tv Key Capitol Hill Hearings CSPAN June 17, 2015 11:00pm-1:01am EDT
t efficient basis, even with the hotel bills and flight and all that. >> and the patients need not always go. another story would be a young woman we recently saw who was from kentucky and she was in her early 30s and found out she had breast cancer. they consulted us and just as they were about to treat her, they realized she was pregnant. they said oh my gosh what do we do about that? and we were able to coach them on how to manage that young woman's breast cancer and her pregnancy. she got great care, never left kentucky, the costs were very low and all of that was done keeping the patient local. she got great care and the costs were minuscule compared to if she had been ping-ponging around locally. again, just terrific avoided costs for your health care plan if it's done well and done right. >> should there be any concern in a system like kaiser permanente, the doctors are employed, have all these great
electronic records. at what point, though, when there is care that has to be delivered, one of the concerns is if i'm trying to control costs, i'm not going to get the best care. someone will try, you know, not to give me the care that i need or they will withdraw that. they won't provide that drug. how do you make those decisions in a system like that where you still have to keep costs under control, it isn't just a free for all? it's -- you know one of the problems is people often get too much care. there's overtreatment. and that's costly. >> yeah. i mean we have the data. you know, the data at the end of the day brings facts to the table. the fact of the matter is, our system is different from the rest of the industry. it's volume driver. quality has been defined in our society over the years as more is better right? >> right. >> but the engine that makes more the definition of more is i get paid if i do more procedures.
i'm not suggesting these are bad people working in the industry. and we're the good people, right? but i am saying that's highly ethical people over time will, in fact, justify certain decisions. so if i'm getting paid every time i do a procedure or see you, that's the way the incentive system works, eventually i will justify that kind of behavior. so what we've been able to do over the years is to bring outcome-based data to the argument and to show that our philosophy is -- there is no such thing as a global statement to be cost-effective, to be more affordable means that you're going to skimp on quality. in fact, we're showing just the opposite. one of the issues, and one of the initiatives that we've been working on is cutting the sepsis rate in our hospital. >> and sepsis aus all know is this dangerous blood infection that can kill you.
>> yeah. which we said there is no reason why someone -- if we don't focus on this in the american hospital system that people should go to a hospital and pick up in essence, a bacteria germ and die or have some kind of consequence in a hospital stay. here is a great example where we have pretty much reduced it now to a level that we're on our way to our goal which is zero, which is a lot of work over the years. we've improved quality and we've lowered costs because now you're not staying in the hospital longer and god forbid, you're not dying. that's another example of that. the other example is now knowing the different treatments that would work in individuales and populations and then building the systems around that, support it and enabled by technology allows us to be much more efficient in diagnosis in treatment, and in prevention. >> right. >> that allows a person to stay
healthier. >> and it's the same idea i assume, one of the things that drives cost up, it isn't just the cost of providing care, but it's the cost of complications of care. so if you go to the hospital and you end up with hospital infection, you see something like cdiff going around the hospital which is a terrible illness, a 00000 people last year contracted this illness and a lot of them die. this is a consequence of hospital treatment. then you end up getting readmission. how much can a system -- you know, when you're providing the kind of care that mayo is, how much of that extra cost and complications can be prevented? and is that an important driver of improving cost and quality in this country? >> absolutely. and bernard mentioned that and displayed it well. cost avoidance by reducing infection, reducing falls reducing admissions all of those are terrific and it requires an engineer, a team-based approach to do that. this is hard work. you save money at the end.
