today a fast reliable internet connection is something no one can live without. wow is there for our customers with speed, reliability, value and choice. now more than ever, it all starts with great internet. >> wow supports c-span as a public service along with these other providers giving you a front row seat to democracy. next a discussion with republican senator todd young of indiana on u.s. competitiveness and innovation. following his remarks a panel of business experts and scholars address the need for investment in semi conductor manufacturing in the u.s. and the importance of having clearly defined industrial policy. the bipartisan policy center hosted the event. it's an hour. >> good morning, i'm jason grumet. it is a pleasure to welcome you to today's discussion about

competition and innovation and terrific to start this off with one of the key leaders of this initiative, senator todd young from indiana. senator young is a principled conservative who knows how to build coalitions to get things done for the american people. he is leading efforts around telehealth in seniors, small business efforts, agriculture and national security and, of course, one of the forces behind today's discussion introduced the lyrical endless frontiers build back in 2020 with senator schumer and really also sits in the kind of crucible. on the committee on foreign relations, finance, committee on science and transportation and small business and entrepreneurship. if we get to a legislative conference, you can kind of do this by yourself, which is encouraging for the outcome. so, look, i want to jump into this and talk a little bit about the broad goals and touch on some of the key provisions and then may ask you some questions about the future.

but, look, just to kick this off, you know, the word competitiveness is a nice word but means a lot of different things to a lot of different people. just kind of level set for us when you think about competitiveness, what does that inspire for you? >> well, competitiveness is part of the very fabric and tradition of the american people. it's been something that is woven throughout our history and we are competitors. we have a system of government. we have a continent wide dynamic economy and we have a people that is competitive against the rest of the world. and if we fall behind in any particular areas, the american people like their leaders to attend to that and do whatever we can to harness their potential, to harness their creativity and power and work ethic so that we can outcompete

the rest of the world, especially, especially those who challenge our value system. right now, there is rightly an increasing interest in the extent to which we are falling behind in certain areas of technology development. and will fall behind in other areas if our leaders don't begin investing more in innovation, basic research in some areas, applied research in other areas and harnessing the talent of many of our entrepreneurs, innovators, investors and researchers around the united states so that we can lead the way in developing technologies like artificial intelligence, quantum computing and robotics and so forth, which will not only drive our economic growth moving forward, but also allow us to defend the united states against those who don't share

our values. so, innovation has always been important to our growth and to our military potential but it's especially important in this era as our military has become increasingly dependent on these next generation technologies. and there's no reason why we can't, we can't optimize our own system to lead the way in developing these technologies. so, we cannot only be competitive. frankly, we can ensure this century is the second american century. we often refer to the 20th century as the american century. i believe that if we have the right leadership and we harness the power and potential of our people, we can defend our values, our way of life but it's going to take some adapitation. this won't happen by itself. >> so, senator, i want to follow up a little bit on the now. fierce urgency of now. the country is still gripped by the pandemic and economic

recovery, some very serious foreign policy crises that i think are appropriately focusing the government's attention and getting things done at all isn't easy. but there seems like there is a real shot at a major piece of bipartisan legislation. so, say a little more about the now. what has allowed the congress to really coalesce around this conversation? >> well, as fundamental as innovation is to defending our values and our way of life moving forward and allowing each individual american to achieve their dreams of more material wealth and realizing their full potential, we really don't have a cohesive economic strategy to take us into the 21st century. this has been a source of real frustration for me and some of my colleagues in recent years irrespective of party affiliation. let me get detail. what is our nation's strategy as it relates to trade?

when do we apply tariffs? under what circumstances? bilateral or multi-lateral? that should be part of an overall strategy, as should our strategy as it relates to exports controls and technology developments and all these areas of economic policy. of course, they have very important national security implications, but they also have implications for domestic growth and i would even say our cohesion as a country. i mean, if we're not bringing everyone along in this dynamic, hypercompetitive 21st century economy, some people are going to become alienated. there is a happy coincidence between domestic policy here and foreign policy. if we're able to harness the power and potential of rank and file americans, we'll grow at a faster rate, we'll outinnovate and out compete others like the chinese communist party and, once again, this can become our

century. >> senator, you mentioned something that i think is really important and that is the idea that competition is in the entire country's dna. and we've seen innovation kind of land in some very particular zip codes. my sense is that there is a lot of shared interest in making sure that the entire nation would reap the benefits of this kind of investment just maybe reflecting a little bit on your experiences with innovation in indiana. what does the legislation do or need to do to make sure it's equitable in its efforts? >> sure. i'd love, of course, to speak to that because in indiana we're really proud of what we've done to improve sort of the table stakes of creating a strong, economic policy environment. we have a great business and tax and regulatory environment. we have some world class companies. you think of eli lily, the pharmaceutical rolls royce whi

