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tv   Key Capitol Hill Hearings  CSPAN  August 31, 2015 2:00pm-4:01pm EDT

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eight years down the line, and in some cases the sanctions are to be removed by the european union but not necessarily by the united states depending on the entity involved. but many, if not most, of these enterprises are linked to the irgc. and to people who have been involved in the nuclear program. so a question i have is, did you examine within framework of the iranian economy be what the effect is on removing these sanctions in terms of strengthening or weakening various players? .. -- various does the agreement strengthen the irtc-linked companies and if
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this strengthens the weaker of these companies encourages economic reform in iraq? discourages it, or has no effect? devarajan: it is a big question and a very important one. we did not look at that. mainly for the reasons that you alluded to. it is very collocated and there is a lot of uncertainty even over how much money there is that is being blocked. i readn artiin "w rk timesouthe ra we really didn't, we completely ducked the issue. it's potentially very important but i think we also don't want to mix up stocks and flows that we're talking about the effect of the lifting of sanctions on the productive capacity of the economy. these are assets that are sitting there. there's money sitting there and the question is will they be
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able to use it rather than have it frozen as it is now? then there's the question of how much money there is, but also that's a political judgment how they're going to use it. we don't have any prior independent assessment of how those resources will be used. i think michael is operating under the assumption that the fact that the revolution guard has benefited from iran's economic isolation, they fell -- they filled the void that some of its economic opening will be an integral to the rubbish regard. and old saying, the revolution guard will stand to benefit from this as well. the big question is whether they will stand to benefit from this opening up more than the population. that remains to be seen. that's what i ask this question about burma because i think
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these things happen, there's great hope and oftentimes we look back whether it's russia or burma in russia's back and we say a few cronies got very wealthy but didn't necessarily trickle down to the people the way anticipated. ddo you want to wait in? i'll come back to let me go back to the back. >> my question is a bit more with regards to domestic politics and its effect with regards to economic reforms. passionate iran has -- >> talk up a little bit more of. >> part of why there hasn't been a lot of success has been the hasn't been this consensus needed among these different actors within iran and basically the lack of political will. rouhani has quite an extensive economic reform plan, and my question is, what are some areas
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where iran will have an easier time politically instituting some of these reforms such as basically developing the productive factor as well of course what are some areas iran may have to wait a bit longer to do later on? >> great question. let me come here to the front. >> hello, my question is for -- imaging the economic regime change. you acknowledge that depends on choices. i want to take one step backwards but how can we say that those of the apparent economic and private concert economic regime change when iran will be facing stronger sanctions in place for the next so you than it did before the
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2010 when the new sanctions regime was put in power? the financial action task force, a much higher level of private sector risk reception towards iran even if they manage to insert a clause in case of sanctions step back and women u.s. agent implementation on other issues has actually become much stronger, much more effective over the years? so is it economic regime change or are we going back something similar to what was before 2010 when there was still a lot of restrictions in place? >> let's take one more. this gentleman here in the front. >> we did a study both iran andm and i think one of the implications of lifting the sanctions is it will strengthen the position of the rouhani government. but that brings into the issue
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raised that lifting the sanctions is good for the moderate government. they will proceed further with reform. in fact, with the sanctions the hardliners benefit more. and that speaks to the issue of the exchange rate. it was mentioned the windfall with -- i think they would not allow significant appreciation of the official rate. what could happen is that a black market rate will appreciate and you will eliminate the spread between the two rates. any appreciation of the exchange rate, which was very small, probably 10%, the black market could be offset with further structural reform. if -- [inaudible] them on a government will go ahead with the reef forms in an
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environment where the the sanctions are lifted. >> some good questions. the first one in particular i was wondering if you could talk a little about what are the sectors that are less sensitive to and tried reform economic -- >> i was hoping you would answ answer. >> i guess it's really a combination of which sectors are, what is an economically compelling case for reform as well. as there's a political window. i don't know what the sectors but serving the whole area subsidies seems to me a very high priority on both sides. there's a political imperative to do something about subsidies because it's a draining the fiscal balance, enormously. obviously there's an economic
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benefit to it. the other thing to keep in mind is iran may be sort of more so than others, did an amazing reform of subsidies five, seven years ago. this is one where the replace fuel subsidies with cash transfers, with a particular twist which is worth keeping in mind. i keep telling other countries to do it. which is that they provided the cash transfers ahead of the reform in a way for people could see the money in the bank account but they couldn't spend it until the reform was done. this shifted the political balance because all of a sudden people actually said they were supporting the subsidy reform because now they could use the cash transfers with incredible opportunity. for various other reasons it didn't work out so well and now the subsidies are back. but i think having done it once
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there's a chance they might be able to do it again. >> on the point of whether it's going to be politically easier, it will be politically easier with the economic case is compelling. the economic case in my view, is especially compelling, it can be in subsidies but it is especially compelling in the whole energy sector where there will be -- they will be desperate to attack foreign investment. the kind of oil regime -- oil royalty regime that they have been moving in the direction desired by international oil companies come in that regard. in general they will be looking for for investment. there are many good reasons to get foreign investment. particularly for investment of greenfield type, which is generation of employment and a
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transfer of technology and funding, access to funds are so this should be a relatively easy play in many sectors, except in those where the cronies, so to speak, our most prominent and most sensitive. i would expect trade liberalization by definition in the manufacturing and tradable sectors to be a particularly tough nut to crack because in my experience, when you have a lot of, a longtime were an industry remains protected and state run enterprises plays a big role, that's a very, very tough to open up quickly. again i go back to the wto and the negotiations.
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i'm not sure fully i know enough to answer your question. i started from the assumption that sanctions are lifted. i'm sure that, i'm not even me with all the details, but i'm sure that this will take time, et cetera. there's a number of groups to combed through including in the next month. and once the sanctions are lifted, which is the intention of this deal, and this may take a year or two or three for it to come to completion, then i would argue that you are dealing with a different iranian economy, and iranian economy that can be part of the world system. the sanctions, really honestly i was very surprised when i looked at the numbers, you know, how devastating the effect of sanctions has been.
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it's really enormous. so this is, i stress, i remain of the opinion that this is an economic regime change potentially for iran. >> jesse one point which is -- >> go ahead. >> ayatollah khamenei famously said economics is for donkeys, and his successor ayatollah harmony hasn't said that. in some ways that acted like a big is never put the country's economic interest as they persecute or second your priority. some the things that becomes popular which are really just no-brainers and for obvious from the economic perspective are not obvious from the perspective of an authoritarian ideological regime. you mentioned telecom, very good example. if you're an authoritarian ideological regime, you do want to see control of your telecom industry to ericsson or nokia or
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outside companies. they said i said the revolution is breathing down their neck. likewise, if you. kind of, the difference between iran and some of the other countries in the region is that, i would argue this regime has actually. the growth of the private sector of the country. i think from, when you talk about, that's why -- is helpful to those forces that want to see change, but i think we are naïve if we think the hardliners of simply going to open up the doors and work on a path that could potentially weaken their hold. this will be a long fight. we have time for one more question. there was a woman here in the front. if you're extremely brief we can add another one, but i don't want to keep you all late.