you invest an awful lot of money doing that. i think the other thing just to remind ourselves, at mayo we're salaried physicians. that's been the case for a hundred years. that gets it right up at the front end. recently, we've expanded to bring pro ton beams therapy to cancer patients two large senior centers, one about to open in rochester and one in arizona. this is a $400 million investment in this safer and we think more effective way to deliver radiation treatment to children and to adults with cancer and we're going to charge the same amount as conventional radiation therapy because it's not about making money it's for the doctors to say you would or you wouldn't need proton beam regardless of the cost. so, again, i think any great organization needs to do everything it can to improve the quality of the product, but also be cost sensitive. and mayo and obviously kaiser do that. i think we're good models of
that. >> and we've talked a lot about the costs of pharmaceuticals. the drug costs. there's the high costs of some of these new and effective drugs. we've talked about hepatitis c which has very much been in the news lately and who wants to pay for that. what is the argument and how do we resolve the extreme costs of some of these new drugs with hepatitis c as a huge problem in this country? how do you get to the kind of cost benefit analysis that says, you know can we reduce this cost, can we keep this cost reasonable or do we pay this because down the road we're saving liver transplants? how do we get our head around the drug cost benefit analysis here? >> it's a -- it's a complicated topic, as you can imagine. because on one happenednd, you know, we are living in the day and age where, for example with the hepatitis c, you have a drug now that can cure hepatitis c. so we don't want to throw out
the baby with the bath water. that's a great invention. that's great for us, great for our society. at the same time what you have around it is what i've been saying is irrational pricing. and i was talking to some of my colleagues in the pharmacy industry and they were saying well, how do you define irrational pricing? i said when you price because you can. because there's no justification to it being this high. which no one is arguing that that is not the case, right? and our concern is we don't want to in any way suggest that you know the pharmaceutical companies who invest in the research and all this which they're doing, which by the way some of it we're paying for should not get their returns on their investment should not -- should be respectful of the capital market, etcetera. but what we have now is run away pricing that is so expensive you can't justify it. now, if my colleagues from the pharmacy industry was in the room, they would say well, the
other half of the argument that bernard needs to present is that he's covering the lives of these individuals and he's going the be charging for liver transplants and all of this that he gets to avoid. and all of that needs to be in the calculation of how we rethink, how do we now look at the cost and the payoff of these specialty drugs that are coming down the pike? we haven't worked out ways through all of that yet. and it's a complex process because there are many more specialty drugs that are in the pipeline. >> right. >> and right now, there is no ceiling of how much can be charged. and so what we're seeing is the price is actually escalating even more. >> i think if i could just make a quick comment, i agree with everything bernard said, but the world expects america to be the center of innovation and entrepreneurship. and there's a tremendous amount of opportunity in the world of biomedical research to do this
kind of work, which is really in regenerative medicine and so on. this is the balance. the price and cost is one thing, but we should be celebrating the explosion of great, new potential therapies to change the health of our nation and have a stronger nation and a more economically viability nation. so it's the balance of that. and this is a fabulous time to be in science and medicine. we just have to work out the details of the expenditures which are serious and important but we really need to step up to this as a country, in my opinion. i totally agree. this is a new age in which we are living in and going into. so the fact that we are now starting too look at being able to cure for example, hepatitis c, the entire health care industry has been built on sick care. and there's only a small
personal of the population at any given time less than 20% that is occupying 80% of the health care dollars. >> right. >> to your point, the fact that we are now living in a an age where you're seeing this innovation going on in which we have the opportunity to wipe out certain diseases etcetera, is a very exciting time that we have to reconcile in the new economics of care in this country and, in fact, in this world. >> i think i could solve it all. >> that's a good moment to take questions from the -- from the audience. i have none that you -- >> should we do a poll though? we have a wonderful poll. >> let's do that poll while you're -- >> because i'm curious to know how the affordable care act@has actually hit your budget, whether you've seen the costs go up since the act whether you've seen them stay the same or go up. i think the question is have you seen them rise since the affordable care act.
>> so costs are up for 77% of the cfos in the room. since the aca. what accounts for that? >> well, you know, one of the cautions health care costs have been going up-and-up and up. so let's be a little bit careful that we don't tag it to it's because of. in fact, i think that that is part of the complexity of what's going on in the health care industry. we all have to work to make health care more affordable and drive down costs while we improve quality and improve access to care. and so there's still a lot of work to go on. but one of the things that's
true is the early issuedcations are those individuals who don't have coverage who might have gone in for care to emergency departments around the country, now that they have coverage meaning in my definition, they can come to the front door of the american health care system they are starting to go through the front door of the american health care system and we're discovering that there are illness epses and challenges that they have been having that we now are treating. so in our system, we're able now, like we managed to figure out the best way to care for them over time and hopefully we'll level those costs out and start to drive those costs or make them more manageable. so those are the early indications of what's going on with the rise in health care. >> i don't think it's any surprise that companies who have health care plans are bearing a lot of the cost of caring for those who didn't have insurance.
that's not to say it's not a good thing to do, but it's not surprising. and bernard is obviously taking the long view that ultimately those who haven't had insurance will find a home and get appropriate care to prevent and treat early but it's, again, not a surprise that we've seen the business in the emergency rooms going through the roof because newly insured folks haven't yet built the infrastructure around them or we haven't created it for them. so they have insurance and they believe they need to -- >> still can't find a doctor in some cases. >> whether it's a good thing or a bad thing, but it's not surprising that the private sector is bearing the brunt of the cost. >> is there an opportunity to use new medical device technology instead of pharmaceuticals that cure or address medical issues? so what's keeping this from expanding? >> i'm sorry -- >> is there an opportunity to use new medical device technology instead of pharmaceuticals? >> oh, unquestionably.