develops aerospace and for the auto sector. we have countless great companies in indiana and a strong policy environment and universities like inianda university and university of notre dame and if you look at states like indiana several that aspire to achieve our level of strength when it comes to a positive business and working environment. yet, we're not attracting all that much venture capital. 80% of venture capital goes to just three states. it's california, new york and massachusetts. so, there's incredible untapped opportunity. once again, this is about harnessing the potential of people all across the country. what this legislation does, first, we wanted to reshore some essential manufacturing

capabilities. the chip sect. second, we want to invest in areas of applied research where we've seen funding go down over the years. areas like artificial intelligence and autonomous systems. we can and should lead the way in these areas and this will increase the productivity of your manufacturing worker in the places like indiana so that those workers and their families can enjoy a higher standard of living. but perhaps most exciting to me and to hoosiers is the establishment of regional tech hubs. you know, my state of indiana, perhaps in partnership with some surrounding states has the ability to take existing expertise, say in battery storage or advance manufacturing, apply to be designated a federal tech hub and then the seed corn of silic established right there in the industrial midwest.

if you look at our nation's economic history, this is, indeed, how, you know, silicon valley was created initially and required federal investors and then later investors and entrepreneurs who took over. and same near boston and the research triangle of north carolina. we know how to do this. we just need to go back and apply what we've learned over the years and, once again, harness the full potential of all americans as we head more deeply into the 21st century. >> one more question about the hoosier state. you mentioned kind of the integration of technology and national security. and, you know, we're starting to do some work with the new effort at purdue, technology and foreign policy. you know, where indiana is really trying to drive this national conversation between, you know, kind of the heartland and what's happening overseas. do you think that the congress

broadly appreciates that connection? >> i don't. and i think it's important for republicans and democrats, of course, at the federal level, to make that argument so that our constituents understand. and i also think that increasingly as we consider this u.s. innovation and competition act through a regular order bipartisan process, my colleagues will have a heightened level of understanding about exactly how the domestic tech and competitiveness strengths of our economy complement our national security strengths and vice versa. this has been the case over the years, but unless we're having that formalized conversation through committees of jurisdiction and by allowing our house and senate to breathe through an amendment process, members aren't fully engaging. our system does work.

we did this over in the united states senate when we passed our u.s. innovation and competition act. i tell you, we didn't have roughly 70 votes when we began this process. we weren't even close to it. but as we allowed members to engage, to legislate, to dive into the process, to ask probing questions and to receive solid answers, they became educated about the process as did their constituents and that's how we ended up with almost 70% of the united states senate supporting this. the same thing did not happen in the house. and i think once we move to a conference committee, once again, we'll move back to a more bipartisan consulitative process that serves a certain pedagogical function, as well. it teaches my colleagues and the american people what this legislation is all about and why it's important. >> so, senate, i was going to

dive into chips and energy innovation, but i can't pass up the opportunity to talk about regular order. this kind of mystical concept that used to underpin our democracy. you are someone who gets this. in fact, you are a recipient last year of bipartisan policy legislation award. roll with me here. we have two big pieces of legislation going after the same problems, but different in their solutions. where do you see kind of substantively the engine of the agreement that can move this actually to adoption? >> you know, the report will have to resemble the senate work product in large measure, if we're going to get this passed. in the end three really important components to that work product and i alluded to them earlier. one is semi conductor manufacturing.

that's the chips act which incent vises businesses to do what some have already done, locate their fabrication facilities in the united states. that, of course, is very important to our supply chain at a time when many auto assembly plants in the state of indiana and other places don't have enough chips to produce all the automobiles that people are demanding. that's just one of many important examples. but it also, if we're making things here in the united states, here in this case, computer chips, we're also on the front lines of innovating as it relates to the manufacturing processes. and that's a key point. so, that's point number one. the second fcet the establishment of an applied research directorate. we'll call it the tech directorate at the national science foundation. over the years, our federal government has done a good job in funding basic research.

