Male Speaker: Ladies and gentlemen, welcome to the CNBC Debate
"The West Isn't Working."
Please switch off your phones. We are ready to begin.
This debate is being televised by CNBC, and your presence is considered your
consent to be filmed.
And now, please welcome your moderator,
Maria Bartiromo. [Applause]
Maria Bartiromo: Good morning everyone. Thank you so much for joining us this
morning. For the first time in a long time, if not
ever, there is a conversation happening around the world that is questioning the
sustainability of the super power status of the West.
Why is the West not working? We are here today to talk about one of
the most urgent problems of our time, unemployment.
The global recession has resulted in a massive loss of jobs, creating what the
head of the IMF has called "a wasteland of unemployment," and Dominique Strauss-Kahn
is not the only one concerned.
President Barack Obama: That world has changed, and for many, the change has been
painful.
I've seen it in the shuttered windows of once booming factories and the vacant
storefronts on once busy Main Streets.
I've heard it in the frustrations of Americans who've seen their paychecks
dwindle or their jobs disappear -- proud men and women who feel like the rules have
been changed in the middle of the game.
They're right.
The rules have changed.
Maria Bartiromo: Without jobs, the economy cannot recover.
We are here today to find solutions. Meet our panelists: Arianna Huffington of
The Huffington Post; Naveen Jindal, the head of Jindal Steel and Power; Laura
Tyson, professor at the University of California Berkeley and an adviser to the
Obama administration; and Philip Jennings, General Secretary of
UNI Global Union. Ladies and gentlemen, our challengers.
Today's debate is in two parts and in each of these, a motion will be argued by our
advocates.
They'll have 90 seconds to make their case.
They'll then face questions from our challengers and from all of you,
the audience. We are looking forward to your
participation so get ready with your questions.
Motion 1: For a dynamic workforce, go East.
Most of the jobs lost since 2007 have disappeared from the West.
Meanwhile, some emerging countries have barely felt the recession.
In the battle of jobs, who is winning? Manuel Salazar: We recorded open
unemployment going up by more than 30 million people.
It becomes more and more difficult to get those millions of people out of the
unemployment and into jobs.
Ian Cheshire: Our key challenge in the West is to prepare for the next generation
of jobs, the type of skills that will be needed, the type of industries that will
be around in 20 years. Ben Jealous: We need vision for how we in
the West continue to employ people who have fewer skills or whose skills can be
found somewhere else for cheaper. David Arkless: In places like China,
Vietnam, Indonesia, where the workforce is probably as dynamic as we've ever seen in
the industrial era. President Barack Obama: When global firms
were asked a few years back where they planned on building new research
and development facilities, nearly 80 percent said either China or India.
David Arkless: They should be scared about how efficient the Chinese economy
is becoming because it will, if we allow it, dominate the world economy.
The issue is can we compete? Can the West come back?
Maria Bartiromo: Let me introduce our first advocates.
Arguing for the motion that for a dynamic workforce, go East is Kiran Mazumdar-Shaw,
CEO of Biocon. And against the motion is Barry Silbert,
CEO of SecondMarket. Kiran, please begin.
Kiran Mazumdar-Shaw: Thanks, Maria. Well, you know, in an interconnected
world, it's just bound to happen that jobs will move from the stagnant mature markets
of the Western Hemisphere to the very vibrant and high-growth markets in the
East. And in an interconnected world, I think
companies will be compelled to move money and jobs to make them more globally
competitive to the East.
So there is enough evidence to show that this is happening.
I mean if you look at what's happening with companies in U.S. and Europe,
they are on a hiring spree in Asia whilst they are shedding jobs back home.
So the evidence is there.
We have to accept that jobs will move to regions where there is high growth
and higher returns. Manufacturing, conventional,
traditional manufacturing is going to move East because that's where the lower label costs
are. That's where better capital efficiencies
are. So this is the shape of things to come
and the West has to accept it. But having said that, I do believe that
it's not all bad news because the Western consumer has benefited in a big way.
Take for example mobile phones. If it wasn't for the huge economies of
scale created by India and China, you couldn't get those bargain prices at
Walmart or Best Buy. So the way I look at it is that times have
changed and I think the West has to accept that fact that there has to be a different
way of creating new jobs. Jobs being lost have to be replaced with
different jobs. Maria Bartiromo: Kiran, thank you very
much for that side of the argument. Now let's hear the other.
Barry, over to you.
Barry Sibert: When I was first approached about participating in this debate, I was
hesitant to accept the invitation to defend the West.
Aside from the fact that I have two very large Asian investors in my company,
how can I overlook the success of incredible entrepreneurs like Ms. Shaw and the many
startups in developing countries blazing paths oftentimes against significant odds?
But it got me thinking given that small businesses are the largest job creators,
what does it take to start a business? I quickly realized that contrary to the
title of the debate, the West is working quite well.
There are really kind of four key critical elements that are necessary to starting
and growing a business. First, you need a skilled and educated
workforce. Second, you need rule of law,
including intellectual property protection. Third, you need a proper balance between
government regulation and free markets. And lastly, you need access to capital.
And it is this final element that I believe the West outshines the East in
particular. The West I believe has the most developed
capital formation process, from angel investing to venture in private equity
funds to the markets both public and now private necessary to support innovative
businesses, and it is these types of companies that create long-lasting
sustainable jobs. So I offer to the audience that the West
can in fact be the engine for future job creation, particularly if the government
and business can work together to find easier access to risk capital for small businesses.
Maria Bartiromo: Thank you very much. You both make terrific arguments.
Challengers, these are the two arguments. Who is right?
Naveen Jindal: Well, I think Kiran Shaw is completely right, that it is happening
in the East.
We are all the time looking for people. We are hiring, say, in our steel
and power business, we are looking, we are hiring thousands of workers,
skilled, semi-skilled, even unskilled people and giving them those skills which are
necessary. In fact, we have a problem of not finding
enough skilled people, and that's a very big responsibility.