whether they'll be less expensive or not is difficult to say, but as i'm sure you're all aware of the changes in technology, we can now replace heart valves without opening the patient's chest. as i mentioned earlier we can use proton beam therapy without injuring the brain of children who have brain cancer if you will. we can -- we're pioneering stem cell therapy to cure long standing fistulas that haven't repaired. i think all these technologies will need to be paid for. some of them will be expensive. i think the key savings -- and i'll pass it to bernard -- will be in the prediction and prevention. so as we learn more about our individual genomes, we'll be able to say, ghee, there's a predisposition in my family for this and for that. what can i do early on to intervene? and that will help to lower the -- but that's a long-term investment. >> no, i agree. i think you said it very well. you know, i questioned you on this earlier, that the -- if you
look at the american health care system, it was designed around sick care. it was designed pretty much for intervention. now what we have is with the technology with the learnings with all the stuff that's going on we have the ability to go upstream and to do early detection detection, early diagnosis early treatment that, if you will levels out the cost over the long-term and hopefully keep a person much more healthier. and so that is the other side of this equation which is how do we really take on maximizing the healthy life years of an individual's life, not just have a health care system that is designed to intervene when someone is sick. >> that's not easy to do though. it's hard to change dietary habits, smoking helmets all that stuff. we're dealing with people. >> it is a major -- it is a major challenge. and i'm glad you said that because it speaks to a health
care system has to be more global in this thought process because many of the behavior issues is what leads to -- >> that is the el factephant in the room. >> since we have a minute and a half left, you interact with a lot of companies. tell us about some of the -- these are cfos who are concerned about the company's health care costs. tell us one or two of the best practices that you've encountered in interacting with large companies such as those represented here. >> i'll just jump in if i may. i think the best companies -- walmart is a great example. i've told that story. but i think if you can look at complex care and you want to reduce the cost to your plan or your employees to deal with complex care find a place that gets it right the first time. and i think that's an investment, it may cost you a little bit more but not actually very much to avoid those costs that will come if that patient ping-pongs around
the organization. that will be the complex diagnosis or the complex diseases. >> yes. i -- i travel around the country. i talk to many of my customers, major employers. the role models for me are the ones who are very clear at the end of the day they say to me bernard, show me the data. show me how you're helping to keep my employee population healthy. what's the personal that follows into the chronic care part, not by name but in aggregate data, what are you doing around prevention? help me understand how to keep my workforce healthy. what new lessons have you learned? you know, we have 200,000 people within kaiser. i often get asked, what are you doing to keep your population healthy? what can we learn from you? they ask me to show them the difference between the cost of care for a very sick population versus the cost of care to keep
someone healthy. so what i have seen in terms of the best practice as we bring forward more data, it prompts different questions. and the ones that have been very engaging bring all three of those perspectives, if you will, the line of sight of i want to have a healthy work population, the line of sight of i want to drive down costs and the line of sight that i want to understand the return of the investment. >> thank you very much. >> that you can. thank you. in a few minutes, world bank president jim yong kim speaks to the chief financial officers who gathered in washington, d.c. this week. he gives a report card on how effective companies are in reaching consumers and developing countries. senator bill caddie of louisiana has introduced legislation to repeal the federal government's
renewable fuel standards which require ethanol or other renewable fuels to be mixed with gasoline. the epa is moving to expand the required renewable fuel mix from 9 billion gallons to 36 billion gallons by 2022. and at noon also on c-span3, several gop presidential candidates will speak at the faith and freedom coalition conference, including senators marco rubio, rand paul and ted cruz. two months ago world bank president jim yong kim announced a strategy to end extreme poverty by 2030, asking multi lateral banks to help bridge financial gaps, infrastructure, energy and water. he's interviewed next by the deputy editor in chief of the "wall street journal."
>> dr. kim thank you so much for joining us today. thank you. it's great to be here. >> you've made plenty of headlines since taking over at the world bank since 2012. you were strong on the ebola outbreak and the slow response there. you have strong opinions about poverty and inequality and also about the role of the private sector. before we get to that, i'd love you -- i know you just got back from egypt and i'd love you to take us on a bit of a tour of the emerging economies. we started out the years feeling very pessimistic about the prospects. is that changing now? >> for this year, the expected rate of growth is 4.4%. what's happened is the impact of low oil prices, at one point we thought it would spur growth, but still we see it as a drag on the economy. also there is currency uncertainty. when you have a divergent monetary policy across the united states, europe and japan, and especially with the rising dollar, you see a lot of currency movement toward the
united states and that affects the exchange rates in developing countries. the impact of russia and brazil contracting has also been very serious. it's different depending on different countries. in africa and many of the commodity export countries, the slowdown in china has had a big impact. whereas in 2000 china made up about 1% of total developing country exports. it's now the biggest trading partner with the entire developing world. there's a mixed picture. if you step back and say, so what about africa? despite ebola, africa continues to grow. and it grew all through the period after the crisis. i think there's still great prospects in africa. china will grow at about 7% this year. we think it's because they are going forward in a very controlled, thoughtfully done shift of the growth model. it's really impressive to watch.
