>>call: good afternoon. i am steve call. iam the president of the new america foundation. it is my pleasure to welcome you to this presentationby eric schmidt the chairman and ceo of google. the new america foundation is a 10-year-oldnonprofit, nonpartisan, public policy institute that invests in new thinkers, writers, researchers,and scholars whose work promises to bring forward new ideasand analysis to address the next generation of policy challenges facing the united states.we have about 100 people working with us in washington and california.when i joined new america as its second president about a year ago, i was attracted by the exceptionalquality of our board of directors. it includes writers like fareed zakaria, jimfallows, dan yergin, and anne-marie slaughter;
economic leaders such as roger ferguson, bernardschwartz, and laura tyson. another measure of our good fortune is thateric schmidt has been an active member of new america's board of directors since ourthink tank's founding 10 years ago. at that time eric had not yet joined google,but was leading novell. what animated him then--and i think what youwill hear animates him now--was an interest in forward-looking and non-ideological thinkingabout public life and public policy. particularly, about those persistent challengeswhich have so often proved impervious to conventional party politics.such as the challenges facing our healthcare and education systems, the challenges of climatechange, energy policy, and foreign policy.
the need for an investment led approach toeconomic growth, and of course the changing role of technology in public life.today, of course, we encounter eric as the chairman and chief executive of one of theworld's most innovative and influential technology companies, google.in his role at new america, however, our conversation has not changed since the time that he wasinvolved with our founding. we are still animated by the same values.we are still recruiting new thinkers and new writers who can reshape public understandingof the most important issues in national life. i consider eric to be one of new america'simportant thinkers, with the added bonus--from my point of view--that he no longer requiresa stipend.
[all laugh] a year ago at my request eric agreed to becomechairman of new america, on whose board he had so long served.in that role i found him to be an outstanding partner, engaged but never intrusive, dedicatedto transparency, a defender of intellectual independence and academic freedom at our institute.above all, he is one of the sharpest analysts of complex patterns that i have ever had thepleasure to listen to. i think you will discover that about him today.there is a certain rigor, frankness, and architecture of thought that the very best scientists bringto discussions of public policy matters. eric's thinking, in my experience, very muchreflects those qualities.
what you may not know about him is that heis also a local guy. he is a product of a local public high school.i believe his mother is here today. i don't want to embarrass her, but i hope you willall be suitably respectful when we turn to questions. he graduated from yorktown high school inarlington. he then studied electrical engineering atprinceton. after that, he earned a doctorate in computerscience at berkeley. these days, in addition to his day job atgoogle, he is a member of president elect obama's economic advisory transition team.i want to emphasize that he is not speaking
today in any reference to that role, but ratheras a chairman of new american and as, of course, the ceo of google.our program today has a very simple format. eric is going to talk for about half an hour,and then take questions for a similar amount of time.there are microphones on the side. please remember as you address your questions tokeep them short. avoid speeches, and also you are on the recordthroughout today. keep that in mind if you do ask a question.with that, please join me now in welcoming eric schmidt to the microphone. [applause]
>>schmidt: thank you. thank you steve verymuch. i think you see with steve's introductionwhy he has been such an effective and dynamic president of the new america foundation.it is an organization that i think is one of the great things about america. a placewhere people gather, they have new ideas, and i disagree with a whole bunch of them.to me that is the real test. are they challenging? are they provocative? are they really makinga big difference? let me thank steve for not just this event,but of course his tremendous leadership in the last year.of course rachel, and the other folks who put this together, and the whole new americastaff.
what i want to do is actually talk about therelationship of technology and policy, economic growth, and restoring trust in government.it seems to me that we are at one of those enormously important periods.it is a clichãƒâ© to say that this is sort of one of the great crisis that we face, butthis may be the toughest economic time that most of us will face in our lifetimes.everybody here is familiar with the statistics. people are unable to pay their mortgages.mortgages are below water. you have the credit crisis, and the fact thatthere is a liquidity issue--which is still not completely resolved.you have issues of significant potential of large bankruptcies coming online.you have this bazaar period of a transition
where we have a president and then we havea next president. as senator obama says, we only have 1 presidentat a time in our country. from our perspective, we have got to makeprogress in the short term, and we have got to make progress in the long term.we have to address at some point, the healthcare issues and the schools issues.these are issues, by the way, that new america has some very interesting and innovative ideasabout. we have to do them in the context now.we have been delaying these things. we have had all of these problems.people locked in various partisan battles. it is time to sort of get forward on that.let me point out that our dependence on imported
oil is just this huge drain.how many wars has oil created? how much of our cost, how much of our infrastructure hasthis been driving? it is time to address these issues.i am an optimist. it is important to say that right upfront because america is in a remarkableplace. unlike many other countries, we have the foundation,the intellectual foundation, the leadership--literally the people in theroom--not just to solve these problems but to build an even better place.as a result we have these interesting capabilities. let's go through this. a hundred years agonobody had information. now, all of you are significant users of the internet.in fact, in our lifetimes all people--it is
reasonable to say almost all people--willhave access to almost all the world's information. that is a remarkable achievement. just thinkabout it. this is on par with 7:10 [??good verbible??] and all of that kind of stuff.i am not just talking about us, because you already have that information.i am talking about the billion people who will start getting electronic accessed informationin the next 3 to 4 years using their mobile phones.think about what the arrival of accurate information will do to their lives, to their culture,to their opportunity, to their rhetoric, and i hope to their standard of living.another thing that is going on is that essentially every american now can create and publishtheir ideas.
some of them are absolutely wacko.with that as our given, 2% are wacko and 98% are good.the fact of the matter is that the power of communication in everyone's hands.my underlying thesis: people do not understand how powerful this is.i don't think our government understands it. i do think they are getting it.i don't think we understand it. i don't think we fully understand how liberatingthat is in terms of information, in terms of transparency, in terms of building newsystems, in terms of making things happen. if you think about it, the barish innovations,small business and so fourth, the cost of starting a new company and so fourth is somuch lower.