We almost need an additional 300 to 350 million trained people by 2020.
And I completely disagree with what Barry said because if the West was working well,
now why would the unemployment rate be so alarming?
And all those clippings you showed,
why would there be such an alarm? Why would CNBC host a program called "The
West is Not Working?" if it was working well?
So CNBC can't be this wrong.
Maria Bartiromo: A fair point. Philip J. Jennings: We need a message of
hope from this event. The working people of the West are ready
to save the West if they are given the chance.
There was a rotten business model in the West which brought those economies to
their knees. It was the people that paid the bill.
They are angry. They are cornered.
And if we have the argument, if I have to face a group of workers and I say,
"The future is in the East," they will be more Jasmine Revolutions by the day.
Maria Bartiromo: And we've seen protests. Philip J. Jennings: People have to wake
up. People have to wake up.
The G20, wake up. We've asked for a working party at the
G20 on unemployment. We are still arguing.
Sarkozy is here tomorrow. I hope he's got his jobs mojo with him.
We have to -- there are things to address.
The G20 has to wake up. We have to look at inequality.
Henry Ford was right. You put money in workers' pockets
and we'll make the wheels of the economy turn. It is not happening.
The top 10ths of one percent in the
States took 30 percent of all the income during the course of the last 20 years.
Maria Bartiromo: So you agree with Kiran? Philip J. Jennings: We got to plan.
Maria Bartiromo: You agree with Kiran? Philip J. Jennings: No, I don't agree
with Kiran. Kiran, we need to grow in the East and the
West. India, you have to create 270 million jobs
in the next 20 years. You are going to need the help of the
West to help you get there. You have 100 million people living in
poverty today.
Kiran Mazumdar-Shaw: Well, you know, Philip, I do agree with you in a way that
this is about creating a new kind of global job market.
This is about creating complementary and equitable jobs in both hemispheres, and I
think we have to create jobs that share risks and resources across the innovation
and commercialization continuum. So I agree with you to that extent and I
think the West will have to become more, depend on countries like India and China
to be globally competitive. You cannot build vertically integrated
job markets in the Western Hemisphere or in any hemisphere for that matter.
Maria Bartiromo: Arianna. Arianna Huffington: What is missing in
the West is what really was here in the introduction to the show, which is that
sense of urgency. I think the introduction to this show
should be played at the White House and on Capitol Hill and in parliaments around
Europe everyday because that sense of urgency around jobs is really missing.
I mean politicians, as the President said in the State of the Union, talk about jobs
but they are not really doing anything about jobs and it's this dysfunctional
political system in the West that's making it so difficult to produce anything but
suboptimal solutions that's creating that danger because remember, when the West
brought a sense of urgency to saving the financial system, they saved the financial
system. We have enough tools in our toolbox.
It's just that we never brought that same sense of urgency around jobs.
And yet, it's not just the economic problems that ensue.
It's the political instability that is growing.
And I have two daughters in college and increasingly, we have college graduates
who cannot get jobs. Just imagine that.
That really disrupts the natural course of events.
So as well as all the other problems we are facing, the problem of youth
unemployment in the West is particularly large and so we cannot just,
unfortunately, assume that things will get better by themselves.
Laura Tyson: Can I say something here? I think actually Barry raised a very
important point. I think we should realize that until the
crisis, if we had a discussion here five years ago, we wouldn't have this
discussion. Five years ago, and the evidence is very
strong on this, it's not an either/or proposition.
There was complementarity and jobs growing both in Asia and in the emerging markets
and certainly in the United States. So we have here a very profound deep
cyclical problem. It does not mean if we go forward,
we cannot find a world with enough growth that we have jobs growing in both places.
So I don't agree it's like a shift, oh my God, a job there is a job lost.
It's just not true. Research establishments in emerging
markets are complementary in many respects to research establishments in the U.S.
or Europe. To Barry's point, I think Barry is making
a very important point. Look at issues of ease of doing business.
That list is dominated by many Western economies, including the United States.
And with the right capital market conditions, with the right demand
conditions, with the right physical and monetary policy, the U.S. has been
and will be in the future a powerhouse of entrepreneurship.
Most jobs that most people have in the world for now and the foreseeable future,
even though they will be globally integrated, will be local jobs.
They will be jobs that are service jobs for the people who live in their regions,
their communities, their states, and their nations.
And those jobs will depend upon two things: one is the amount of demand,
how healthy the macro-economy is, and two is the strength of the educational system in
those economies. And we can talk about that.
That's going to be the second session here, but I think that's, for me,
I believe the U.S. can get its macro house in order.
I worry very much about the educational challenge.
Maria Bartiromo: Education is a critical part of this and we are going to get
there. Let's bring in our audience and our
special invited guests will kick that off with the front row.
Comments? Who is right?
Adi B. Godrej: I think that what we should realize, as Laura mentioned,
that the recent rise in unemployment in the Western world has little to do with job
transfers to the East. It has to do with the slowdown of the
economy post the financial crisis.
The system worked very well just prior to that and we need to encourage that.
Comparative advantage will create for productivity increases which will add to
global growth and lead to employment creation in both parts of the world.
I think we should also distinguish between unemployment and unemployability.
Some of the unemployment may be because of economic factors.
But a lot of it is because of unemployability created by lack of
education, lack of training. I don't see why in the Western world
where unemployment benefits are paid out in large numbers simultaneously insistence
of those people going through training programs is not done.
Maria Bartiromo: This is a very critical point and we will get to the skill sets
that are required to get the jobs of tomorrow in the next segment.
Zhu Min, you've spent a long time running the People's Bank of China and then moving
over to the IMF. You have a special vantage point here in
terms of what's happening in the world. Give it to us.
Zhu Min: Well, thank you. We at the IMF in the past few years
coupled with the labor unions particularly on these issues because these are
absolutely important. If we are looking for the job, there are
three trends underneath this apparent job situation.
I think we really need to go further to see the whole thing.
