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tv   Politics and Public Policy Today  CSPAN  January 31, 2018 10:21pm-12:01am EST

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news and policy issues that impact you. coming up thursday morning, 5:30, computational journalist and cook political reporter house editor david wasserman discuss their new project on gerrymandering and redistricting and clarissa martinez di castro talks about the future of the daca program and trump administration immigration policy. and we're live in montgomery, alabama for the next stop on the c-span bus 50 capitals tour with alabama senate president pro tem delmar, on the key public policy issues in his state. be sure to watch c-span's "washington journal" live at 7:00 eastern thursday morning. join the discussion. thursday congressional republicans are holding a retreat at the greenbrier resort in west virginia. we'll join the event at 12:45 p.m. eastern when president trump addresses the group.
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you can see that live on c-span, and later at 2:30 p.m. eastern marx senate majority leader mitch mcconnell and house speaker paul reinhold had a news conference at the retreat. we'll bring that to you also on c-span. sunday night on "after words," former speech writer for president george w. bush and atlantic columnist david frum with his book "trumpocracy, the corruption of the american republic." he's interviewed by "washington post" nonfiction book critic. >> trumpocracy is a book about the study of power. that's what the suffix means. this is the study of donald trump's power, how does he get it? how does he maintain it and how does he get away with if? trumpocracy is the system of enabling, it's system in the white house, the system between trump and congress, the system between trump and the media that
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enable him and create an audience. it's the system that involves his -- the republican donor elite, the traditional elements of the republican bheert have succumbed to him and above all the core group of the voters within the republican party who enabled him to win the republican nomination and then go on to the presidency. >> watch "after words" sunday at 9:00 p.m. eastern. next, international monetary fund director christ ianella guard joins a conversation on the global economic outlook as part of the world economic forum in davos, switzerland. >> and so delighted again to be moderating the global economic outlook after what one has to agree was a rather unusual warmup act.
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i am very disappointed, however, that for some reason they forgot to provide the band. [ laughter ] which i think we would have enjoyed very much. the previous speaker said three things with which i think we can all agree, that growth is very important, that jobs are very important and trade needs to be free and perceived, and i agree with this, to be fair, and i think those three points, growth, jocks and the nature of the trading system are pretty important for our discussions now. we are meeting at a point in which i think for pretty well the first time since january
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2008, the web has a tendency to be a bit behind the times so it didn't realize at that time just how bad it was going to be but since ten years of extraordinary global economic optimism and about a widely shared and synchronized recovery, so we will discuss the nature of that recovery, the risks in both directions to it and some of the longer term opportunities and challenges it creates, and to do so, if i may introduce to the panel very, very quickly, because you know i think everybody here. i have christ ianella guard to my level. i think she's been a member of this panel for a very long time, and to her left, she's obviously the managing director of the international monetary fund and to her left is governor carney,
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governor of the bank of england and the central banks have so many governors after all. to his left is carry lamb, is chief executive of hong kong. and to her left is hiriko kuroda, the governor of the bank of japan who has actually been a friend of mine for 40 years. we met at oxford, and to his left is mary callahan edoes who is chief financial officer of jpmorgan's asset and wealth management who i've met and shared panels with now on quite a few occasions, and i'm looking forward very much to this one. so let's start with the short-term economic outlook, and you've just recently at the imf produced your update which is wonderfullly cheerful and forecasting 3.9% growth in the world this year and next, so
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what could go wrong? >> well, let's celebrate what could go right for the moment because we are in a sweet spot, as i've said. 3.9%, 3.9 in 2018 and 201 is not bad and what's interesting is about 120 countries have actually seen the growth increase last year and we only have one-fifth of the emerging and developing countries that are seeing the gdp on a per capita basis decline so it's well spread out, and it's shared between advanced economies, emerging market economies and the part of the world that i would certainly worry most about is subsaharan africa where there's a combination of factors that lead to that lower income per capita. i think we should celebrate that we don't do that too often and at the imf we're defining
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negative risk and we should celebrate. i think one of the reasons we are in that sweet spot at the moment, it's a cyclical upswing and it's largely attributable to policies that have been implemented, monetary economic policies that we had no idea about ten years ago. fiscal policies in many corners as well which have been reasonably good. it's debatable what was on exactly eight years ago but in the main it's the result of good policies. what the could go wrong, i'll mention three vulnerabilities as i see them. first of all, financialble vulnerabilities, and while the u.s. tax reform will certainly have positive effects in the short term for the u.s. and for other countries around, it might also lead to serious risk and we can discuss that later, if you want, and that has an impact on the financial vulnerabilities,
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particularly given the high asset prices around the world and the easy financing that is still available. i would say that the second risk which is short and medium term and needs to be addressed in the short term is the excessive inequalities that in many places are growing and creating those fractures that klaus has identified as one of the themes of the world economic forum this year, and i would say that the third downside or risks that i see is the lack of international cooperation and the geopolitical risks that could be created as a result. i'll stop here, but happy to comment on any of those three. >> well, these are huge points, and we'll certainly come back to them. let's turn to one of the central bankers who has produced these outcomes. central bankers have certainly become controversial. they have been described by a well-known authority as only
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game in town, and i think many of us think that's probably truer of japan than anywhere else so there were three arrows and yours is certainly the arrow that's gone further, mr. kuroda so tell us about your remarkable monetary policy, its success and how you're going to get out of it. >> thank you, martin. let me first explain the current status of the japanese economy. the economy is expanding moderately, supported by both domestic and external demand in a well balanced manner. real gdp has continued to grow for seven consecutive quarters, and the average growth rate during that period is close to 2%. since japan's potential growth
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rate at this time moment is slightly less than 1%, 2% growth in the last seven quarters is really substantial improvement, and the unemployment rate has declined to less than 3%, actually 2.7% which is each in the japanese context is really full employment, and the current economic recovery has lasted for over 60 months and this is the second longest boom in the post-war era. going forward japan's economy is likely to continue its moderate expansion so the cycle is expected to be maintained in both the corporate world as well as household sector on the back
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of highly accommodative conditions. on the price front, annual consumer price inflation excluding fresh food has been approaching 1%, but it has remained slightly positive, excluding the effect of energy prices. in japan a cop draft between strong economic recovery and relatively weak prices stand out as much at or even more than in the u.s. and europe. >> we're part improving in labor market conditions steadily tightening from its price setting is expected to become gradually bullish and medium and long-term fluctuations are projected to rise. so while consumer price inflation is likely to increase
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while the price activity target of 2%, the deflationary mindset entrenched among people under prolonged differentiation has been more tenacious than expected. therefore, the bank of japan will continue to support japan's economy and prices by pursuing powerful monetary easing with persistence under the so-called quantitative and qualitative easing with various controls. there are various exists in the short to medium term but from my perspective they are mostly external including some geopolitical risks. >> can i follow up.