you have science and technological advancesthat are unheard of. i will talk a little bit in a bit about theenergy crisis and the amount of money being poured into university research programs.the best and brightest are now going--20-year-olds are going--into these fields,because they believe that they can change the world, make their professional mark,and be hugely successful in something that is critically relevant to our nation's future.it is a huge cause for optimism. we have an opportunity, for example, to becomethe most energy efficient economy in the world, with all sorts of really good benefits.as a result of the innovation, the structure, the investment; and literally, the drive ofamerican will.
it is interesting that technology makes adifference. technology always follows these curves whereeverybody says: "oh my god." the first sentence, the first telegraph messagewas "what hath god wrought," year 1844. [pause] this is not a new phenomenon. we are all ignorantof history, but these waves come over and over again.when electricity happened, it is the same thing."oh my god," think about what we can now do. we have that in us, we have that opportunity.we have this balance now that we have to construct. i think we have had sort of the most extremeversion of the free market rules approach,
and we have seen some of its consequences.we have to balance, from a regulatory perspective, the enormous creativity of the free marketwith some of its unfettered excesses. what we have been doing here in washingtonis having these debates. as the symbol caricatures of free merchants--anythinggoes, versus socialists who promote 5 year plans.the right answer is the balance between these different groups. a balance that causes theoutcomes that i am talking about. that balance is achievable by people withjudgment, as long as they understand the objective. the objective is to win. i don't mean personally,i mean as a country; with the objectives that we set out and things that we want to talkabout.
what has happened, now, is that we are findingthis balance point. we are finding it again, as we study what has happened in the lastfew years. fundamentally we have to agree with the freemarket, which is fundamental to the innovation, the capital formation, and so fourth.what is the proper role of government? i want to talk a little bit about that some more.it is really important that the outcome here is that small start-ups with funny names--thenext generation of googles--get founded, get funded, and become successful in this newregime. that is where the wealth will be created.that is where those 20-year-olds will go. that is where the new set of innovation willbe created.
it is always true, and it will always be true.the internet, of course, itself is an example of this.everybody here knows, funded through darpa. i was one of the recipients of some of theearly grants, and it made a huge difference. the fact of the matter is that it was a networkthat was designed through protocols and standards without constraints on its ends. it is calledthe end to end principal. what happens is basically as long as you arereasonably well behaved you can connect to anything that you want.look at all the things that people have connected; some successful, some not, some hugely successful.it is that openness, the ability that anyone can play, which is a characteristic of dynamic,scalable markets and networks which really
drive the modern economy.when these things grow, they grow very quickly. they become these phenomena that no one reallyunderstood the impact on. we were optimistic. we understood that innovationwould flourish in it. why don't we do the same thing with the energygrid? isn't it obvious? you have a command and control structure designedin the 1960s. why don't you open it up, allow the innovation--things like distributed cogeneration, those sorts of things, and all these interestingnotions of smart grids-- a classic example being the ability to usethe battery that is in your car to provide peak power.literally, they pay you to provide peak power
because it is cheaper to get the power fromyour battery, than it is to build a coal fire fuel plantwhich is a disaster anyway for peak power in the middle of the afternoon.you can charge the battery at night when energy is cheap.it seems obvious if you think about it. why can't we do it? it is just a design problem.every aspect that i have just described has been shown in labs, it is part of a technologymission, people are excited about it, and it is easily achievable.it is just a matter of will. that is really what i want to focus on today.if you are going to spur economic growth--literally make it happen--you have to focus on infrastructure,research and development, and energy.
when we talk about twenty-first-century infrastructure--infrastructureslike this is exciting or what? it is really exciting to me, i'm sorry.let's be very clear, you may like other things but infrastructure is important.infrastructure is the foundation upon which wealth is created. i mean societal capital.if you don't fundamentally build that infrastructure, you are not going to get the scale effectsthat i am talking about. i am not just talking about roads and bridges,which are absolutely important and so fourth. i am talking about new networks that can puttools of communication information in the hands of millions.take a look at broadband. here we are. we invented this stuff and we are now fifteenthin the world.
only 55% of americans have high speed internetconnection at their home. in the rural areas it is one in three.all of us do, but there are a whole bunch of americans who don't.it is a big problem. we have almost no competition in many of these markets, most people--95%--only have one or two suppliers. there should be 4 or 5. competition reallydoes a great job of setting market prices. we have to move from a regulatory framework.president roosevelt took on the business of rural electrification.in the 1950s president eisenhower talked about the interstate highway system, and built aneconomic framework; one which will drive the development of this broadband infrastructure.we have to find this right balance of incentives.
if you look, the current federal communicationscommission has done tremendously good work on this.against tremendous political and business pressure, they decided to open up the spectrumand increase consumer choices. why did they do that: because they read theircharter. they said this is our mission. our mission is to make this infrastructurehappen. it is an act of remarkable courage from thestandpoint of the fcc, and one which we applaud. the decision to open up the white spaces;these spaces exist between television channels roughly.it provides a whole new unregulated spectrum which people can play with to develop newgoods and services.
it is an enormous increase in bandwidth whichis available that you didn't even know you had.now all of a sudden, by virtue of good regulation, good judgment, and good insight they can pullthat off. of course, we can do even more; even moreeffective use of underutilized spectrum. spectrum is everything in what we do becausewe are mobile. that spectrum is all around us.as we look here in the hall, it is all around us. most of it is not being used at all, forvarious reasons. let's open it up.then, a universal broadband strategy that gets people more choices, more vendors, moreplatforms, and so fourth.