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[inaudible] >> that's exactly right. >> there was a year. -- a lady here. >> thank you. judith barnett. from a commercial perspective, once the implementation date pass or transition date there will be a whole lot of trade that can go on for not an american companies versus american companies. in the next three to five years, assuming this works out as well as can be expected, how do you see the agreement affecting u.s. companies overall? i know it's a pretty big question but just wondered if you could opine that since will be at a disadvantage initially,
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wondered how this could work out? >> very good, thank you. >> this is one of my worries either way, not just because of the mechanics of the deal but because of the animosity, not to put it bluntly. because of the animosity particularly towards the traffic and the discussed of the united states. on the other hand, united states has a lot of assets in its corporate sector. that's what it's the richest country in the world. it has a lot of technology, a lot of stuff that iran needs. it also has companies with enormous financial clout in a number of other sectors. so i think the united states is at a disadvantage. it is seen as a disadvantage
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right now, and a lot of other countries are ahead. but again the united states has enormous assets, and if we can get, move forward on normalization, then over time the united states can be a significant winner. >> i do think though that as long as iran's condition towards israel remains the same and it's support for groups opposed to israel remains the same, congress is very unlikely to lift u.s. sanctions against iran, and i think the situation will simply go back to what it was pretty 2005 for which the european countries were importing every, but the united states was still likely to -- >> i think the question was
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posed in the best of circumstances or something like that. you want to talk about that way which is not what you were just describing. there's still, he is still does have some issues that could support because for some high-tech equipment and technology that only the u.s. produces, and is needed in iran. it may not be in the big oil companies. it may not be the -- as far as i know, it seems like the french and germans already in tehran as we speak beginning better deals. so i think the u.s. might be too late to the party on that one, but there's still plenty of things the u.s. produces that nobody of produces, and that's it for a high-tech love, which is still made in iran so i think there's potential there. >> there was -- >> i like this question because i agree. michael achieved economies, donkey, whatever you want to call it, that exactly the point.
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you can make a real appreciation however it transmits itself work for you. with structural reforms. that's how successful countries have done it and that was what i was think about trying to make sure that uses a windfall in such a way that the nine on a sector can continue to grow. >> fully agree. >> thank you all for coming. above all thank you for this terrific report, and hope to have you guys back. thank you so much. [applause] [inaudible conversations] >> congress is expected to consider a resolution of disapproval on the iran nuclear
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deal after members return next week. starting tomorrow night we look back at the agreement negotiated by president obama. the president explained a plan during a speech at american university. here are some of his remarks. >> now, because more sanctions will not produce the results the critics want, we have to be honest. congressional rejection of this appeal leaves any u.s. administration that absolutely committed to preventing iran from getting a nuclear weapon with one option. another war in the middle east. i say this not to be provocative or i am stating a fact. without this deal iran will be in a position, however tough our record may be distilled advanced its capabilities.
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it's breakout time, which is already fairly small, could shrink to near zero. does anyone really doubt that missing voices now raised against this deal will be demanding that whoever is president bomb those nuclear facilities? and as someone who does firmly believe that iran must not get a nuclear weapon, and who has wrestled with this issue since the beginning of my presidency, i can tell you that alternatives to military action been exhausted once we reject a hard one diplomat solution that the world almost unanimously supports. so let's not mince words. the choice we face is ultimately between diplomacy or some form of for -- maybe not tomorrow, maybe not three months from now,
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but soon. >> you can watch all of the president's speech at american university tomorrow night at 8:00 eastern. will have that on c-span as well as a review of some of the other discussions and hearings on the iran deal as congress returns to capitol hill and works on the resolution of disapproval or a former commerce undersecretary international trade talked about the u.s. role in the global economy at the heritage foundation to his remarks were about one hour. >> good morning, everyone. welcome to the heritage foundation. it's really a delight tod morni. welcome to the heritage foundation. it's really a delight to have all of you here this morning. it's the end of august. people are still on vacation but school is taught in some areas but it's hard to feel like maybe washington is getting back into the care of things, so we are all too happy to thought process
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along. very happy to be here for the release of a new report by the heritage foundation, this is the 2015 global agenda for economic freedom. here is a copy of it. this is a study that produced in tandem by the davis is a deeper national security council and policy, and also the institute for economic freedom and opportunity, both of which are distinct entities inside the heritage foundation. i am especially happy to be here today for two reasons. one is to host my good friend grant aldonas as a keynote speaker. grant is one of the sports people that i know of economics. is also a true gentleman. but i think most importantly he is a good guitar player. he's a fan of the blues and jazz as i am as welcome as they keep on teasing him about putting together the economic freedom group as the newest thing in
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rock. something is wrong with the term i guess. but the other reason is that i was the founding editor of the index of economic freedom, here's the 2015 edition of the index, upon which this study is based. and also we started a series of these global studies from the least of which will be discussed today, but when i was vice president of heritage. i'm proud to see that these reports continue and to watch them grow. i think it's one of the most important things that the heritage foundation does, in my opinion. is especially timely to have this discussion day because of what's happening in china and, of course, with the u.s. stock market. the debt and structural problems causing the melt down of china stock market are not limited to china alone. me at the same economic failures at heart china be doubled the rest of the world, huge debts,
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corruption, bloated state-owned enterprises, a lack of transparency, a lack of the rule of law at a general lack of economic data. and as you will learn from today's discussion many of the mistakes of china and others make are also being done by this administration. so we should not be surprised event that our economy is in trouble, too. and we have lost the particular the ability to lead the world out of recessions and economic troubles, which i'm sure all of our participants, particularly grant, will be talking about. did get us started, grant would deliver some remarks. he wears many hats and has a wide range of experience in trade and economic policy and the law. from 2001-2005 roughly the same time i was at the state department grant was undersecretary of commerce for international trade. a number of historic trad figurs were enacted was in office including the normalization of trade relations with china and the trade and element act of
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2000. before his tenure commerce grant was cheap economic trade counsel to the senate finance committee which is the top of trade policy position in the congress. today he is the principal managing director of a trade and investment consulting firm. he is an adjunct professor at georgetown university's law center, a board director the initial technology and innovation foundation and also a senior advisor to the center for strategic and international studies, csis. after grant makes his remarks we will be joined by commentary by bill wilson is a senior research fellow at the asian studies center here at heritage. bill lived for a number of years and i think three years in beijing and also spent some time in moscow, so he has a unique perspective on the economy of these two countries which i'm sure he will share with you. also is a jim roberts, research fellow for economic freedom and growth at the center for good
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economics here at the heritage foundation. so i'll ask grant to come up and deliver his remarks and then after that we will have, we'll hear from the other two. and she very much. >> well, thank you, for that kind introduction. i'm at the age was only goes back to you by your fears of aging all over again so i'm not sure how much i should really appreciate the introduction. but the blues part i really like because it's one thing that keeps us young. my job here first of all is to applaud the release of the global agenda item the other for every year to the index coming out because it's a benchmark against which we can measure the extent to which decides
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recognize the importance of economic freedom and then measured the extent to which the unlike visitations actually promoted or undermine it. i'll come back to this at the end of the problem of course that you see reflected in the global agenda report that is communities where the united states is, i can only put it this way, mired at this point and has been for some time. because of the united states has to be to be america. it has to be a beacon in terms of economic freedom. we can't depend on hong kong to be the advocate. and an absence of the united states assumed that leadership role in the global economy is no alternative. we have to be the defenders of not only our own freedom and understand that our defense of the freedom depends on the day of slaughter where i want to start and why so welcome the opportunity that kim and the foundation has given me is an opportunity both to reflect on my own expense but also to read
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friedrich hayek and "the road to serfdom." i'm going to start with a personal reflection and then spent a little time on hayek just as reminder of the backdrop for this study and develop them back to where i think economic freedom should be essential to the 26th in president's the problems we're facing in china reflect what economic freedom ought to be central to the debate in 2016 both about domestic economic policy and equally important the role issue put on the part of american foreign policy going forward. but first to the personal side. i am what i like to say that fortunate son of jonas kaczynski's, refugee from refugm lithuania. like many immigrants before him he receive received a new name e person of u.s. immigration when he came to ellis island which is why his middle name, album this is my families and me.