my predecessor wrote this great report, china 2030, with them. they really talked through all the things they're going to do. we're going to switch our growth model from exports and investments to services and consumption. they're going through with it. we are not surprised that they have a 7% growth rate. again, it's having a lot of knock off effects. we're really impressed with india. india, for the first time in 15 years, it's going to have a higher growth rate chan china. i met the prime minister last year when he just took office and i was impressed with how focused he was. he was generous to give us a meeting, it was going to be short. but what we did is we took all the benefits of this new operating model that we put in place at the world bank group we did a little study and showed . then we said you know, we're going to focus on the top ten
problems and we're going to show you the best and most innovation solutions from all over the world that have been applied and tackled your state problems. because we did it in such detail, we spent an hour and we talked about everything from his public-private partnerships to railways to cleaning up the river. this is a guy who is incredibly determined. and has done something that you know, they've wanted to do for decades, which was to reform their tax laws. because, you know, we did a study. we showed him. trucks in india, they are stopped 60% of their day. whereas in the united states it's about 25% of their day. why is that? because every time they cross the border, from one state to the next, they have to pay taxes. so now he actually got the reform done. there's a goods and services tax. when it's all said and done, you pay once when you start and you pay once when you end.
that's going to have a huge impact. his confidence in the structure reform has driven our own sense of the growth prospects and in india. we can keep going, but let me stop there. >> other than the long-term, are you optimistic enough about india where you see it supplanting a china role from businesses? are you optimistic enough that we should stop thinking about this? >> we are optimistic so far. prime minister modi is -- is in a very complicated country that has lots of big problems still. still the highest number of people living in extreme poverty are in that country in terms of any specific countries. there are lots of issues around education and health care. i have to say, the impact of this one leader on our own sense of where things are moving has been profound. i wouldn't go so far as to say
supplant china but here is one thing that struck us about being very different about prime minister modi. when i went to see him we have this thing called doing business ranking. india is ranked 166. >> out of how many? >> out of 180 or so. you could imagine booel being in industry finance are very critical and were not happy with it. and it has been very critical of the methodology etc. but if it were based on your statement which he has instituted lots of structure reform and would be ranked 50th in the world instead of 166th. so instead of continuing to critique the methodology, he said we'll set a goal and we want to be at number 50. and i want everybody in this government to focus on getting us from 166th to 50th. there's a lot of complexities in
that system. he has a tough road to climb. but we really like what we see so far. >> you just returned from egypt where i guess you had quite an eventful trip. unfortunately there was a bombing in one of the cities where you were going to visit. you kept going. could you talk about the middle east? it's all in such turmoil but yet you feel it's important for both the world bank and the private business to support egypt and the region. >> we have a designation fragile and conflict-affected states and regions. the entire region is fragile and conflict affected because so many different conflicts are happening at the same time. egypt is really critical. people have said that the arab world is like a tent with two poles, one is saudi arabia and one is egypt and both have to be stable for the region to be stable.
so we went in there to see what we've been doing. and we focus on things like cash transfer programs and that's why i was going to the place where they had the bombing, and i was very impressed with his commitment to tackle major issues. youth unemployment is a major issue. sanitation is an issue health care. the educational system as a whole, lots of major issues that he has to deal with. i was very impressed with his and his entire cabinet's commitment to tackling them. having said that there is a lot of challenges. i went to luxor and i saw two things. one, egyptian antiquities are one of the great resources for the entire world. it's really stunning what i was able to see. but at the same time it's also one of the very poorest regions and the conditional cash transfer program was making a transformative impact on the
lafs of very, very poor women. so there's a huge agenda with egypt, but we're committed to it because we -- we've got atack the situation. our goal is to end poverty by 2030. by 2020, half of all people are living in it stream poverty so i've asked my vice president, do we have a new tail? for example, addressing the issue of radicalization are there things we can do to help educational systems or a government tackle this issue? so we don't know yet but we're trying to ask questions in a very different way. >> and in terms of private investment, i understand that you're thinking of going on a road show creating different types of investment vehicles to entice the private sector into these countries. >> right. >> could you explain.
