucks and what have you because of global competition and the system that was built collapsed and that's what you see is a disaster of detroit. but can we maybe go to david for a second and i'm sure we have
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questions from the audience. >> thank you very much. first -- [inaudible] >> i highly recommend steve's book, they nailed the energy problem right on the head. it is that we have cronyism and hysteria driving energy policies. hysteria that we are heading to a catastrophe which data simply does not show. you can check that out. the cronyism follows the money. you look at the first poster child, the current one i would maintain, a solar thermal project in the desert of southern california and nevada, and it simply burns natural gas to turn it into solar energy. about a third of the solar
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energy they sell is generated by natural gas and they're selling it at all ridiculous prices and that's the current poster child for cronyism. the climate policies are probably more likely to start wars than any potential climate catastrophe that people are talking about, they generate animosity towards the developed world instead of the developed world providing a model for getting people out of poverty, the world bank and others are pointing to the developed world as the cause for the developing world. the solutions are to extend poverty in the developing world and we need to get away from that, big energy policy is the clean burning cook stove which it has been. it's an embarrassment. >> one quick point about that. it is an issue.
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i agree with everything that you said. the left whole montra is reducing income between rich and poor. when you think about all the green policies of making electricity and energy more expensive, all they are a regressive tax on low-income people. to the extent that these institutions are holding back energy production and making more expensive, this -- this is doing more than anything to widen the disparity between the rich and poor. we will open it up for other questions and comments and please just very quickly introduce yourself and then ask for a question as quickly as possible and this gentleman right back. >> i'm an attorney here in town.
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the underlying thesis that heritage does or everything that you said here is less regulation, means for economic growth and we had low economic growth over the last what, six, seven, eight years. but compared to china there's still far less regulation of the economy than compared to the economy in the united states than it is in china, china has economic growth rate whether it's 10% eight years ago or 5% now, why are they doing so much better than we are? >> yeah. did you mean to say they have more or less regulation? >> chinese have much more. 80 or 90. why are they doing better than we are? >> yeah. what happens with developing countries is a catch-up phase. the per capita is 55 u.s.
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dollars and per capita in china is 7 u.s. dollars. if you go to china tier one and tier two cities and look at the transformation it was not generated by 4 to 5 per growth. they were probably growing 5 to 10% for a long time. someone who wrote about it in the 1990's talked about factor accumulation, so what happened with china in 1980, 10% of the population was urbanized. today it's 54%. so you have massive transfer from the farms to the cities and low-productivity areas to a much higher-productive area service and manufacturing. then you had what we called capital accumulation.
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the chinese have spent -- [laughter] >> 50% of gross domestic product on asset investment, enormous capital accumulation. their exports in 2000 accounted for 2% of global exports, today is 12% and that's not going to rise much faster. so that -- so the two major economic engines, those two things expired. we call them factor accumulation. you can generate in any country as long as you have political stability and they've had political stability, make no doubt about it. the chinese communist party is in complete party. anyone that challenges the ccp is crushed to matter what you
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are. they've had very -- political stability for three and a half decades and they've had enormous factor accumulation, so you get to what we call mit, the middle income trap. i challenge you over the last 40 years of all these developing countries and there's hundreds of them, how many became high-income countries, south korea, taiwan, singapore, hong kong, i'm not going to include the petro states like kuwait, population of 600,000, tinny petro states. really no one else. i believe china -- china now has to go through productivity growth. its working age population
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peaked in 2012, it's the fastest-aging population in the world and fixed asset investment, 50% of gdp is not a sustainable and excess capacity in all industries sement steel, they have to bring that figure, massive contraction in economic growth. so china is in the early -- the intermediate stages of entering what we call the middle-income trap unless there are major structural reforms. >> no. maybe another question. >> other questions? [inaudible]
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>> i hadn't heard any mention of company inversions and the current administration has been trying to do something about companies that have circumvented and should they approach things this way or would there be a better way to by these companies back to america where they belong rather than just have a headquarters overseas and american company -- [inaudible] >> there's very few real-life examples that are visible to the naked eye about why tax rates matter than to see what's happening with corporate relocations and, you know, when i talked about the age of reagan, you know, if you look at what happened from 19 -- actually from 1990 through
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today, the rest of the world has been very, very aggressively cutting tax rates. used to be we were slightly below the world average in the united states and now we are significantly above the world average because the rest of the world has been exercising what i will call reaganomics. ireland has the lowest tax rate in the world at 12 and a half percent. it is a big problem. we are stuck at 37-38%. the rest of the world near 20. almost every rational person in the country, you know, other than hillary clinton and barack obama, really we should do something mighty fast to make america more competitive and cut corporate rate as quickly as possible and so i think the
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trump plan has the -- brings the corporate rate down to 15% and i believe if you do that, you're going to see capital flow in the united states. i don't think there's any question about it. it happened in the 80's when we cut tax rates in the 80's, one of the reasons the u.s. economy grew so much is we became magnet for capital. >> it certainly makes brexit look good in terms of what the eu is trying to do to apple right now. i'm sure that the british are happy that they are leaving. >> yeah, among the so-called countries, correct me if i'm wrong, steve, the highest -- >> highest. >> highest corporate income tax and i worked in largest sectors and the purpose of company is to maximize profits for the owners. the owners are the shareholders. that's all they should do.