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he was actually very colleges because of his life experience of the -- aldonas -- forgive me. of the freedom he enjoyed in his adopted country. because he could measure it could measure the freedom he lost a lithuania. when my father was born in 1922, ma the first your lithuania gained its independence five centers. of courses would he witnessed the gradual erosion of the independence by forces within limiting the site and without. what he saw was his country destabilization and occupation by the soviet union as foreshadowed, its destruction upon the nazi invasion in june 1941 and roughly four years of german occupation of which point all his friends are medical school were murdered and finally the murders -- the 900 day siege of leningrad. as the soviet forces approached
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my father would can underground to resist the soviets tried to persuade his father and a dummy to leave. his father refused, arguing that things would return to normal after the war. my grandfather in a letter to my father never spoke about a lithuania expressed his sorrow for not having followed my father's advice. but in fairness he had grown up -- become a widely regarded hospital administered in the couldn't conceive of a different life might be in a totalitarian society. indian my father did escape with only his sister and a nato off in hiding across europe and eventually on a boat to take into sweden. and even a german patrol boats stop them obama offshore mi5 had to swim the last mile in the cold waters of the baltic to freedom. it was over qualified for you.
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as oftentimes seem to case both in my father's life and them is like held. as he was in a stockholm and gives up line for refugee status of essentially as i live in the united states he met my mother who is serving as a foreign service officer in the hotel diplomat which was at that point the american embassy in stockholm, and my mother used to tell the story that she walked in the hallway and looked up and saw that he was a 6'3", dark green eyes and dark hair, i don't look lithuania i look like the swedish side but said she fell in love you. my father told this to the opposite perspective that he came down the hall, saw this beautiful woman nearly $60 up, lighter blue eyes and saw a visa to america. [laughter] in those days the foreign service was a lot less enlightened to as a woman you
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are fired if you are married even to a u.s. citizen. when it finally did mayor in 1949 my mother looked at the foreign service and return to minneapolis which is were i was born. i'm the fortunate son of all those events. roughly seven years have passed since my father met my mother at the hotel diplomat and it was ironically at that time in london an expatriate friedrich hayek in the short book we all love as "the road to serfdom." but long before i read hayek i observed it. we would normally walk together in silence just enjoyed the beauty. every so often which, of course, find you as a young boy, my father would turn to me, really in a very solemn way to try and explain what is his experiences have taught him. a single server which doesn't summarize his lesson is one that returned me when i was reading
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hayek in preparation for the stock. he turned to me and simply said, grant, someday someone will a few security in return for your freedom. you should never take that you because you end up without either one of them. broad outline, that was high excuses. -- hayek's thesis. just as relative it as the time my father was explaining that to me as you would in minneapolis. freedom is indivisible. it can't be the second navy between the political and economic realms. but a recent hayek warned the progressive erosion of freedom and economic fears without which political freedom has never existed was something of a death sentence for free society. hayek underscored quoting the words of -- traffic control of the production of wealth is the control of human life itself. he sought to remind us that what
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we forgot as hayek putit, the system of private property is the most important energy of the. and for those who own property but scarcely for those who do not. only because the control of the major production is divided among many people acting individually that nobody has complete power over us, that we as individuals can decide what to do with ourselves. hayek understood that the freedom of individuals, of individuals shape their own lives close to such with the growth of commerce. that offers a stronger explanation, david ricardo's discourse when compared advantages in portuguese wine and english cloth. it's about the free part, not the trademark as powerfully compelling as the economic argument or. at the end of the it's about the right of the individual to
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choose free of coercion by the government or by another person in our society that vindicates the idea behind free trade. what hayek recognize was the erosion of the freedom would threaten not just the interest of the individual entrepreneur, farmer or worker but the basic individualism that we had inherited from others. the supreme tragedy as hayek saw was is largely people of goodwill, many were admired and held up as models in a democratic country prepared to wait for it to do that as a great the forces that destroyed that inheritance. a subtitle for hikes workers that would be a font which is often attributed to saint bernard. today as was true in hayek's time, those who advocate do so out of an appeal to the greater good.
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cps estimate is a good example of the act. a certain package of health insurance regardless of whether there's a need for it, that active compulsio compulsion is e underground message to make health insurance affordable to every american. what that ignores is the extent to which it paves the way for other erosion of freedom both economic and political. president obama's willingness to ignore the requirements of the operable care act is systematic of a broader justification by which the ends justify the means. regardless of what that means in terms of respect for law, the constitutional limits on executive power or the erosion
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of individual freedom. the fact that the idea that before the operable care act were supported by researchers at the heritage simply underscores the problem. it's confronting the political exigencies that any particular moment it's easy to forget that liberty is the ultimate and we seek, not merely a management type that can be casually sacrificed on the through the encryption is mild and outweighed by the greater good. hayek saw that clearly as he noted the principle of the end of justice the means is either immoral or amoral. but the from the perspective from achieving a greater good becomes necessary the supreme rule. there is nothing which the consistent collectivist must not be prepared to do if it serve the good of the whole. so-called progressives today much like liberals socials of hayek's time our guide in their endeavors by the tragic collision that by depriving individuals of power they
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possess and by transferring that power to society or to government that they are there but extinguishing power in exercise of power that at times disenfranchises people. what that implies is a tyranny the collective good is about what individuals who claim to represent the interests of the politically or economically disenfranchised. to understand is, it is essential to understand his time. as a unit in austria he witnessed the evolution of german, political and economic thinking starting with hagel who rejected the idea of the individual. at this distance we can see german history to the prison of world war ii to the rise of national socialism and the holocaust the what hayek sought to remind us was the evolution with the german fought predated and prefigured both the embrace of socialism in germany in the late 19th century and later emergence of nazi-ism and. hitler's rise in parallel with stones was at the end towards which philosophy pointed because
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the theory of the collective good could that be realized in practice without compulsion. key to the practical implementation of that agenda was the promise of security at this is what come back to the thought my father -- the promise of security can hardly disaffected. and did the times about to be defined freedom as security, freedom from choice rather than freedom of choice. as hayek pointed out for from increasing the chances of freedom the promise that security became the greatest threat to it which explained why my father's words continued to echo in my mind. so in closing trained to this year's report, -- turning to this report, i want to focus on one right up front. the report says in 2010 that time it fell from the highest category of economically free
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countries in the latest index of economic freedom than has been stuck in the ranks of the second tier ever since. that to my mind represents the core issue of the 2016 presidential campaign. at the end of the day went to determine to ourselves when we went to vindicate the idea of academic freedom because it's indivisible from the idea proposal and whether we will pursue that not only for ourselves but make it a core principle of our foreign policy, and organize principle of what we do and integrate the objectives as a part of our foreign policy as we've never done. frankly, even in the reagan years it was not told i integrae as a part of the agenda that we need to pursue. the reason is very much out of their own interest but in the broader id and acceptance of what it means to be an individual and to be free. thank you very much. [applause]
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>> thank you, grant. 90, kim. -- thank you, kim. as kim noted, our index of economic freedom over the last 21 years has shown that open economies lead the world in innovation and economic growth. greater economic freedom correlates with more prosperity per capita in more countries around the world. worldwide increases of economic freedom this year have been driven by improvements in trade of freedom, monitored freedom and freedom from corruption. in the past year, average scores for most of the economic freedoms including business freedom, property rights, labor freedom and financial freedom have registered small declines. more troubling in 2015 with the losses in the comfort and increases in the size of government, higher government spending cause is the duration
