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2016 Presidential Election Teleconference with Gary Shapiro Recap

On July 7, 2016, The Center for Policy on Emerging Technologies held our 2016 President Election Teleconference series featuring Gary Shapiro, the President, Chief Executive Officer, and Member of the Executive Board of the Consumer Technology Association (CTA). Below is a lightly edited transcript of the teleconference and should not be quoted without approval.

Center for Policy on Emerging Technologies

Teleconference with Nigel Cameron and Gary Shapiro.

Nigel Cameron: So let me welcome others and thank you for joining us for this teleconference, by the Center for Policy on Emerging Technologies Washington DC, we are very glad you have joined us. We have up to an hour and with us, our guest is Gary Shapiro who is president and CEO of the Consumer Technology Association (CTA), formerly the Consumer Electronics Association, a trade group with 2,200 or so members and we are delighted to have him with us. Before we invite him to speak, I’ll mention the next two calls we have in this series; we have Jim Greenwood president of BIO on July 12th at 10.30am and then we have Linda Moore from TechNet on July 20th at 2pm, and you can register for those calls online. I am delighted to welcome Gary Shapiro and perhaps he could begin by saying a bit about CTA, about the work of CTA for people who don’t know too much about it, and then say what else you want to say about the Science and Technology (S&T) agenda in the context of the upcoming elections in Washington. Gary the floor is yours, thank you for joining us.

Gary Shapiro: Well thank you Nigel for having me, I’ve looked at the list of people on the call and I am extraordinarily impressed and honored that you would take your time to listen to what I have to say, and hopefully make it more interesting for all of us by asking questions. We, the Consumer Technology Association recently changed our name from the Consumer Electronics Association, we are a non-profit trade association [with] about 2,400 US and Canadian companies and we own and produce the CES, which is the largest event in the world focused on innovation every January in Las Vegas. It attracts more than 165,000 people from industry, media and government including over 50,000 people from outside the US and about 6-7,000 reporters. It includes about 2.4million net square [feet] of exhibit space with 3,800 companies exhibiting and it has over one thousand different speakers. It’s all focused on innovation and it’s different industries coming together, whether it’s the music industry, Hollywood, cable broadcast, satellite providers, increasingly the packaged goods industry and the automobile industry, even Madison Avenue and Google, and Yahoo content, and YouTube creators from around the world. It’s viewed as the ultimate event where people are focused on the fact that technology is changing business, it’s changing life with rapid, rapid innovation and increasingly companies are identifying themselves as technology companies, rather than how they used to identify themselves a few years ago. Some of the success points for company CEOs have started to figure out is showing outside of their vertical and cutting deals with other verticals, other companies and working together. In fact, the skills that kids are developing now, and getting their MBAs on are becoming much more valuable, are combining different disciplines, are working in teams, are creating partnerships and that should be impacting education overall, [in] addition of course to the importance of STEM education. As a trade association we have a very simple set of policies, it’s all about innovation and we believe innovation is important because it will solve a lot of the economic problems we have. It’s the easier approach to economic growth, which would solve our deficit problems. We define innovation as changing something which somebody will pay for, providing value, and innovation comes from all sorts of things. I’ve written a couple of books about policy and innovation in terms of corporate practice, based on some of the CEOs I know from the world’s top companies and that’s what we try to focus the show on. In terms of our policy agenda focusing on innovation, we’re a little unique in that we don’t ask for money from the government, so we’re not interested in advocating for the tax credit or for special funding in any way, we didn’t win a lot of friends on Capitol Hill when we refused to ask for or embrace any money for the digital TV transition, even though it was going at our industry. In fact $2 billion went toward the transition, which a lot of us feel is a waste of government money, to make a lot of people feel good for something that ended up with almost no complaints at all and no real problems, especially compared to other bigger societal problems where the money could have been spent more wisely. So what we do advocate for is the factors that go into innovation and encouraging the unique aspects that we have here in the US, and generally what we do very very well is we have a culture of innovation and risk taking. We basically are an immigrant country, more immigrants here than any other country on a percentage basis, perhaps more than any other country except Israel. That’s a reason why Israel has done so well, and in fact I had the honor just two weeks ago, sitting in Tel Aviv with Shimon Peres and talking about innovation with him, and the similarities and differences between the USA and Israel, in terms of why we are so innovative. We agreed, certainly, that what we share in common is a risk taking culture, an immigrant culture, a culture of questioning, our kids grow up asking why and why not, rather than learning things by rote. While some people, most people, seem to lament the breakdown of the US educational system, I personally don’t view it that way, I think it’s a great educational system because it teaches kids to think in ways that other countries don’t. China produces kids working six and a half days a week, learning rote things, they just totally lack a culture of innovation. In fact I have a Chinese au pair living with us, who tells my wife this past weekend that she doesn’t know how to be creative and she’s amazed that we will do some of the things we do, and she wants my wife to teach her how to be creative. That to me was symptomatic of a lot of the problems that Asia faces compared to the US; they’re really good at working hard, they’re really good at rote, but they’re not good at thinking outside the box and we’re good at that. Another reason we’re good, in my view, is because of our constitution, our First Amendment, some of the things we take for granted here. We’re allowed to take risks and not have out government punish us, or incumbent industries punish us, we can create an Uber, a Lyft, an Airbnb, or a Google, where certainly you’re affecting other people’s revenue source, but they have to go through a process to shut you down as opposed to other countries where you can convince a government and they automatically shut you down, and that’s an important issue. A big difference between us and Israel though, is Israel benefit[s] a lot from what they invest in defence and every person has to serve in the military for two to three years, and when you’re 18 or 19 years old and you’re commanding other people or various bits of machinery, and your life is on the line it gives you rapid maturity, it gives you incredible management skills. In the US, I think we have a different approach, and that is we benefit from there being a lot of money to invest compared to other countries in the world in terms of innovation and there’s hotspots, the biggest one, obviously, is Silicon Valley, but there’ New York, the Maryland area, Virginia, there’s Austin Texas, and many other hotspots of innovation. What we’re encouraging in terms of public policy, is we see some blockades to innovation, one of the one’s we are focused on closely, is patent trolls. For those that don’t know, patent trolls are usually lawyers who buy up old patents that haven’t been exercised much and then they try to exercise them with massive mailings, threatening letters, legal extortion, in my view, and they go after startups and others, and once you get one of those letters it is very difficult to get funding. You, depending on how you respond, may be asked for as little as a few thousand dollars, or as much as millions of dollars, and this is affecting almost every American business in the technology industry at this point.