The first is, as Laura mentioned, is the cyclical cycle before the crisis which had
hit the advanced economies so bad. The second also is the structure issue
because the manufacturing moved to the East because labor is much cheaper
and education is pretty okay so we also saw that.
But the third issue also, we have to understand, that the whole job situation
is changing, for example, in the next 10, 20 years.
For example, you mentioned in next 20 years, India will provide 250 million
fresh labor into the market. Also, South Africa will provide 450
million fresh labor in the world market. And almost all advancing economies will
probably have an active fresh labor supply for the world.
So today, we talk about unemployment rate is very serious in the advancing
economies, but in the tomorrow, the future can be very, very different, so we have to
anticipate the whole thing change.
I think that's the first important issue. So we need to have a whole picture.
But the certain issues I will say in these situations, we have to, for the most
advanced economies, this is the issue we are today, really, the whole thing I will
say advanced economies, the growth strategy because you have to think about
it given the income level. You have to create a job.
With the job is what kind of job? What job can create a value which is high
enough to pay $20 to $30 per hour which would be paid in emerging markets with $2
to $3 per hour?
You have to have a very high value-added margin to support as a whole sector.
You need a whole growth strategy to create a confident new industry to balance
the global growth. I think this is the most important issue
rather than say get manufacturing back to the advancing economy.
I think that probably will not work. I will stop here.
Thank you. Maria Bartiromo: Thank you, Zhu Min.
Duncan Niederauer. Duncan Niederauer: Sure.
If I can just add a couple of perspectives from our vantage point.
I like where Phil started.
This is an opportunity for all of us. It's not a threat.
It's an opportunity. And I think if we think about the focus
on job creation, the impact that has on creating demand that some of you talked
about, then guess what, the pie gets bigger for all of us and it's good for
everybody. And I think from our vantage point at the
Exchange, what we focus on is good news. The job creation engine you'd want to
fill, it's about incentives for companies who are positioned to be able to do an IPO
and it's about some of the things Barry was talking about for companies who may be
too small to contemplate an IPO, and that's about getting them capital
and getting them access to revenues and investments like Steve's firm has,
et cetera. At the IPO level, even more great news:
$270 billion of issuance globally last year, 2011 set up to be a great year.
Just keep creating incentives for those companies to go public.
It's a great job creation engine. And we also know, as Barry said, most of
the jobs come from SMEs. Get them the capital.
Worldwide, they will create the jobs and we can get people back to work.
It's an opportunity. Philip J. Jennings: That's a good point
but why is capital on strike? Duncan Niederauer: Yes.
Philip J. Jennings: At $1.6 trillion sitting in back accounts in corporate
America?
America has to be rebuilt.
Without a new infrastructure, Laura, you're not going to bring those local jobs
to local communities.
Isn't it time, and Barry's getting an easy ride here, Barry, how are you going
to put that $1.6 trillion to work to help those local communities.
to build the schools, to train the workers, and to pay them decent wages?
Barry Silbert: Well, I think you have to separate kind of where this capital is.
And so I think you are referring to the capital that's on the balance sheets of
large companies,
right? Is that what you were referring to? Maria Bartiromo: Two trillion dollars on
balance sheets. Laura Tyson: Yes.
He is referring to the large companies. Barry Silbert: Right.
So yes, it will be great to see them deploy the capital in the United States.
But I think the point here is, and everybody's talking about it, this is not
an East versus West. This is collaborative.
And at the end of the day, the jobs that are being outsources, they are for
manufacturing jobs. They are manufacturing products that are
being designed, developed, innovated in the United States.
So if you create the environment where small businesses can get formed, if you
make it easier for whether it's the large corporations or individuals or private
equity firms investing in these companies, whether it's tax incentives or otherwise,
you will create the next Tesla car. You will create the next Google.
You will create the next Facebook that ultimately will create jobs worldwide,
I believe. Laura Tyson: Can I raise something that
Zhu Min mentioned which is very, very important?
Up to the crisis, there was virtually no evidence at all that outsourcing had
caused a net loss of jobs in the United States.
I've looked at this literature. I think it's a very interesting
and important question. Didn't do it.
What has happened in the United States is that we've had a restructuring of
manufacturing. We have technologically very sophisticated
manufacturing. We have a value chain which moved some of
the employment to other low-cost labor areas where you use people.
The problem with this is the nature of the jobs available to U.S. workers have
changed and there has been a loss of jobs in the middle.
I think we should distinguish here the structure of jobs.
It's not when demand is corrected, the problem is not a lack of jobs.
It's the lack of good jobs. And we have seen the polarization of
employment both in the U.S. and in the rest of the Western economies.
Growing jobs and wages, particularly wages at the top, with the skill levels
that are complementary to the modern technology, the middle being essentially
made redundant by the technology moving towards the bottom, this is a wage problem
and an education problem because we need to educate more people, as Zhu Min
is saying, so that they go with the growth strategy of the West to the high-end
technologically sophisticated jobs. The U.S. was the first advanced
industrial country, before we even used that term, to make high school education
compulsory for all. We don't do it yet.
We should make college education compulsory.
That is it. Maria Bartiromo: The idea of spending
money on education in an environment when you're talking about a $12 trillion
deficit is another major issue. Laura Tyson: There is a difference
between operational deficits and capital investment deficits.
I agree we need investment in infrastructure, investment in education --
Arianna Huffington: But you know, Laura, you may be absolutely right, speaking as
an economist, but when you come to the political reality, you see something
completely different. Laura Tyson: We won't get that is what
you're saying. Arianna Huffington: Yes,
exactly. I mean in terms of our political reality at the moment, the will is not there to do
what seems absolutely the right thing to do.
You mentioned infrastructure. Even if we are at full employment,
we would need to spend over $2 trillion according to the American Society of Civil
Engineers to update our infrastructure. And yet, the will is not there to do
something bold, like create a national infrastructure bank.
So politicians including the President talk about it, but in practice, it's not
happening. And you know, Lloyd George, the great
British prime minister, said, "You cannot jump across a chasm in two leaps."