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and reflects the continuation of the countercyclical and indigenous students policy that greg was mentioned in the united states and many other countries. our global agenda that is based on these index of economic discourse and their calculated using for areas contain indicated and the issues there is a surface often as challenges in every region of the world. for example, while international trade place in increase a significant role in the economies of the united states and other countries come unfortunately negotiations for for the global trade liberalization to the doha round have graduate halted the global agenda notes some potential bright spots for global trade. the ongoing effort to negotiate a trans-pacific partnership in the 21st century trade agreement. to be the benefits of each tpp country were willing to make beneficial policy changes that would include reducing tariff
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but nontariff barriers commitment and protection of intellect property, including international investment rights, the dismantling agriculture and other government subsidies and limiting support of state-owned enterprises. as documented, protectionist measures industry-specific subsidies access and potentially protectionist enforcement actions such as antidumping or accountable and to become regulatory measures reduce the efficiency and competitiveness and diminish the prosperity of all nations. all countries should resist this counterproductive policies and the united states should lead that resistance. our example -- more freedom for workers to labor freedom and business freedom scores are higher in the index countries with laws, regulations and policies that give workers and employers flexibility and opportunity. the global agenda calls for more with less corruption, less cronyism, strong judicial institutions and more property
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rights. the biggest problem in the indian economy is uncertainty about land ownership and its effects, ethics hundreds of millions of people. american leadership can be decisive in promoting property rights anticorruption measures in other countries with technical assistance to strengthen rule of law, for example, or develop an appropriate legal norms and land property and mapping property. i will look at the first four in some detail now and then my colleague dr. bill wilson will cover the rest. incentives of them and the craving economic freedom scores range from excellent and chilly to abysmal in cuba and venezuela. with major players such as brazil, the world's sixth largest economy registering comparatively low scores because of protectionism and heavy-handed regulatory regime. that are some positive regional
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trends, most of the world ftas arthur based in the region aren't regional participants especially among members of the alliance of the pacific, pacifica lines, chile, colombia, mexico, peru. economic freedom scores have plummeted. wadhams of the pacifica lines have full access to international markets, strong international liquidity, alice e market and fiscal performance and deposit inflation outlook. the global agenda praises the unprecedented energy reforms undertaken in mexico that could great numerous mutually beneficial opportunities for the u.s. and other multinational energy companies but urges mexico to continue to liberalize and open its economy and remove
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pemex will no monopolistic power. and benefits already substantial should be expanded through the tpp and bilaterally to remove remaining barriers to international trade and investment. in europe we see the former ussr countries are still struggling to achieve more economic freedom and dr. wilson michael into that in more detail. moving to sub-saharan africa, despite some setbacks caused by political turmoil and ebola in the last year, sub-saharan africa's one of the most improved region and the 2016 index. six of the 10 largest score improvements among all 170 countries in the index were registered by sub-saharan african countries. nonetheless, the region as will continue to underperform when it comes to following through on reforms to help emergence of a more dynamic private sector and result in more broad-based growth.
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more critically the continuing existence of some countries of money the economic playing field exacerbated by week will of law means resident residents who lae connections are still being left out that have unlimited prospects for a brighter future. the global agenda that calls for prioritizing the fight against endemic corruption in africa, and the fragile protection of property rights and inefficient entrepreneur environments in africa. elsewhere in africa, kenya is in the process of evolving as highway -- -- this devolution process could result in the job gains in decentralization of power and limited government but the devolution of it requires not only enhancing local lexus of capacity but more critical improving budget management and oversight capacity.
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for global agenda encourages african economic integration, formal trade remains at a weak level. to maximize the trading potential the series and bold plan for a greater continent wide integration just did develop and put an accurate to steps are being taken, however haltingly to the free trade area been pursued by the africa union. however, complex custom unions and administrative procedure and regulations continued to hinder these efforts. although fdi has grown substantially, such an effort has been hindered why political unrest and uncertainties from investors concern over taxation issues and in the absence of specific investment instruction per countries such as china have different roles in africa. they are opaque investments may help build a port or high with our railroad today, but they do
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with and potentially a bitter legacy of corruption and nepotism. many of the same themes emerging in the global agenda's findings that we've already talked about are present in the middle east and north africa were countries have undergone political and economic upheavals during the arab spring. as long overdue economic reforms continue the postponed in the region due to political instability. as a result of the gradual rise in economic freedom that have been recorded in recent years has come to a halt. structural and institutional problems abound in the region's unemployment rate is among the highest of the world, fueling more instability. these problems are complex and record in decades of authoritarian rule in the middle east which is get power and resources enhance of a few. as long as national economies are dominated by the state sector, political leaders will be reluctant to share power if that diminishes the access to
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state-controlled will. difficult institutional reforms are required to reduce the states role in the economy and in people's lives. than the other like to turn the floor over to dr. bill wilson to cover the rest of the world. thank you. [applause] >> good morning. nice to be a. my presentation be a bit different or i've recently been fishing for over three years and then returned last year to the united states after living in moscow for about two years. so my comments will focus on what i think is going on the ground in these countries after talking to government ministers, business people and property developers. so i have about 10 minutes to talk about china, india and russia. so if my remarks are quick, i apologize. we need to leave time for questions and answers. 50 from 60,000 feet is that my
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feeling is very strong without after being the global economic engine for a long time in asia, especially east asia, economic growth has clearly peaked big time in asia for a number of recent the i'll give you three quick reasons. number one, demography. if you look at china, taiwan, singapore, hong kong, south korea, japan. you have fertility rates well below two, approaching one, compared to 2.1 in the united states. so much of asia especially east asia has its phenomenal demographic dividend for about three decades. it is now entering very rapidly the demographic deficit right now over the next few years in two decades. reason number two which i'll go into detail in the 60 seconds, the china stronger china
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accounts for 45% of asia's gdp, and its growth in china is growing, is slowing much more than you think it is. reason number three, something no one is talking about, especially outside of china, since 2008 much of asia especially east asia sort of sailed throug to this economic . why? credit growth, debt. there's been an enormous, i'm not talking just about china and even outside of china, there's an enormous increase in credit growth. no one has we talked about all throughout asia effective look at total debt household, corporate, government debt as a share of asia gdp, unbelievably it's higher now than it was before these financial crises in 1997. so much of asia especially east
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asia has manufactured a growth the past six, seven years build on a surge in liquidity and debt. a huge story. let's switch to china for a few minutes. given the recent slowdown in traffic question is should the global economy be concerned. the short answer is absolutely. here's why. china agenda is the work the second largest economy at current exchange rates about $12 trillion compared to u.s. at 18 trillion. there's no close third. it has now doubled from it surpassed japan in 2010 and a summary twice the size the japanese economy. is the largest trading nation for 75 countries and is by far the largest importer of tomatoes in the world which is of course a final export for many, many, many emerging markets. this is why commodity prices are
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at a 14 year low. and over the past seven years china has accounted for an incredible one-third, one-third of global economic growth. so naturally it's a concern for the global economy if china enters the so called hard landing, which i think as i will go into detail, is a mathematical certainty. it's not based in hong kong tuition to i think it is a mathematical certainty that china has to enter a financial crisis, economic and financial crisis. the question is whether it occurs sooner rather than later. question can we sing the chinese stock market collapse in at about 50% over the past month or so. is that huge concern? interestingly i would say no, it's not a huge concern. only one in three chinese owned stocks. and only about 2% of chinese
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market capitalization, 2% are owned by foreigners so the contagion effects from the fall of the chinese stock market in the is the second largest stock market in asia after japan i think we'll have a large contagion effect if it falls with which i believe it will. i think we'll probably be raised all the gains it had from the previous year and have it not there yet that it is moving there. and we should center on, center folks are going to economic fundamentals that are currently dramatically slowing, slowing china's economy. what has become crystal clear in my opinion is that china's economic model of the past three decades was built upon largely free big pillars. ..