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other you have an economy growing significantly above trend for a length of quite an extended period. you have unemployment at 2.7%, which is clearly very low and falling, and you announced when you became governor, not you, the government and the bank of japan together, that you would hit an inflation target of 2% which didn't seem -- most poem would say if the economy is like this you would have got there, so why is there no inflation? what down think is going on and how does that fit with what you're seeing in many other areas like eurozone and the united states as well? >> i think there are two factors behind rather slow response of prices and in relation to strong economic growth. one is sort of universal common
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factor like globalization, new technologies, even effects so on and so forth, and all of them may make inflation rather subdued. this is universal factor, but second, japan's specific factor as i just said in my initial remark, that is to say after is a-year long deflation from 1998 through 2013 the deflation and mindset people expect prices and wages to not rise, and this kind of mindset is not as strong and it's not so easy to eradicate
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this kind of mindset from japanese household as well as companies, but there are some indication that wages are actually rising and some prices have already started to rise and even medium to long term inflation expectations which have been so weak in the last couple of years and are now trying to pick up and there are many factors which made achieving 2% inflation target or price target so difficult and time-consuming, but i think we are finally close to the target. >> okay.
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>> which hope so since you promised to the government you would deliver t.mark carney, you don't have the problem of low inflation at the moment. you do have the problem of managing monetary policy in the face of some strange decision that the british people, got bless them took in june 2016, one which those who ever read me will realize i wasn't wildly enthusiastic about. you have started a tiny increase in interest rates so a step towards normalization. how do you perceive the monetary policy challenges for you and other central banks in similar situations ahead in this strange environment of strong growth but still generally contained inflation and where among other things people are concerned about is that the -- this normalization process might reveal more financial fragility than is now evident.
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what is the path forward? >> in the next what 15 minutes should i answer that. >> you can do it in two minutes. >> to do it in two minutes let me talk about the normalization challenge, if i could, and if i could pick on what we just heard. the nature of the expansion, the recovery as the imf has just indicated, it's stronger. it's getting up to around 4%. it's broader. it's 90% of economies growing faster than potential so slack is being used up, and it's also healthier. i'll give you one example. in terms of the acceleration of g7 growth in the last year, 80%, 80% plus of that has been investment picking up and net trade pick up, so this is not a consumer boom-led poll recovery or acceleration and all of those have consequences for normalization as you can anticipate. the first slack being used up is the phillips curve coming back. that's the question in the face
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of bigger secular pressures, globalization technology as just mentioned and all of us have been discussion over the course of this -- of this woke and at other times. i think crucial point is as you get towards full employment as the output gap shifts, they call it a phillips curve for a reason, and you start to see the convex element of the slope show the pickup should be there or should begin, maybe not quite to historic degrees, so we have to be cautious but should come, and if you look at wage behavior in the u.s., in the uk, some of the other -- well, maybe i shouldn't speak for other economies, but you see that firming of wages which once you adjust for productivity growth and some underemployment and up until very recently a low level of churn in the labor market, it starts to fit together as least directionally so there's element
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that's pushing up and the second element pushing towards normalization i should say of policy, the second element is that healthier, more investment as part of recovery so investment picking up relative to savings and we've seen, as you know, a big shift in fiscal policy. i think on advantage advanced economies a 2% to 2.5% drag now adding, fending on how you add multipliers, adding to growth maybe half a percent or so on average, somewhere in that zone, but that's a big, big swing so investment up. savings down and pushing up on the equilibrium rate of interest. the third element of that i would highlight is just the stance of policy as a whole of if i could use the term for these purposes the g-4 so the members of the g7 who were
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practicing quantitative easing, and if you look at the flow of net fiscal issuance minus the bonds being taken out of the market by asset purchases, whether it was the boj or the ecb or bank of england or the fed, we've shifted from collectively 2013 to 2017 basically no net flow or even bonds being taken out to this year on the order of magnitude to about $1 trillion of net issuance based on announced plans and potentially that going up to 1.5 trillion or higher next year so that one would expect to push up on rates. so in the context of normalization you have sort of a real economy providing some support for it. you have some technical factors which play into it. you have a very tough judgment to be made about where is the equilibrium rate of interest which has been very, very low
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and arguably should be raising a bit. you can make an argument about direction but certainly with not any precision about degree. one has a sense of direction i would say as a whole for the central banks, a regime shift in terms of towards normalization, but a requirement for each of us to be quite prudent and patient as appropriate in making those judgments. the last thing i will say and i won't expand on that unless you want, the uk is in a relatively unique situation in that over the course of the next year as the negotiations with the eu 27 progress, we're going to find a lot more about what the supply capacity of the economy is in the near term and what the right level of the exchange rates should be, whether or not they are going to be there for other trade costs and how all of this affects demand and of course it is all of those factors together
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which determine the appropriate stance of monetary policy. >> let me ask one follow-up question because i go to the -- >> i was trying to run out clock. >> i'll come back to that in a moment. >> yeah. >> you have had a central role through the financial stability board in the strengthening the global financial system. i get and every time i write on this sort of hundreds and hundreds of comments below on the lines of, these crazy central banks have already, and if they haven't already will soon have created the most unmanageable asset price bubble ever, the omni bubble. it will burst, probably when you -- as of when you raise rates, you collectively, and the crash will lead to a total meltdown. >> yeah. >> and this sort of thing. >> on a scale of 1 to so how likely is that senator.
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>> which way? >> you can choose. one zero risk, essentially all of you go away and not worry at all and 10, run away and get a big umbrella because the house is going to fall down on you. >> right, two points. it's a composite probability. what's the probability there will be an adjustment in asset prices? yeah, that probability has gone up. if you look at corporate bond spreads, high yield spreads, near all-time lows, last seen before lkccm, just before the global financial crisis in a rising rate environment, one would expect adjustment there. other asset prices accordingly. i think the big question is not the market will find the right level for assets. the question is whether the core of the financial system is in a position that's going to amplify those movements in an rad verse way and there will be a feedback to the real economy, and on that component of probability i would put that as quite low because
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it's not just the regulators. it's the financial institutions represented here and across the world that have really transformed the liquidity and capital positions of the institutions. give you very quick numbers, if i may. pre-crisis, the coverage of short-term liabilities for banks, the major banks particularly in the uk, plus their access to central bank facilities was 10%. now that's 110%. so they are fully covered. both their own liquidity and access to the liquidity on all the short-term liability and second figure, and we've had healthy debates on it, but the overall level of capital standards have gone up ten times but actual levels of capital have gone up about five times for the major banks, apples to apples comparison in terms of capital. that's a huge shift and the type of shift in the judgment of the bank of england, and i'll be around if this judgment is tested, that would allow that
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system to sustain a shock of a disorderly brexit and we're confident in terms of the magnitude because we've tested it and we're not all that way there in too big to fail but we've made a huge amount of progress in terms of reshaping and institutions reshaping their business lines and being able to separate their high street or retail component of the banking and adding on top of all of that capital big layers of debt for the uk and i'll stop with this. the major banks have 25% total loss-absorbing capacity, so even if they go through that capital, there's another layer of securities that are held by institutional investors, some of whom are represented in this room, who would find out that they are no longer debt holders but are equity holders, so all of this provides real shock-be a shoshing capacity for the core of the system. that's not to say that asset prices couldn't change, but it's to provide a measure of confidence that if and when they
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do, even if they are sharp changes, that the system isn't going to amplify that impact. >> i think this is hinn credibly important so the conclusion that i would draw, too, one is that all those commenters and one or two in the audience who are worried that the whole world will fall apart in the next couple of years because of policy normalization and asset price collapses should calm down and feel completely and utterly relaxed, and the second conclusion which is completely personal, that if there are any politicians in the world who are telling us that the continually rising stock market is an indication of how successful they are, they might find the central banks are going to get in the way. let me turn to -- let me turn to you, carrie lam. tell us about how the world
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looks from your perspective both in hong kong, a core part of the asian economy and financial center and if you can about the rather large place with which you're closely connected and to your north. >> yes. >> yes, as a small and externally oriented economy and one of the most freest and competitive economies in the world hong kong personal benefits from the global economic recovery so we're doing very well. last year, we are projecting full-year growth of 2017 at no less than 3.7% in real terms which is considerably higher than 2% in the preceding year. that is 2016. christine kept on reminding us that while the sun is out, i'm pleased to tell you that i've not discovered a leaking roof in hong kong yet, but similar while sun is out it's always good to strengthen the foundation.