Another issue that has fallen out of popularity lately, is the ability to trade freely. There’s been a clear turn to anti-trade agreements, the US has very low tariffs and other countries have very high tariffs and they exclude them at both ends so our exports do better. But our consumers do better, because they can buy a smartphone for a few hundred dollars, whereas if we were to do some of the things extreme politicians are pushing for, smartphones would cost us several thousand dollars, we’d have to try to figure out how to do them here, and this trade benefits consumers more than anyone else. There are some other things that we are concerned about, in terms of our ability to innovate as a nation, the U.S. Department of Labor recently issued a mandate that any business who uses employees and pays them less than $50,000 a year must pay overtime. That has a huge impact on startups, it’s of great concern in the small business and startup world, if you start something right out of college and hire your friends, and all of a sudden you can’t get the project finished because you can’t pay them a lot of money, and you can’t get them to work later and you can’t send them an email, and now we’re getting to be like France where if you send someone an email all of a sudden that’s a potential DoL violation if you’re not paying them overtime to read the email or respond to it. Or work, as many of us did when we were in our twenties, where you would work the midnight oil because you were learning a lot, and you didn’t get paid a lot but you were able to soak it in like an apprentice. It’s almost like what doctors do when they work 80 hours a week and don’t get paid a lot of money, but that’s when you learn a lot and you pay your dues.

Another thing we focus on is spectrum, there are two types there’s licenced and unlicensed, and it gave us valuable things like the garage door opener and the TV remote, and is now giving us things that are just rescuing our broadband infrastructure, things like Wi-Fi, we want as much unlicensed spectrum as possible, it means no one has to pay for it and you can produce whatever you want, and you basically need to be a good neighbor with what you produce. But licensed spectrum is also important, it allows massive broadband deployment and our view of the world, is we don’t want a lot of rules on these broadband deployers, we’re not that excited about net neutrality, what we are excited about is competition. We feel that the more different broadband providers there are out there, the more transparent they are in their policies, and if they change those policies, as a consumer you can get out of any deal you entered, then we think you’re ok. So we’d rather see less government involvement, except to the extent that it is encouraging rather than discouraging competitions.