this is sort of curiosity driven research at our nation's universities. but we have stopped funding some areas of applied research that aren't receiving much funding through regular market processes. and we really need to up our game in areas of applied research especially those like artificial intelligence and quantum computing that have direct national security implications. the last pillar, of course, is the tech hub component of this which arguably is the most important component of the overall legislation. >> so, you know, if we could go school house rock for a minute and legislative conference is a mythical being, white buffalo, reagan democrat, we've not seen these happen a lot in the last several years. take a few minutes and actually explain the premise of a conference and what some of the challenges are in terms of the timing of getting this done. will we really have an official

conference or the leadership kind of semi conferencing across the aisle? >> well, of course this statement will be met with skepticism. maybe a bit of excitement for those who follow these things closely. but i think we're poised to actually revisit school house rock and have a genuine sit down conference, right. where each side at least in the case of a 50/50 senate has equal representation where they sit down and respectfully negotiate and objectively negotiate the various issues and then after doing that over the course of weeks or more likely months, will produce a conference report. and those conferees who have been appointed by their party leadership to sit as negotiators in that conference committee, will either approve of that conference report by signing, fixing their signature to it and it will be voted by the house and the senate. or they'll disapprove of it. and that's, that is the most

methodical, i think, responsible process and it's a collaborative process that lends itself. if you can get this done, you get the muscle memory of negotiation and principled compromise going again and the american people can be encouraged by this. they can be encouraged that their federal government can still tackle incredibly challenging issues and do important things, even during a time when our politics is tribalized and often falls short in terms of getting important legislation done. >> well, senator, like chris matthews, i have a tingle. we'll be watching c-span religiously to track the process. one last question as we close this out and it relates to the ability to get a true bipartisan package. we're spending a lot of time thinking about the role of

innovation as we transition the economy to a dynamic and low-carbon future. a lot of interest in this kind of coming from the house. i don't think there has been enough discussion of the potential importance of this legislation like the infrastructure bill to moving forward and the energy innovation industry. i just wonder a thought or two about that before we let you go vote. >> sure. if you step back, big picture, again, this is about competitiveness and saying the talent of our researchers and our entrepreneurs and ory financial markets to ensure we win this century is a subset of that. one area that we have designated as a key area of applied research over at the national science foundation will be advanced energy technologies. we already have the existing expertise in this area. of course, the united states is a net exporter of oil and gas

resources. that will continue to be the case over a number of years because geopolitical and geo strategic advantage for our country and increasingly we all understand it. these other technologies will become cost effective at the consumer level and we want to lead the way in development of these technologies. so, in addition to the technology directorate establishing this as a key interest in research we also ensure that we're countering the chinese communist party. their belt and road initiative where they're investing fairly heavily in green energy technology development and distribution to other countries. we have a strategic competition act component of our senate bill that ensures we can compete as it relates to clean energy

technologies as well. so, it's just one of many subsets of our efforts to lead the world in developing next generation technologies, mostly national security technologies as we head more deeply into the 21st century and compete against our leading strategic rival which, of course, is communist china. >> well, senator, look as we scan, as we do every day, you know, the possibilities to move significant legislation, we keep coming back here in terms of its stuative importance and principled discussion. so, really want to thank you for your leadership. i know there are many people who are watching who are eager to help get this done. so, really, thanks so much for what you're doing and we look forward to watching the progress. i am now going to turn this over to dane stangler to lead the

next panel. >> thanks, jason. thanks to senator young for a substantive conversation. i now have the pleasure of moderating a really outstanding panel discussion of the issues that senator young talked about and his notion of competitiveness in the legislation that is making its way through congress. i am going to take a quick second to introduce our really elustrious panelists here. first maryann feldman from university of north carolina at chapel hill. professor of finance at the business school and also the research director of the institute of private enterprise which does outstanding work on entrepreneurship. maryann, thanks for joining us. we also have chris griswold

policy director from and chris worked on capitol hill for senator marco rubio and was really involved in some of the thinking and texts that have laid the foundation for this bipartisan moment in congress. chris, thanks for joining us. lastly we have john neuffer ceo of the semiconductor industry association. john leads that organization which has been really the leading advocate for strengthening and promoting the semi conductor industry that we heard senator young talk about in the u.s. and have done some great work, especially the last couple years highlighting the challenges and opportunities. john, thanks for joining. i want to start with a lightning round. a definitional lightning round for all of you. i want to go around briefly. we heard senator young talk about what competitiveness means to him and how he defines it both nationally and internationally.