literally, build the market by making surethat people really can make this thing happen. my point is these are not a panacea. theyreally do enable a whole new category of platforms. open systems--meaning my ability to interconnect,my ability to run an application of any kind on any device--is at the cornerstone of this, because we don't know where the innovation is going tocome from, but we are pretty sure it is not here.it will be over there where we don't expect it.you never know where your innovation comes from.in an innovative model, you welcome it, you expect it, you build a platform that can accommodateit, and then the rest happens.
these open platforms really drive choices.in many ways--if we go back to the wisdom of crowds arguments--an open system meansmore voices. more voices mean more discussion. more choicesmean better outcomes. a community makes a better decision than anindividual. the sum of all of those is one spectrum ofideas. the alternative is the case of ma bell. youcould have any telephone you wanted as long as it is big, heavy, and black.sorry that is not quite fair, big, heavy, and expensive.the opening up, which as you know was fought for 20 years, enabled this tremendous reductionis prices; lots and lots of choices.
this finally unleashed this enormous opportunityaround information, which google and all of us are very much beneficiaries of.open systems have this sort of very clear promise of constant innovation and even greaterchoice. now we are about to go through another one,which i am not going to spend too much time on.this is a shift to cloud computing. for those of you who have not heard the term, cloudcomputing is essentially where the ã¢â‚¬ëœcloud,'--which is the term that we use for the network--iswhere all the computation is done and where all the information is.from your perspective what happens is: here you are; you are here in the hall.you take out your computer or your mobile
device, everything that you care about isalready on the network, and brought to you in a safe and secure way.it is just a better model. every corporation, even the people who built the last model,is moving as quickly as they can to cloud computing.why? because the regulatory, the business decisions that were made in the last 10 to20 years have enabled us to build that infrastructure and to get that information to you quicklyover typically wireless communications and open standards.it seems to me that this massive shift to cloud computing has a number of other implications.for example, if you are a small business you can now compete fairly against the big businesses.the old saying on the internet is that no
one knows you are a dog. then there is a cartoonof the dog typing. i remember that from way back.the important point here is that, on the internet, you really can compete fairly.in a cloud computing model, it doesn't matter how big you are; it really matters the servicethat you offer. this is another example of this innovativeopen model that i am talking about. when you combine that, you also have to focuson r&d. the situation in r&d in the last few yearshas not been good. it seems obvious, but let me state it: whydo we fund r&d: because no one else does. it is actually pretty simple.businesses, by law, have to serve their shareholders.
they are not going to fundamentally investat the level of pure research. it makes no sense for them. even enlightenedbusinesses ultimately are judged by their shareholders, by their rate of return, andby their capital requirements. it takes government policy to take advantageof it. when i was in graduate school, i was on afellowship from the government. it made a difference.much of the work that i participated in, in the 1970s, came out of some of the darpa andnsf works. i know how real and fundamental this is.if you take a look at most of the interesting innovations, they have occurred not in largecorporate labs--as much as i would like to
claim to you otherwise--but typically in universities where the funding has come from the nih, the nsf, and othergroups. that model works. it is a core aspect of america'scompetitiveness. i would argue it is the core aspect of america's competitiveness.in fact, in looking at it the budget for basic scientific research went down last year, asif we don't care. do you think all interesting science problemshave been solved? i can make a long list of those which haven't.how are we doing against our target of solving cancer, atomic issues, mysteries of the universe,transportation issues, energy efficiency, and so fourth?have they all been solved: of course not.
furthermore, you have an even greater opportunitybefore you. thank goodness president elect obama announced,as part of his platform, his proposal to double the basic funding. it is long overdue.what would you do with this money? why don't we invest in science and math? whydon't we focus on it in an education context as well?we are also falling behind, as you know, against some other countries--in particular asiancountries--in this regard. do you think that this matters? do you thinkthat it matters that eventually not only will the asian economies have lots of smart people,more cash than we do because of the way they run their industries, but also a whole bunchmore technical people?
do you think ultimately you will be dealingwith innovations that they come up with, that drive their economies, where you will simplybe the captive consumer? i hope that is not the only outcome of theirglobal competitiveness. i welcome what they are doing, but it seemsto me we should get our act together right now.here is another example, just use incentives; math and science undergraduates to pursuegraduate studies. i will come back to the fact that we thenkick them out of the country if they don't have the right visa, which is another disaster.the federal tax r&d credit has been extended 11 times since 1981. we just extended it fora few more years.
just make it permanent, guys. what do we haveto do here? here is another example, we train these people.we bring them to the country. we have the best university system in the world, bar none.then we won't give them the visa to work here where they would then pay lots of taxes.help me with this reasoning. i just don't understand.i have yet to find anyone who can explain to me, in a rational way, why we would notwant the best and brightest to come to america to create industries,invent new things, solve the various technical and operational problems we have, cure cancer,and you name it. wouldn't you rather have them here?it is bazaar. it is disgusting. sorry, i have
a strong opinion, so i'm not done.then of course we have patent reform, which has got to be on the agenda.again, innovation is part of this. what is happening are that there have beena series of very good patent reform bills, which have not made it.the system is dysfunctional. it makes no sense. why is every case filed in the east districtof texas? you can't come up with a legitimate answer for that either. it is just bad publicpolicy. i will let you check out that one if you havean opinion. from my perspective, patent reform litigationand international property laws which allow internet users to access things and get theappropriate compensation are fundamental to
this.google, we are doing what we can here. we believe ourselves to be one of the great innovatorsin this space. we care a lot about it. we focus on innovationall the time. let me give you some examples. flu trends: we think we can sense outbreaksearlier than anyone else by looking at what people are doing in an anonymous way--this is very important, in an anonymized and aggregated way--let people know.how many lives will that save? is it worth doing: if it is one life, absolutely.if it is a next pandemic and it is a million people, you bet.we are pretty excited about that. we will see if that technology proceeds and how farwe can take that.