The other issue which I alluded to earlier in the immigrant nation, is this issue having to do with highly skilled immigration, it is so important for the future of our nation. Four years ago, we took on the cause of someone not related to the consumer technology industry, a guy who had a PhD from a major university and he started a business right out, and he got funding which was contingent on him staying in the U.S. and he was being deported, because he had graduated and his year was up and yet he had a few million dollars in funding. He was from France and he came to us because he heard we were focusing on highly skilled immigration. He had developed technology which allowed you to look at a heart, as a doctor, and see it and share information. We worked very hard with members of congress, and he credits us with getting him a special visa. We were successful with him, but unsuccessful in getting the law passed, and the good news with him is that he asked me to visit him, and I did a couple of months ago and I was shocked to see that he has $20 million dollars in funding and he employs over 100 people, and he’s probably going to save a good proportion of Obamacare with information sharing and interpreting the results from all hospital testing equipment, by stripping out patient characteristics and aggregate data and figuring out what works and what doesn’t, and providing visual pictures for doctors. He’s already doing it with hearts, he can do it with mammograms, he can do it with brain tumours and he can do it with almost any disease without a lot of investment and it’s already being used around the world. So four years, one immigrant, saved at the last minute but there’re many like that. Frankly when I agreed to do this a few weeks ago, it appeared very dark we had two major presidential candidates, and neither one had much to say about technology. What changed was last week Hillary Clinton issued a tech agenda, which was very thoughtful and thorough and covered a range of things I was talking about. Not all of them, but many, it was certainly light about free trade, didn’t talk much about the DoL overtime rules, but it did talk about patent trolls, it talked about spectrum, broadband and it had a whole bunch of proposals, not every one which we would personally embrace, but it did have some good ideas. Now what we are focusing on going forward, we created something called the Disruptive Innovation Council, as part of our organisation and it includes Airbnb, Uber, Lyft, Pandora, Yelp and a series of other companies which meet certain criteria in terms of size, and impact in dollars for disrupting things. And going forward in the future, that disruption is important, because that’s how things change dramatically and that’s how new jobs are created. In the future we see some major technology trends that are going to transform the world, first the most obvious and biggest is self-driving cars, over 30,000 Americans, over 1 million worldwide die each year from car accidents, the estimate is that over 90% of this will go away, plus many other things, it will have an impact on jobs of course and a whole bunch of other things I am happy to talk about. The other big changes, which are moving very quickly, are 3D printing, drones both commercial and consumer, I’m not talking about military drones. Also, wireless health products, things like Fitbit and Jawbone and Misfit and other products like that, these are all members of my organization I should disclose, but bottom line is all these things that lead up to the internet of things in a sense, which is a mass of sharing of information are going to fundamentally change and solve many of the most basic of problems we as humans face involving food production, agriculture, clean water, transportation, as well as education and of course healthcare. A lot of major problems that society faces, are going to be diminished rapidly in the next 10-20 years, provided we don’t mess it up. The reason that’s going to happen, is really because of smartphones, as literally hundreds of millions have been sold and the components and the sensors, that smartphones contain, and very smart people are figuring out ways to connect them to analyse all sorts of things, from where your pet’s going to whether your infant is breathing to whether your pulse is racing to whether you’re a diabetic and you need to do something about your blood sugar. All these things are rapidly changing, in so many different areas of commercial activity that would be beneficial to mankind, and at a very low price. Obviously, the energy use goes down and there’s all sorts of ways of getting energy to these devices, you’re going to be embedding in all sorts of products, things that we wear and even clothing that we wear, or chairs that we sit in or driving seats that we sit in. So we’ll be solving a lot of these major problems in society, and of course that will be transformational but it will also raise other issues with jobs, the nature of what work is, whether there are employees or contractors, and things like that which we will be facing in the future. I’ve gone on for 20 minutes, and I could go in many different directions but I would be happy to interrupt myself at this point and see if there are any questions or comments?

Nigel Cameron: Thank you, that is a great beginning, and for those on the line, you’ve been asked in the emails you received to drop me an email and we’ll be happy to bring you into the conversation at a suitable point, if you’ve got questions you want to raise and join the conversation. I’ve got one or two to begin with, if I could just take you back, your main initial comment was about education, and you said you were more positive about American education than conventional wisdom suggests because we are training people to think, with concerns for STEM and broader issues. Obviously, one of the issues here is the role of the government, you probable saw that the AEI (American Enterprise Institute) put out a piece, just today or yesterday, which is very critical of Hillary Clinton’s set of proposals, and one of the things they were criticising was the notion that putting more federal money into education was going to do any good. Could you talk a bit about how you see the federal role in providing a stimulating, innovation focused education effort, and the extent to which you think we can do much about that?

Gary Shapiro: That’s a great question about the federal role in education, and obviously we’ve had ‘no child left behind’ and other controversial things. My view of the federal role in education is multifold. I’ve served on the board of George Mason University, Virginia’s largest university, and that gave me an opportunity to see things from the university level, and obviously having children I see it from another level, I don’t claim to be any great person in education, but what I do see is that technology allows different approaches, and obviously with some of the online universities, and what’s going on there, it’s making a huge difference in people’s lives around the world, because all you need is broadband access and you can learn a lot of things you could never learn before. Or you can go to YouTube and learn things, and some people are visual learners, some people are audio learners, some people you have to write it down, and some people need face to face learning, and that’s what we can evolve over time. There’s not a one-size-fits-all approach, and the challenge for federal government involvement, in my view which is just my view, we compare ourselves to other societies and countries which have better test scores and we say we’re failing, and those tests scores are measuring specific things, sometimes just rote learning, it’s not measuring creativity, and I think we are the world leader in creativity. We’re also comparing ourselves to small, homogenous, compact, fairly wealthy countries like Sweden, Norway and places like that, and we’re saying we’re failing, and this isn’t only true in education, it’s true in other ways we measure ourselves, including for example broadband deployment or other things. I don’t think these are fair comparisons, we’re a very large, extremely diverse country, and we face problems with 14 or 15 year old girls having babies, and things like that, and to include that in the mix and say our numbers are bad, is probably not the way we should be self-critical but we are very good at being self-critical, and I think that’s healthy in itself. But in terms of the federal role, at the graduate level, I’ll start at the top, we are kicking out our best students and that’s an immigration issue. Our top graduates in STEM are majority not US citizens, and we fund the National Science foundation at $6 billion a year, most of that money goes to work by these foreign graduate students, so the investment we’re making, I wouldn’t say we are totally throwing it away, but the people who know it best are these young graduate students and then we’re kicking them out of the country and they can form competitors to us, which is what they’re doing. We know a lot of them would love to stay in the US and be part of a startup, and that’s crazy. Hillary Clinton’s proposal, out of fairness President Obama’s and the Republicans before him was to staple the green card to their graduate degree. Now the problem with Hillary Clinton’s proposal, and Obama’s proposal, and if you read the book about Steve Jobs by Walter Issacson, there’s this great discussion that Steve Jobs has when he’s sick and Obama comes to see him in the first year of the Obama presidency, and this is Steve Jobs’ issue with the president and Obama agrees with him totally and says this is wrong and we need to change it, but it must be part of overall immigration reform, and then Steve Jobs says well then you are going to kill it, it will not happen. And seven years later now, Steve Jobs is right and that’s the same thing in Hillary Clinton’s proposal, she says that she really supports highly-skilled immigration, attracting the best and the brightest, but it must be part of overall immigration reform. Frankly, I don’t know if the political dynamic is going to change enough in the next four or eight years, where eight years from now we’ll be having the same discussion but out economy will be worse off and we’ll be creating literally thousands of competitors overseas, and we’ll be losing our competitive strengths, which is attracting the best and the brightest, and keeping them here.