>> if you look at one particular need in developing countries and that would be the need for financing for new infrastructure, it's about $1 trillion a year. so if you look at all of the official development assistance put together, it's about $130 billion. and then you add in all the funding that's provided by the multi lateral development banks and it doesn't even get to half of what the need is. so there is no question that we need to get some of these capital sitting on the sidelines moving for these infrastructure developments. our sense, based on our long history, and even some analysis done by some of the ratings agencies that the infrastructure investment in developing countries are a great -- provide a great potential return on investment for sovereign wealth funds, for equity investors, for just about anybody. but the perception of risk is holding people back. now, you know, we feel that we have a very good sense of risk
and reward. even some of the most difficult situations in, you know, central africa for example. but we feel that if we get together with all the other multi lateral banks with some of the private sector players who have been in those regions for a long time, we can effect itchly derisk those investments. even a teacher's fund or a pension fund will feel comfortable investing in. that's where we have to get to. we have to move past perceived risks and be clear enough and present the picture clearly enough so that these funds that don't have people on their staff who can assist risk and reward in the democratic republic of the congo begin to trust the analysis that we can provide. >> i want to ask the cfos out there to answer a question about how willing you might be to invest in some of these more vulnerable areas, really the midwest. i think there's a question if we can tee it up, should the private sector play a big role
in development work, especially in troubled regions like the midwest? i'm going to take a couple of seconds. seven seconds here now. these responses have been very interesting all morning. not exactly scientific. but i think we have a pretty split opinion here. not sure 31%. no, 31%. and yes 38%. so i guess that means you have a little bit of work to do on this front. >> let me just say that -- okay. 41%. let me just say we would like to talk with the 41% out there. you know the mid east is -- i mean there's just a tremendous amount of uncertainty, even for us. i mean i think that we would love to work more with the private sector everywhere. i mean it is going to be the key to -- for us for achieving the goal of ending extreme poverty by 2030. we have another goal which is to boost shared prosperity
meaning focusing specifically on income growth in the bottom 40%. and we're simply not going to get there unless we can attract private capital. so it's something that you know, we've had a private sector group that's been working in developing countries for a very long time. but we are trying to now bring together more of the private sector and the public sector group. because there are things that the public sector can do that can make it easier for the private sector to invest and there are opportunities the private sector group can present to government, but they may not see otherwise. so that's really what we hope our value add will be over time >> could we talk a bit about in inequality? how concerned should we be about inequality around the world? you have spoken about the role of technology and how really now, if you're a student in africa, you can see how the other half of the world is living and that's changing the world in very fundamental ways. >> it's happening everywhere.
the most dramatic story for me was i went to see the president in bolivia and i went to see him the week after his plane was brought down under suspicion that he was travel, edward snowden. so he wasn't very -- he wasn't in a very generous mood toward americans right at that time. but he said i'll meet with you, but you need to get to 14,000 feet and we're going to play soccer together. i never played soccer in my life, so it was a challenge. but as he were landing the helicopter at 14,000 feet, the most remote village in bolivia, they were taking pictures of us with their smartphones and they could see miami-based spanish language telenovela. everyone knows how everyone else lives. it's not just that the people who don't have access to jobs and education and income are resentful. it's that, you know, the analysis is beginning to tell us that -- that higher and higher levels of inequality are actually a drag on growth. so the imf just came out with a
study saying countries really should focus on improving incomes of the bottom 20% because that spurs growth much more than increasing the relative incomes of the top 20%. now, this is new. this is all, you know new research that we're beginning to just get our heads around. but what does that really mean? for us, it means trying to -- to spur the kind of investments that will lead to -- especially private sector growth that will create jobs that will lift the incomes of the bottom 20% to 40%. that's what we focus on everywhere. and there's -- without question we cannot do it just with donor assistance. we cannot do it just the loans to governments. we've really got to get private sectors moving in all those places. >> and know that you don't want to get involved in the negotiations ongoing about greece at the moment, but could you talk a bit about the difference between austerity and structural reforms and a sense
that greece really -- you know, they may have done one part, but didn't do the important second leg of this? >> you know, people noti'm not involved in the negotiations at all. let me just take a step back for a second. this is the discussion that's ongoing. there are different views of austerity. it pretty good outcomes as a result. others have a very different view about the importance of austerity. the thing that everyone agrees on is that there's hardly a country in the world that doesn't need to go through structural reform. and it's the case everywhere. so when i talked about prime minister modi changing the tax law, i think it's given us all a sense of possibility that we just didn't have before in terms of indian bureaucracy. indian bureaucracy still is formidable. but the fact that he did that made a big difference. so the thing that we just keep saying to every country in the
world is you all need to go through a certain kind of structural reform and you all need to do things like in japan, for example, one of the big issues for them are being open to immigrants and getting women in the work force. but that's hard. that requires a political lift that is always difficult. but what we would say is that whatever your view on austerity, focus on those structural reforms, see if you can find a getting there. because the reaction of markets is pretty quick. when they see that you're serious about it i think that the overall sentiment to your future prospects for growth and likelihood of investment can change pretty quickly. >> when you look at greece and europe as a whole do you think there's been not enough structural reform in general? >> and, you know, it's one of the things we talked about all the time. again, countries across europe you know all of them are needing to do it. and then there are some countries that have moved pretty quickly. spain has moved pretty quickly