i will give you another example: universallanguage translation. we have invented technology which uses a statisticalconcept which actually can translate from language to language without a dictionary.it is bazaar. i cannot explain to you technically how it works--although people have tried--butit works. it works enough that you can figure out roughlywhat they are saying. it is not as good as human translation.why is this important: because language causes war.people don't understand, they don't try to mediate, they get themselves into their hyperbolicstates, and bad things happen. don't you think we would be better off ifall of those books in the library of alexandria
had been translated into english?don't you think that we would be better off if all of the enormously interesting workswritten in english had been translated into arabic?we can do that now systematically. it seems like an obvious thing, and we cannow do it at scale. we are not done. what we really want to do--andagain this is with your permission, with you signing up, and with appropriate privacy--is be able to answer questions that are more interesting, rather than looking somethingup. we want to be able to answer the question:what should i do this weekend? the answer is: it depends. it depends on whoyou are and what you care about.
we are not there yet, but we are working onit. we think technology can fundamentally changethe way that you think about how you spend your time and what you care about.you can be infinitely more educated. i can tell you that from google's perspective--frommy perspective as a google user--i am enormously more knowledgeable at the things that happenin my daily life. it is a wonderful way of living one's life,in my view. i want to talk about energy as part of this.we have talked about technology. we have talked about policy.i want to talk about energy, because we are at one of those points where we have to getthis right.
the argument, roughly, goes like this: oilis infinite--oil is finite, excuse me, limited, but information is infinite.how can you take information, how can you take the structures and the kind of stuffthat i am talking about now, and apply it to something which is the life blood of whatwe do. these challenges are very hard. they are certainlyas hard as the information challenges and the science challenges that i am talking about.they may be harder, because there are so many players. we understand that energy is everythingabout what we do. it is interesting that it is a trillion dollarindustry, 1.5 trillion dollar u.s. industry. it is a very large industry.you have a situation where you have climate
change, which can be argued as the other ofthe 2 threats against essentially global disaster. the first being nuclear proliferation.climate change is very real. it is very much a threat in our lifetimes.you have all of the issues of the energy industry, energy efficiency, waste, and so fourth andso on. you have issues that are going on now withrespect to pricing, pricing stability, incentives, and so fourth and so on.is there a way of solving this problem? over the summer a number of people got togetherat google, and we said is there a silver bullet? of course the rule is that there are no silverbullets in life. is there one? is it possible to come up with a solutionto this question, which solves the climate
change problem, causes oil prices to go down,gets people to go to work, replaces our energy infrastructure with basically fossil fuels,creates an export industry, and--by the way--we can afford?by the way, if you ask the average person anywhere in the united states--certainly herein washington, certainly in the meetings i have been in--the answer is no.okay, but we have produced such a plan. it is called the google 2030 energy plan.it goes roughly like this. when you look at the energy problem, you candivide it into 2 halves. the first half has to do with electrical powergeneration, energy generation which as you know is primarily coal.coal is very bad for co2, but very cheap and
very prevalent here and in china, and alsonatural gas. the other half has to do with transportation.most of the issues with oil are really transportation issues.for various reasons you don't use coal in your cars and you don't use gas and oil togenerate electric power. so divide the two. how do we address the fundamentalissue of electricity? we have a lot of ideas. the most importantthing to do in our modeling is to make sure that we have the same level of efficiency--thatis consumption-per-citizen--now for the next 20 years.well that is kind of wimpy. an interesting fact is that the per capitaenergy consumption has gone up by around 50%
per citizen.this means that it is growing even faster because the number of people in the u.s. isgrowing. except in states where the regulatory environmenthas decoupled utility profits to utility efficiency. in california we started this in 1973 in anact of enormous insight, i think. they changed the way they regulate the industry.they get paid based on the energy that they save, not the revenue that they make. interesting.two thirds of states, now, in america, have some variant of that, either in place or inlegislation that is being discussed. this is a very real thing.if you make that assumption, and you assume roughly $3 a gallon gas, you get energy efficiency--literallysavings from plants that you don't have to
build.then you can build different kinds of plants. the observation about plants, by the way,is that every plant we have now will have been rebuilt in some form by 2050.you are going to have to rebuild them anyway. so why don't you build them differently?stop building the coal plants, and focus on solar, wind, and enhanced geothermal.solar: the sun is going to shine for the rest of our lives, thank goodness.the amount of power that comes from the sun, especially in the united states of coursewith our deserts and so fourth, is enormously powerful.there are new technologies; these amazing solar concentrators that take all of thatstuff and really get it to wherever it needs
to go.wind is almost approaching now--with these huge turbines that move very slowly so theturbines don't hurt the birds-- the cost per kilowatt hour is very close toapproaching the cost of coal. by the way, there is a problem with solarand wind. there is no grid where the wind and the solar are.the people are in the cities. the simplest thing that we have to do is we have to addressthe grid problem. this is independent of the smart grid. youjust have to get the grid there. in talking to the utility people, they areactually happy to build the grids but it takes them 15 years because of the overlapping issuesof government and so fourth and so on.
there is something called the high plainsexpress. there is a wind tunnel essentially that goes through wyoming, colorado, new mexico,and so fourth. they are trying to harness it, but they can'tget the infrastructure approved. here is an example where good public policy,federal preemption, and all those kinds of things, and incentives between these differentplayers could really make a difference. that is how energy plays out.i will take you through some of the ideas, being more specific, in a second.there is the other half, which is cars. you have to do both, by the way.what is the story with cars? we have these cafe standards. the automobile industry isin trouble and so fourth and so on.