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strengthening the foundation enabled hong kong to seize many opportunities arising from china's economic policy and also asia because asia's growth now account for 60% of the gdp growth worldwide and china alone is 30% contribution. so this session is about global economic situation. i would not be doing justice if i talk more about the economy of hong kong so if one looks at the china economic policy which will be very relevant for hong canning because president economy jinping said he'll support the central government hong kong being integrated in the national development strategy. last year the presidency delivered two very important speeches internationally. one, of course, is in in forum at last year's davos. in january last year, but at
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that time i suspect that the global economic recovery was not very certain, so the president was talking about leaders in various economies should shoulder shoulder joint responsibility to propel the economic growth globally. and then in november last year, which christine and i were also there at the aipac meeting, ceo summit, at that point in time, i think everybody was very assured that there is now very bright signs of economic recovery. so president xi talked about that we should really seize the opportunity of a global economy in transition to accelerate the growth of asia-pacific. so putting in that context, i try to summarize for our distinguished guest a gist of the economic policy of china in my view based on my reading of the two species and how china will continue to uphold free trade and economic
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globalization. that we should adapt to it and guide it and cushion its negative impact. and deliver its benefits to all because if economic benefits are not shared by all, all economies will face one problem or the other. and it should be more reinvigorated, more inclusive and more sustainable. so wig that in mind, since the world is now seeing some driving forces for growth, i feel we should take this opportunity to improve governance, to focus on more trade rules, to have more regulatory collaboration between central bankers and regulatory authorities, to put in place sound social policies to address issues that christine has reminded us also, poverty. income disparity and lack of opportunities, particularly for the young people. so i would just like to say that in this term of a government, i
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will embrace those values and although we do not practice state planning under the basic law, we are still a free capitalist economy, but we will embrace those values to put in place the necessary social policies to make timely investments in education. so enhanced connectivity with the rest of the world. especially with asean. last november we signed an agreement with asean and we are negotiating several free trade agreements at this moment. i remain very optimistic about the short to medium term future of hong kong. because we are so externally oriented, please keep the tsunami away from us and we will be safe. thank you. >> this is difficult but i don't think we can avoid it. can i just ask one follow-up question and i'm also going to discuss this with mary. president trump when he spoke here, i think the most
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substantive thing, think for this audience and this panel, is what he said about trade policy. and he said two quite interesting things. one of which was new. we'll come to that in a moment. and one more traditional. he talked very explicitly, and it's not new, about countries, though he didn't name names, which are perceived to misbehave on intellectual property and countries that are pursuing industrial policies with government subsidies. i think he used that word. and it's surely no great secret that when he said that he's thinking about china. and there are those of us who are very concerned at the risk of serious trade conflict. we have, of course, at the beginning of this week seen relatively minor actions in this regard. from your perspective, running a
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very open economy, great trading place, connected to china and, of course, to the u.s., too, how concerned are people where you are that this actually might prove a very destructive development? how do you perceive that risk? >> well, of course, as i mentioned, being such an externally oriented economy and so dependent on free trade, we would not like to see any trade conflicts or trade wars, so to speak. but trade deficit is not something that we are not used to. i remember at a session that i shared with president trump at aipac, i gave him a figure. i said, mr. president, the largest trade surplus that america has is with the small economy called hong kong at $31 billion u.s. a year. he seemed to be quite pleased with that. >> and you didn't threaten him with protection? >> he did not mention this word just now.
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so coming back to china, as i mentioned, from president xi's discussions in the two speeches, china is still a developing economy so it will evolve and build in those things that will make trade more transparent, fairer to everybody, but the fairness must be to everybody. >> if i may turn to you, mary erdoes. i'm very much interested to see if there is anything in the overall picture that has been presented by the distinguished officials of t officials that you disagree with. i would be interested from your perspective on where you on on the impact of the tax reform, which is obviously a very big issue, and possibly financial f fragility as a leading -- >> you know, i can't help put
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sit here and we're all in this audience. this is the last panel of the 2018 davos event. and when we think about where we've come from and what we just heard from all the major economies around the world, i think we first and foremost have to thank mr. and mrs. schwab for bringing us together to be committed to improving the state of the world. because the vision to bring together, not just policy-makers in one area and central bankers in another and ceos in another and philanthropists in another, but all together to import and export the best thinking so that, and especially after the great financial crisis, how do we get back on a road where we don't have a boom and bust cycle? and here we sit nine year later. we could be in our second recession post-then had we had
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the regular upts as and downs ae have a global economy that is expanding almost universally and it is because you look at the people up here on stage and the other central bankers and policy-makers around the world and you think to yourself how incredibly complicated this was to pull off. nine years. $11 trillion. put back into the system. but not in an unthought-through manner. so we are sitting here and having people who have worked tirelessly. it is so incredibly complicated to have gotten this right, and what you've done for all of us, especially the investors of the world to be able to invest in that on behalf of all the pensioners around the world who will benefit from that as they move towards their retirement, i cannot thank you enough for that and i can also not thank you enough for giving all of these government jobs such a fabulous prestige and something that i know all of us now perhaps
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aspire to do even more son s. t in the past. we thank you for that. >> that was fantastic. >> thank you. >> that's the nicest thing i've ever heard said about central bankers. >> so thank you all for coming. [ laughter ] >> the official sector should feel extraordinarily happy. i'm waiting for the but. >> there is no but. >> oh, okay. >> the -- and -- and, therefore, it is incumbent on us as investors to watch what they're doing and to not miss a beat and not sit here and think about the greatest worry in davos that i've heard for the past several days is that there is not enough worry. people are worried that people aren't worried. and it's okay to not be worried. it's okay, as ma dam lagarde said to where we are, how we got here and people can benefit from
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investing. so people all around the world can have access to public markets can be able to participate in the recovery of what's happened and continue to do so. the opportunities, we can talk about them in the u.s. they're almost everywhere, u.s., europe, emerging economies, being able to have participation in these companies, taking these policies and putting them back to work and reinvesting in their own communities and in their own products and services and exactly what our job is to do. >> do you want to say anything about the great tax cut and how it's going to impact the u.s. and the world? >> you know, the great tax cut is really the great tax normalization, the u.s. was just out of whack. so the fact that we got to done was a very important move for the u.s.' competitive nature. how that goes back into play i think is the thing that is so exciting for the rest of the world because what happens in the u.s. can often be contiguous for other companies that exist in a multinational fashion or just in their own nations.