i want to go around to each of you. quick answer. what does this mean to you? how do you define competitiveness? john, i'll start with you. >> generally speaking competitiveness is ensuring america is held to the high level economic talent and growth that will enable our workers to succeed and prosper well into the future. for us in the industry, that means industry and government working together to advance chip technology, improve our s.t.e.m. education and ensure free trade in open markets. very big deal for our industry and level the global playing field when it comes to the cost of researching manufacturing and designing. other countries are investing heavily to gain ground in chip technology. we should be doing the same thing here. and as senator young mentioned, the second american century won't happen by itself. it will take a lot of

collaboration on the part of u.s. industry and government. >> thanks, john. i appreciate your mention in there especially about the talent and worker and human compoentant of this. maryann, now to you. what do you see and what do you think when you hear the word competitiveness? >> well, you know, interestingly competitiveness when we think about it at a business school we think about the competitiveness of individual firms and so there is a long sort of intellectual history where we think about competitiveness and perfect competition. large number of firms, easy entry. so, we have sort of moved away from that where we have now a high degree of concentration in a lot of industries. also want to mention that when we think about competitiveness and this again is the way that we grow the pie and we increase prosperity. but it's embedded in a system of

business strategy. and so, you know, over the long run what we've seen is that how do firms secure a competitive advantage? it is either by being innovative and finding a niche that's profitable or by cutting costs. and unfortunately in the u.s. i think since noten friedman said the duty of the corporation was to maximize shareholder value, we have seen a lot of leaning on cost cutting which has really decreased our international competitiveness. and i think it's, you know, sort of mentioned as the academic and intellectual history. there are many trade economists who realize that they were wrong. the theories that they were proffering in the '80s and '90s have not really benefitted the american economy and specifically have not benefitted american workers. so think that we need to think

about competitiveness a little bit differently to make sure that everyone is working in the same direction towards a goal of economic prosperity and renewal. >> thanks, maryann. justice john linked competitiveness to workers, talent, people. i appreciate you linking that to individual businesses because when we talk about nations competing, as you point out, really about the components of the country especially our businesses that compete with each other and internationally. chris, turning to you. what does competitiveness mean to you? >> yeah, sure, i think it's a really great question and i really appreciate what maryann just said. she nailed it by referencing our failed economic theories of the last few decades. for me, i think, excuse me, for me i think competitiveness. we should step all the way back and ask what the dictionary

definition of the word is. to be competitive means to be capable of winning a competition and to be capable of winning a competition you have to acknowledge that you're in one and you have to understand what the nature of that competition really is. in the context of national economic policy, that means admitting that nations really do, in fact, economically compete. that's really important, i think, to say at the outfit because that understanding as maryann referenced is a significant departure from the economic orthodoxy that was supreme. i saw a quote from the '90s where he said if we could teach our undergraduates to win when they hear somebody talk about competitiveness, we would have done our nation a great service. that's been the prevailing opinion for a long time. so, for me, the use of the term competitiveness should imply a

kind of realistic admission about the way the world really works. once we admit that, once we admit as senator young mentioned that we really are in an economic and geopolitical competition with china, for example, then that lets us ask all the other questions we need to ask, which is what this discussion is about. what industries matter and why. why does it matter where production happens. how does innovation actually work. and all the other things we need to ask and answer to secure our national security and supply chains and economic resilience. >> thanks, chris. both you and maryann have referred to the intellectual history here and what's changed and how we thought about competitiveness in the '80s and '90s and something's changed and we are thinking about it differently or should be thinking about it differently today. maryann, how have economists and scholars of innovation and technology how have you seen that evolution of thinking and

what is different today from 10, 20, 30 years ago? >> really i think one of the most pressing problems right now is the rising income inequality. and also the fact that there are many places that have been left behind. so, really, theories of international trade said that we would be better off if we had specialization in different countries and then we should compensate the people who would be laid off who would lose their jobs. but that never happened. and, so, what we are i think sort of now seeing is the emergence of, you know, sort of new models and they're not sort of lagging, i believe. we don't have a statement as powerful as milton friedman's statement that the purpose of the corporation is to maximize the shareholder value. and so, you know, sort of people

are now talking a lot about corporate responsibility and the way in which things are produced. sort of recognizing that we are in this complicated economy where things are interrelated. and so, you know, there is, i think, a very nice sort of movement to look at redefining the rule of corporations in society and really rethinking the, you know, sort of workers not as of cost, but as a productive input. and so, you know, that changing, that change is sort of under foot. i also want to recognize that when we think of national competitiveness one of the big surges has been the recognition that the locust of inventive and creative activity is at the regional level. and so this underlies the sort of hub technology hub proposal and it really is then a matter

of working with these local economists to sort of then create things that trickle up. rather than trickle down, which had been such a dominant theme. it is a matter of creating this synergies, and then allowing greater participation in the economy by a variety of different places and different actors. >> i absolutely want us to get into a discussion about that regional component. it's a big part of the legislation on capitol hill, we heard senator young talk about it. i absolutely want to make sure we get that in this discussion. maryann, you also talk about the corporate purpose, the purpose of corporations. it's something that's gained a lot of attention, a lot of financial investment, something bpc is working on, at least in our conversations with hill