And that's what we've been trying to do. Take small little leaps trying to do it
when [cross-talking] --
Maria Bartiromo: I want to share with you a fantastic poll from Facebook which you
will want to hear about. A quick comment from Naveen.
Naveen Jindal: Maria, I'd just like to elaborate on what Mr. Zhu said on the high
wage rates, and I think high wage rates in the West is also not helping the situation
because generally, I mean other things would follow market mechanisms of demand
and supply. Whereas wage rates do not really follow
demand and supply and continue to be high and continue to add to this problem.
Maria Bartiromo: And of course, [cross-talking] --
Laura Tyson: They're falling. I want to say in real terms in the United
States, median real wages are falling. Maria Bartiromo: Since unemployment
affects all of us, we asked Facebook to partner on a poll for this debate.
We asked, "Is the West in decline?" Look at these numbers.
Forty-eight percent said yes. Twenty-seven percent said no.
Twenty-five percent were not sure. Reaction from the front row?
Amy Gutmann. Amy Gutmann: Let's look at just some
numbers about unemployment to put the relationship between unemployment
and education in perspective.
At the height of the great recession, under five percent of college graduates
were unemployed in the United States. Over double that of high school graduates
and then another 50 percent more than that for those who didn't have a high school
degree. So even when jobs are at their lowest ebb,
college graduates do extraordinarily well in the West and that's true in the East as
well, and a key to this driving innovation economy is going to be to have an educated
workforce. Maria Bartiromo: We will get to
education. We will move on.
Thank you so much for your comments, everybody.
CNBC of course is all about actionable solutions and that's what we want right
now. Let's talk solutions.
Arianna, most important solution, most important action to be taken now.
Arianna Huffington: Well, the most important solution and the one that
actually people can do something about is to recognize that democracy is not
a spectator sport. So everybody can do something right now.
And in fact, my source of optimism comes from the fact that if you go around the
country, people are doing the right thing in their communities.
People who cannot find jobs the conventional ways, for example, are going
to xc.com and turning their hobbies or their passions into a way to earn
a living. People who can't get jobs are coming
together, as Seth Reams did in Portland, Oregon, creating sites like
wevegottimetohelp.org and helping others in their communities.
So there has been an outpouring of creativity and generosity all around the
country, and those of us in the media need to actually put a spotlight on what
is working in the country in order to help scale it up.
I'm less optimistic about government finding the will to do the right things,
including a payroll tax holiday, including massive infrastructure investment,
including doing something about immigration.
We need the kind of Visa Startup Act that would allow entrepreneurs with good ideas
from all around the world to come and create jobs in the States and in Europe.
Maria Bartiromo: So the people get together and working on immigration
another major component. Naveen, solutions.
Naveen Jindal: Well, solutions, I talk in the respect of in India.
We need to firstly provide quality education to our youth and for which,
we have just passed a Right to Education Act. And also, we need to increase our
graduates coming out of colleges. Presently, only 15 percent of the
graduates from school have a college education.
We need to double that, and for that, we need to open many, many thousands of
universities and colleges and also give people employable skills, like vocational
training institutes, and again, to cater to almost 200 million new workforce
because we have a large population of the youth and obviously, we can collaborate
with the West. We would need help from the West also in
educating our youth, in creating this capacity building in our country.
Maria Bartiromo: Laura Tyson, solution. Laura Tyson: So I want do macro and then
the third is structural. On the macro side, I think a number of
people agree here a lot of the unemployment, probably almost all but
a percentage point of the unemployment problem in the U.S. is a demand problem.
It's a business cycle problem. It's very, very severe.
I think what the President said last night on the importance of investing
and research, the importance of investing in infrastructure, the importance of
investing in education at the same time that we do something meaningful on the
medium-term deficit is exactly the right policy.
The politics, I leave it to Arianna. She thinks the political model is broken.
Maybe it is. I think the economic solution
is absolutely clear and I think economists from the left and the right in the United
States agree on that basic solution. So that's on the macro side.
On the structural side, I will just say we are going to talk about that in the next
section, but think about the education issue from the U.S. point of view.
It's not a great university problem. We have the best universities in the
world. There are wonderful new ones developing in
the rest of the world but people come from around the world.
There is no issue with America's great universities.
We have highly diverse set of community colleges and alternative technical
training institutes. We have the for-profit institutions now
which are training people. Our problem is a breakdown much,
much earlier. Maria Bartiromo: K-12.
Laura Tyson: In the United States, it is K-12.
And my most negative thing I'm going to say here right now is the state and local
government disaster in the United States, which is not being discussed enough
perhaps here, is a disaster for education.
So there we have the great universities not being able to tap in to the talent,
the potential talent pool that's lost in fourth grade in the United States.
Maria Bartiromo: And we will get to that. Philip Jennings on solutions.
Philip J. Jennings: Change the rules of the game.
A new political priority on job creation. The G20 has a Jobs Pact before it which
was agreed by 150 nations. Make it work.
We have to have a policy of inclusive growth.
The crash was brought about by an economic model of exclusivity.
We need an inclusive growth model. Working people have to be able to find
their voice at work once again. Collective bargaining should be the place
where standards are set. We want to see more fairness in the
distribution of the wealth which we see to put the demand back into the economy,
which Laura mentioned. We need active labor market policies.
You can't leave this to the market. Those countries which survived this
crisis best had active labor market policies focused on keeping people in
work. Finally, we need a universal social
protection platform.
Eight out of 10 workers have no social protection whatsoever today.
You build in that social, protection,
you build in demand, you build in stability and you build in hope.
Finally, stop this rush to the exit with these austerity programs that we are
seeing from government. They are going to do more harm for jobs
than good. What we are seeing in a number of
countries is going to aggravate unemployment.
Stop the rush to the exit.
Maria Bartiromo: Stop the austerity programs.
Very provocative statement and we will get to that and get some reaction from our
audience. I want to get one reaction though from
this very global-minded informed audience.
