How Bill Clinton Would Solve Social Injustice to Budget Gaps

Former President Bill Clinton agreed to field questions on critical economic concerns from five U.S. civic and business leaders, including three CEOs.

Q: John Chambers, chairman and CEO, Cisco Systems.

“Which developed or emerging country do you believe has the best model for governments and businesses working together to solve economic and social challenges? And what can leaders learn from this example that will help them drive growth while improving the lives of their citizens?”

A: “There are lots of good examples. In Europe, Germany kept unemployment down after the financial crisis with a system that encourages employers not to lay people off and supplements the costs of keeping them on the job. Finland has made dramatic progress in its educational system. In Asia, Singapore’s government/business alliance has produced robust growth and visionary development, especially in biotechnology. And don’t forget that 6 of the 10 fastest-growing economies over the past decade are in Africa. Those that are doing best are moving forward on human and resource development, maximizing trade and investment, as well as more effective aid, and integrating the work of nongovernmental organizations (NGOs) into their national development strategies.

“In Latin America, Costa Rica has branded itself as the green economy of the future: 93 percent of its electricity is from renewable sources. Most of that is hydropower; ample geothermal and solar potential could make its energy generation 100 percent green. Twenty-six percent of its land is in national parks, and its forest cover increased from 41 percent to 52 percent over the last decade. Already its per capita income is more than twice the Central American average.

‘Robust Growth’

Mexico and Brazil have enjoyed robust growth and declining income inequality. In Mexico, large expansions of the university system produced more than 100,000 engineering graduates last year. And Mexico City has gone from being an environmental nightmare to a model of green development, with clean air, green buildings, and more tree cover. Latin American economies are expected to grow almost three times as fast as higher-income nations in 2015 while doing groundbreaking work on social and environmental issues.

“Brazil’s success is rooted in having three effective presidents in a row whose policies led to robust growth and declining inequality. This was accomplished through empowerment of the poor, including paying the poorest families to send their children to school and for regular checkups.

Ethanol Use

“President Lula [da Silva] reduced rainforest destruction by 75 percent per year. For five years Brazil has used more cane ethanol than gasoline to power its cars, and its cities have been aggressive in seizing opportunities to adopt green technologies that promote both sustainability and growth.

“In both Mexico and Brazil, there’s a very high level of cooperation between government and the private sector and NGOs. In Mexico, the Carlos Slim Foundation has financed the university education of 250,000 young Mexicans and is working with my foundation on innovative initiatives to empower farmers, fishermen, and women entrepreneurs in Colombia and Peru.

“In 2011, I went to Manaus, on the edge of the Brazilian rainforest, to a conference to discuss how Brazil could get the energy its growing population and economy needed without destroying the rainforest and displacing tribal people who have lived there for thousands of years. The governor of Amazonas was there, along with the minister of the environment and the mayor of Manaus. Representatives from oil and electric companies and cane ethanol producers were there, but so were advocates for the native tribes and the rainforest.

‘Talking Respectfully’

“Everybody from right to left, from government to the private sector to the NGOs. They were all sitting around tables talking respectfully to each other about what to do about this problem. We all have to do more of that to tackle increasingly complex and interconnected problems.”

Q: Stephanie Rawlings-Blake, mayor of Baltimore.

“Cities and towns across America are struggling with the issue of crumbling infrastructure and how to finance new investment. In older American cities, the potential for infrastructure failure can no longer be ignored. We know that infrastructure investment creates construction jobs immediately and lays the foundation for a stronger economy. How can we stimulate a more serious, bipartisan discussion about the importance of investing in America’s infrastructure on a national scale? And what can we learn from other nations that are making smart investments in roads, bridges, transit, water systems, and broadband?”

Improvements Needed

A.: “We clearly need to modernize our infrastructure, including better roads and bridges, smarter electrical grids, upgraded water, sanitation, and mass transit systems, clean energy and more energy-efficient buildings, and globally competitive broadband. And as Sandy so tragically demonstrated, the increase in extreme weather events means it’s even more important to act soon to make all our infrastructure more resilient.

“This is also a huge economic opportunity to create jobs, attract private investment, and increase long-term economic growth and productivity. The most important thing we can learn from other nations is to budget more public funds for investment and to attract more private capital to infrastructure projects. The American Society of Civil Engineers estimates that the U.S. needs $3.6 trillion in infrastructure investment by 2020.