staff, on both sides of the aisle there is increasing recognition of the close connection between esg and competitiveness. we've seen that growing recognition on capitol hill. chris, the corollary to what maryann has been talking about is kind of the political evolution here and how views of competitiveness, the national policy, of industrial policy, which has been used with increasing frequency in the last few years, how has that changed? you worked on capitol hill, you worked for senator rubio, i think you were involved in the papers, the reports the senator produced on american investment and industrial policy. take us through how you've seen the political context change over the last several years. >> yes, sure. first of all, thanks for reading all that, my former colleagues will appreciate it. so just for reference, the texts that you're referring to are a few reports that senator rubio released back when he was chairman of the small business

committee, and just to summarize them very quickly, the first was on china's made in china 2025 strategy in which the communist party clearly outlined its specific plans to dominate ten critical industry areas in the 21st century. and what that report did was try to understand the implications of that fact which, number one, were to, again, admit that the chinese communist party clearly understood itself to be in fierce competition with us, and was organizing its economy accordingly. and the implications that have were really important. it meant that china was trying unilaterally on the basis of its own economic strength to set new terms for international economic competition in a way that merely appealing to kind of global trade rules and norms couldn't really do anything about. and if global trade norms weren't going to help us, then we better have a plan for our own industrial and innovative

strengths sufficient to answer the challenge. the other thing the report concluded, something which maryann pointed out, quite rightly, is that the common defense of international trade, expanded trade with china in the '90s, including our offshoring, was wrong, the concept was totally flawed, the idea that we could design here and make there, what actually happened is china started maneuvering up the higher value chain relative to us as well. we got how innovation works wrong, it does actually matter where things get produced. that was the first report. the second one, quickly, pointed out that capital investment in america is declining, that decline is being driven largely by the fact that our economy has been financialized and is in the thrall of shareholder primacy theory. maryann mentioned milton friedman. one of the things that a

quarterly returns obsessed financial sector does is underinvest in both productive industrial capacity and in science and research. senator young made this point about, you know, market forces on their own not now inadequately investing in the kind of innovation and science that we need. hence the need for public investment, number one, and for public policy to promote investment from the private sector. those were the texts that you referenced. and to answer your question, at the time, those reports were sort of a voice crying in the wilderness. industrial policy wasn't a phrase respectable economists were supposed to say. but as you mentioned, in the last few years, we've seen that change. and these concepts, what i just described, has become more widely accepted wisdom. academics and think tanks across the political spectrum, including mine, have taken up the task. and there's also a new appreciation that industrial competitiveness has always been part of our history, all the way

back to alexander hamilton. so there is still a lot of economists and libertarians who don't like it and as senator young said, there is still a lot of work to help congress connect the dots. but politicians in both parties are starting to understand that things haven't worked out the way we were told they would. the only point i would make there is part of the reason politicians get it now, increasingly get it, anyway, is not just because they can see the problem for themselves, although leaders like senator young clearly can. it's also because politicians are responsive to the public. and the public absolutely gets it. a lot of working americans have understood this problem for a long time. offshoring our manufacturing costs millions of jobs and a lot of those communities have never recovered. people have been angry for a while. and i think that anger has reached a political breaking point that politicians are starting to notice and respond to and that's prompted leaders toward new approaches to trade, industrial policy, and

competitiveness. >> thanks, chris. john, i want to take up a couple of these issues with you. i would be remiss to not remind the audience to submit questions on facebook and twitter. john, we've heard chris and maryann talk about how the mindset and the thinking around the competitiveness, around policy, has changed. i want to ask you about some of the specific things that are in seek and competes with regard to semiconductors. help us think about where the semiconductor industry fits into this historical evolution, where are we now, where were we and how are things changing? >> great questions, dane. as you said, the global chip shortage has been a very stark reminder of the ubiquity of semiconductors and their importance in virtually all areas of our society and economy as we've become amazingly digitalized.