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. >> exports to china have been a source or significant source of economic growth since 2008. that engine is gone. china is not the export and the fact that china has 13% global exports compared to 2.5% and recently is 2,000. the housing market is much more important than the stock market in asia.
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it's a critical recipient, it's household savings and supported by many developers in china. of having a house of unsold units of 70 million unsold homes. 70 million. to give you some scale, the height of the u.s. financing house, the bag lock -- back load 1.5 million. if that figure is correct, 70 million, the prices would fall, they would have to fall. in fact, they have been falling. tier one, tier two. the housing market has been falling for two years. the housing sectors are the major source of savings. they're falling for the first time in decades. we have investment, the last two quarters have been running at a
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mind boggling 50% of gdp, leading to massive excess capacity and major industries, cement, and highly doubt that we are at the 70% right now and what's being released, et cetera, etc. growth is slow to 5% and more importantly it continues. think about it. you're investing 50% of your economy, 50% and you get -- that 50% is generating 5% growth. 5% gdp growth. so what we're seeing a decline on returns on investments.
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80% of are state-owned enterprises. the rest are private. i have to keep moving here. the anticorruption campaign with scope and intensity are far greater than anyone, anyone expected. in my believe it's the strongest leader that china has had and -- get this figure, nearly a quarter million officials and others have been held in detention or formally charged with corruption. a quarter million. this is more about clearing the
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old guard. this is much bigger than that. so for over 100 committed suicide. lets move onto india. lets see if the picture is any brighter there. the first gear tells about the intentions of an administration. go back and did what regan did in the months. quite revolutionary. political capital that's in peak. if i had to give them a grade, i had to give them a gentlemen c. most economic indicators over the past 12 months, even before he took office have been
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improving, exchange reserves increasing, the fiscal deficit is increasing, low oil prices, socialism and central planning that was good, so you get some credit there, but the bottom line is this, no really what we call bang reforms, which ibdia so sourly needs right now. india has its own demographic problem but it's different. india is getting enormous growth at it working-age population. india has to create 12 million new jobs a year, and under current conditions, they're not going to do it. the economic policy that required guts to undertake the
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roll back law that makes hard to acquire land. this is critical. government needs to acquire land for infrastructure. the goods and services tax which was meant to simplified the nasty complicated tax system. it was a no-breiner. it should have past the first year. the bottom line i think the westerners looking after 12 years, there was the perception that mody will be another reagan . they wanted smaller government. excuse me, smaller governments. i don't think smaller government was his intention. he didn't want smaller
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government. he wants for efficient, efficient government and it's a clear big difference between that. i'll finish with a clear quick comment with mother russia. i was in moscow for 24 months. go back if you get a chance. just don't tell them you're american. you're can -- canadian or english, they can't tell the difference. today it's a stamping for vladimir putin. they have no power. they challenged putin.
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putin will just enjail. it was relatively free. i'm telling you this, the media print, radio, tv is completely controlled. all important decisions in the country go through and essentially run by the internal security, make no doubt about it. you've seen recently some good news on population. the population is actually stabilized the past three or four years. why? one reason why is per cap -- ca punishing >> were high in the 1980's. that generation is having
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babies, what happened to the birthrate in 1990's? it crashed and burned. a decade from now what you are going to see a clear rapid decline in russia's birthrate. it takes $110 a barrel to balance the budget. unfortunately, we have oil hovering 40 a barrel. the difference that they did have massive exchange reserves, but you can burn through those quickly. russia is in recession. the economy is being contracting for at least three quarters.
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i know i'm going to finish here. i know my presentation tend to be bleak. [laughs] >> what i present was my boss, he's not here today. he's on vacation. he only wants to present with me late in the afternoon so he can go out and get a drink. [laughs] >> i'll finish with a quote from one of my favorite movies. most of you have seen it a 1987 movie, classic wall street played by charlie sheen gets arrested by the feds. he gets arrested in the office in front of everybody. his boss is played by al brook.
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man looks and sees nothing looking back at him. only then does he find his own character which prevents from falling. i having to like crisis, you don't get structural reforms unless there's a deep economic crisis. think of china in the late '70's and asia in 1997. as for russia, the man looking is vladimir putin and russia is not going to change until he's gone. thank you. [applause]
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[laughs] >> thank you all of you for your presentations. we have a few minutes left here from questions from the panel. we have a gentlemen with a microphone. if you can raise your hand and identify yourself briefly, and in the interest of time, if you please ask a question, and if possible keep it short and to the point as possible, so anyone would like to start? down here. >> yeah, voices of america and mandarin services. he says we shouldn't worry too much about china stock market crash, i'm just wondering that there are other experts you hold similar views on that?
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>> it's probably something my colleague would agree, the truth is it represents based on lack of information in transparency in the way the chinese government. there's not enough information in the marketplace, expectations are never in line with reality and then you get this sort of sharp contraction. so the unwillingness -- let me put it this way. the willingness to concentrate make sense. what it does is forestall to one that's based on rule of law that allows personal exchange. but deferring those economic reforms, it's setting the stage for this current crisis. it's the reforms that are essential to attack the underlying issues in the
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economy. i understand why politically he's doing what he's doing, but the reality is, is that by deferring the economic reforms it's setting the stage for real economic falling. >> any other comments? >> one more thing. i never learned chinese stock and there's a good reason why. what i did once was is a clear simple graph. i listed companies and listed variables, a clear simple graph. i reported cash flow and net profits for u.s. companies and the correlation was 90%. i mean, 100% because you have extraordinary items, you know, right off. i did the same thing for chinese listed companies to see if
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there's a correlation, what i got was a cloud. there's no correlation with cash flow and net profits. how could that be? when chinese companies have high cash flow, they don't want to pay taxes, they want to avoid taxes, they report lower net profits. a lot of chinese companies will list hire profits for less, you know, fewer losses. why is that? why would a chinese company do that? the worst fear of any chinese company is to be audited. i mean u chinese companies rated triple a in shanghai.