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so the fact that the ceos in the united states of america are not just doing one thing with those tax cuts but doing multiple things, they're taking that money and they're helping the shareholders. you see more buy-backs. you see more dividend payments. they're helping the customers of the companies. you will see much more m & a to get more products and services. much more cap x. more importantly, they're helping their employees. it's not just the one-time bonuses we've heard about. it is the wage increases. it is health care support. it is being able to help them and increase their retirement benefits. so it's being able to help them continue to participate in that, and then additionally, companies are also taking that money and putting it back into their own fill thorpic efforts that they serve and the job retraining. if you continue to see that across america, that is what capitalism is all about. >> i'm going to move on now
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to -- unless somebody wants to add on the shorter term risks to the longer term opportunity. i think the inf was the first to say we should fix our roofs while the sun shines. i think it's -- the fund has been rather good on metaphors of various things of this kind in the last few years. so i like that. and it's no longer the new mediocre, which is nice. so the big issue people are focused on is the feeble state of productivity growth. some people seem to think tax cuts will be enough. but what is -- what is your view, christine lagarde, of the agenda of fixing the roof when there is a cyclical recovery will be turned into an uptick in
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trend growth across the world? >> thank you, martin. a couple of things that i would like to point out, too. one is the productivity numbers that we have are not satisfactory. productivity prior to the financial crisis was about 1%, which was not particularly high. it's now down to 0.3% in the advanced economies. so that needs to be addressed. second point is, the potential growth needs to be improved as well because while we are in a sweet spot at moment, it's not going to last forever and clearly many of the economies that are growing nicely at the moment are growing above potential, which in and of itself presents risks. so growth potential enhancing reforms, whip ach are going to country specific. i'm not going to give you a laundry list, each country has a roof of its own, need to focus on those two aspects. if i can just focus on
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productivity for a second, and that will touch on something i mentioned earlier on as one of the downside risk, which is lack of international cooperation. to address productivity or the lagging productivity that we have, we need to invest in research, development and facilitate innovation. no question about that. we need more trade rather than less trade. because trade encourages competition, fosters innovation and actually is conducive to that improved productivity. and that takes me back to my concern about lack of international cooperation. to have more trade, better trade, fair trade, free trade, reciprocal trade, we need international cooperation. and the concern i have at the moment is that we tend to see a degree of common denominator, which is, yes, we all need that,
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but it needs a reset. we need to look at state-owned enterprise subsidies. we need to look at sharing of intellectual property rights. we need to look at constraints imposed here and there. yes, and the imf agrees with all of that, but it needs to be looked at in a cooperative way and through international cooperation. i think that should happen. i was particularly pleased to hear that president trump mentioned wto. it's one of the forums in which those things can and should happen. and hopefully through improvement there, innovation that we've heard many of the leaders in the last few days focus on and identify as one of the areas where they want to invest, we will improve that productivity. final say, while, mary, i want to thank you so much for recognizing the efforts that we've endeavored, i don't think that we've completed the job. having growth is good.
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improving productivity is good. but making sure that the results of that growth are properly allocated, properly distributed and the growing inequalities that we see in advanced economies, many of them, and still very high in emerging market economies are a threat to sustainable growth. we've done multiple research on that. >> i can't imagine why but we don't seem to have any professional politicians on these panel so they can't respond. one tiny follow-up. >> yeah. >> i was very interested, and this came up yesterday already, but president trump repeated it just now. he said, if i understand him correctly, that under the right terms, the united states would consider negotiating to re-enter the tpp as a multilateral
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endeavor. >> yeah. >> i think that's the first time i've heard this. you would have to regard that in terms of the trade agenda we've been hearing so much about as really rather remarkable and encouraging development, wouldn't we? >> yes. i think we -- i think we -- i agree with you. it's not multilateral in is essence, it's plural lateral. i think that's a really good indication. one more area, if i may, where international cooperation is key and favored by many countries, including the united states, i think, actually. it's the fight against corruption. we haven't talked much about it and i don't want to spend too much time on it, but it's one area which combined with the fight against tax evasion and profit shifting and all the rest of it is actually vital to give more hope and encourage our economies. >> mark carney, i think you wanted to say something on this.
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>> you want to speak structural so i'll try to concentrate there. i'll start with the cyclical point which is that we should be seeing a pick up in productivity, particularly with capital deepening. but another factor in the cyclical sense that leads to structural, we have had up until very recently quite low job churn, particularly in the united kingdom, and part of the difusion process in their new application and learning at one firm and moving to another firm and setting up a new company. so we should get that, and particularly at a time of great innovation, that's where you get the productivity pickup. as you're well aware, and you've written on this, we have a very long tail in most of our economies of quite substandard firms. i think that's one of the elements of it. it then goes to sort of structural policies, but the elements that facilitate people to move up and set up new firms. last point on structural, which
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is around trade. i entirely agree with christine's emphasis there and sharing the gains of trade, and one of the things i would suggest that could be some more thought given is the nature of the trade deals, how they can immediately provide a dividend because it's the nature of the companies that benefit. people have put on in this forum over the recent years free trade for smes being an objective. actually, we've got the network effects and the financing ability to change that. all of a sudden that's an element of globalization that works for all, brings productivity and brings instant defusion but also for trade in services. when you think about having a positive set of discussions around trade, the lagged liberalization of services where most of our populations work, it's not all tradeable, i know, but most of our populations work, trying to bring that up to the level of liberalization that has been accomplished on goods, at least directionally, has that bigger impact or has the potential to have that bigger
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impact. >> does anyone else want to add something on the structural before we move on? >> thank you. in the japanese context, the most significant challenge faced by the economy is demographic change. working age population in japan is shrinking every year by half a million to a million, so since the economy is growing by 2% or so, well above the growth potential, not just the unemployment rate has declined to 2.7%, but, really, a significant labor shortage is developing in almost every sector of the economy.