this industry has a proud history in america. semiconductors were invented here more than 60 years ago. and u.s.-based companies command the lion's share of the global market, we account for about half of the world's total chip sales. but we have lost ground in key areas, especially when it comes to where chips are made. in 1990, some of you may have heard these numbers before, 37% of the world's monday chip manufacturing capacity was located here in america. today it's only 12% and it's continuing to fall. in addition, even as the cost of researching, designing, and manufacturing more and more advanced chips has increased, federal investments in chip research have been flat as the share of gdp for decades. while other countries have significantly ramped up research investments. chris mentioned underinvestment in r&d by industry. but i'll say, u.s. chip

companies plow about one fifth of their revenues back into r&d, which is among the highest share in any industry. but it's important for federal government to supplement those huge private investments with its own funding. product development and product manufacturing work best in our industry when they happen in the same place. it's two sides of the same coin. when we produce more chips here, we do more of the research and development of those chips here. in addition, research funding and the activity it generates in the universities, centers of excellence, national labs, et cetera, is a major driver of talent and workforce development. it's a virtuous cycle we need to pump more oxygen into. >> thanks, john. we heard senator young mention a few times the chips act. i think he highlighted this as one of the three key components that he cease not just of useca that he helped lead but what

could ultimately be the core of a bipartisan package. tell our audience, what is the chips act, what does that do and what the potential impact would be. >> senator young and many, many of his colleagues in the senate have been huge champions of the chips act and useca and the counterpart legislation in the house was just passed recently, all very helpful. i just want to offer my appreciation for the support of senator young for this historic legislation. most relevant in both useca and competes to the chip industry is the $52 billion to fund both critical semiconductor manufacturing incentives and research investments. this funding has the support of a broad, bipartisan majority in both chambers, i know it's hard to believe we're actually there, but we are, and it's wonderful. many of america's governors and

mayors, a range of top national security experts, lots and lots of ceos and business groups in many critical areas of our economy and last but not least, the american public, as chris said, at the end of the day, politicians are responsive to the public and that's why we're seeing this legislation. the senate passed useca last june and the house passed the america competes a few weeks ago. now leaders in both chambers must work together to work out differences in the bills and develop a compromise version that can be swiftly passed by both chambers and signed into law by the president. a $52 billion federal investment would spur hundreds of billions of dollars in company investments, create hundreds of thousands of u.s. jobs and issue usher in an historic resurgence

of chip manufacturing in america. the clock is ticking and the time to act is now. getting across the finish line would greatly strengthen our national security and make our supply chains more resilient and our leadership position in a range of essential and emerging chip-enabled technologies would be much, much improved. other countries are not waiting. >> thanks, john. for all the reasons that you have laid out, bpc, through our advocacy, endorsed what became useca for all the reasons you lay out for the strong bipartisan support, so thank you for that summary. john has gotten us into the discussion of the specific legislation that is making its way through congress. i want to ask chris and maryann about some of those specific pieces. but first we have a couple of audience questions. one i'll save for a little bit

later in the conversation. but one is on this question, this issue of industrial policy. chris and maryann, that you were talking about, and john, you alluded to in terms of sec my conductor investment. does industrial policy even still exist? chris and maryann, you talked about some of the intellectual evolution here. but i think there is this question of, you know, what is it? we've talked about it, you're talking about it, but does industrial policy even exist? i'll let any of you jump in. >> let me say we have a de facto industrial policy, you know, which, you know, as chris mentioned, favors financialization, right? and the growth of banking and venture capital and the evolution of venture capital to look a lot more like banking.

and so we have always had industrial policies. so chris, i've never met you before, but we have a lot of similarities. and going back to alexander hamilton, right, and sort of thinking about what was the role of manufacturers and the economy, arguably we've had industrial policy. we just don't want to acknowledge it. and i think that we need to think more strategically. i think that building back supply chains is very important. and that is a part of industrial policy. we focus a lot on science policy, and i think that we do need to be investing in science. but if we're investing in science without investing in industries and other downstream activities, we're simply pushing on a string. >> i would agree entirely. and it's such a critical distinction that maryann just

made, which is it's about strategic decisionmaking, which on the intellectual history side requires admitting we're allowed to make strategic decisions, which a lot of economists would prefer that we not do. but yeah, i mean, to be a supporter of industrial policy of any kind, we have to answer questions, do we care, what industries do we invest in, and if we do, is there anything we do to promote that outcome. the answer to those questions is, yeah, we do care, we should, anyway, and there are things we can do. to give john and your industry some credit, to echo what you said, you know, we did a little bit of research into semiconductor -- the semiconductor industry and found that there are significant -- it costs us significantly more to do this here, anywhere from 30 to 60% more to, you know, manufacture chips here than elsewhere.

