Future of Work: American Innovation
Transcript: Future of Work: American Innovation
By Washington Post Live October 11, 2022 at 5:22 p.m. EDT
MR. LYNCH: Hello, and welcome to Washington Post Live. I’m David J. Lynch, global economics correspondent here at The Post. Today we have two segments on American innovation and the future of work. First, I’ll be joined by Representative Ro Khanna, Democrat from Silicon Valley, and then MIT president, Rafael Reif. So be sure to stick around for both conversations. Now, Congressman Khanna, welcome back to Washington Post Live. REP. KHANNA: Thank you. I appreciate you having me, and I have so much admiration for Rafael Reif. So I’m sure your audience will have a great discussion with him as well. MR. LYNCH: Great. I want to start with a major piece of legislation that President Biden signed back in August, the CHIPS and Science Act, which as you know provides $52 billion in federal subsidies for domestic semiconductor production, and I wonder how did we end up in a place where such a quintessentially American industry requires such massive federal support. Does this represent or reflect a failure of American trade policy, our approach to globalization, insufficient government investment in technology over the years, or all of the above? REP. KHANNA: Well, all of the above. I was proud to coauthor the CHIPS and Science Act with Senator Schumer, Representative Gallagher, and Todd Young. It started out as the Endless Frontiers, but we made a strategic mistake in this country, and that is we said that manufacturing was somehow dirty, production, didn’t matter. Andy Grove warned about this in 2010. People can look at his Business Week articles saying how can you just let all the jobs leave, that if the production leaves, the innovation will leave as well. We didn’t invent the automobile. We mass produced it in America. We didn’t invent the jet engine. We mass produced it in America. That’s what made us an economy. We did invent the semiconductor chip, we did invent the solar panel, and we said the production didn’t matter. This was 50 years of misguided thinking, and the reality is we should care about production in America. Some of the trade agreements had negative consequences, but the fact was that we were not building in our industrial capacity that requires government partnership in workforce and with industry to provide them often with financing that other countries were providing to have the production offshore, and of course, there should be public standards, whether or not stock buybacks and workers are treated well. But we just did not have any of that policy. We thought let the markets do what they want, and let globalization run its course. That, in my view, was a mistake. MR. LYNCH: Now, some of the corporate investment announcements that have come in response to the CHIPS Act are truly eye‑catching. Intel has said it will spend $20 billion to develop a new facility outside Columbus, Ohio. IBM is going to spend $20 billion up in the Hudson Valley in New York, Micron, yet another $20 billion program also in New York, tens of thousands of good‑paying jobs promised, although many won’t materialize for several years. I wonder, how confident are you that all of these plans and projects will actually come to life or bear fruit to the scale that they’re being described as doing today? REP. KHANNA: If we do our job well, they should. I mean, a lot depends on the Commerce Department, and they have good people there. A lot depends on making sure that they’re collaborating with the private sector, collaborating with local universities, investing in workforce, making sure we have a rational immigration policy. Some of the people we need are in Taiwan and other parts of the world to revitalize our industries, but I believe, directionally, it will come together. Now, the problem is that, you know, China, as Eric Schmidt says, does one of these CHIPS Acts every year. We have sort of an ad hoc approach. It took Schumer, myself, Todd Young, three years to get this across the finish line over the course of two different presidencies. We need‑‑and we just did it on semiconductors. What about all of the other industries in America? Steel where we’ve gone from 20 percent to 5 percent, aluminum where we’ve gone from 37 percent to 2 percent, graphite where we make zero, basically, here. You could go industry after industry where we’re not doing much to be in competition for the next generation of production. So we need a much more comprehensive approach to the development of new industry, factories, jobs, making things here in the next decade. MR. LYNCH: I want to talk about the extent to which this can be applied to other industries in a moment, but I also want to ask you about another provision of the legislation, which establishes regional technology hubs in parts of the country that haven’t traditionally been thought of as tech hotbeds, and this idea has obviously appeal. But I also wonder whether it’s vulnerable to sort of traditional pork barrel politics in terms of choosing the locations for these sites. How confident are you that‑‑or how do we make sure that these new centers can actually stand on their own and will pay off in a genuine way? And can we really replicate the sort of Silicon Valley success model just by having the government write checks? REP. KHANNA: Surely no to the latter, nor do we want to replicate Silicon Valley everywhere, nor does everyone want to become Silicon Valley, but the reality is we can create massive production clusters on robotics, on automobile supplies, on electric vehicles, on batteries, on clean energy in different parts of the country. And different parts of the country may have different assets in what they want to emerge as, and they don’t all have to be, quote/unquote, “high tech.” You can’t put a semiconductor fab everywhere, but they may be new manufacturing processes for making old things, better ways of making refrigerators and dishwashers and car parts. So I