Based on what we have heard, if you had to allocate money to any region in 2011,
who would allocate money to Europe?
Who would allocate money to the United States?
Asia?
And there of course is our majority. Reactions?
Steve Pagliuca.
Stephen Pagliuca: Well, I think in allocation of money, it really is more
a microeconomic problem. I think there are great opportunities in
Europe. There are great opportunities in the U.S.
and in Asia as well. Obviously, there are trends.
There is huge growth in India and Asia that's not going to stop, but the question
is what is the price to that growth and how sustainable is it?
The panel has talked about the fact that the United States and Europe have legal
systems. They have systems for companies to grow.
And the real issue that I fear and what Laura was talking about is that the
structural unemployment is higher than what you're talking about here.
And so we need the Manhattan Project on the structural unemployment problem
because we are not going to solve it. We are not going to solve it with the
current approaches. Arianna is absolutely right.
The politicians talk about it but we don't solve it.
There are solutions in front of us. We've invested our country's deficit in
a lot of short-term programs that aren't having benefit for the long-term.
So the money has got to go back into education, structural reform in education,
which we're going to talk about next. But if that structural gap is as large,
and I think it is, we have a real challenge on our hands and we're not going
to fix unemployment until we fix that structural gap.
Maria Bartiromo: Before we move on, Tulsi Tanti, quick comment.
Tulsi Tanti: Yes. It's the solution point of view, I feel
it's a very great opportunity in the Western part of the world is there.
We have to revisit the industries… university sit together.
Which segment of the industries can be allocated in those… and to make a market
creation? Because the next generation of the
industries are growing and those great opportunity for Western world is there
because when we are going in India and China, it's not just for the cheaper
manpower but we need a lot of 360 degrees infrastructure technologies,
universities, low cost of the fund resources, and the export opportunity.
I greatly see the renewable industry has a great opportunity to mitigate the
climate at the same time to create a great manufacturing base in the America
and Europe. It is possible because it's a high --
high-value product is there and high engineering value is there so that can be
there. It's not going to be required to go to the
India and China. It's not required.
But the whole world needs this and that's that new mechanisms will be developed
and new markets should be market created first in the home market.
And if there is no home market and just we are dependent on Asian market, no job
creation will be sustained. So that is the main focus area.
The change in safety is required. The second is on a value chain.
There is a sum pocket of this segment can be distributed in different geography,
whether it is a technology, whether it is a manufacturing, whether it is a service,
and to allocate like that, I think we can make a more balanced and inclusive growth
of the whole world rather than just at West and East.
Maria Bartiromo: Once again, we learn how connected we really are.
Thank you very much. That is it for Part 1 of the debate.
Many thanks to our advocates and their wonderful insights, Kiran Mazumdar-Shaw
and Barry Silbert. Thank you very much.
Next up, where are the jobs? What are the skill sets required for
those jobs? We tackle the skills gap.
This was another problem addressed by President Obama last night.
Let's hear what he had to say.
President Barack Obama: Nations like China and India realized that with some
changes of their own, they could compete in this new world.
And so they started educating their children earlier and longer, with greater
emphasis on math and science. So yes, the world has changed.
The competition for jobs is real.
But this shouldn't discourage us.
Maria Bartiromo: Education is failing industry, motion two.
Even with high unemployment, businesses say they cannot find the skilled workforce
they need.
David Arkless: We got the wrong people in the wrong place at the wrong time.
Peter Loscher: We are urgently looking for highly qualified engineers which we
can't find.
Tristan Wilkinson: STEM subjects, Science, Technology, Engineering,
and Math, have just become unfashionable. Ben Jealous: We are not training and we
are not even really clear what jobs we should train them for.
Ian Cheshire: But I don't think business could sit there and simply throw rocks at
the educational establishment. We actually have to get involved and say,
"This is what we need and this is how we can help make it happen."
Sir David Bell: What we need is an education system that trains people to be
flexible, responsive, and able to change what they are doing maybe several times in
the course of their working life.
John Studzinski: But the most successful companies are successful not just because
they train people well but they retrain people well.
Maria Bartiromo: On stage to argue for the motion that education is failing
industry, Jeff Joerres, Manpower CEO. And against the motion, Amy Gutmann,
the president of the University of Pennsylvania.
[Applause]
Maria Bartiromo: Jeff, your time starts now.
Jeffrey Joerres: Thanks. Well-educated people create jobs.
What creates those well-educated people are universities, and what we are finding
is that universities are not producing the amount of people coming out or, for that
matter, the quality in order for us to create this flow of jobs.
Let me give you a few examples, a U.S. one.
Sixty-seven percent of all high school students go on to college.
Only half of those can finish their degrees in six years.
Twenty-five percent of the low-income students can finish their degree, and 20
percent of the African-American community finish any kind of secondary
and post-secondary degree. So what we see is not enough and not
enough of the right kind. Why do I say not enough of the right
kind? High unemployment and the highest level of
job openings which is a massive conundrum, a skills gap of not having the right
skills at the right time produced by university systems.
Having said that, what is going on in STEM, the Science, the Technologies,
Engineering, and Math, is outstanding and is absolutely needed.
What is missing is all the way from K-4, all the way into university are things
like intellectual curiosity,
problem solving, empathy, and collaboration. It is those things that create the basis
for education to move on to be lifelong learning.
If we do not fix education system, technical schools as well as others,
we will not be able to create enough people to satisfy what jobs are required.
Maria Bartiromo: Jeff, thank you very much.
Amy, the other side of that argument. Amy Gutmann: Thank you, Maria, and thank
you, Jeff. We live in a global innovation economy,
and universities are at the heart of it. We invest billions in innovative research
and we educate young people who combine a breadth of skills with an in-depth
knowledge of a subject, what an MIT professor aptly called a "T-shaped
intellect."
CEOs love to hire T-shaped individuals. They are creative and collaborative
and they also have specialized skills. And those graduates from America's top
universities drive the future economy that none of us can yet imagine.