and the primary explanation for that difference is the government support that other nations are pumping into the industry there. it's a very straightforward, strategic question. does the united states care about whether we can make chips? if the answer is yeah, then we should do something about it. >> yeah, and as maryann said, i think industrial policy does exist. the question is, not just choosing is a choice, so let's be honest about the fact that we've got to make a choice and do it right in the industries that matter. >> yeah, i couldn't agree more. the reality is the american economy does not function in a vacuum. we work in a global community that plays by different rules. countries that have strong, focused, targeted industrial policies. when it comes to chip manufacturing, it stands out starkly that strict adherence to market forces just simply

doesn't work. other countries have major incentives in place that make it much, much cheaper to build fabs, chip manufacturing facilities around the world, much more expensive to do it here. so we need the government to make the strategic choice of stepping in, in this case, and level the playing field. because if we don't, the end game for us is no chip manufacturing on u.s. shores, and that's probably not something that anyone really wants when you think it through. >> thank you. we've got a couple of more audience questions. we'll again remind the audience, you can submit questions using the live chat feature on youtube or facebook or on twitter using the hashtag #bpclive. maryann, you have just referenced a couple of pieces in the legislation that also relate more broadly to this

competitiveness discussion. one thing the legislation establishes is a new technology directorate, i think you've done a couple of tours there. you also mention this complementarity. i wonder if you can talk about what you see as the need there on the industry commercialization piece and how this technology directorate at nsf would work and promote those ends? >> so thank you, dane, it's absolutely true i have been funded bit national science foundation, i've worked at the national science foundation, and i've also studied the national science foundation as an agency. and it is a really kind of remarkable place, and a national sort of gem for us. and as they expand their mission, it really is creating

balance between nih and nih funding, which is just health, and health is important, but then also all of the rest of science. and so i think that, you know, what we witness at nsf, nsf started the small business innovation research program, the sbir program, and they've also been very creative in adapting it to the needs of small businesses and industry. but i want to mention sort of three things i think that will be critical. we're going to be funding more research. and the dole act gave universities ownership of the intellectual property that results from federally funded research. this passed in 1980. and universities have responded by creating tech transfer offices that manage this commercialization process. but in many ways, this is an

unfunded mandate. you can own the intellectual property but there is no funding to secure that it is going to be commercialized, it is going to end up in the hands of firms. and so this is you know sort of something, if there was a setaside to better fund the translation and tech transfer activities, i think that would enable the legislation to have its impact. and so really, this is like so beautiful, to see this coming together. but the devil is in the details of the implementation. i also want to say as we think about these hubs, it's important, what we're doing is building ecosystems. and the idea of ecosystems has replaced the older concept of clusters. and really ecosystems are more organic in their formulation and they require a lot of local involvement. and here the department of

commerce economic development administration has been funding many projects that are sort of furthering this end. so there is a need to sort of look at the synergies between science funding and other activities. and specifically to let local areas sort of define where they're going. but i think also, you know, we tend to focus on vc funding. what we see is that vc funding, we'll fund small firms and then we'll tend to pull them to silicon valley, pull them to the locations where they're located, with the idea that the firm will be sold or acquired in a finite period of time. so this does not allow the local areas that are incubating these firms and sort of creating them to realize the value and the

employment potential of new firms that are really, you know, sort of the innovative engine of the u.s. economy. and i think also we have to be concerned about monopoly power in the u.s. and so what we have is a lot of small firms who are starting to sort of scale. they're going to be acquired by these monopolists. and they're not able to compete against them. and so it really requires sort of some fine-tuning to different components if we want to realize the potential of this act. >> thanks, maryann. you have made a number of excellent points in there on all issues that i wish we had time to get into. we've got maybe eight or nine minutes left. i have a couple of wrap-up questions for all of you, some looking-forward questions. but i want to make sure we get in a couple of audience questions. we have multiple questions from the audience regarding something we heard senator young talk

about, which is the relation between energy innovation and our energy challenges and competitiveness. a subset that have question, as senator young described it too, a subset that have question, john, i think directed to you, is the relation between rare earth elements and critical minerals in semiconductor manufacturing. i want to open it up to any of you to talk about this relation between energy innovation, climate change and economic competitiveness. but john, i'll throw it to you first to see if you have a comment on this rare earth elements/critical minerals question. >> the reality is for our industry we are not wildly exposed in that regard. most of the raw materials, the key raw material is silica, which comes from quartz sand.