ireland has moved pretty quickly, portugal. and i think they're seeing the benefits of that. these things are always hard and yet our role, and specifically what we did for prime minister modi, is we said we know these changes are hard. but just telling you that you need to do this is one thing but giving you ten examples of how other countries have done this and walking through it with you, providing support, sometimes from the people who did these reforms or were involved in these reforms, i think that's helpful. and that's what we want to be. that's how we want to be known we want to be known as the group that if you have a difficult structural reform you need to go through, we're going to help you get there. let me give you an example of a structural reform that's needed everywhere that is difficult to do but has so many positive impacts. that's the removal of fossil fuel subsidies. in egypt it's a huge portion of their budget. and they've started to make
movements. they're moving to go away from fossil fuel subsidies. one, we know fossil fuel subsidies are regressive. the imf did a study. the top 20% benefits six times more from fossil fuel subsidy dises than the bottom. moreover it puts more carbon in the air and it is essentially a regressive tax that's takes money away from government so they can spend much more effectively in other areas. but if you do it taxi drivers and truck drivers block your streets and it's tough. but we've now found ways and helped certain countries to get through it. it's not intuitive that you could do these things altogether and get through a potentially difficult structural reform like removal of fossil fuel subsidies. so we want people to think of us like that and we are going to literally scour the globe. looking everywhere on the earth
to find examples of others who have do than effectively. >> i want to ask a final question about china. obviously, they've been a big part of the global slowdown. but you've been impressed, you were telling me backstage by just the discipline they have to take something that works in one province and immediately spread it to the rest of the country. >> yeah. so it -- with the china 2030 report, bob zoellick worked with china for two years and really wanted to be sure that the chinese were comfortable with what was coming out in this text. so, you know, things like greater flexibility and currency all these things we thought china wouldn't commit to and they did. what was so successful, the first time i met the premier he said we love that project it was helpful to us. now we want you to take on urbanization. they have a lot of complex problems. if you were born in one
province, you could only get services in that province. so when they come to the cities cities, it's difficult because they can't get services in the city when they move away from the province. one of the things we did was say here is a way that you can move away from that and they're beginning to do it. here are ways that you can build smarter, cleaner more livable cities and they were happy with that. they're at 5% gdp. they're saying now do we want to go to 4% of gdp and have better health outcomes than anyone? we are now looking again all over the globe bringing in experts from all these different places and trying to help them see if they can take that curve and move it in the direction where they'll have better health outcomes for lower cost. we know if we come up with good
ideas, they'll first of all, implement them for them on a small scale with like 100 million people and then they'll go and do it with 1.3 billion. it's quite amazing to watch that right in front of you happening. >> questions from the audience for president kim? >> so when you are talking with the private sector and they -- a company in the private sector has approached you or you are approaching a company, give us a couple of examples where the ven diagram demarks enough mutual interest that a project goes forward. a for instance or two of companies such as this linking up with the world bank on a project that the companies found beneficial to their growth prospects in the developing world. >> you know, it varies tremendously. and so we've worked with companies on building hotels. you know tourism is 9% of the global economy. so the two places i just visited, i went to indonesia and
there i went to bali. when i was in egypt, i went to sharmel sheikh because the meetings were happening in those places. it turns out the world bank was one of the first investors in bali to turn that into a tourism area. for tourism, there's a huge potential for us to be able to help with everything from wastewater management to the rights in the policy for the government to make it worthwhile for tourism companies hotels and others to work in developing countries. in road building, for example, or the construction of dams. you know, we're back and focusing on hydro electric power because it's -- it provides the base load that poor countries need while at the same time taking carbon out of the air. so there are all kinds of possibilities from all areas of infrastructure. we work with companies around animal proteins, the demand for animal protein is shooting up all over the world.
so we've seen worked in those areas. so if you can think of a sector we almost surely have experts who are looking to provide opportunities, specifically for mrern and other developed world companies. >> dr. kim, i wanted to ask about your own organizational change at the world bank. there's been some criticism that you've made a lot of changes trying to get the organization to focus on poverty and the cfos out there might be able to relate to this. you're trying to cut down the silos that existed within each country and completely re structure structure. where are you and for folks who are trying to do their own organizational change, what has it told you? >> well, it's always really really difficult. and, you know i've had great people helping, so just a couple of months ago, alan mulally recently retired from ford and marshall goldsmith, a great leadership coach, my coach they came and spent a whole day with
us trying to figure this out. so i would say try to get really great people who have taken organizations to change. fred haspen from the -- who has had a great experience in turning around pharmaceutical companies worked with us. here is what we did. we went from being almost six regional banks to creating a real matrix so that the technical areas in the region were forced to collaborate. before, it was basically giving each of the regions their budget based on what they got last year based on cost of living. now we argue about the budget and we are forcing ourselves to work together and it was a huge structural change that upset a lot of people. but we needed to do it. we were from six regional banks to a real matrix is a big change and it's going to be an important one. the other thing we did is at the same time, we took 8% of the budget out. we took 400 million out of the budget. so structural change is hard. taking money out of the budget is hard. but we had to do both at the same time.