is there a solution? it looks like there is.it is called plug in hybrids. what happens is you have a battery--the newbatteries are phenomenal, getting better, and there is a lot of battery research thesedays--with a small engine. the battery is charged up for 40 miles orso. this is the chevy volt for example which is going to be a great product.you drive around for your short trips just on the battery which you can charge from yourhouse. if you need more humph to get wherever youare going the gasoline engine then charges the battery, and off you go.when you do the math of those kinds of approaches, you save half the fuel.all of a sudden your mileage in a prius, for
example, goes from 50 miles per gallon to100, pretty neat. does that work for all cars: absolutely.there are many other ideas. one person, [indistinct], has actually donea calculation where you can improve if you do things involving flexible fuels, the useof this hybrid approach, new carbon fiber technology to make the carslighter and stronger, and other aerodynamic styles, he can get the efficiency down bya factor of 30--that is 3-0. think about what that does to our friendlyoil producing states and their ability to set oil prices, and have us go through thekind of teeter-totter that we just went through in the last 6 months.why don't we figure out a way to never let
that happen?the way to do it is to create other choices, and let the market sort that out.how does the government do this? the first thing is let's just have bailoutprograms. here is an example: current government discussionabout stimulus--by the way let's assume we are in a pretty severe recession.i don't actually understand how they make these decisions, but everyone assumes thatwe either in a recession or entering it. as a result the government will probably doa stimulus program. why don't we use the stimulus money to getthis initiative started? why don't we get a two-for?let's get the stimulation, but let's also
get the infrastructure.remember i love infrastructure. let's get it built.all of a sudden, instead of just a hand out program or just a subsidy, let's get it donebased on the principles of the kinds of things that i am talking about.you do everything with private money at risk too. you have matching programs and so fourth.there are smart people here in the room who understand how to design these things so thatthe incentives are in alignment. maybe we could de-carbonize our economy. maybewe could actually get started on a multi-year, maybe multi-decade program which will ultimatelyproduce the outcome. for example, if you want to do stimulus, wheredo you do it.
give matching funds to energy utilities atthe federal level--so these are state utilities--for energy efficiency programs which they alreadyrun. they already have the legislation. they alreadyhave the standards. they already have the costumers. they already have the people whotalk to them. it is a no-brainer.what is interesting about those energy efficiency programs is how they do them. they hire localcontractors. what is happening in the housing industryright now? the contractors have no work. a byproduct of this is a good employment programwith a wonderful impact on energy efficiency. it is literally a jobs program for peoplewho are really desperate right now.
they went through the huge bubble, they allgot laid off, and their employment benefits are running out.let's do it this way. let's get them employed fixing something.there are many examples of this, insulation and so fourth.by the way, insulationã¢â‚¬â¦you install the insulation in your house and it pays backnext year, the following year, the following year, the following year, the following year,and 50 years from now. oil prices are not going down.another example: people are unwilling to do improvements to their homes because they thinkthey are going to sell their house in 3 to 5 years, which as we know is not true today.nevertheless this is what they think.
a county in california figured out a particularkind of bond where you could take a loan to do home improvement--you know green improvementfor your home--and the loan goes onto your title.when you sell the house, that indebtedness continues at this very nice and friendly rate.all of a sudden people now have an incentive to think about a 7-year payback, or a 10-yearpayback. by the way, we all know that they are goingto be in their houses for 7 years anyway, so the city will, in fact, get its money back.it is a huge societal good. you could imagine more interesting ways.you could fund the auto companies--going back to the auto example.you could fund the automobile with bonuses
when they beat the cafe standards. they areclearly going to needs some kind of support here.you could have differential tax treatment for efficient cars versus expensive cars.this is in fact what was done in israel. my point here is that these ideas have beenaround for awhile. we talk about the smart grid, matching thesmart grid. federal preemption to try to get the infrastructure built fairly quickly.here is another example: renewable portfolio standards. about 10 states have renewableportfolio standards where they have committed to get their energy portfolio--a typical example would be 10% of their energy is renewable by 2015.you have federal renewable portfolio standard,
which has been discussed.you could have incentives, for example the government will help fund a transmission linebetween any 2 states as long as they have a renewable portfolio standard.these are some interesting ideas. another thing you have to do is you have toget money going. you have to get money going into the rightplaces. tax credits--we talked about before--solar,wind, and geothermal. how much tax credit should they get to offsetthe tax credits that the fossil fuel industries have absorbed over the last 50 years?if you do the math you will discover any number i give you is low.a calculation on the order of 10 billion would
be just fine, thank you very much.another problem is getting money going into the system.money has dried up. we all know this. it is very difficult to get a loan.there are ideas floating around. the cleverest one that i have heard is to create a federalenergy lending authority modeled on the farm credit act of 1916.in this idea, you create a federally funded, that is, a capitalized bank.under a set of assumptions, which need to be worked out, makes low-interest long-termloans to people to do the kinds of things and build the kinds of businesses that i amdescribing. you do it with matching money, private sector,and all that kind of stuff.