That is why the United States remains the single most sought after global
destination for higher education. Last year alone, 700,000 foreign students
came to study in universities in the United States driven by a 30 percent
increase in Chinese students. India and China are avidly competing with
the American model of higher education. We welcome that competition.
We can learn from them just as they have learned from us.
We also should reverse the visa restrictions that deport foreign students
who graduate from American universities with advanced degrees.
We, the Land of Liberty, send them home even if they want to stay here.
That's a mistake. Higher education prepares students.
K-12 education is failing us. We must invest in infrastructure and in
K-12 education. Thank you.
Maria Bartiromo: Thank you very much, Amy.
And you brought up the issue of immigration as part of the failure here in
terms of education. We've heard both sides.
Challengers, who is right?
Arianna Huffington: Well, I think in many ways, Jeff is right that our education
system is failing us, but it doesn't start at the college level.
It starts at the K-12 level. And it starts at a way in which we are
both educating our children and the way we are minimizing the key importance of
teacher effectiveness. Teachers are the most important thing in
our children's lives. And yet, what do we have here?
We have an impossibility for firing bad teachers in the United States.
If you are a doctor, one in every 57 doctors loses his or her medical license.
If you are a lawyer, one in 97 lawyers. If you are a teacher, one in 2,500
teachers is ever fired for being a bad teacher.
Now, that is not sustainable because if you are going to imbue children with
a love of science or the love of math or the love of English, you have to have these
great teachers in third and fourth grade. And one last thing, at the university
level is the student loan problem. We now have $900 billion in student
loans, more than our credit card debt. And you have students graduating with
a student loan burden of over $20,000 and not being able to get jobs, and that's
another huge crisis we are facing. Maria Bartiromo: Well, you are talking
about students getting to the university level unprepared.
Naveen. Naveen Jindal: I would say, I mean I do
not really disagree with either Jeff or Amy.
I just like to present a new point, and that is that we also observe that not many
engineers or highly skilled people, they do not want to work in the field.
They do not want to work in a steel plant or the power plant which are mostly in
remote sites, remote areas, or building dams.
They would much rather work for a software company or a consultancy company living in
big cities. So I think that paradigm also needs to
change because until these people are willing, and these are the areas where
growth is happening, where opportunities are there in the job market.
So good people have to be willing to and keen to work in these areas.
Maria Bartiromo: We want to get to an audience question, but I wonder if,
Philip Jennings, you would like to address an issue that Arianna brought up, given you
are a leader of so many workers.
We can't fire teachers, bad teachers? Philip J. Jennings: Arianna,
you're heading in the wrong direction. This is not going to help the discussion
about improving schooling, about improving universities if you put the finger of
blame on teachers who you can't fire.
Arianna Huffington: Well, it's not either/or.
It's not either/or. Philip J. Jennings: Do me a favor.
I know the teaching community, they are the angels of our societies,
teachers. You get a good teacher and those people are dedicated --
Arianna Huffington: That's exactly what I said.
I said precisely because teachers, it's very important to have this debate
precisely because teachers are so important, we need to be able to fire bad
teachers in order to reward good teachers. Philip J. Jennings: Arianna, please let
me finish. Amy Gutmann: Arianna, Philip, could I --
Philip J. Jennings: Can I just finish? Amy Gutmann: Absolutely.
Philip J. Jennings: I don't think it's right to put the finger of blame on the
teaching community who are dedicated to their kids, dedicated to their students,
and to have a slash and burn approach to the education profession I think is the
wrong way. I think Jeff is getting a free pass in
the sense that when I talk to my members, they say the skills that we have aren't
being used.
They also tell me the training budgets are being cut back.
The governments, we talked about civil servants use, they say, "Philip,
austerity packages mean that the education budget is getting cut."
So please, I'm with Amy on this one. Jeffrey Joerres: But I don't want to get
a free pass. Philip J. Jennings: Okay.
Jeffrey Joerres: Because the fact is whether we like it or not, the world in
business is moving very quickly. And if we can't have an iterative process
instead of maybe an episodic training process, what will come out is antiquated
skills or not as finely tuned. So I think it's the relationship between
government, businesses, and educators to make it a more relevant output to get
people to work faster. Philip J. Jennings: But Jeff, how strong
are those short-term concerns on a business leader with the Wall Street
community that wants to see a performance every quarter?
Does that help? Jeffrey Joerres: There are hedge funds
who want to see that, but you know what? The companies I talk to are thinking
about five and 10 years. They are not thinking about quarters.
They are looking at an educated workforce that has the ability to have lifelong
learning that is taught in some areas. Philip J. Jennings: Are we ready for
lifelong learning? Jeffrey Joerres: No.
Maria Bartiromo: Amy? Amy Gutmann: Look at the facts about what
drives the economy because I think otherwise, we are going to talk across
purposes. First of all, creative and collaborative
skills coupled with in-depth knowledge is what drives this economy, and those are
the first kids to be hired. Secondly, we don't need to talk about the
downside of teachers in K-12. Let's talk about the huge upside.
Here is a concrete progressive proposal that could unite everybody.
Let us reward successful teachers with a true career ladder so that there is high
status in being a K-12 teacher.
That would make a huge difference. There are millions of college students
who would love to enter K-12 education. Many of them at Penn, Teach for America
gets them. They leave after three years.
There is no career ladder there. Let's do it.
That will propel the innovative economy. Where training is for the jobs of today,
education is for the jobs of today and tomorrow.
And then when industry hires them, they won't fire them.
Maria Bartiromo: Very smart insights. Arianna Huffington: Amy is absolutely
right but let me just say one quick thing, which is that right now, getting a good
education at the K-12 level, if you are a poor or middle class child in America,
it has become a matter of chance, literally lotteries, in order to be able to escape
dysfunctional schools and go to good charter schools, which is often where poor
kids or even middle class kids now can get a decent education.