we couldn't wait. and so the good news is, we're basically through it. and in a previous episode whether they did -- when they did this structural change 20 years ago, they put a couple hundred million extra into the budget and their business dropped 20%. this year, we took 400 million out and business grew 20%. so it was tough because we did so many things at once but my advice is if you've got to do it, just do it. just do it and get it -- you know, and get past it as soon as you can. and it's not something that a lot of leaders of bureaucratic institutions have tried before so it watts really new to the world bank group. but boy am i glad we did it. if we hadn't done it we would have to start now. and so i -- that is my advice. get really great help and figure out what you need to do and get started as soon as you get and get it done. >> thank you very much. >> thank you.
>> "the wall street journal" cfo network conference continues in a few minutes. we are showing you several sessions from the day-long event tonight. you can see more wsh including what several members of congress said at the conference at c-span.org. >> on the next washington journal, two members of congress discussion issues before the house of representatives this week including u.s. military strategy against isis, the withdrawal of troops from iraq, international trade and the affordable care act. we will talk to missouri republican vicki hartsler, and connecticut democrat joe courtney, also on the armed services committee. washington journal live at 7:00 a.m. a eastern on c-span. >> chief financial officers for major corporations gathered in washington, d.c. this week to discuss the financial challenges facing their companies and the
global economy. next is several international trade pacs are finalized and the government considers whether to give fast track trade authority we heard from michael froman and charlene barshefsky. this is a half hour. >> so thank you. we have a lot of trade negotiators up hear on stage. this is good. we should all get some action and have a negotiation session. you know, the best strategies for that. mr. froman, this has been quite a remarkable day just in sort of the evolution of this -- the latest trade pact. let's assume for the moment so we don't get into the politics of this since we've been discussing it a fair amount so far today, that tpa, the
trans-pacific partnership gets to a vote. what does this trade deal hold in store for these companies in the room? what's an opportunity for them and what also might be new competition that that -- they have to be concerned about that might result from the trade deal? >> well, we start from the premise that our market is also an open market. we have an average applied tariff in the u.s. of 1.4%. 70% of all of our imports come in duty free. actually, 80% come in duty free from the tpp region. and we don't use regulation as a disguise barrier to trade. so we're competing in the global economy. we're already competing against other markets that have lower labor standards, lower environmental standards. what we're trying to do through these doppler radar agreements is proportionately removing the average applied tariff in these tpp countries is three or four
times as high as ours. it's 70% on autos, 50% on machinery. 35% on chemicals 50% on beef. these are all going to go to be either zero or much lower than they are now and that's going to create more opportunities for american firms and american workers to be able to compete and to export the product abroad. and at the same time, we're using the trade agreement to raise standards in these other countries. whether it's putting discipline on endser prices so that when they compete with our private firms and they have the benefit of being a state-owned enterprise and having the subsidy dids that that might involve, ta they have to do so a commercial basis. if they don't, we now have a trade action. >> they can't be subsidyized and use those unfairly. >> is there a way to track that? >> well we're engaged with them in that and they're using tpp
frankly to drive a lot of reform of their state-owned enterprise sector as well. we'll be able to hold other countries into account if they violate these agreements. i think one of the great benefits is the small and medium sized businesses who find negotiating different customs procedures border procedureses, tariff regimes, nontariff bewildering, if we're able to get rid of a lot of those, it makes it easier for the 98% of the firms in the u.s., over 275,000 firms in the u.s. that are small and medium sized businesses that are exporting to increase their exports and to bring more small and medium sized businesses into the global economy. >> so there are a lot of elements to this state-owned enterprises is one. patent protection you mentioned incident electal property rights protection. how is that going to work? how does a company move some
technology overseas and not have it ripped off inspect how is that going to be protected? >> that's a very good question. we have a whole series of disciplines in here that first and foremost go to the enforcement of intellectual property rights requiring countries to have laws and to enforce those laws to protect copyright, protect trademarks, protect patents, you know, as appropriate. we have got a mechanism for ensuring that -- whether it's in the creative industries, laws against cam cording people walking into movie theaters recording a movie on their cam corders and selling it immediately on the internet. we've got rules against downloading illegally material from data lights or from cable. we've got rules to make sure that the digital environment -- the first trade agreements deal with the digital environment, to make sure there's a free and
open internet. >> so service based in singapore but serve clients in malaysia. >> right. you don't have to move your business from the u.s. to one of these markets. you can put your -- >> what you require. >> exactly. right now we're seeing one of the great threats to the global economy, i think particularly the 21st century global economy is the vulcanzation of the internet. the effort to use digital protectionism and tpp puts a major stake in the ground about keeping the internet open and free. >> ambassador barshefsky, china is not part of the tpp. is that a problem? >> well, look there are a couple of aspects on to that. one is that china is the major player in the asian region. it's the center of most supply chains in asia. so i think with tpp companies need to think about rationalized supply chains potentially
reorganizing their supply chains. but china is absolutely critical in that respect. it is also the major trading partner of almost every one of the tpp countries. in excess of the united states and in excess of other countries around the world. but one of the big questions is how to reconcile tpp with the china not in the tpp, but such a major force in the region. and it seems to me there are a couple of different things to think about in that regard. one is eventually china joining the tpp that obviously could only happen if it could come up to the very high disciplines in the tpp that mike and his team have set out. another is for the united states and china to agree on certain modifications of china's current regime to make it over time more compatible with tpp standards.