do think it can emerge. Now, on your question of should it be‑‑can it be free of politics, what I would say is members of Congress like me should have no say in it, neither should Senators, and it needs to be an independent process. Commerce is going to be doing a lot of it. I don’t think ideally that’s sufficient. Senator Rubio and I have been working on a bill to create an economic development council with different agencies, the private sector, to really work with local and state governments to be more strategic in how we develop these types of industries across America. But, at the very least, with the system we have now, we need Commerce to implement it in a way that is apolitical, and I’m hopeful they will. MR. LYNCH: Now, you mentioned earlier that we’ve spent the last several decades really letting the market sort out these questions of where manufacturing and other activities should take place. We’re clearly now in an environment where members of both parties seem more comfortable with the government playing a more active role in directing economic activity. Industrial policy used to be an insult. Now it’s become a shared objective. But I wonder how you distinguish or where you draw the line in separating legitimate government functions designed to spur innovation and sort of create opportunity for new ventures across the country and inappropriate wasteful government largess. Today it’s semiconductors, but you’ve mentioned several other industries already today, and you could, I think, expect to see a lot of industries lining up on Capitol Hill with their hands out. REP. KHANNA: Well, I don’t think we have to reinvent the wheel. We just need to look at what Alexander Hamilton said and how FDR developed America to be the most productive economy, and the way it developed was a partnership with the private sector, with government purchasing, government financing, and investment in people, in education and workforce development. And that partnership, I think we should do across geographies, across industries in developing America. Now, how do we make sure that it’s not just a handout? We make sure that they’re public standards, that corporations that get financing or businesses that get financing are paying a fair wage, that they aren’t using that money just to enrich shareholders, that they are‑‑have some differential in terms of their corporate CEO salary and worker salary. But I believe we can through such an economic development council‑‑I call it a new economic patriotism‑‑actually have industry across America, new mask‑‑build masks here, make more baby formula here, make the thick steel here that’s going to be needed for windmills, make graphite here that’s going to be needed for electric cars, and we should be more intentional about it. MR. LYNCH: Over time, won’t efforts to promote domestic production inevitably carry an inflationary cost to it? Perhaps it’s a cost that folks would be willing to bear, but presumably, the most cost‑effective situation or setup is what we’ve got, and if you add additional requirements to buy American‑made products or to make things here at the expense of overseas locales, that is going to cost more, isn’t it? REP. KHANNA: Not necessarily. I mean, if you look at Germany as a model, where they ran trade surpluses, our last trade surplus was in 1975. Now, we have a stronger dollar, and we can get into what we need to do in terms of the dollar being a reserve currency. But Germany managed to have much less of a decline in manufacturing, much more stable, almost 25 percent manufacturing work base because they invested in productivity. And our workforce is productive, and I believe the advantages of productivity coupled with the savings from the risks particularly in the geopolitical world we face, coupled with the risk to savings of shipping cost can make it productive here. So, if you’re bringing back manufacturing, if inflation is just too much money chasing too few goods and you’re adding to the goods, then that can actually be deflationary. The question is really, are you adding to the goods in a way that is more than if you were adding to the goods from imports? And a lot of that is a question of productivity, and that’s why I’m arguing that what we should be bringing back is manufacturing where we either have high technology focus like semiconductors or productivity advantages because of new processes. MR. LYNCH: Now, we’ve heard a lot about China in the context of the CHIPS Act as a motivation for making these investments. How do you assess the overall technological balance between the U.S. and China? In what areas do you worry that we’re at greatest risk of being eclipsed? REP. KHANNA: In production over–across the board. I mean, they are producing more electric vehicles. They’re producing almost all the graphite that goes into batteries. They’re producing almost all the lithium. They’re producing almost all the cobalt in terms of the processing. They are producing almost all the solar panels. Now, we still have a lot of the Nobel laureates here. We still have a lot of the advantageous science here, but ultimately, there’s innovation in production. And China has been doing that at scale. What won World War II was that we outproduced Japan and Germany two to one during World War II. I’m not sure that we had that capacity as a nation right now to massively outproduce other countries. So we need to build our productive capacity. We also need to invest in AI and quantum computing. We’re doing better than China in the private sector there, but our public investments there are lagging China. MR. LYNCH: Now, you mentioned it took three years to get the CHIPS Act across the finish line. It was a heavy lift, even though you did have support on both sides of the aisle. Having a foreign threat has always been a good way to argue for government action. The famous example, as you know, is President Eisenhower selling the interstate highway system as a way to evacuate American cities in the event of a