Nigel Cameron: I just want to push backwards there, because it seems to me this is a hugely important question, it’s a distinctive question, and I don’t know anybody who in a smart or relaxed conversation would disagree with the position you are articulating.

Gary Shapiro: Which one is that?

Nigel Cameron: Why do you think it is that people so readily slotted back into this enormously complicated issue, of a general overhaul of immigration policy, rather than recognizing that it’s a stand out issue, with enormous strategic significance. Obviously you go up to the Hill, you testify, you meet with members week by week, why is it that it can’t be pulled out and handled separately?

Gary Shapiro: Because the Democrats will not allow it to be pulled out and handled separately, because they want overall immigration reform and that is more important to them than this issue is. So, and Republicans will say we disagree with your approach, there’s 180 degrees difference between the Democrats and Republicans on overall immigration reform. There’s 100% or 90% agreement on this aspect of it, so the Democrats can pull Republicans in by forcing this to be the only way they can solve national strategic innovation interests of the US, and they’re willing to throw that over basically to get overall immigration reform. And so for seven years, if not longer, that has been the strategy, and the nation has gotten hurt, because in the Democrats view overall immigration reform is much more important than investing, and attracting the best and the brightest of the future. It’s a political equation, it’s not what’s best for the country, it’s just what they feel is best for the country, one thing is more important than the other and I don’t think, maybe how I said it they would disagree with, but overall the substance is their position. Republicans feel that they want a deal in this, but they can’t and I don’t know if the next election is going to change that at all. So those of us that live and die by immigration, and the other thing that’s going on is that many of our companies now are forced, essentially, to create offices overseas to deal with this issue. And then we say ‘Why are these companies going outside of the US?’ Well, because they can’t hire the people they want to hire. There was a billboard in Silicon Valley that Canada placed, saying if you can’t work in the US come to Canada, we want you. So it’s a competitive world out there and since 9/11 we’ve become very anti-foreigner, look at the success of the Trump candidacy, that’s one of the main issues is that foreigners are bad, immigration is bad, we don’t want them, build a wall and he’s the head of the Republican ticket now. Now he’s gotten to where he is on this issue, I was in the Detroit audience when he said he favoured highly-skilled immigration and I was the only one who cheered, but he’s also walked that back the next day. You never know really what his position is, until he’s president and we know what he does, but he’s all over this issue and I think he’s going to stay anti-immigration until the election.