a third is to take the agreements that china is in in asia, which is u.s. is not in which includes a variety of agreements with the asean countries as well as the new agreement being negotiated now, initials rcep, and decide that over time those agreements ought to either merge with tpp or find some means of harmonization or accommodation between the two to better rationalize, if you will the asian region. i think the thing that we want to be careful not to see is an asian that is developeded into two trading blocks one headed by toous one headed by china. and the reason i think we want to be careful not to see that in the longer run was that if countries in the region are asked to choose as
unfortunately, the u.s. set up in part with the asian infrastructure investment bank, the answer will not be favorable to the united states. so i think that it's going to be very important ultimately, to find a way for china to work with this agreement this agreement to work with china using some of the mechanisms that i just outlined. >> so china presumably has been back channeling a little bit to try to influence these negotiations. is china prepared anytime in the near future to make the kinds of concessions that you're talking about, we're talking about restriction from state-owned enterprises, intellectual property rights protections that china might find onerous. is china anywhere close to being -- >> i don't think china is close now, but i do think that as it restructures its own economy to
move increasingly from an investment investment-led and export depend economy to the economy that is more balanced toward domestic demand led growth, for example and services china might find it in its interest, at least in part, to deal with the tpp countries on a tpp basis. those are decisions china will have to make. they aren't going to be made soon, in my view. but it's not impossible that china would begin to move up the scale, if you will of these kinds of agreements. when we did the china wto deal it was inconceivable china would have made the agreement and restructured the entirety of its economy the way it did. before it did. so when china makes the decision -- >> you could not have made these
expectations in the tpp during the wto negotiations? >> no. no, no, no. but, of course, china was a command-and-control economy, very, very small, and a minor contributor to overall global growth at the time. so all i'm saying is that when china decides to move in a point of view direct, it can do so quickly. it has a way of driving consensus fairley quickly, even though consensus is still needed. and over time, i think we may see them move in a more positive direction. right now the direction of china with regard to multi nationals is more negative, even hostile to what it was five years ago. >> a lot of democrats and a lot of unions say this is a job killer. this is just one more open door for job out migration from the united states. if we're thinking about wage stagnation in the united states over the last 15, 20 years, this
kind of agreement is what has facilitated that kind of wage stagnation it's going to create more wage stagnation and job loss. what do you answer? >> we're already competing as an open economy and a globe economy. we know every $1 billion of additional exports supports somewhere between 5,000 and 7,000 jobs and that those jobs pay up to 18% more on average than noengs port related jobs in the same sector. firms that export tend to invest more in their r&d their productivity. so we view this as a way of creating more jobs and creating better jobs. higher paying jobs. we've also the department of commerce has done a study that shows as you reduce other country's tariffs, it has a positive effect on wages here and it varies from sector to sector but anywhere from 1% to 12% higher wages.
so we see this very much as being supportive of what the president calls bioeconomics and that goes very much to creating more jobs and making sure that there are high paying jobs. >> so logically suggest that if there's equalization or tariffs come down in vietnam and a little bit more here, but we already have pretty low tariffs if i was a light manufacturer if i haven't outsourced it to china, costs are going up there, maybe i'll consider vietnam now. in other words, i'll send my jobs over there low wage low labor cost manufacture there and ship the product back to the united states. that's not going to happen? >> again because we're already so open this creates incentive to keep your jobs here and export to vietnam a fast-growing economy where they're going to need capital goods, they'llny greater nutrition and higher agricultural products, better quality agriculture products they'll need services. and to provide them from here to