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and now -- no manufacturing sector, which was compared with u.s. nonmanufacturing sector is less efficient is now investing heavily in high-tech labor-saving technology and investment. and also robotics and a.i., whatever. in japan because of a labor shortage, not just business but also workers and trade unions, they are in favor of those new technologies and labor-saving investment being made. and that is really improving labor productivity
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significantly, particularly in the nonmanufacturing sector. so in some sense, this makes prices -- to respond rather slowly to the very strong economic growth. but in the long run, this improvement of labor productivity and growth potential would make the economy sustain relatively high growth in coming years with, hopefully, price stability target of 2% being achieved. >> can i turn quickly -- and then -- because we're going to have to have time for at least three question. mark carney, if i can ask you a risk we haven't discussed, which
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has interested you a lot, and i think others here, and that the private sector -- i want to ask about this again very, very briefly. the internalization of which i think you called the tragedy of the horizon, namely climate change. and which most of the world still thinks is a big problem. and how do you think we're getting -- is the private sector people here beginning to have some recognition that this has significant business implications? >> short answer, yes. and i think -- and to make it tangible, let me use one example, which is the task force on climate financial disclosures, which was something that was set up at the request of the g20, g20 leaders. run by the private sector, chaired by mike bloomberg. bottom line, with the summit of president macron in december, the middle of december, i'll just give you some numbers of
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the investors numbers that have signed up to this with an expectation that climate disclosure is going to improve for those whom they invest and whom they lend. the top 20 globally systemic banks, 8 of the 10 world's largest asset managerers and the two major shareholder proxy firms, glass lewis and iss all signed up. $80 trillion. 8-0. $80 trillion balance sheet with an expectation that working with the users are capital we're going to get into a much better place in terms of the disclosure of not just static risk but strategy and governance of those risk and hugely importantly, the opportunities over time so that whether you're a sceptic or a true believer in technology or a denier, we need a market in the transition to a lower carbon
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future and now the private sector, and i absolute the private sector on this because they were passed the baton by the public sector and now they're delivering it and now the question is implementation and improvement. >> is there anything else you would like to add very quickly? >> what mark said at the end is very important for the private sector. it doesn't matter while you believe in climate change or not. you can have a majority of this audience understanding and believing in the issues, it's not universally felt. therefore the investors of the world have to figure out how to do that. it's about the prevention of what happens when you have all these things that are happening in the world that must be addressed irrespective of what you believe in. if you look at a city like amsterdam, its infrastructure is set to protect itself for a one in 10,000-year chance event. new york city, a one in 100-year. the problem is we keep having these one in 50-ye0-year events
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the united states of america. if you look at hurricane katrina, it cost the government $120 billion to fix something that had $10 million, $10 million been spent by the army corps of engineers to figure out that there was ten feet of wall that should have been expanded and built underneath. we could have saved $120 billion. so you have to invest in infrastructure to protect yourself for things in the future. i think what we're going to see from the u.s. government is the next phase of big investments in infrastructure asking for public-private partnership, and i think that's the next exciting wave of what's to come. >> thank you. that's very encouraging. and certainly true that the dutch do really understand the danger of water. so i'm going to take three questions. they must be one sentence. i'm very bad on timing. say who you are. you can address it to one person. i probably won't be able to give more than one person an opportunity to answer anyway.
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does anybody want to ask? somebody right there. yes? please stand up and say who you are. >> julio, minister of finance of guatemala. just a question, the productivity's been going down over the last ten years. isn't there an element that the speed of urbanization has also slowed down and the social license needed for infrastructure projects has become much more complicated? so that it's not just innovation, not just business productivity, but social productivity and the capacity to agree on doing things. which has slowed the capacity and the speed of productivity. >> you said slowing urbanization, is that what you said? >> yes, in developed economies. it has slowed down. >> i understand. does anybody else want to ask a question? is there a woman here somewhere that i can't see? >> oh, yes. i think there should be gender equality. let's go for you. >> good afternoon.
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juliana. the world has changed. do you think the target of 2% inflation is still realistic? >> is the 2% inflation target still realistic? and, okay -- and i apologize to all those i won't manage. >> thank you. paul from peek global. knowing what we know now about the lessons from the financial crisis, are there any fundamental changes that you would like to see made in the macro economic policy framework? are there any major things we still need to do to improve it? >> this has the great advantage of being just the envelope for the second question. so we don't have much time. so may i start with you, christine lagarde? the suggestion was made that productivity growth is slowing in part because some of the fundamental drivers, particularly urbanization is slowing. i think that's very important. so we shouldn't be surprised that productivity growth and
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slowing emerging in developing countries. on the other hand, there is still a huge backlong of productivity enhancing investments they can make because so many of them are still relatively poor. how does the imf see the balance here? >> a bit like you just did. >> have i answered the question? >> you steal the answer. no, i think urbanization when it comes to infrastructure projects, the lag time between the beginning of the project, the financing the implementation and so on and so forth, that is clearly a slowing down factor. i think this is not just it. there is population aging. maybe not so much in some of the emerging market economies. there is also, you know, delayed investment over the course of the last few years, which certainly has not helped. so the multiple factors that are actually affecting it. but increased urbanization is certainly one of them. can i just say one word on the 2% inflation because i think that's really an interesting one. that 2% inflation was not decided randomly.
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i think it was very carefully calculated on the batesis of multiple factors. there are areas in the world where certainly from our perspective we consider that to arrive at an average 2% inflation targets about there about in a particular currency zone. it might be appropriate for some of the countries in that zone to tolerate higher inflation than that 2%. >> i'm going to ask the question about the inflation target of you, governor. since you've finally agreed it, after, as you said, almost two decades of deflation. and now it seems to be suggested by some that 2% is too low and really it should be 4%. so you've got plenty of room for maneuver. what is your view where you are now? are you actually trying to hit a very hard target that is already outdated? >> i think 2% inflation target
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or price stability target is still meaningful republican relevant and useful for managing monetary policy. a few points. one, as you may know, consumer price index, whatever price industries tend to overestimate real price development. so if your inflation indicator shows 1% differentiation, but in reality there may be 0% inflation. so you must aim at achieving some positive inflation target rather than 0 inflation. second point is, there will continue to be some cyclical
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movement and when you need to implement accommodative expansion in monetary policy, you have to have sort of policy room to do so. and in order to do so, i think you have to keep reasonable inflation targets under which your policy rate would be some positive level and you can substantially reduce a policy rate in case of need and so on and so on. so policy room, monetary policy room is necessary. third, after many years of trial and experimentation, almost all central banks in the developed world have adopted 2% inflation