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maximize profits for the shareholders. >> not triple bottom line. >> that means unversion, sobeit. >> let me ask you before we get to the next question, one thing that has been on my mind that entered the debate about good economic policy. trump has brought this on with some of the ideas on trade, many of which i don't agree with, but there's a rethinking among some economists about whether this idea of multilateral trade agreements or bilateral are preferable. i think trump is talking about, you know, if we are going to do trade deals they should be bilaterals. are you comfortable with that development or should we -- should we -- are multilateral agreements better than bilateral? >> it fends on who is negotiating them and who are their ultimate objectives. that's been one of one of --
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problems. it's been a concern with the ttip and ttp with other antibusiness components of these agreements. bryan, what do you think? >> it depends on who is doing the negotiating. [inaudible] >> if you have a good agreement with 150 economies that's better agreement than two economies but it's harder to get done as well so i don't view them as exclusive whatsoever. you can have bilateral deals with different countries and the rules are different, that might make it challenging for people to benefit from them.
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so i don't think either/or question. you mentioned anal age break and we have a nafta agreement and i think while not perfect, significant things to improve economic freedom. >> one last quick, if i can. >> go ahead. >> we haven't had a large multilateral trade agreement which president clinton pushed through. there's a trend that no one is talking about that has been proplexed and i don't understand it. the growth in global trade has always outpaced global real gdp growth by a significant margin, every year with the exception of maybe one or two years until the last four or five years, last four or five years we've seen a
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collapse in the growth in global trade, you may say, well, of course, the economy is growing slower. that's not my point. the growth in rate is growing slower than gdp. >> what explains that? >> you know what, i don't know. [laughter] >> we have time for one more. >> we are very depressed and i have a question which is probably not answerable to a housewife, where you see tie today morality and -- [inaudible] >> understand that economic policy that lists people,
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delabels and the younger people seem to -- is there any way to educate -- [inaudible] ..
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cronyism and the tendency of the last to do virtual signaling they called it came to be on the right side of history, that is all tied up with having too much power in tin and the wrong hands. our goal is to take some of that power away. the press has caused the dismal science. will immediately get a drink. i don't understand why the money also merits them here or here i can see in the audience. millennial spoke for left-wing entity parties. we have an estimated, according to the cbo, $80 trillion of unfunded liabilities,
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$80 trillion. security, medicare and medicaid. but in terms of the last time we had broad-based economic growth was the late 90s. we have a lot of capital expenditure that was really driving growth, averaging growth of about 4% a year. the stock market was rising by double digits. it was missing and that's recovery. 1% in the first half of the year. that is lousy. i get sick of hearing the late larry summers say he misses the new normals. this is trained to. it is crap. it is lousy public policy. until we change that, we are not going to resuscitate growth. >> i share your concern about millennial spare i attend big talks on college campuses for 30 years and it's worse now than
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it's ever been with the understanding of the kids in high school and college today. i've been scratching my head again why is it that the kids today are so enamored by government power. they are such precious things. why do you want to give up your liberty to these politicians? it lies in what you talk about in this book, which is what happens is people have come to think that capitalism is cronyism and they associate capitalism as the left calls the crapitalism. he goes around the worldsame capitalism is a terrible thing. he didn't get it where pope john paul ii get


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