we get from strategic allies. and so we're really not heavily exposed. on the climate change issue, i just want to say that chips are absolutely critical for helping us sort through better solutions to climate change. they really are a kind of a big component to that, ai chips and others. and that's just another reason that we need to get this useca and competes legislation through congress. >> thanks, john. chris, any thoughts on this link between energy innovation, the energy challenges we face and national competitiveness policy? >> sure, i think just as a general matter you see a really good example of how energy dependence has geopolitical

implications right now in europe with the crisis we're facing in ukraine, right? europe, germany especially, is incredibly dependent on russian energy sources and that creates geopolitical problems. sure, as a general matter, the better job we do investing in our own energy innovation and independence across the board, yeah, of course it's essential. >> thanks, chris. i want to end on an optimistic note. it's assume congress, we get through the formal confirmation process, this mythical procedure that we described with senator young, and the bipartisan bill, is this -- do we declare mission accomplished? is the job done? what do each of you think, okay, bill passes, but what else needs to be done, is this the end of the beginning, is this kind of the end, is this simply a first step? maryann, i'll turn to you first, then john, then chris to take us

home. maryann, what needs to happen after legislation passes? >> that's a really good question. and i think that simply getting this across the finish line is a big victory. what we are seeing is a once in a generation investment in science and innovation that's unprecedented in my lifetime. and so i think that there is just great potential. but again, this, you know, sort of -- many times the sort of dreams in washington are dashed in the heartland through bad implementation. and so i think that a lot of attention needs to be paid to the details to make sure that we're talking about competitiveness and innovation, that really the objective is to increase american prosperity. and i think that's got to be kept in mind. and i think also that, again, the best plans in washington

will not be realized unless we can get firms on board and can get, you know, firms to adjust their thinking. >> thanks, maryann. and taking a cue from some of your earlier comments, i think that regional piece, the innovation piece, clearly an implementation priority no matter what gets done in washington. john, you're a representative of those firms that maryann is talking about and has referred to. what do you think is going to still need to be done? chips act passes as part of this, what else needs to happen in terms of semiconductor? >> in terms of chips act, $52 million is certainly not chopped liver, but once we get this passed we will not be able to declare mission accomplished. but i will say it's a great start. as i mentioned before, enactment of competitiveness legislation will provide a huge return on investment. i expect government leaders will see this and be eager to enact

similar measures in the future to reap the benefits for the american economy, job creation, security, and supply chain resilience. in terms of priorities, we believe in investment tax credit for semiconductor manufacturing and design expenses would be a very helpful complement to the grants and research investments included in useca and competes. we also support continuing efforts to strengthen america's s.t.e.m. education system reform, high school immigration laws, promote free trade and open markets and protect the industry's valuable intellectual property among a number of other priorities. >> thanks, john. chris, i'll turn to you to take us home. maryann highlighted implementation. john has highlighted many other pieces that need to get done and also painted this as a kind of passing this legislation will help policymakers kind of see the light for further action but

what else do you see is going to need to get done? >> yeah, no, i agree entirely, i think it would be a mistake to seat passage of a single bill as kind of the endpoint. i think what we need is a shift in mindset about economic policy. sometimes i think we should stop calling ourselves a developed nation. it kind of implies we can be complacent. i think what we need is a mindset of, to steal a phrase, a mindset in which we are continually invest in our own capacity and innovation as a way of doing economics for the long haul. so to the extent that the passage of this bill helps put us on that path of a shift in strategy and approach to our economics then i think it's great but it's certainly not the endpoint. and i also think on the specific question, it really depends on what the negotiators end up with. there are a couple of ideas in one version or the other of these bills that are really

ambitious that i hope make it into the final product. but if they don't, we'll have to circle back, back to the one i'm particularly hot on is the competes act provision for an outbound investment review authority where if a u.s. firm wants to offshore a critical capacity, the president can just say no. i think that's awesome. i really hope that makes it into the final package. if it doesn't, we'll need to come back and try again. similarly, one of the things we haven't talked about enough is how innovation gets financed. we need a national development bank or some way to invest on the financing side. whether that's coordinating the existing financing authorities that federal agencies already have, whether that's a new facility like a development bank, whether that's the compete act's office of supply chain resiliency idea, which has $45 billion to invest directly in manufacturing capabilities,

whenever it looks like, we've got to get that right. so there are a number, i think, of the more ambitious ideas that are on the table that i really hope make it across the finish line and if they don't we'll have to keep at it. >> thanks, chris. sadly, we are out of time. we could clearly go all day on these topics. there were too many audience questions to get to. thank you to our audience for submitting them, but they are all questions that are important and that bpc and our partners will continue to pursue. thank you, maryann, john, and chris for participating. on wednesday, president zelenskyy gives an address to congress. watch live coverage at 9:00 a.m. eastern on c-span, online at c-span.org or watch full coverage on our free video app,

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