And this is not acceptable because you cannot produce enough students with their
requisite skills to go to college. Laura Tyson: I think I would actually go
to the audience at this point because I am a little concerned that the conversation
here is really too U.S.-centric, all right?
We have -- no, listen. There are lots of different school
systems throughout Europe that perform at the K-12 level better than the U.S.
There are lots of countries in Europe, Germany, Denmark.
I used to hear two years ago, three years ago, people were talking about Denmark as
a successful economy that combined security with flexibility and high levels
of training in the workforce. Germany, we know, has been able to
survive this recession and basically rebuild its manufacturing strength with
very high cost, technically trained workers.
So let's not get too hung up -- yes, I agree with Amy completely.
That's what the U.S. should do. We should definitely do.
But I do think we need to talk about the structure of education in countries where
it's working and how it has to change because the technology and globalization
are changing the skill bases. So when you look for workers in Europe,
what are you seeing? What needs to be done there?
I'm a little too concerned we are doing too much U.S. stuff here.
Maria Bartiromo: Well, I mean the extent of education is also a piece of the
conversation. In the U.S., students are in school five
days a week, seven hours a day. In China, six days a week, 10 hours
a day.
Question from the audience. Laura Tyson: What about Europe?
Male Speaker: I'm from media. The work institution, what I look to
is that the East and the West, we from the developing nations have totally
a different approach. You are looking for graduates,
high technologies. We don't need that.
Where we are, 60 percent dependent on agriculture.
We need basic education for our kids so that they can continue in agriculture.
The investment ought to be that of based in, as he says, about rural agriculture
employment so that the farmer can do his own agriculture, a part-time service,
and then live happily in the village. But this high technology I mean which we
are getting from West to the East, I think it's creating a lot of problems to our
developing nations. I think there is a limit.
I think you, most of you, look at what Mahatma Gandhi said.
Go back to the villages and try to limit the needs and wants, including education,
then there will be a solution, not this high tech…
Maria Bartiromo: More questions from the audience.
[Cross-talking] --
Naveen Jindal: -- Indian youth and they want the best of education, even in the
villages. And they do not -- they see, watch the
same TV. They even watch CNBC so they have very
high expectations.
And I think even there is a serious lack of accountability in a lot of teachers in
India. We really need to improve the quality of
education. That's a big challenge for every
government, every state government, and the government is trying to pursue that.
We really give now, with the Right to Education, also improving the quality of
education and giving our youth employable skills is very, very important and we are
working very seriously on that and involving private sector in a very big
way. Government is giving many incentives to
the private sector in India to involve in training of the youth for giving
employable skills, and we can learn a lot, especially the community college concept
of the U.S., and we are trying to bring that to India and that would help a lot in
training of our youth. And our youth is very, very ambitious
and they want the best [cross-talking] --
Laura Tyson: And you don't need an either/or.
It seems to me that having higher value-added agriculture is the future.
Having higher value-added services is the future.
You want a technically trained, sophisticated group of workers whether
they are doing agriculture in the countryside or information services in
Bangalore. So I go back to my notion of the developed
countries, college education for all, community college very, very important as
economies develop from emerging market economies into [cross-talking]
-- Arianna Huffington: But also, when we
look at the system in China, which obviously, we tend to celebrate because of
their incredible prioritization that's being put on education there, but it is so
much rote memorization that is affecting the ability of students to be creative,
to innovate, and to expand their own circles of concern and empathy, and all these
things are just as critical when it comes to education.
It's not just about skills. It's also about what kind of human being
do you become.
Laura Tyson: Arianna, I don't know if we are going to be able too long to say that
somehow or other, the educated students of India or China are less innovative than
American students. I really think that is something that
these are very sophisticated -- the students going on to the best universities
and colleges and India and China are extremely sophisticated and innovative.
Maria Bartiromo: Question from the audience.
Very quickly, Dennis Nally. Dennis M. Nally: Maria, I think this
is really an interesting discussion. And at the risk of oversimplifying,
I don't think this is about the East and the West.
In a recent Global CEO Survey that we conducted, over 1,200 CEOs from all around
the world participated in the survey and basically said 2/3 of them believe there
is a real shortage wherever you are operating with skilled workers.
And so I think you've got to take it back to individual countries and understand
exactly what is driving that issue. And what business is saying, I believe,
is it has to be a collaborative effort working with governments, working with the
educational institutions to solve that problem in those respective countries.
If you overgeneralize, I don't think you get anywhere with this discussion.
Maria Bartiromo: We want solutions. The conversation is getting heated.
Let's look for action.
Solutions now, Philip Jennings.
Philip J. Jennings: We know where the jobs of tomorrow are.
We know that when you look at the progression of employment in Europe,
in the U.S., and other parts of the world, there is a growing shift towards the
services industry and knowledge intensive.
The solution must be that we have to gear up our education, our training, and our
employers that they can meet those needs not just to give them the basics but
continually through one's working life. We have to have a strong commitment to
lifelong learning. Learning and training at work should not
stop at the age of 18, 25, or 30. We need a new social contract, a new
social contract that every worker has access to relearning and to reeducation.
Maria Bartiromo: Where does that relearning come from?
The corporate sector? Government?
Who is providing this retraining? Philip J. Jennings: Government has to do
a much better job in looking at what labor and manpower trends are to identify where
the problems are.
Government has a role to provide infrastructure.
The private sector has an enormous role to play as well in terms of the innovation
requirements that they have.
We can't have a -- you can't just discuss this with government without business
and you can't discuss with business without labor.
I would like to see a learning representative in every workplace on the
planet that that simple worker could put his hand up and say, "I am being trained
for three months." Maria Bartiromo: Solutions from the
audience. Yes, sir?
Male Speaker: Well, in looking at models that work, in response to Laura's
question, I think it would be good to look at Finland.
They have come out top of the list for the last 10 years virtually, per the OECD's
PISA reports. And they do it by investing in education,
also starting with child education at the very early stages.
They have a system of social partnership. It's not based upon firing teachers or
based on motivating teachers. I could make one suggestion from that to
the U.S.