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target, and i think this has become a sort of global standard and then the fixture of medium and long term exchange rate relationship between major currencies tends to be stable. so all in all, i think 2% inflation target or price stability target has been well-established. and although some economists are now arguing for higher inflation targets or price stability target or nominal gdp target and so on and so forth, there may be good reason to consider, but at this moment i think after ten, 20 years of experience among major central banks, i think
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this 2% or so inflation target should better be maintained for price stability and sustainable economic growth. >> 30 seconds. >> very quickly to the last question. you know, ben befornanke idea o targeting prices and making it very clear that's a possibility is an interesting idea. we looked at it in the uk in the throws. it's hard to do because of the quality of the data. also, it's tough to do in the middle of that circumstances. and obviously what ben and charlie evans previously had proposed is different than that so it merits some consideration in, you know, quiet seminars in good times. it's an example of potentially fixing the roof while the sun shines. >> the only point i would make, if i may, is i don't think the monetary policy in the macro policy tool was the mishandled
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element, and i've been saying this now for ten years, the mishandled element was fiscal policy. we really have to go -- it was used very effectively very early and it was withdrawn, the stimulus was withdrawn much too soon and that created some very big problems. now, i have minus ten seconds so i'm going to summarize our wonderful discussion in the following five unbelievably quick points. one, we have a wonderfully strong recovery, which is certainly cyclical and we want to make structural. second, there is a consensus on this panel of those who are not responsible for all of this, that the official sector has done a wonderful job in getting us here. and since -- this is a time to be generous i'm going to go along with that fully, but, of course, in all other days when i write my columns, i'm definitely not bound by that -- by that
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recognition. but i think it is fair. it could have been very much -- very much worse and in the interwar period, it was. three, this is -- provides us with a serious opportunity to improve policy on a whole range of dimensions and christine lagarde particularly has emphasized some of the most important, which includes the distribution of the benefit of growth. fourth, the only thing to fear is the absence of fear itself. well, there are many other things to fear, but the absence of fear always terrifies me, particularly when it's in the markets. though we have been told very confidently by someone i always believe, mainly the governor of my own central bank, that the financial sector itself is pretty strong. and, finally, if we're thinking about fear beyond the financial sector and the possible meltdown of asset prices, whatever that
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might do, there are plenty of significant domestic political, global geopolitical and global economic challenges such as trade policy, and beyond that we discussed climate, so if anyone leaves this hall feeling the complete abstinence ence of fea suspect they're in the wrong job and in the wrong place. with that, may i thank the panel for a wonderful discussion? >> thank you, mark. thursday morning, we're live in montgomery, alabama, for the next stop on the c-span bus 50 capital's tour. del marsh will be our guest on the bus during "washington journal" starting at 9:30 a.m. eastern. thursday evening, supreme
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court justice ruth bader ginsberg sits down for a conversation with the editor-in-chief of "forward" magazine. they're expected to talk about the intersection between law, media and jewish life. our live coverage begins 7:00 p.m. eastern on c-span 2. and at 8:00 p.m., we join president trump as he makes remarks at the republican national committee meeting at the trump hotel in washington. that's live, 8:00 p.m. eastern on c-span. for nearly 20 years, "in depth" on book tv has featured the nation's best known fiction writers for live conversations about their books. we're featuring best selling fiction writes for our monthly program "in depg" fiction edition. join us with colson whitehead. author of "the underground
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railroad" which was awarded the pulitzer prize and the national book waertd. our special series with author colson whitehead, sunday, live from noon to 3:00 p.m. eastern on booktv on c-span 2. next, deputy homeland security secretary elaine duke speaks to the nation's mayors about disaster preparedness. this was part of the u.s. conference of mayors' winter meeting in d.c. it's just over an hour. all right, y >> all right, you guys, why don't we go ahead and call this session to order.
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if everybody who is -- all right. you guys, whoever is going to -- whoever is going to be in, get in. whoever is not, don't. all right. thank you all -- thank you all so much. can i have everybody's attention in the room, please? thank you so much. i know time is precious for a lot of people and we have a lot of very important guests with us and i want to make sure everybody's time is honored, and i'm just thrilled to be able to have a conversation about something that just continues to challenge us in a very significant way in the country and there is no reason to believe that it's going to abate, all of us are going to suffer through disasters of some type or another and cities along with states and the federal government have been working very, very hard before and significantly after september 11th to make sure that we organize ourselves as a country
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so that we can recover quickly from disasters that happen so that we prepare for them, and so that we build in a way where we're resilient, when bad things happen we actually are not hurt nearly as bad. and i am really thrilled to have elaine duke, who is the deputy secretary of the homeland security, who, as you know, oversees not only homeland security in the country but fema and the recovery agencies as well. mayor sylvester turner of houston, texas, who, of course, went through his own trauma. mayor craig cates, the mayor of key west, florida. paul rainwater, served in many capacities in the state of louisiana. to governors and united states senators. but also has been of great assistance in recovery efforts after katrina and helped me work with very difficult issues with our sewer and water system in the city of new orleans. paul, thank you for being joined here. a number of mayors from puerto
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rico. mayors, thank you so much for being with us today. we look forward to continuing to work to make sure we help stand up your communities as well. all of you already know the story well of new orleans. katrina came in. it was one of the biggest storms to hit the continental united states. we lost 1,800 people. 500,000 homes and/or buildings were hurt, 250,000 were destroyed. literally, communities were set asunder and the city of new orleans had to rebuild almost from scratch, and we did so with the well-wishes and financial help from people around the world, and i want to thank all of you from that. subsequent to that, we began to really redesign our recovery systems in the city of new orleans and we are in a far better place today. but since that time, we have suffered in the united states of america from storms, wildfires, mudslides, hurricanes, tornadoes, in some instances terrorist attacks, and otherwise just an incredible amount of
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violence throughout america. and we all are continuing to work on that. so in the next few months and years, i know that bad things are going to continue to happen. think we can expect that. we just have to get ready. we have to get prepared and we have to know how to respond. and we can only do that if there is really good horizontal and vertical communication between and amongst all of our partners. that means on the federal level, the state level and the local level, so that we hope that when bad things come, we're ready for them. if they hurt us, we're ready to stand back up, and if we need each other's help, we're there to lift each other up. i thank you all for that and would like to call on paul rainwater. i'm going to have to excuse myself in about five minutes because i have another event as president to take care of. i'll stay with you as long as i can. subsequent to that, elaine duke then mayor turner and there mayor cates. we'll move on from there. >> thank you, mayor landrieu for having me here.