another example is that you can do that andyou can tie that to an energy buying authority. how much oil, how much energy do you thinkthe federal government buys every year? one number i came across was 40 billion dollars.i have no idea if that is correct or not. my point is these numbers are large.you create a market. you create a lending opportunity. you stoke the innovation.put it all together and you have an opportunity to really go.there are even crazier ideas. there is a co2 eating rock that if you takethe co2 and you pump it on the rock it turns to marble.let's find more of that rock and solve that problem.another person said the problem with the auto
industry is that the auto industry has 17million capacity and they are selling 10 million. they don't have enough demand is the problem.one way to have demand is to reduce the number of cars people currently have by buying thepolluting cars. getting them off the road creates demand.these are interesting ideas. i don't know if they pencil out, but these are the ideasthat need to become part of our public policy. if you put all these together, the estimatesare that these are jobs programs. we understand, in a political context herein washington, that jobs programs matter. they matter a lot to our congress, and theymatter to our citizens. estimates are that there are 1 million, 2million, even 5 million jobs being created
by these kinds of programs.we need to do these, and we need to do these now.putting all of that together, it is time to restore trust in how our government worksand how it makes this decision. i want to return to the model of the internetand how people can use it to make decisions. everyone here knows that the internet is changingour nation. i would argue that the internet was a big winner in 2008.there is no question that president elect obama used the internet very skillfully, especiallyearly on when he was not as well known. he used the internet for fundraising, forgetting his messages out, and for communicating. over the weekend he used, as part of his radioaddress, he used youtube to communicate a
video image of him giving that--which wasvery successful. what has not been as noticed is that as aresult of that people are now debating it. it is causing engagement. on youtube you cannot only just see his talk, but you can say whether you agree or disagree.you can produce videos that say he is wrong, or i don't like it, or what have you.this notion of engagement is fundamental to, i think, how we get through this.historically how is legislation done? you have smart young staffers who sit there.you have all the politics among all of this. it is done in the corners and so fourth.then all of a sudden they unveil the legislation. instead why don't we move to much more ofa consensus building model, which is what
the internet allows.why don't we get people more engaged? yes, you will get your 1% crazies.the fact of the matter is a lot of people want to participate.what is interesting about it is that--i will give you the negative example first.why did we not have more of the tremendous scandals in the last year? the political scandalswhere there was this issue and that issue. many of them were based on falsehoods, andthose scandals didn't occur because when a falsehood was asserted by somebody, it wascorrected quickly by what i am going call the police of the internet.people care so passionately about these things--and they obviously have a lot of free time--
that they tracked each and every thing thateverybody said. if you are political leader and you make astatement and it is not true, you are going to hear.especially if you say something which is at odds with what you said the hour before.people are watching. that level on engagement is a permanent changein our political thing. even if you don't really care about the internet,you think that we are all crazy, and all that kind of stuff, as a political leader, youknow this matters because you have seen your fellow members be caught in it.they have been caught in the business-as-usual model, when this new model is happening.how can we take that? how can we take that
forward?with this enormous accomplishment of the first african american president in history, 40years after martin luther king's assassination. this is an amazing achievement for america.we should all--whether you support president obama or not--you should be proud of that.how can we go forward with this idea? it seems to me that you want to encouragedebate. more debate and more voices let the truth emerge.basic information that the government uses is not available. you still can't fundamentallysee the information sources that are used. there have been a series of acts which havetried to open this up. the vast majority of information is stillnot searchable or findable, either because
it is not published or because it is on websiteswhich the government has put up which no one can index.that is our job. these are easily solved by legislation andby a focus on getting the information out. it is better to have all of those people withyou, than to shut them out. the people who have lost in the last somenumber of elections, and political leaders have learned this.you embrace them, you don't shut them out. how do you embrace them?for example: we can stream almost all of the public meetings on technologies like youtube,youtube's competitors, and so fourth. the bandwidth is there. we built all of it.why don't we get people more involved?
warren buffett writes in his manual: "ourguideline is to tell you the business facts that we would want to know if our positionswere reversed. we owe you no less." why is that not also true of our government?government has not embraced, generically, the tools that we all use everyday.they have not embraced blogs, video, and all the information sources.it is time. it is time to do it and to do it right.other countries are doing this better. britain for example--i was looking for exampleshere in the us. arizona has a particularly good one wherereal estate agents can actually now figure out what everybody is doing, what the rulesare, and so fourth.
there are examples, but it is no where nearwhere it needs to be. there is no particular reason why it can'tbe done very quickly. waiting until the eleventh hour to solicitfor input on the bills is crazy. why don't you start?you will get a better bill, and you will certainly get more buy-in if you get earlier.yet culturally we don't want to do that. here is another example: the patent and trademarkoffice which is as overloaded as it has ever been.they are running a very interesting new experiment where they publish the patents early for publiccomment. guess what; all the players who care deeplyabout these bazaar and nerdy patent really
go after it.there is no way that their patent examiners can fundamentally get all the insight thatthe wisdom of crowds can do. why is that not true of every branch of government?it makes perfect sense. use all of those people who care so passionately and who have a lotof free time to help you. i want to finish by saying that--let me putthis in the context. i am very much an optimist about this.you sit there, you read the paper, and think: god, should i wake up in the morning or shouldi just take the day off. you feel like turning it off while it is allhappening. i don't know if we are at the low yet, orif there are more lows coming.
i certainly don't think anybody else does.i do know that the country has faced many more significant challenges.let's start with world war i, world war ii, and you name it.let's take the crisis, let's take this huge set of issues that we face, and let's dealwith it as an opportunity to get the structure right.the aspects of this have to do with communication, policy, and the proper regulation.this financial crisis that we are facing today, to some degree, will force all of these peoplewho have had such a good time arguing about tax policy in 2011--this is something which is not particularly relevant today--to force them to deal withthe reality of the choices they face.
the choices are not easy. they are very hardand very subtle. figure out a way to get the population involvedin those in a way that is much more immersive. there is recognition among americans thatyou have to have private sector and public sector involvement together.there is not a silver bullet of just government or just private freedom to do whatever youwant, regardless of its costs. this framework gave rise to the internet.remember the government funded it. the government helped in its creation.it was designed by scientists. it created a business opportunity that was open. thatis how scientists think. the openness created business opportunitiesthat created huge corporations. they changed
telecommunications. they changed modern life.it brought us, i think, to a much better understanding of each other.to me, my optimism comes from a rock solid view of the genius of the american peopleand the power of technology. this is how i live my life every day.i am convinced that, armed with the internet and sister technologies, we can get our countryback to work. we can get really outstanding solutions overthe long-term. we can face these challenges, and we can facethem head on. let me close with a quote. there is a mr.de tocqueville said--i will paraphrase because this is a french writer:america will do well because of the optimism
of its people, its abundance of land, andits absence of a king. this was said in 1831. let's listen to that. the optimism of itspeople: that is what i am talking about now. the abundance of its land: think about allof that solar, all of that wind, all those people, all those cities expanding, all thatgrowth that is within us. its absence of a king: think about the peacefultransition of power to a new government. one with a new set of opportunities to succeed,and we hope them very well. thank you very much. go ahead, yes sir. >>foster: hi, my name is david foster andi am with the social security administration.