The other aspect is at the undergraduate level, so we have created a situation, and it’s part of the Bernie Sanders platform and the Hillary Clinton platform, is that basically all education is good education and it’s equal education, in terms of at the undergraduate level, and I think this is really unfortunate because it is obviously untrue. This is where I’m sympathetic, and I can’t believe I’m saying this, to the Trump people about political correctness; getting a degree in art history, or study of music is not the same as getting a degree in electronics engineering, or cloud architecture, or massive data processing. There are degrees where you can get jobs, and degrees where you can’t, and we’re promiscuous, whether we’re saying you should have free education or we’ll give you loans at the exact same rate no matter what you study, and that is problematic, it is not a good use of societal resources. I submit that a better approach is to go further and do what Germany does, where they say we value technical training as much as we value a college degree, not only in terms of our willingness to invest as a government or a society, but also as how we treat you and how we respect you. The problem with American parents is that the average American, upper middle class parent wants their kid to go to college, and if they don’t, parents consider themselves a failure, and everything we do in society perpetuates that. We look down on people who go to technical schools, we look down on community colleges and that is absurd because community colleges are producing people with the skills we want, and we need more people who can fix things and do things and make things happen, and we also have 3 million jobs open in the technology world and we need a lot of highly skilled developers, and cloud developers, and platform providers, and we don’t have, that’s another reason we go overseas or we go to India, it’s not a matter of cost it’s that people aren’t available. In Detroit, today there are tens of thousands of jobs open, but people in Detroit are not trained so they’re trying to go after Silicon Valley, they’re trying to go after others and that’s a problem. At the high school and other levels, I don’t lose a lot of sleep the way everyone else does, as I said earlier, I think that schools are doing their jobs, given very difficult circumstances, given some of the laws they live under and given the fact that teachers’ unions sometimes put themselves above the students. I think the charter schools and competition are a good thing and should be encouraged, to the extent that we have some of the situations we have in New York with rubber rooms and things like that, where you can’t ever fire a teacher, that’s a problem. But even at the college level we have some problems, I was speaking recently with the president of the most expensive university in this country and I was asking what his problems were and he said he had two problems related to each other, the first is tenure and the other is age discrimination laws. He said he can never get rid of anyone who’s very old, they learn their skills 40 or 50 years ago, and they cannot be fired under tenure laws and he can’t discriminate against them based on age. That clogs the pipeline of incoming people they can’t hire who are highly skilled, and that’s a really interesting problem and I think we need to acknowledge some of these problems, where laws have good purposes but really don’t protect the people they should, or the societal interest they should. Whether it’s the federal government or the state government, should be how do we get the best and most appropriate education for kids who will be best at it, or whose parents are willing to fund them, but we shouldn’t be giving them free money and the talking about having a contest with politicians as to who could escape college debt that kids take on, which is a trend in this election, a spiral to the bottom of giving away money we don’t have.

Nigel Cameron: On this issue of apprenticeship, it’s in Germany and Switzerland and whoever comes to fix your washing machine is paid much more money than in the US and they’ll do a better job, and they’re a respected member of the community, in a way that these trade type jobs, even though the evidence shows that these people can do very well for themselves, even in the US, but this is not the social modelling, and this discourages smart people to think in those terms. And you’re absolutely right, we have this fixation with college credit and the traditional 4 year college degree, which for some people is simply not the way in which they are going to build their career. Community colleges have come a long way in recent years, they’ve become a lot more interesting, partly because of the technical skills they provide, but where is the leadership coming from, if we’re looking to move more in the German/Swiss direction, with technical learning and apprenticeships and trying to reshape our social expectations of people who’ve been through that track? Is there really leadership out there, and where would the social movement be taking us?

Gary Shapiro: That is a really thoughtful question. I think the leadership has to come from the business community itself, I think the business community needs to stand up and say this is what we need, and this is how it should happen. When was the last time you heard of people with technical training being invited to the White House? But yet, we feature other people all the time. We’re in an Ivy League environment, and that’s unfortunate, I’m trying to think of the good things of a Trump presidency, and there’s very few I can come up with, but maybe he would go with that approach, and recognize that. I think there is an opportunity for someone like him, to challenge the status quo. Another thing, Hillary Clinton failed the bar exam in D.C. so maybe she has a certain sensitivity there as well, and maybe that it’s not all about academics and doing great in everything. I do believe that it does require a greater political discussion than what we’ve had recently. I saw a little bit of it coming out in the Republican debates early, when there was some talk about that, I think Marco Rubio was going in that direction, he did it in his book and he talked about some of these issues in a more thoughtful way, but it certainly hasn’t come, at this point from what I’ve seen, from either of the leading presidential candidates, and I haven’t seen much of it on Capitol Hill. So that’s why I end up with let’s not rely on federal government, now it could be that members of Congress could be sensitive to this, there could be some legislation that would support skills training and apprenticeship programs. I know there are some companies in North or South Carolina, who are doing some things with apprenticeship programs, I think it’s a German company. There is an opportunity, but the business community has, sadly, been quiet on a range of issues. The Chamber of Commerce doesn’t, I think, talk much about these issues. They talk about things which they are focused on because their membership is willing to financially support them on, like their big argument today is if you get financial advice there’s no fiduciary obligation, no required disclosure that you’re getting kickbacks or anything like that. Is that the most significant issue that our country faces? On either side, probably not, but I’d say that most Chamber of Commerce members, and most employers probably want their employees to get good financial information, but the financial industry is very strong at the Chamber of Commerce and, at least in terms of what the Chamber of Commerce is visibly doing lately, it’s what they seem to be supporting.

Nigel Cameron: Let us shift the conversation a bit to federally funded research, as we all know all of innovation comes from basic research and the federal interest in funding basic research has gone down rather than up, as innovation has flourished in the last generation. We had this conversation with Norm Augustine, and I said to him ‘well look, isn’t interesting if you look back to 1967/8 5% of entire federal budget went to NASA, and it’s now about one-tenth of that as a proportion, it is possible for us to get federal interest in basic R&D which is going to lead to all sorts of spin off innovations. Obviously now we have a fixation with lowering taxes, we have concerns about deficit, of course, and any interest in giving the kind of basic funding to research, which is less of course in the private sector than it used to, is under that sort of threat. What is your sense of how we need, or do we need, in terms of MIH, in terms of MSF, these basic funding agencies, and of course the way in which our elite universities have been enabled to do this basic research? Is this something that concerns you or do you think the focus is more in the private sector?