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thank you, mayors, for everything you do. you're the front lines of recovery and disaster. we've been in the trenches together many times. whether it was evacuating people out of new orleans during katrina or literally the mayor loading up when he was lieutenant governor of the state of louisiana, putting people on c-131s as we evacuated them out of harm's way during hurricane rita. i appreciate everything you've done as the mayor of new orleans and i've enjoyed working with you to solve your problems in the city of new orleans after the august 5th floods. this has been an unprecedented year of disasters in our country. including major hurricanes harvey, maria and irma. we are joined by deputy secretary of homeland security elaine duke and other mayors. we are here to talk about recovery after major disasters and their challenges. certainly mayor landrieu has insight and opinions on this issue as disaster recovery and
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resiliency has been a major focus on his tenure as lieutenant governor of the state of louisiana and mayor of new orleans. i can tell you as former head of the louisiana recovery authority which led recovery from catchy -- can shape our cities and our states in profound ways from the strength of residents who rise up to rebuild to the struggle of navigating a complex federal recovery system. which can challenge us all in difficult times. but we respond. we as leaders and you as mayors provide the leadership to work through those issues. there are short-term and long-term challenges and they can get -- create some of the most complex functional and political issues that you can imagine. after a response and recovery. so let's start a discussion on recovery. we have with us our first speaker will be deputy secretary elaine duke. she has previously served as the
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acting secretary of homeland security from july 31, 2017, to december 6th, 2017. she is an accomplished leader as a civil servant, deputy secretary has served in the federal government for nearly three decades, including as the department's senate confirmed undersecretary for management, a position she held from 2008 to 2010. she has held senior leadership positions at homeland security and the department of defense. over the course of her federal government service, deputy secretary duke has received the presidential meritorus rank award, the dha secretary medal, the tas medal for customer service and the united states coast guard's distinguished public service medal. deputy secretary duke has served as a men of the homeland security council. so i'd like to allow deputy
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secretary duke to make some comments. >> good morning. i have been with each of you over the past year addressing issues. and, you know, sometimes we're on the same side of an issue. sometimes we weren't. but what i found every time we talked, especially face-to-face, which is a lost art, i think, is that we are all united by our passion for the people. the passion of our cities' people, the passion for the people of our state and our country, and the commonwealth. so i think that that's the spirit by which we come together today. and i've talked to several of you before. and i think it's important that with this time we have today in the conference of mayors to focus on how we can even better serve the people within our jurisdictions. so it's very much a pleasure to
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be here today and i'm going to focus more on preparedness. because i would love to never see you again. in the -- in the context of how most of us have met. but, unfortunately, i don't think mother nature will allow that. you probably read in the news today that hurricane harvey is now officially the second most expensive disaster. so i have the most expensive and the second most expensive on my right and left. correspondingly. and that is a real, i guess, eye-opener to us. it's not the money as much as it is the people and how people's lives were disrupted. in total, 25 million americans, that's about 8% of our population, were affected by this year's hurricane season. i have visited all these, and what i saw was homes, families, businesses, communities totally
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devastated. but the thing that struck me most was the humanity and the sense of community. it re-enforced to me that in the structure of federal, state, local, that the mayors and the communities are always going to be the heart of preparedness, response and recovery. it can be no other way. when i visited -- with my friend maria, it was amazing. two things stand out. one is how many people had moved to the mainland that went back as volunteers to help their elders and others that were impacted. just to leave from their jobs, young people went back. we hear so much negative about our young people today, but i met dozens of young men and women that went back to help their families and their communities. the other thing that impresses me from the time in puerto rico is near the end on a very hot day, we were offering more water
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than was the allotment to some people and 95% of the people turned down the extra water and said, no, someone might come along later and need it. that's true community of worrying about not only yourself and others. it was just amazing. in puerto rico, in florida, in texas, it wasn't just -- it was throughout. in the -- in the -- in my trip to texas, two stories i'll tell you there and then i'll get on to real business, but i think this is what unites us and is so most important. one of the drivers on one of my trips was a secret service agent who had lost his home to the flooding that was created by the release of the dam. so that was that real quick flooding. and it happened so fast to his home that they -- he had to take his wife and daughter and go up to the second floor and be rescued from there. as i mother, i was sitting there thinking the fear of running up the stairs with your spouse and your child and hoping someone
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comes to your second floor window to rescue you. perhaps the most touching, and i have pictures of this, is we were outside of houston at one of the smaller communities that has a too large of a proportion of low income and there was an elderly couple with their cots against the wall. they had to have their cots against the wall because they were both on the breathing machines and there were plugs there. i was talking to the woman, and she was sitting next to her husband on the cot next to her holding hands. they were probably in their 80s or 90s. you don't mind me holding your hand, do you? i'm sorry. i should have asked first. i guess in this environment, i have to ask first, right? but i asked her, i said, how are you doing, really? she said, it's a little hard. i lost my husband of 45 years. excuse me -- i lost my home of 45 years but i have my husband
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and i've had him 54 years. that's more important. and that's how i'm going to remember the hurricane because that's really what the people are about. their home was destroyed. they were in a shelter but they had each other and they were holding hands and they looked so peaceful. and i think that that's what it's about. and that's what our country and our communities are about. so now enough of that. i apologize if it was a bit of the human side, but i don't think we can forget it because now that the storm is over, the hardest part begins. we also have the deadly wildfires currently going on. one of our panelists couldn't be here today, the mayor, because of that. and i think in total we have done a good job from administrator brock long through your communities in responding to these hurricanes. i was grateful to have brock newly to fema to help lead the federal response and partnership and glad that he's going to be here because mother nature is stubborn. there is no way to stop her.
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and i think we're going to be here. so i want to talk a little bit about disaster preparedness. it isn't a kit that you pick up at a store. it isn't an article you can read online. it's a habit. it's vigilance and it's constant. it's about the fire drills and other activities to get ready. and i think that this season has taught us that we have got to continue to focus on preparedness and there is never enough preparedness. when we hear something like a fire drill and we can leave, and this time it's not a drill, we get out safely because of the planning and the exercises and the preparation. and i think this is a time in our country with not only the natural disasters but the threat against our countries that we have got to build this culture of preparedness throughout the country and make sure every person knows their role in preparedness. it's critical that we all are thinking about how to respond to a disaster before it occurs.
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as we continue to work in the communities affected. and there are as many people in the communities working as there was this summer and fall. we have to be preparing for the future. we want to continue to work with you on how were you receiving emergency alerts and warnings? what are your communications plans? make a plan. practice it. and update. we continue exercising at the federal level, and every time we exercise, we find out a kink in our armor, a kink in our plan that we're able to correct. and we record those and we fix them. and that is so critical because until you actually sit down and really go through the plan, those of you around the table, the operators that know it, you will not know how unprepared if you're like us you are. and it gives you the pact forward. i really think that, you know, what i would like most from the community of mayors is to
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continue to work with us on this preparation. so that as we support you as the federal government in response and recovery, the least amount of disruption to your people is possible. we learned a lot through this season. it was a real world exercise. we learned about how challenging it is when we have logistics challenges like getting to the island of puerto rico and the virgin islands and we're working on those and improving those. we learned, again, more about floods. we learned some in katrina but learned even more about the devastation of flooding. even when it's only for a day or two and how to prepare and be ready for that. but i think that that is what we have to do. we learned a lot on debris removal. and that ends up being critical path in many of these disaster recoveries. do we know who is removing debris where and do we have the legal authorities?
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there were several locations i went to where there wasn't debris removal because we couldn't reach the mayor or the local authority, couldn't reach the homeowner's association and they didn't have permission to get into that community. so people couldn't leave their homes, their streets because we were stuck with how to figure out how to remove debris from neighborhoods. these are the types of technical details that i would like to continue working on through these exercises and through these hot washes after the -- after the disasters we had this last season. and i encourage you to be looking at the planning documents. we have 32 core capabilities in our preparedness emergency response documents. those are the guidelines to help you as you prepare. we are looking at those at the federal level. we have to look at them at the state level, but every city level with you as mayors, have to look at those, too.