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how can that be? there's a couple of companies, a lot of companies. a lot has to change first. >> okay, next. terry. >> thank you, terry miller from the heritage foundation. dr. wilson said he liked crisis because that is how you get structural reform. i would like to link that back about freedom and the fact that we've seen crisis used, for example, with germany, before world war ii and recently in 2008 here in the united states for governments to enact structural reforms that do not promote freedom and do not contribute to a stronger economic growth in the future, so my question would be how can we help ensure that when we have a chris sis like we had in 2008
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or there current crisis if there is, in fact, one that actually increases economic freedom and guard against reforms that would have just the opposite impact? >> this is why we have to make it a central issue in the 2016 campaign. you think about donald trump leading in the polls, he represents an economic theory that reflects his life. if you're a property developer in new york, it's his play, not so say that he's bought into or reflecting some ten uir but to point out the what the
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philosophy is. it's time to stand up and on politics, but the point out what's wrong with the underlying philosophy, in the process is the reasons why freedom matters. the reasons why an individual shall expect something different and better if you reject whatever you want to call it. but the bottom line is you have to have the courage to do that. what we're waiting for a candidate with the courage to lead. when you think about what you had with reagan, in both uk tanned united states, they're required. we had tendency to think that
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america has declined. i met a bet when we entered the financial crisis, we will be a larger share of the global economy for all the wrong reasons and it's because the setting was strong in its founding that we still live with the benefits of that freedom while everything else is declining. because what happens, when you have a crisis with all due respect, good for economist, but from the point of view of the rest is fight or flight. and that's what the politicians sees. in the faith of that you need the courage of reagan why you need to fight for freedom in that context. that's what i think we're waiting for and central to the campaign. you can see where hillary is doing. she is deferring to folks that
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are interested in that greater good, collective enterprise. so you kind of have to come out in the republican side, but shining bright light on what is currently being sold as a version of where the country ought to go. >> yes, sir. >> i hope that's not as far as it was meant to be. >> american citizen. it's easy to miss the trees for the forest. they sort of stick out and they're not the same as other ones. freedom is good between me and you but freedom with my walt, no, freedom with my wife, no. there's limits. if you look at the american economy, agriculture and second
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is scrap. our latest 70% of electronics are made in east asia. do we see any problem with that particular tree in the forest? >> let me start with a basic tale which i've explained the economic side as well as the freedom side, free trade. today we're negotiating and one leader is ford motor company. if you look entrepreneurs in this country we have a lazy notion that it takes in silicon valley, down in austin, we tend to forget that they start a business as landscaping. the first capital purchase is a pickup truck.
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25% tax before anyone has earned their first dollar on creating that enterprise. that's what ford motor is asking to maintain. so when i look at the tpp, even accepting what she said, the first time i think is why is that subject to a 25% tax because ford motor company sees in its industry to maintain that protection. why is that choice limited for that individual? now at the same time you have to be conscious of what is really going on in the world. for example, as a free-trader when i see a chinese company, i'm clear concerned about that. now it's not the conventional concern that it is eroding industrial, i worry about the
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basisline technology. but i worry about the fact that a chinese company becomes part of a political process, right. all those thing that is we learned reflects why we should be concerned about that. when you say there's limits on free trade, i would say we should pursue for the benefit of eliminating those sorts of tax that is we see that injury our ability, we should have clear conscious of the areas that you are inviting forces down the road. my response would be on free trade, trying to make sure that we are trying to vindicate our rules in the global marketplace and deep consistency or concernd when other places that violate the rules undermine our ability in delivering promise both here and abroad.
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>> okay. yes, sir. >> john with cti of taiwan. where the volatility have any negative impact on president's position when he comes to a state visit next month? would it make him more acceptable or easier to make deals or concessions to the u.s.? another issue with taiwan we all know that the economy is so dependent on the mainland. what are the volatility of the stock market and slow and expected growth, and potential financial crisis have any impact on taiwan and anything that taiwan can do to prevent that? thank you.
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>> yeah. >> let me say this, you look at the factories right now. brazil is in recession. russia is entering a deep recession. four years ago china was growing at almost 10%. it's almost half of that down and grinding slowly. he comes to washington in september, he won't be studding in. so you've seen -- the u.s. economy is always written off. it's written off in '81, your -- '82. it's a pretty strong.
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u.s. corporate balance sheets are in prestine condition. i was in taiwán about nine months ago. we are concerned. we used to be by far the largest trading partner for taiwan during most of the postwar period. this that is completely reversed because of the proximity. china is so big now. 40% of exports go to -- exported, the value added and gets complicated but now you have the case where 70% of taiwan's outward bound of foreign investment goes to china, and if they end up
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approving the cross trades service agreement, that could go both ways for taiwan. after living in china, the service sector, the quality of the service sector is extremely poor. there's no culture in terms of -- in the service industry and providing quality services. you realize that clear quickly. so there's a possibility taiwan could do well because it has a much more sophisticated service sector, but, of course, on the other hand, given a difference in size the chinese economy now is 20 times larger, 20 times larger of that of taiwan and recently is 2,000. it was only ten times larger. and so there's a worry among small medium enterprises about being consumed and swa swallow
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swallowed. >> he's read the opposition accurately. the president has invested a lot and china being on board in terms of the climate change agreement at the end of the year. the idea that president obama which jushed -- under >> lets not kid ourselves, i used to love when the chinese use to describe as a paper tiger. china and ping are clear good at projecting idea despite the turmoil you're seeing in the
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market. the reality is much more unsettling. this is the country that has ruled for the benefit of the people, not for the rest of society. and under those circumstances we should be clear concerned about the fundamentals, but that won't play out in terms of meeting with president obama. >> i think i'll take the liberty of asking the last question. going back to the question that terry was asking about how do you -- how do you direct a crisis in the right direction. we've been in a series of crisis for a number of years. the one the ronald regan and got turned into the right direction. what was the difference, what was going on in the country that allowed the politics to go off in different directions? i don't know the answer to that. maybe you do have it. it did remind me of another
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thing, it is that clearly in the case of regan there was a widespread perception the way the direction the country was going was not working, there was a high inflation for the 1970's which leads to the federal reserve. by keeping the interest rates low, by putting all this money into the system every time the stock market hiccups -- the same thing happens with china, it's hiding the structural problems and politically this is benefited the party or the movement who wants to easy answers on security and all the thing that is you had mentioned. and so the other thing that you talked about here, we talk about hard things. i think we speak the truth.