a pleasure, i very much enjoyed your talk.we have one of the largest it centers in the world. we are also leaders in health it. wepump out a billion dollars a day to the american people.in many ways we are the face of government. we are very interested in terms of what youwere talking about. in terms of changing the structure and getting it right.we have an it advisory panel. we were wondering--any help you could get us in terms of gettingthese new innovations into government would be extremely helpful for us. >>schmidt: it is interesting that social security,i think, is probably the most successful large it project in the united states.for about 20 years, as best i can tell, the
it department has been--as far as i know itis the largest operational such site. it does it with enormous accuracy.i don't know how you all do it. it is sort of the interesting case. >>foster: i would also like to add that weare actually the lowest funded it agency of comparable size. >>schmidt: so now we understand how to doit. maybe because it is done so professionally. maybe it is its mission.to me the social security thing is a good example where you can build a government systemthat is federally funded that really does provide things which are highly measurable.what i would suggest is that the opportunity
with all of that data is to make as much ofit available--again in generic forms--for people to analyze, to understand,and to open up some of the information that you have to get others to be able to helpyou. the only suggestion i would make for the socialsecurity administration--because i think you really are the best of the best--is how can you get the other people to help you do an even better job.that i don't know, but i would encourage you to think about it. >>foster: any of your colleagues would beterrific. >>schmidt: okay, will do. thank you. theyare here.
>>simpson: i am john simpson. i am with consumerwatchdog. i was fascinated by your quote of our success coming from the fact that we don'thave a king in this country. i guess i would fear that perhaps you havebecome the king of the internet. that has all sorts of terrible implications for privacy.we are very concerned about the way many people enter into google's web without even realizingthat they are having information go in. we have posted 2 videos about that, whichare available on our site: consumerwatchdog.org/google strangely enough.we encourage everyone to look at that. specifically for you sir, we wonder why you haven't respondedto us in over a month about these. these are very well documented situations.how you essentially look at people's email
even if they haven't opted in.how you are now marketing all of your acts to congress without really talking about thekind of necessary security that is there with cloud computing.we have issues with the privacy things. what you are doing with congress could potentially,it seems to us, be a breach of security. we are very eager to work with you. we thinkthat much of what you do is fantastic. it has to be done in a transparent way. people,as you said, they have to opt in. most of your material now i would suggestthat the default does this to you and there is no easy simple way for instance to optout of autosuggest. we have some specific suggestions. we lookforward to sitting down and talking with you.
i ask you today: when can we do that? >>schmidt: this is not the best time to setup a meeting with me. we can talk about it afterwards. >>simpson: we can talk about it afterwards.it is not easy for me to do this in front of 200 people. this is not my preferred method. >>schmidt: i have actually read your lettervery carefully. >>simpson: thank you. >>schmidt: i am generally sympathetic. youmake a set of specific suggestion which have to do with ssl, https, and so fourth and soon.
>>simpson: exactly. >>schmidt: our general approach would be todo all of those except that they make things slower.for example, in most cases the specifics that you talk about--we have the opportunity butthe default is not to use the most secure form because it slows everything down. >>simpson: it also advantages your marketingefforts. let's have a transparent conversation. >>schmidt: again, i can assert to you as amatter of fact that this is not something we think about.what we do think about is latency, literally speed.we are looking at the specific ideas that
you talked about, but ultimately we are not,i think, going do anything that disadvantages speed.what we will do is things which advantage communication.i applaud your publishing your analysis, your area of concerns, and so forth.we are very focused on this from the standpoint of both the combination of performance andprivacy. some of the other specific things that youtalked about: for example you talk about email and sender versus receiver.i am going to have to take those as product suggestions and/or that is not how our systemswork. we can do that offline.
>>simpson: i would look forward to doing thatoffline. thank you very much. >>holferd: dr. schmidt, esteemed members ofthe media, honored colleagues and guests. my name is elizabeth holferd and i am withneutral net. i would like to shift the conversation backto infrastructure. distributed energy as well as smart grid applicationslike automatic outage notification, truly advanced meter reading, and those types ofservices require a robust twenty first century 2-way communicationsfabric in the electric utility industry. at the same time things like cloud computingas well as telemedicine, telework, and things that we talk about reaching intorural communities and really allowing people
to function at very much higher levels thanthey have in the past. this requires again a robust 2-way communicationsfabric. the company that i am involved in does that.one asset addressing both of these aging infrastructures-- i want to go back to the infrastructure issuebecause you talked about encouraging and restoring confidence in the government.what are your suggestions, as somebody that is a chief development officer and as somebodywho is getting a lot of feedback from the markets right now.how do we restore market confidence in investing in infrastructure and investing in innovation?right now, all of us realize that there is money out there. the investments are goingare into distressed assets, assets that already
exist.people plan to turn those around in 2 to 3 years. it is not an investment in infrastructureor innovation. it is an issue for us right now. how do werestore that kind of market confidence? >>schmidt: i think partly we have the correctpresident to do this in the sense that president elect obama has indicated his support forthe notion of a smart grid. there are in fact task forces being assembledthat are looking at this question and are thinking about it in the context of short-termspending versus long-term. one of the problems that we have is that wecan't do--infrastructure spending doesn't generate enough stimulation.in my conversations i will say: well you know
have we spent a billion here on that.they are talking about much larger numbers in order to get the country moving again.i think our problem fundamentally is that we are not a big enough target.the technologies are not mature enough, they haven't scaled enough yet, and there is stillmore technical work for example to be done on smart grid.my message has been more r&d funding in it. we, google, did a bit partnership with generalelectric on precisely this issue to try to get more momentum.it sounds like your company is pushing very hard on that as well.i think ultimately we have to create a bigger target to get the stimulus to actually includeit.