Gary Shapiro: I don’t lose much sleep over that to be honest, I know other countries are stepping up and investing heavily as a national strategy and I think that’s an opportunity. But I also think while we say the numbers are that there’s less money being spent by the government in basic research, it’s still a lot of money, and the question is if we are giving money to, which we are, the National Institute of Health, does that count in the basic research, or not? Our government’s doing a lot of funding of various types of research, but what’s changed in the last 20 or 30 years, is not only that other countries have picked up on it, but the ability to share research globally is fundamentally altered. Take medicine, there’s a website now that researchers can go to, where they can report not only significant research they’ve done, but the fact that they’ve done research and it doesn’t produce a result that is valuable. So, until 10 years ago many people would study the same thing, and when you study something and there’s no significant results, you don’t get published, well now with the internet there is the ability to publish results that are not significant, so other researchers don’t go down that same blind alley, which has been happening repeatedly. The nature of information sharing has dramatically changed so much that there are opportunities for quicker research, and corporations themselves in the US have been blessed with some really wealthy companies like Google, or Intel, or Microsoft and if you look at some of the wealthiest companies in the world and what they’re doing in terms of research, it’s pretty significant and pretty strong. So, we are succeeding and also, by the way, the way you test and analyse massive amounts of data is rapidly changing, and the ability to do it economically is rapidly changing, and that’s what data analysis allows. You could find all sorts of correlations, that you would have had to do almost manually 20 or 30 years ago, or very slowly 10 years ago, you can now do in literally minutes, that used to take weeks or months. So my concern about the federal role in that is probably not as great as other people who study it, and probably know it better than me because I see positive developments in other areas. And when you said that people are fixated with the deficit or things like that, we are fixated, I would say our organisation is fixated on that, we view it as one of the major impediments to the future of the US’s economy, is that you have now a doubling the debt in that last 8 years to almost $20 trillion dollars, at a normalised 5% interest rate; that is $1 trillion dollars that we need to come up with each year that we don’t have, and that will totally eliminate every discretionary, you want to talk about including basic research funding. Of course there’ll be no basic research funding, there’ll be no funding for the commerce department, the education department, EPA or any discretionary funding. You’ll only have funding for entitlements and interest on the debt, and a little bit for defense maybe. That’s happening and the next 20 years, so yes there’s fixation because this generation has promised itself, and spent money on things we cannot possibly pay for. So the debt, even our military leaders have said, it’s the biggest existential threat we face as the US and that debt is part of our innovation strategy, and to us it’s central and that is why as an organization, frankly, we supported the bipartisan deficit commission findings. We are very disappointed that President Obama created the commission and ignored the results, and we’re disappointed that both Presidential candidates are in la-la-land in terms of beginning to deal with the deficit or debt. Mr. Trump has said that he’s not going to do anything but improve entitlements, as has Hillary Clinton, and that’s beyond absurd at this point. So it doesn’t make sense to talk about federal investment in R&D as something that’s going to happen. It’s not going to happen, because 20 years from now there will be no money for it to happen, unless we do something pretty radical, or we’re able to grow the economy, which is why we spend a lot of time asking how we can grow the economy through innovation. The only other choices we have is to cut federal spending, or raise taxes and both of those are pretty harmful to the economy as well, which is why we say we should have an innovation strategy, we should go out and get the best and the brightest in the world, we should get rid of patent trolls, we should do all the things that are necessary with free trade, and then we’ll have a really strong innovation economy that keeps growing. The only thing that has saved us these past 10 years, is the growth of an incredible number of Silicon Valley companies and others, where we’re leading the world, and every other country wants to be what we are. We’re leading in content creation, with YouTube and Hollywood and the music industry, and software like Microsoft, we’re leading in chips like Intel, and we’re leading in design like Apple. We’re leading with every major internet company that is a US created company, and every country in the world wants what we want, and they either try to replicate it or, like they’re doing in the EU, they’re trying to shut it down and extort fines and dollars. So that’s why we are passionate about innovation in the US, and that’s why in terms of R&D spending going down in the US, I know it’s a passionate issue because it was an issue that was critical in the 1960s and 70s and 80s, but right now I don’t see it, frankly.

Nigel Cameron: It’s certainly nice to speak to someone who is not lying awake at night worrying about US test scores, or worrying about the R&D issue! Let’s talk about these future technologies that you outlined in earlier, driverless cars, 3D printing, drones, health applications and so on. Now all of these are profoundly disruptive technologies, disruptive not simply of competitors, but in terms of issues of licences and regulations, all sorts of government related dimension, quite apart from obviously coming up with rivalry to existing commercial set ups. Looking 5 or 10 years out, we have self-driving cars rolling out, we have 3D printing and drones, very concrete concepts, and anything in the health area is very complicated because of the FDA and so on; how do you see us adjusting to the statute, regulatory licensing environment, which will have to shift quite radically to adapt to the innovations that are being driven here.