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>> right. >> the truth is not what people want to hear. talk about the federal reserve and the issue, is it possible to unwind that problem without having the kind of pain that could put the crisis in the direction, in which direction, i don't know it could go, but at will -- a lot of americans are not seeing the reality because of this. >> you raise such an interesting question. i mean, it is the central problem. if you think about the debt crisis we've had there's been amount. it's driven starting during the inflation, and what we've done with the existing policies. we are simply, the federal reserve the possibility of
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global financial crisis. how do you try and combat that when it still has faith in the economic theories despite the failings is a real problem. she's somebody who is clear steady, was when she was president, keep the money flowing. lets keep the money flowing as a practical matter. i doubt that you're going to see much resistence to that. he was pointing out thing that is were fund -- fun
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>> he was shun speaking the truth. you're absolutely right. you even think about an economist in a clear practical way. when we measure, we measure goods. we delude ourselves in thinking that the inflation is low even though you see it popping up. all the data that you are looking and persuade most people, lets stay where we are, ignore the clear feature of the system that's creating the next crisis, that's where we are stuck. china, frankly, because it had the opportunity to take advantage of the period with its rapid growth, reserves, is now stuck with a problem that was ones in the united states, ones in asia, in russia, but it's just money, debt in the international system, and it is
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until we bring it -- but that has to start politics. there has to be courage to stand up and say that this is not what it purports to be. >> any other comments? [laughs] >> i hope everyone will join me in thanking the speakers. i learned a whole lot and i hope you did as well. stay tune for the index of economic freedom. it comes out in january of 2016. thank all of you. [applause] >> president obama is on his way to alaska where he will talk about climate change,
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participate in reality show and is planning to stop in denali, we will have the president's comments tonight from the arctic global warming conference. today a journalist with the political report talks about the supreme court's decision on redistricting and the coauthor of undercover starting at 5:15 eastern. he talked about the department's counterterrorism efforts including border security, cyber security and recruitment of foreign fighters. he spoke for about 45 minutes. >> thank you, joe, and thanks to you to all the hard work that you do in organizing the event every year. it's always so great to me to realize that thus for 9/11 any
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of us would be in this room, responsibilityies that changed the economy in many ways. i wanted to open up the subject matter with a brief video clip from the last republican presidential debate. >> terror and national security. you said that senator, even go so far that he should be called before congress to answer for it if we should be hit by another terrorist attack. you really assign lame for opposing phone records in an event of a terrorist attack? >> yes, i do. i'm the only person on this
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stage whose actually filed applications and have gone to service court and prosecuted and investigated terrorist in this country after september 11. i was appointed from president bush and the world changed enormously do next change and it happened in my state. i went to funerals, we lost friends of ours. my own wife was two blocks and her office having gone through that morning. you have to be responsible respecting civil liberties and protecting the homeland. i will make no apologies, we have to give more tools to our folks to be able to do that, not fewer and trust those people and oversee them to do it the right day. as president, that's exactly
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what i will do. [applause] [screams] [shouting] >> i want to collect more records from terrorists but less records from innocent americans. the fourth amendment is what we fought revolution over. john adams said it was a spark and i'm proud of standing for the bill of rights and i will continue to stand for the bill of -- >> megan, that's a completely ridiculous answer. i want to collect more records from terrorist but less from other people. how are you supposed to know, megan? >> get a warrant. >> listen, senator, when your subcommittee is blowing hot air like this, you can say things like that. when you're responsible of
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protecting the lives of american people is to make sure -- >> here is a problem, governor, you misunderstand the bill of rights. every time you did a case, you got a warrant from a judge. i'm talking about searchers without warrants of all americans' records. i don't trust president obama with our records. i know you gave him a big hug, and if you want to give him a big hug, go right ahead. [shouting] >> senator paul you have the hug that i gave from the people who lost families in september 11. it has nothing to do with politics unlike what you are doing to raise money for your campaign and while still putting our country at risk.
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>> i think you get the jest of the discussion today, and we have all of those point of views express in our panel today. i want to introduce briefly -- [laughs] >> our panelist. >> i hope we can do better than that. >> i hope so. let me briefly introduce our panel. i will do it briefly and i'll urge you to look at their vowels. laura is the professor of law at the georgia town law school. she's a director of the georgetown on national security. she's director on privacy and technology, she writes extensively in the subject area and we're always dlit -- delighted to hear from laura. washington college of law,
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served attorney general in the department of justice and she was a senior counterterrorism counsel at human rights, bob been serving as the general counsel of the office of the director of national intelligence for the past six years, previously he was a partner, he also prior to that served as the deputy assistant, attorney general in the criminal division of the department of justice as well as deputy attorney general. we have ron lee, former general counsel of the national security agency, the nsa, he's currently a partner, specializing in national security, cyber security and privacy issues and government contracts. we have also have dan, national
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protection and programs director at the u.s. department of homeland security. dan, prior to that served on the senior national intelligence service in nationallal counterterrorism center. so we have a clear distinguished panel and i'm going to ask each of them to briefly in two or three minutes to describe issues of privacy versus of national security. after they make those remarks, stating forth what they believe to be the issues, we are going to open it up and we are going to have a lively debate as you saw in the republican national convention. >> hopefully a little bit more civilized in some sense. what i would like to highlight
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is three areas. the first area is the impact of digitization, the second is the scope of global communications and digital storage networks worldwide, and the third is the shift to big data analytics. lets start with digitization. i'd like to suggest the third-party doctrine is out of date and no longer reflects how the world would recollects. a case from the 1970's, in that particular case there was a woman who was robbed, her purse was taken, the man afterwards was harassing her at her home and the police went into his home, got a warrant to two into his home based on order -- trace on his phone. the court found in the case that individuals have no privacy interest in third-party records, particularly calling records and it's on the basis that we saw
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the data programs continued in the united states. the fact is as many of the judges suggested in these cases that zero plus zero still equals zero, the fact that we have cell phones, that records more information about us, if we have no privacy interest and the numbers daled and dialed and received. it's not zero plus zero equals zero, but it's actually zero plus one. the information that you have about people not just their cell phone usage but all the data that we generate is significantly different from the type of information in 1976 or '78 when the case was decided. since 1970's we relied on the
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county's borders. higher standards on citizens and domestic soil under the surveillance act. our communications no longer stay within domestic bounds. so in 2008 the government made a clear strong argument that it didn't make sense anymore that if communications outside the united states, if you had a bad guy in london calling a bad guy in paris, traditionally under 5c you don't need to go to a court to get a warrant. now the same two actors and happens to go through the united states, the government will have to go through a court to actually intercept the communications. it's a clear strong argument. the problem is it works two ways. now if i'm sitting in this room and i e-mail general, now it can be collected. data is not territorial.
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if i make the google document with my students, it might be stored from google in their finland server. our traditional understanding of territorial boundaries is no longer adequate moving forward. the third and final point i wanted to make was big data. we see in the snowden era there are surveillances that come to light the section 215, 702, executive 12, we've seen a collection of e-mail, collection of internet data. the underlying argument is principle to collect the information and then to analysis it. this is the promise of big data. this gives a possibility to heading in the united states. there's programs involving large
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amounts of information. why is this problematic? particularly at the point at national security and criminal law. this is not a new question in this country. lord cook discussed this in detail when he was worried about the crown in 17th century, looking for potential evidence of criminal activity and then using it as a way to go after enemies of the crown. later hopkins wrote about this. we saw this in black stone and then james odis, railed against the concept that the government should be allowed to collect all of this information on individuals and then to look for evidence of criminal activity. the fourth amendment was introduced at a prohibition and what we are seeing with this kind of rationale underlying foreign intelligence, the point where it converges with criminal
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law, you are seeing see reappeae which raises questions about the fourth amendment. >> thanks for putting this terrific congress. one the problem of incidental collection which relates to what lawyer a was talking about with respect to global communications and global data, and second, under the radar problem associated with law enforcement action that involved a cross-border access of data and privacy concerns. so first the problem with collection, and i think everyone here knows both the fourth amendment and current statutory scheme has protection based on one's identity and location.