“The most promising opportunity for bipartisan cooperation is a national infrastructure bank, which would be seeded with a modest amount of public money, then mostly funded by private investment with an attractive and secure rate of return. Originally, this proposal had bipartisan support. If Republicans in Washington are no longer willing to back the bank, then state and city officials should establish their own.

Chicago Example

“Based on Mayor Rahm Emanuel’s experience in Chicago, there is plenty of bipartisan support outside Washington for this idea. In fact, at last year’s CGI America conference in Chicago, Mayor Emanuel and 16 other mayors established the U.S. Conference of Mayors’ Infrastructure Financing for Cities Task Force, and I’m glad to be working with them.

“As you know from being on the task force, we’re learning from the challenges and successes in other cities. In your hometown of Baltimore, for example, Baltimore Housing and the city of Baltimore, along with more than 20 partner organizations, plan to eliminate 3,000 vacant residential buildings over the next three years--rehabilitating 1,500 properties and demolishing an additional 1,500. Besides eliminating dangerous, blighted structures, this will mean increased opportunities for quality housing and the creation of jobs and job training opportunities. It will serve as a model for cities facing similar issues.

Reducing Debt

“In 2012, United Water, through CGI America, partnered with institutional investors to provide Nassau County, New York, and the city of Bayonne, New Jersey, with private capital to pay down accumulated debt and invest in their municipal water systems. In exchange for resident-paid user fees, United Water will operate and repair the systems, while the municipalities will maintain ownership and regulatory oversight. Bayonne has already cleared $150 million in debt, which upgraded its bond rating and is helping the city make investments to increase economic growth. These kinds of creative approaches will repair outdated infrastructure, create a cleaner environment, and expand the economy.”

Q: Paul Jacobs, chairman and CEO, Qualcomm.

“Advanced manufacturing doesn’t really generate a lot of operating jobs, and the jobs it does create are highly skilled. Manufacturing that requires a lot of lower skilled labor will likely continue to be located outside of North America. So how important, finally, is manufacturing to U.S. job growth?”

‘Balanced Economy’

A: “Manufacturing remains critical to our ability to build a balanced economy with good jobs. It accounts for over 80 percent of our exports and 90 percent of our patents and R&D spending, according to the U.S. International Trade Commission and the Department of Commerce. As such, it’s a jobs multiplier -- every new manufacturing job creates an additional 4.6 jobs to support it.

For high-tech manufacturing jobs, the multiplier effect rises to 16 additional jobs. Because of increased productivity, the cost of labor is becoming a less significant factor in siting decisions, while the costs of energy, materials, and transportation increasingly matter more. That bodes well for the U.S., where our workforce is huge, energy is plentiful and cheap, and labor costs are not that high compared with Germany and other countries with strong manufacturing sectors.

Training Workers

“We do have continuing challenges. They include training our workforce to meet the needs of a 21st century manufacturing sector; developing and delivering new manufactured products to domestic and global markets; and maintaining and improving our innovation culture. To develop highly specialized products in industries like aerospace, renewable energy, and nanotechnology, our manufacturing sector needs workers with significant training and specialized skills.

“Yet today just 7.1 percent of all bachelor’s degrees awarded in the U.S. go to engineering majors, compared with 18.4 percent internationally. Countries like Germany, Japan, South Korea, China, and Taiwan invest in engineering education at many levels. They build workforce pipelines from apprenticeships to university programs. That helps their governments and private-sector companies apply scientific breakthroughs and rapidly move products from concept to production. A robust manufacturing workforce gives economies a competitive advantage. When we fail to keep pace, we risk losing that advantage.

Investor Networks

“The U.S. also needs to finance and support entrepreneurs to deliver new products in key sectors. That will require networks of investors, entrepreneurs, designers, manufacturers, scientists, and government agencies. This year the new nonprofit Made in America Organization, together with seed support from the Stiefel Family Foundation, made a Clinton Global Initiative (CGI) Commitment to Action to launch a pilot program to identify, support, and scale 10 companies in advanced manufacturing industries. (Commitments to Action are unique to CGI; every member commits to a plan for addressing a significant global challenge.) The four-stage process of the Made in America program is scalable, replicable, and most important, sustainable.