In 2006, you paid 25 hedge fund managers the same as you paid all of the teachers
at New York City for two years. So would those people in the audience who
are hedge fund managers think about giving some of that money or accepting taxation,
which will put it back into teachers' pocket and get incentives going the right
way. Maria Bartiromo: Good comment.
Onto Carrefour. Lars, do you have a solution?
You are the largest employer in Europe. Lars Olofsson: Thank you.
Well, listen, first of all, when we are talking about demand, what is all about
demand? It's about growth.
Now, when we talk about growth, it's sure that if we divide us up into West and East
that East, they have a let's call it a demographic advantage, so in terms of
quantitative growth, I don't think that the West can do anything.
However, it's all about value. Now, when we talk about value growth,
and I think that's the way forward in Europe, what are the levers?
Well, long term, I think it has been addressed.
It's all about education. It is about the research and development.
It is about giving, helping the small and medium-sized enterprises.
Now, short term, that is the problem in Europe.
How can we get back in growth? Because without growth, we will not be
able to absorb the unemployment, okay? So the question is what do we do short
term? Today, we are all talking about rigor.
Well, we need to increase the taxes. We need to get our costs down, et cetera.
That is not going to generate growth. So my question is how can we have
a rigorous growth? That's what it's all about because that's
what we have to do. And here, we have to think about how can
we create value? Every good cannot be transferred from
West to the East. This is rather an opportunity.
Now, so my question is actually how do we help?
How do we help Europe in short and medium term?
Because without a rigorous growth, I'm sorry, I will be -- a tendency to be
pretty pessimistic about the future of Europe.
Maria Bartiromo: First, we've got to see growth before we can address the issue of
education is what you're saying. Lars Olofsson: Yes.
Maria Bartiromo: John Studzinski, solutions.
John Studzinski: The reason why, and Laura… Germany, the reason why Germany
works so well is that at the supervisory board, you have 50 percent of the
supervisory board management, 50 percent labor, and they have to live with each
other as strange bedfellows and therefore, they take several years to work through
issues and problems strategically. And I think if we had more of this
locked-on collaboration around the world where labor -- and even in the United
States, labor is not enough at the table when it comes to long-term planning.
Put it very simply, we have to change in ethos.
We have to take labor away from being an expense item on the P&L and we have to
make it a long-term capital asset. If we can do that and make it a long-term
capital asset, which implies the points that were made about education, the worker
will retain their own dignity, which I think is the most important.
Philip J. Jennings: I think the worker has to have that voice and has to have
that opportunity. I'm please to say with Carrefour, as
a UNI Global unit, we have a social dialogue at the global level with the company.
We also have the same conversation with Manpower and 40 other companies covering
something like 10 million workers. This affords you the opportunity to get
away from the daily skirmish but into much more strategic thinking about what the
employment projections are. And those people actually have
a genuineness, an authenticity about them. They know what's going on.
They know where management is not performing.
That worker's voice needs to be heard, and I'm pleased to see that there is a strong
plug for the… an involvement of working people in these kinds of decisions.
Maria Bartiromo: That's the person on the ground.
Philip J. Jennings: It does work. The person on the ground needs to find
his voice. Maria Bartiromo: Zhu Min with a solution.
Arianna Huffington: One very simple thing.
One very simple thing at the K-12 level is to increase parental involvement because
right now, parents very often in schools are seen as the intruders.
And if parents are not involved in their children's education, it's going to get
really hard. And at the government level, we need to
see the opportunity cost of where the resources go compared to where they should
be going if we are going to do some nation building here at home.
Right now in America, we are spending $2.8 billion a week fighting
a non-winnable war in Afghanistan.
That money could come back home and rebuild some of those collapsing
infrastructures when it comes to our schools.
Maria Bartiromo: Education begins at home.
Zhu Min, solutions. Zhu Min: Laura has a very important
point, which is a mandatory higher education.
I think it is absolutely important because if you think about job, what kind of job?
It's the competitiveness.
If you want to get competitiveness for the advancing economies, they have to move
into upper... You want the move in upper… and not into
the small section but in the massive scale sense.
Barry mentioned you have a Facebook or Google here and more.
You have iPod. You have Louis Vuitton.
But even iPod is made in China, right? I mean those are not enough to create job
for the advancing economies today. So when we talk about education system
today, it's not only to fix the problem in today but looking for the future.
You really need a massive educational reform, create the hope high education
system so that you would be able to bring the people able to work in high-end
industry. I'll give you a number.
China produces six million college graduate students every year.
Among them, one million are engineers.
In China, …they are not enough for the growth of a Chinese economy in the future.
What happened in the advance economies? Laura Tyson: And as the President often
points out, the U.S. has actually had declined in this respect.
We used to be number one in terms of college completion rates and college
enrollment rates for the college-age population.
We are number 14, number 16, number 17. We are not -- we are falling behind the
need to, for the next 10 years, take students and give them the education they
need and the technology that they need [cross-talking] --
Maria Bartiromo: Well, Tom Friedman had a great quote that we showed earlier.
When was the last time you saw a 12-year-old say, "I really want to be an
engineer?" Laura Tyson: So there has been a race.
The demand for skills has gotten way out of line with [cross-talking]
-- skills. Maria Bartiromo: Exactly. Solution.
Kiran Mazumdar-Shaw: Yes. I just wanted to comment that when we
talk about the skill deficit, it's again an employability debate and I think there,
I really want to subscribe to an internship-based training program within
corporates because I think that's very, very powerful and that addresses both the
training deficit and the kind of employability issue.
Maria Bartiromo: This is a great idea. We've heard some great insights.
Thank you very much. We are out of time.
Thank you so much to all of our contributors and our great ideas from the
audience, including of course our panelists and our advocates.
Please go to cnbc.com to find out when the program will air on CNBC globally.
I'm Maria Bartiromo from CNBC's Davos Debate at the World Economic Forum in
Switzerland. [Applause]