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we want to be and will be as the federal government part of your team before, during and after a disaster. but the focus has to be before. because that's where we can make the real difference. i want to leave plenty of time for questions. so i'll yield at this point. thank you. >> thank you so much for your comments. and thank you for focussing on the human element in the beginning because, i mean, as a person who has been an operator and working through multiple disasters, it is why we're in the business, because of people. and although, i mean, it is the technical piece and the monetary piece and the piece that we kind of focus on, but the reality of it is, it's all about people and about citizens. so thank you for that. we do have the mayor of santa barbara could not be here, mayor kathy mario. she actually had to cancel because she's in recovery meetings right now. so hopefully everything is going well for her. but the mayor of ponce will
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speak on her behalf after we finish with mayor cates. now i'd like to go to mayor turner from houston. mayor turner was elected in december of 2015. he is serving his first four-year term as houston's 62nd mayor. since taking office, mayor turner eliminated $160 million budget shortfall in record time and led the city's remarkable rebound from hurricane harvey. he made some very difficult and good decisions about evacuation and anybody that's been in those roles understands the difficulty you have as a mayor or a leader in making those decisions. i thought those decisions were based on fact and you did a great job and saved lives. he championed a historic pension reform and he's chaired on the 2017 world series winning astros. go astros. i was an astros fan. raised on the louisiana/texas border, so houston was a second
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home. he's hosted a successful super bowl and he's expanded municipal investments and led the winning bid to host the world petroleum congress in 2013. i'd like to turn it over to mayor turner for some comments. >> thanks, paul. secretary duke, certainly thank you so much. good to see you again. the other mayors, all of you, certainly a pleasure to be here. look, ms. secretary, you can hold my hand any time you want to. it may cost you a little bit. in fact, let's continue to hold hands. no, thank you, and thank you for coming to houston. i know you've been there several times into the region. i very much appreciate it. let me go straight into my comments. harvey was the second costliest storm in the history of our country. but there was -- more rain fell on the houston region than any storm in anywhere in our history.
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i appointed marvin odom, who was the former president and ceo of shell, to lead our recovery effort. because it's not enough just to rebuild to put us back where we were before, it's to make sure that houston is stronger and more resilient as we go forward. and so i asked marvin, he led the recovery effort after hurricane katrina in louisiana for shell, and i asked him to lead the effort and he's doing a yeoman's job. i think what we've -- certainly what we have learned is that mitigation efforts should come before the disaster, not after the disaster. let me start with that. mitigation first. not mitigation second. we know mother nature is going to come. it remained quite a bit and flooded in houston in 2015, the memorial day flood. it flooded again four months into my first administration.
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the tax day flood on april the 17th. and, again, it flooded harvey last year. what we do know, that there were certain mitigation strategies that have been put in place, thousands of hopes would not have flooded. for example, project brave in the city of houston. widening the channel. the city of houston is the bayou city for a reason. it's built on a number of bayous. there was a project already shovel-ready. it only took another $47 million to complete it. it is a federal project, corps of engineers, reimbursed from the feds. but that project had been delayed. instead of being completed in '15 or '16, it's been delayed to '22 and possibly later. based on the modelling from hurricane harvey, if that project had been completed, thousands of homes would not have flooded. the city of houston has gone out, i recommended to city
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council, we cannot wait so let's go and borrow the money. we borrowed the money from the texas water development board. we forwarded it on to the harris county flood control district and the corps of engineers. that project is scheduled to start in march of 2018, in a few months. but that's after the fact. there are a number of other projects to expand the bayous, add capacity, shovel-ready. we need to take place. and, quite frankly, the funding needs to come, like, yesterday. if that takes place, thousands of homes would not have flooded. we know if there were detention base ins, put in place, hundreds of homes would not have flooded. the city of houston has started the engineering work on a detention basin. that would be big enough to hold the amount of water as the astro
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dome. hundreds of homes would not have flooded. that project costs about $45 million. needs to take place. there is a third reservoir that needs to take place in the city of houston. we've known about it for years and years. the barker dam, for example, has been on the worst list for a long time. those repairs and another third reservoir need to be put in place. the cost of that is about $400 to $500 million. if there had been a third reservoir put in place, we know that thousands of homes in west houston would not have flooded. that's what we know, $400 to $500 million. if hurricane harvey had hit the galveston bay and the storm surge had come through galveston bay and backed up the water, because the way the drainage system works in houston, the water comes down -- the city controls the streets. the water flows from the streets to the bayou. the harris county flood control
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district corps of engineers control the bayous and then it goes into the gulf. if the hurricane had come and hit galveston bay, created a huge storm surge, backed the water up to the bayous and the streets, it would have been horrendous. the port of houston that services jet fuel to all the united states, a large percentage, it would have been horrific. the cost of what we call the coastal spine, the ike dike, is about $12 billion. people say that's a huge sum, but after hurricane katrina, the feds provided about $18 billion in mitigation strategies. this is 12. and we know the storms will come. those are mitigation projects we know if we put in place, you build a city that is stronger, more resilient and then we won't be knocking on the door of fema and congress saying, give us more money -- give us money. if we are provided only enough
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money to put us back where we were prior to hurricane harvey, then what i have said is that the feds, fema and others, you are only providing us funding for failure. because storms will come. if you don't put in mitigation, it's funding for failure. so, for example, there is a multi development project on the bayou. it caters to low-income tenants. it flooded in 2015. they went to hud, they got money to rebuild it. it flooded in '16. they went to hud, they got money to rebuild. it flooded in '17. they went to hud. as mayor i said this makes so sense because unless you expand the bayous and provide added capacity, hud and everyone you're providing funding for failure and we'll be back again. so mitigation is critically important. and just to provide enough
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funding to put you back where you were doesn't solve the problem. it just doesn't solve it. that's a lesson learned. the other thing is that communication, communication, communication. leading up to a hurricane or whatever may be coming your way, it's important to communicate it. we start communicating with the people before harvey came. before. letting them know it's on the way. get prepared, medicine, food, whatever you need. communicate, communicate, communicate. because no one really knew where the storm was going to go. so it's kind of hard to tell people to evacuate when you don't know where the storm is going. you tell them to evacuate here and go here and the storm hits you there. so we didn't know where the storm was going to hit, really, until about a day before, okay? and we were communicating between the city and the county. we were communicating very, very closely. when we did find out where the storm was going to go and people were saying evacuate, what we said to people, if you evacuate,
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how do you evacuate 2.3 million houstonians and another 4 million people in the county in one day's time? you put them on the road and you create a chaotic situation. the city did evacuate for a storm in 2005. but the state, the county, the city had not made preparation along the evacuation routes. so literally all the major interstates turned into parking lots. you literally would be on the freeway. you could go to target, shop a little bit, come back and your car was in the same spot on the freeway. and we lost 120 lives. and so in this particular case, we were not facing the hurricane, we were facing the rain water. the rain. so we told people make sure you're sheltering in place and that you have the supplies and everything that you need. now, what we did in learning from the previous flooding
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before is that we knew there are certain areas that were prone to flood. so we set up pre-position shelters. had them equipped and staffed just in case we needed them. and when we got the report from the national weather bureau at 5:00 p.m. and they told me, mayor, there are three bands of rain that are coming, each carrying between 7 to 9 inches of rain, we knew then that these areas were going to flood. so we sent the first responders to many of these low-level areas and said you have to come to the shelters. and in a matter of an hour and a half or two, we had 2,000 and opened up some additional ones. this time we didn't have people out on the streets, on the bridges saying come rescue me. they were already in. then we turned the convention center into a shelter during that storm and we were able to house more than 10,000 in record time. so pre-position shelters. and what i would do even more
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the next time around is that pre-position shelters for people who are elderly in particular, especially in low-income communities, people with special needs have certain shelters already set up ready to house
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