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it protects persons in the united states as well as citizens and other person with sufficient voluntary to the united states wherever they are located. there's statutory surveillance tracks this framework. when it was first passed in 1978 warrants were required for all covered collections at the time. in 2008 with the changes it's now the case that the government needs a warrant based on probable cause to clict -- collect communications of u.s. persons, wherever they're located but it does not need a warrant, it does not need a individual target decision, it does not need court review to collect the data of noncitizens outside of the united states. the result is a huge quantitiy of what's known collection by
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which the government is targeting noncitizens or effectively targeting nobody, not under cyber authority but other authorities that sweeps in lots and lots of u.s. person information, lots of information about u.s. citizens. there's a number of ways in which this happens. i won't talk about it. i'll be happy to talk about it later. the data is collected, acquisition matters. the acquisition itself triggers the fourth amendment regardless of how it's used, regardless of restrictions are put into place, that this is something that has been and ought to be a matter of congressional concern. if you look at the amendment act as well, congress spends a lot of time regulating acquisition.
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a bare minimum of subsequent use restrictions, restrictions on retention and who has access to the data. that's a mistake. congress should do more. congress also clearly recognizes the point of collection matters, the point of acquisition matters and they spend so much time. there's many reasons of this matter. i'll just name a few right here which is the possible association that results from acquisition, the way in which acquisition shifts the balance of power between the citizens and government and the risk of abuse no matter how well intentioned our officials are, no matter how well trained they are, there's always a possibility of actors and possibility of less than intention government decision makers in the future.
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and so i think this brings me to the my second point that the rules of acquisition are fail to go adequately protect the u.s. persons of both the fourth amendment and intelligence surveillance to protect, and that we need to rethink the way we think about acquisition and that we need to think about having rules across the board that no longer depend on the identity of the person who is being collected upon the identity of the target because those rules fail to serve the interest that we're most concerned about. i want to say that this is not the same thing, that a warrant is required every single time the government engages in any sort of collection, i'm clear comfortable with the idea that there's a warrant exception to some time of intelligence information. this proposal is not necessarily right protected nor right restricted. we have to we think what the rules are.
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my basic premise is that we need to start thinking the ter -- territorial distinctions. secondly, i just want to raise clear quickly and we can talk about this more, the problem of law enforcement trying to access data across borders. we are seeing that with respect in a pending case, a microsoft case. the government served a warrant on microsoft for emails. it turns the emails were located in a server located in ireland. microsoft said we are not turning over the data. it's pending in the second circuit. the united states is not the only government that's asserting the power to compel the production of data located territorially. other companies, other countries
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are looking at similar legislation as well. i think this case, what we end up -- what the court ends up doing in this case and more importantly what congress does in response matters in terms of our own ability to protect our own data as well even within our borders. ly stop with that there. i just wanted to flag that as an issue that i think we should be discussing. thanks. >> so i have a lot to say if i had unlimited amount of time but i don't and i just want to caution you. i completely agree that we need to adjust our prer depositions of the fourth amendment based on technological changes. 50 years on now and it's pretty
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clear that we cannot use the same conceptions of the fourth amendment that we have all along. but i would argue that that's a two-way street. we need to -- so just one example in terms of third party doctrine. i'm speaking for myself here. i just don't think the courts are ever going to go there and i find it difficult to believe that the department of justice will ever argue that. i also think it has to be two-way street. unreasonable searches and seizures. that should take into account among other things what kind of restrictions on use of data, how comfortable are we with that, how can we be sure that in fact,
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data that's being collect súper doppler not being misused and what are the technological challenges in collecting data in the current environment, data that's a, out there, b, being collected by our enemy. having said that i want to respond to a couple of points. on the issue of the third-party doctrine, i think it's worth noting that it's a case a come of years earlier in the supreme court that involve bank records, financial records held by the bank and the court held -- because you gave records to the bank you have no interest in privacy to prevent them from being seen by the bank. i think we need to accept that this is a fairly well routed doctrine. i do think that it needs to be
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reexamined on a case-by-case basis, looking at the type of data and the use being made of it. laura touched on a principle, that actually i think not true of any activity that we undertake. first of all, of programs she mentioned the only one that involve collection is 2015 telephone program and that did not looking criminal evidence in the data, protection foreign investigation under restricted situation. that's generally true of nsa, it does not have authority for collection for evidence of a crime. what nsa can do is searching for valid intelligence, they come across evidence of a crime, they can provide that to the fbi for further investigation, which is a clear different thing and one i think frankly that as -- has
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evolved in insufficient coordination. finally on the issue of global communications, it's absolutely not true that we could collect an e-mail between laura and jen because it goes outside of the united states. if we want to collect of an american, we need a warrant based on probable cause. so there are already substantial protection. the collection point that jen raised is a significant one. again, it's not new to the law in this area. if your barber is wired tapped, if you call, regardless of possible cause to you, but that's not necessary. if your barber is an informant
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and talk to you and he's wearing a wire, then that can be collected. if your barber throws his computer out without wiping it and aband ons and the government collects it, then your communications can be incidentally collected. the general rule if there's a legal basis to collect one end of the communication it can be collected and then we do have minimization rules to ensure that the communications are not improperly used. you don't have the ability at the front-end to weed out owl communications involving americans, nor would you want to if you could because some of those communications are going to be foreign significance intelligence value. have appropriately limited authorities to collect foreign
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intelligence and protect the american citizens at the back-end, and that's what we do. yeah, sorry. i can make one more point? i completely agree with jen that this is an area where congress should be legislating rules as it did after the case i mentioned about the bank records that passed the right to financial privacy act which limited access to records. i think this is for more suited for legislative action and i'm not holding my breath. [laughs] >> indeed, after united states versus cats congress went out and passed three. there's a long traditional of getting involved, i think our opening remarks -- i'm going to mix rugby and football metaphors. our opening remarks are our free kicks that we get. when he said he was going to
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show us a video, i thought that the one he was going to show us with john stewart a few nights ago taking a share into the wrestling wring and going at it. i think that's the lively debate he wants to see from the panel. so i don't know if my two or three issues are really the ones that you're going to see in the headlines, i hope they are. they are kind of my observing the issues both while i was on the government and private sector. think of them as issues looking beneath the surface. it's not just about the latest twist and turns of the usa freedom act or what the crazy malicious is up to with his general counsel or anything like that. i want to broaden the scope a
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little bit. so one thing i learned when i was at main justice is there's like a huge amount of activity prevention, interception, enforcement, all that, that's carried in all levels of government, city, county, state, you know all that. a lot of that involves gathering information. sometimes it's called intelligence, sometimes it's called good police work or whatever. so there's that. there's public safety which involves a huge amount of gathering information. as you recently filled out a tax return. what i'd like this group to do maybe not today but over time is start thinking about the privacy
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versus security trade-off in light of all intelligence that is being collected or aren't being collected because it perceived operational or economic or privacy or constitutional issues and think about those trade-offs as well. and thinking about that, i want to mention the panelist referred to some of these, the wild cards, it's never a balance. one, of course, is technology. the second is budget pressures which you heard this morning from the panel. that affects this as well. the third, of course, all the types both jen and laura have referred to. that's the first issue. it's -- some attention to it and follow the twists and turns, the latest patriot act issue will
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probably be beneficial. the second issue is perhaps even more -- is nowden leak was one model of how some discussion, lively public discussion about intelligence collection and privacy versus security trade-off happened. sometime at the cocktail hour you can ask what he thinks about the integrity of public discussion. i think we all need to think about other models, maybe some lawful models. there's one model, which i'm sure you've seen in the usa freedom act which allows foreign intelligence court to appoint. ..


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