that is, i think, part of our joint goal.i missed somebody in the back. yes sir? >>trumble: hello, my name is will trumble.my question goes to utilizing bridge technologies to the point at which then we can assume usingplug in hybrid vehicles and the electrical gridthat we are hopefully going to generate through the wind turbines and solar technology inthe future. the immediate threat which we hear come outof folk's mouths day in and day out is that we are transferring wealth to parts of theworld in the forms of oil revenues. rather than shipping our wealth abroad, weshould keep it here. what is your stand point and view on utilizingnatural gas as a technology, as a bridge technology,
until we can create the infrastructure tolive off the renewables? >>schmidt: natural gas has been called thecrack cocaine of the energy industry because it is extremely attractive.it is an easy conversion for traditional operators. its co2 emission is half that of for examplecoal. you would clearly prefer that over coal inthe current pricing regime. there are many problems with l&g and sortof the infrastructure that makes it, the number of players, the number of sources, and theglobal supply. what will happen of course it that as we movemore and more to that, prices will go up. this neutralizes some of its cost advantage,which is why it is so attractive.
i would prefer to have us focus on de-carbonizingthe economy with an understanding that if we do use l&g and c&g, we do that in specificareas. the most obvious is in fleet transportationfor trucks and buses. you have a single source of filling up, itis a local market, it is highly efficient for that use, it replaces an oil source whichis worse for the environment etc. i don't think that, if you scale the modelof the amount of power that we need, i don't think l&g and c&g fundamentally make up enoughof a gap to be the solution. they bring with them still a significant carbonfootprint. >>trumble: thanks
>>schmidt: go ahead. >>damashek: hi, my name is robert damashekfrom the binary group. i am a strategic advisor to the dod and army cios.we have been doing work, you know, inside of government.you mentioned the inside and the outside connecting on trying to leverage the web 3.0, web 2.0technologies to connect people together to increase transparency and all.it is hard to know how we connect with the transition team. how do we connect with thefolks to share our lessons learned? i can give you a white paper. what do we needto do in order to help make the inside of the government work more effectively withthe outside of the government?
>>schmidt: i don't know exactly. i want tolet--since i am not speaking for them--i want to let the transitions speak on how to bestcommunicate. i will tell you that in my contact with thesepeople, they are very smart, they really are listening, they really are looking for newideas, and they really are in a hurry because of the issues.i think this is a good time to be getting those ideas out there. i know that they wouldwelcome yours. down here, yes sir? oh did i miss. i am sorry.i apologize. way up there. >>sacs: my name is vicky sacs. i am from mit.i did my phd in management. i met a directory from nsf and i was speaking to him regardingthe mit lab producing a lot of interesting
projects.i am curious, do you guys offer support for projects like those?for example, i did a project with a friend of mine developing telemedicine.he developed a polymer. if a patient is traveling abroad or something,the polymer allows a doctor millions of miles away to transfer the medication to terminallyill patients and things like that. >>schmidt: we have been doing funding in 2areas. in basic computer science we will work with innovators in computer science and facultyat the leading universities including mit. we have also been funding in energy. we havemade small technology grants to do precisely the kinds of things that you are describingwith respect to alternative fuels.
we have also been investing in companies thatwe think are particularly promising for the energy future.that is an example. we have not been investing so much in the healthcare because we don'tunderstand it as well as we should. yes sir? >>clark: i am charlie clark, an editor withtax notes. i was interested in your plea to make the r&d tax credit permanent.i was wondering if you could speculate on any specific projects that either google orsome other major corporations would be ready to roll out if the r&d tax credit were mademore reliably permanent. >>schmidt: as you know it was just extendedfor some years. my argument was more of a
long-term. certainly in the short-term weare going to take advantage of the r&d tax credit that is already in place.it does, for us, make a difference because so much of our expenses are tied up in ourinnovation. i can't give you a specific because it wasjust extended, as you know. it looks like we only have time for a couplemore. who did we not call on. down here, we will go ahead. >>tucker: thank you for coming today. billtucker is my name. i am a consultant. if you mentioned it, i missed it. how do youthink nuclear power would figure into providing power? it is one of the most efficient meansthat we have and is nonpolluting.
>>schmidt: nuclear power is a sort of rat'snest of issues. the first set of issues has to do with safety, long-term storage, andthe ability to do reprocessing. those are largely, i think, political issuesnot so much--they are technology issues but they are fundamentally political issues thatwe face. there is a debate as to whether there shouldbe a federal national reprocessing center. that has not been resolved. i don't have astrong opinion on that. i think those issues weigh on the industryas a whole. the second problem is an economic one.not only have there not been any new plants in the united states since the 1970s commission,but the cost estimates for the plants that
would be built now exceed the capital capability--literally the ability to fund those plants by the utilities.nuclear power in the united states will not happen in my view until you solve both problems.the second, there is a proposal--a working group, for example, at one of the nationalacademies said there are roughly 4 or 5 different interesting new nuclear power plant designs.they can never get funding because of the number of billions that is required to dospeculative funding will never happen. we as a country need to make a decision asto whether we want to take that expense. it is not for me to say. i think it is easyto say you are pro-nuke or you are against nuke.when you compare nuclear power for example
to wind, you would build more wind farms andconnect them to the existing grid quicker than you would build a nuclear power plant.obviously you might want to have nuclear as well.prioritization is such that nuclear does not come first.the model that i talked about in my talk does not include any nuclear. it does not includethe shut down of any nuclear either. nuclear, if it works, just like carbon captureand sequestration--if it works isn't that positive to the model that i am talking about.we can achieve our energy independence without resolving the nuclear fight, and without resolvingthe carbon fight if we focus on these other renewables.that is what i think was so interesting about
the idea. >>tucker: thank you. >>schmidt: it sounds like we have to go. iapologize to those of you who had questions. >>call: on behalf of new america, thank youall for coming out this afternoon. we will see you next time.