“Our nation’s 300,000 small and medium-size manufacturers, meanwhile, account for more than 50 percent of America’s total manufacturing employment and serve as a major source of technological innovations. U.S. research labs have the physical and intellectual assets to help smaller companies build a larger manufacturing sector.

Educating Engineers

“Lowering the barriers for small and medium-size companies to innovate is something I know you’ve made a personal priority through the institute you are launching with U.C.-Berkeley. The Jacobs Institute will greatly expand the role of design in engineering education at all levels and empower young engineers to design innovative solutions to society’s biggest challenges.”

Q: Jorge Ramirez, president, Chicago Federation of Labor.

“The skills gap in America has nearly reached a crisis point. There are hundreds of thousands of unfilled high-skilled jobs, particularly in areas such as manufacturing, while millions of people are out of work. How do we reconcile this discrepancy so that businesses can maximize productivity and, more important, working men and women can secure meaningful, family-sustaining employment that builds a strong middle class?”

A: “It’s been reported that over 3 million jobs remain unfilled in the U.S., even though 7.6 percent of Americans are unemployed. Employers say they can’t find qualified applicants, despite booming enrollment at community colleges and a plethora of other training programs.

‘Valuable Skills’

“Many low-wage workers and others who lack post-secondary credentials already possess valuable skills that aren’t reflected on a résumé. Getting people into courses or credentialing programs recognized by employers will allow job seekers both to better develop skills and to demonstrate them to employers.

“At last year’s CGI America meeting, a group of participants started a conversation about setting competency standards for educational institutions and employers to place qualified workers in open jobs. As a result, the Business Roundtable, with support from the Joyce, ACT, and Lumina Foundations and Siemens, committed to evaluating how industry-recognized certifications can address the mismatch between what an employer needs and what a worker is trained to do. We need this kind of increased private-sector commitment to skills training, particularly when public resources continue to be a challenge.

Labor’s Pledge

“Two years ago at CGI America, we received a commitment from the AFL-CIO that is a model of private- and public-sector involvement in job creation, energy efficiency, and skills training. Organized labor committed $10 billion of public and private pension assets to energy-efficiency projects and related infrastructure investments over the next five years. It pledged to train incumbent and entry-level workers for the skills to meet industry demands.

“The Building Trades unions, in partnership with employers, dedicate considerable resources to meeting the skills gap through their jointly managed registered apprenticeship programs. These respond to the needs of industry, equip workers with skills for not only a job but also a career, and don’t cost the government any money. We should promote more of these types of partnerships to develop successful models across industries.”

Solar Issues

Q.: David Crane, CEO and president, NRG Energy.

“With the cost of solar panels now just 10 percent of what they were five years ago, how do we streamline the local approval process and reduce the friction costs so that U.S. homeowners can realize the solar value of their property while paying less for their electricity?”

A: “We need to develop in every state a network of cooperation in which contractors, utilities, building and home owners, tenants, and government agencies understand the shared benefits of solar energy and work together to accelerate its deployment. Our outdated energy grid’s outages cost the U.S. economy $25 billion or more every year, according to a recent Morgan Stanley study using Department of Energy data. Recent extreme weather events have had devastating effects on our aging infrastructure and make a stronger case than ever to build a more resilient and reliable energy system. Distributed solar energy will help us to build that resilience and reliability, both for the nation and for individual owners of homes and buildings.

Panel Use

“Though innovative companies are speeding the deployment of solar panels, especially in states with financial incentives that reduce or eliminate the need to cover out-of-pocket expenses upfront, more needs to be done to push all our states to adopt user-friendly financing for solar panel purchases or leases.

Big differences in the level of financial subsidies from state to state, as well as limited financing options, continue to slow the adoption of the panels. Over the next two years, Clean Power Finance, an online marketplace for software and financial services, will join with researchers to develop a better understanding of how to encourage consumers to adopt solar power and how to make panels more affordable.”

Editor: Don Frederick

To contact the reporter on this story: Bradford Wieners in New York on +1 212 617 2060 or bwieners@bloomberg.net

To contact the editor responsible for this story: Timothy Franklin in Washington on +1 202 624 1864 or tfranklin14@bloomberg.net

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