Gary Shapiro: Well, sometimes it’s a battle state by state, city by city, and country by country. Being active with Uber, Lyft, Airbnb and a whole bunch of other homesharing applications, the ability to share your capital, your time, your car or your skills, what we’re seeing is pushback by taxi drivers or hotel owners and others and they’re trying to preserve the status quo. Now what we’re also seeing is a deliriously happy user environment, people who use Uber or Airbnb appreciate them greatly. And we’re also seeing discussions and accommodations, and they certainly are legitimate government interests, there’s a government interest with home sharing and making sure there’s a safe environment, that taxes are collected, that a method of preservation of the environment that people get when they buy a home and their neighbours are protected. In the automobile area and transportation, there’s some expectation that there’ll be screening and scrutiny and insurance, and things like that. So there’s a combination, there’s negotiation and there’s give and take, but ultimately it sometimes is a political issue and usually consumers are winning on this one because they want better service. In the Washington area we experience the most unacceptable taxi cabs in the world, that I have experienced, because they are just terrible here. And then Uber came along and all of a sudden D.C. taxis are accepting credit cards, and so on but even today it’s tough to take a cab in DC without the driver being on the phone, the air conditioning being broken and things like that, so Uber is a better experience. So the competition which is a by-product that we’re always talking about in terms of innovation is a good thing, but competition has losers. Are the cab drivers losers? Well those that are adapting are doing better, I think they have better local knowledge and could compete that way if they are willing to make the investment. Hotels have an experience of offering pools, restaurants and things like that, and that’s how they can compete. But the fact is that as a vociferous user of both Uber and Airbnb, as I go around the world, it’s a great experience on so many different levels and it allows people to pay their mortgage, it allows people flexibility. I’ve had two Uber drivers today already, and I always ask them ‘why are you doing this?’ and the answer I always get is flexibility, as the number one, I can do what I want when I want, I meet people, I can’t believe how many people do it because they’re retired and bored, or they’re bored because their girlfriend or their wife or their husband is working. And then there’s the small percentage who are full time, and it’s a way for them to make money and set their own hours. So the question that people like Hillary Clinton are addressing is a very difficult one for them is, is this good or bad? I think what you’re going to see in the next few years, especially if it’s a Clinton presidency, is what kind of labor law changes are necessary, to allow that kind of gig workers to obtain some benefits that they can shift around, and they can preserve for their own retirement. There’s going to be a lot of give and take, and I imagine there will be something to benefit the workers which will allow them to plan for their own future, but will hopefully not impede the business model in a way which dramatically raises transaction costs or things like that, or the costs generally.

Nigel Cameron: We’ll talk a little bit about your Disruption Innovation Council which you mentioned, where you’ve got these member companies coming together who are on the disruptive leading edge. What is it seeking to accomplish? How is it fitting into the broader strategy of CTA?

Gary Shapiro: What we’re facing as human beings, is we spend our whole lives in our personal relationships, in our jobs, everything we do essentially trying to preserve the status quo and change is very, very difficult. When a kid goes off to college, or starts a job, or we shift jobs or whatever it is we do, or we break off a relationship or start a new one, there’s a lot of anxiety involved, it’s something changed. But yet we know, we’re humans, we grow and eventually we may marry, have kids and, of course, we’re going to die and we fear that stuff. Yet change is the most inevitable and unstoppable thing we face as human beings, and in the business world it’s the same thing. If you do not change you die, and the expression that I have used, which has been repeated a number of times and places, including at the startup I was at yesterday, is “Innovate or die.” If you don’t change you are standing in place and other people are moving around you, the environment will change around you and you will just go away. So the disruptors, the really big disruptors, are changing things in such a way that they are clearly providing a new benefit to consumers, that they will pay for, but also to a certain extent, they may be expanding the pie but they’re taking away a little bit of someone else’s slice of the pie. And then, when your slice is taken you scream like a 3 year old kid who’s cookie has been taken away, and you go to government and try to get it changed. Our job, as an entity representing the disruptors, and we spend a lot of time talking about whether a disruptor is a good or a bad word, and it used to be a really bad word and we’re trying to make sure it’s more and more being used as a good word. Disruptors are good, and we’re trying to get society to fundamentally change, humans to fundamentally change, and say things change and you must deal with them. Change is actually good, and that’s something really important, and if you change your whole way of thinking about life even, if something bad happens, you accept it and you try to turn it into something good and deal with the situation, you will be happier and [a] more successful human being. And I think that happens too in the business environment, in dealing with, especially larger companies, when I deal with small companies and startups the questions I deal with are ‘how do I compete with a large company?’ The easiest thing in the world is to compete with a larger company, because they are very change adverse. They usually have one thing they’re good at, they make a lot of money doing it, and every incentive in that company is to protect that one thing and discourage anything else. So they can’t deal with change quickly and that’s a problem. So what we’re trying to do at the Disruptive Innovations Council is to first, baseline survey and figure out common perceptions of politicians and consumers, and then go forward and try to change those perceptions to show that change is good. That’s something that should be a mantra for Americans, that change is good; we’re a country formed by a revolution, a major, major change. And that’s why the best example, really has nothing to do with the Disruptive Innovation Council, but I was truly amazed at the reaction to Brexit. I thought it was terrific, not because it was good for Britain, I don’t know if it was good or bad, but great for the US because it gave us an opportunity to redefine the discussion on trade, it gave us an opportunity to make closer the relationship with one of our best allies ever. It gave us a new market, in a sense, to deal with and it gave us a tool to use against the EU, which has done everything they can to hurt business, especially American companies because they do not have the level of creativity and innovation we have. So anytime something happens that is a major change, I was raised to say how is the glass half full? What is good about this? And if we approach things like that in terms of change, it’s a good thing. Our job in Washington, and my whole career has been about, every time there’s a major change in technology, the natural result of legislators is to push to stop it, as the music industry tries to stop recording devices, and Hollywood tried to stop the VCR and those affected by the internet tried to restrict the internet because of copyright. Everyone is trying to stop new technologies, and so our job is to say as new things come along, how do we encourage them? And, for example, we don’t always win, like we’re losing on facial recognition. Now facial recognition is a great thing, especially for Alzheimer’s patients, for people like me who can’t remember names, it’s going to be great for terrorism and defence, yet all of a sudden it became a privacy issue and that took off. Google took off facial recognition from their glasses, and now there’s very little facial recognition and when it does spring up occasionally with an innovator it’s beaten down. That’s not good, and there’ll be other issues that come up related to that, for example biometric identification, today you can analyse people’s voices and determine their emotion, whether they’re telling the truth or not and it’s being used by call centers, and it can be used by airports and other places where they are terrorists, it can be used on TV to see if a politician is telling the truth. You can also look at the lines around their eyes, and other points on their faces to determine their exact emotion, you can put all of that together and determine really what a person is really thinking, and what they’re likely to do. You can do it together with predictive data, and a whole bunch of other stuff including facial recognition based on who they are and where they’re from, and you can dramatically cut the risks from terrorism. And these are all things that are going to be discussed in the next few years, and there will be a battle between those who say privacy at any cost, and those that say these are great tools that we can use as society, and there is a role for government, how do we regulate in a reasonable way that balances off different societal needs, to get good information about people for commercial and safety purposes vs legitimate privacy needs that people have? There’s literally thousands of debates that can occur in the next 10-15 years on a whole range of issues where you have two important societal tensions going against each other, one of them often being privacy, another being safety of individuals and the group, safety against terrorism and these are important discussions to have.

Nigel Cameron: We’ve only got a couple of minutes left, but I just wanted to raise another question we touched on earlier which is certainly becoming, thanks to the presidential campaign, a much bigger issue than it has been for a long time and that is the issue of free trade. The way Mr. Trump has framed this again and again, as something that he wants to tackle, he wants to take a non-standard view, he wants to be more confrontational and he wants eventually to unpick NAFTA. How do you see the free trade discussion, and how much damage could be done, or advantage could be gained by starting over and having that discussion again.

Gary Shapiro: I think, travelling around the world and talking to global government and corporate leaders, if Mr. Trump happened to win the presidency it would be extraordinarily unhelpful for the US in a whole range of ways, one of them being trade. We entered deals, by both Democratic and Republican presidents, they were approved by Congress and we cut a deal. To walk away from that deal at this point is unethical, immoral and will hurt us for the future in terms of our trustworthiness. In terms of not entering deals, as president, I guess Trump has the right to do that, I think it’s really bad policy, I am obviously not a Trump supporter. I think he would greatly harm the reputation of the US, he comes from a background in real estate, where you threaten a lot and you can walk away and you can insult, and you can pull out the nuclear bomb of bankruptcy-which he’s done three times-and I think he has the worst possible background to be President, he has very thin skin and he’s very dangerous for the US. Not only for trade, but I lose sleep over the power for nuclear arms, he clearly has a temper and is very dangerous and I cannot believe that we would hire him to do this job. Certainly if a head hunter was selecting the next President of the US he wouldn’t be in the first million people selected. So there’s my view!

Nigel Cameron: There’s your view, and it’s a sobering one on which to finish on. Thank you, it’s been a terrific discussion across a whole series of fronts, I want to thank my colleagues Adam Turosky and Jen Sertl who’ve been part of the set up for this discussion. I hope you people will join us next week when we are talking to Jim Greenwood of BIO and my great thanks to Gary Shapiro for joining, and for some really very fascinating and very stimulating perspectives, quite fresh perspectives in some ways, which are now there as the election comes in a fresh way. Thank you for joining us and giving us your time, very much appreciated.

Gary Shapiro: It was my pleasure.