nuclear war. How important was the specter of Chinese progress in these areas, in an area of innovation and technology that I think many Americans sort of do see as a birthright of this country? Was that sort of the key that allowed this to finally come together? REP. KHANNA: I do think it was a significant factor, especially in getting Republican support, this idea that America wants to remain preeminent, that we want to make sure that we are leading in technology and production, but there was also a recognition, especially after the 2016 election, that something had gone wrong in this country, and the fact that millions of people were deprived of their jobs, that jobs are just shipped offshore because of cheaper labor and corporations searching for lesser environmental standards, that there was a problem, and that production matters. So I think the combination of those two led to this bill which was remarkably bipartisan, probably the most bipartisan thing that has happened under President Biden and certainly in my six years in Congress. MR. LYNCH: We also want to talk about the human dimension of innovation which involves immigration, education, and also making better use of those who are still on the sidelines of today’s economy. And that brings us to a question from a reader, Richard Hood‑‑or a member of our audience, I should say. Richard Hood from Florida asks, how do you engage so many men who seem to be disconnected from the economy? Disconnected, I think he means from the world of work. REP. KHANNA: Well, there’s a great book that Richard Reeves has written recently about how one in seven men between the ages of 25 and 54, prime‑age men, have basically chosen to opt out of the workforce, and that is quite depressing. And he argues it’s the highest we’ve seen in American modern history. I believe one of the reasons of that was deindustrialization, that people’s communities were destroyed, their plants moved offshore. They lost a lot of pride, and so there are multiple causes, and I certainly wouldn’t say that I have a silver bullet. But I do think if we bring back production, if we are focused on making things in our country again, and if we’re focused on investing in our workforce, that we can make progress in getting communities revitalized and getting people back into the workforce. MR. LYNCH: There’s also already been some talk that these new semiconductor facilities may encounter a shortage of engineers or the highly trained specialists that they’re going to need for this work, particularly in specific communities. How concerning is that prospect, and does government have a role in trying to encourage the development of more people to fill those jobs, or are you confident the market will take care of that part of the picture? REP. KHANNA: No, we need education in this country. Look, China is going to have twice the number of college graduates as us by 2040. I’d say it should be a wakeup call. You can’t have in this country–pit blue‑collar workers against PhDs. Columbus, Ohio, showed to get 7,000 blue‑collar jobs in construction and manufacturing, you need the PhDs. You need the BAs as well, and that’s why we need to have a massive investment in education in this country, for STEM education certainly but lowering the cost of college. I’ve been for free public college for that reason, having land grant universities have programs with private industry, and incentivizing people to go into engineering and electrical and manufacturing fields, and so that has to be a huge priority. The lesson, you know, if I can make a comment that is slightly partisan, you know, Trump talked about bringing all these factories back, but the reality is just giving corporate tax cuts and deregulation isn’t going to bring new factories. It’s much harder than that. It requires financing. It requires government purchasing. It requires a developed workforce, and that’s why I look to Hamilton and FDR who were actually able to bring many new factories to America. MR. LYNCH: Now, of course, there’s plenty of talent outside the United States as well, and you know coming from Silicon Valley how important immigrants have been to development of some of our greatest technological success stories. But we’ve made it harder for immigrants to come into the country in recent years. Chinese students who used to fill the ranks of many of our top universities are not coming in the same numbers as relations between the U.S. and China have soured. What would you like to see happen in immigration? And given the fact that this issue has been blocked on Capitol Hill indefinitely, is there any prospect of reaching some sort of sensible compromise that would allow us to get access to the technology‑‑or to the competencies that we need and still satisfy those who are concerned about the border? REP. KHANNA: Well, my parents were immigrants and beneficiaries and part of Sputnik, where after Sputnik and the Soviets beat us to have the first satellite in space, our country said we needed engineers from any part of the world. And after the ‘65 Immigration Act, many Indian Americans, including my parents, came here. My father came here to study engineering at the University of Michigan. So I obviously believe that immigrants are critical to America’s sense of innovation, to our sense of comparative advantage with the rest of the world. What I would say is that we should link the immigration with massive investment in our own land grant universities, in our own educational institutions, so that we are also giving people born in America the tools and opportunities to become the engineers and scientists, and that it’s not an either/or but collaborative. And I would invest in border security but also have some program for people to come across the border in an orderly way to work here. And George W. Bush started a proposal of guest workers. I would have it be more permanent as the Lofgren bill in the House which we passed is, but there are the elements to come to a compromise. It’s the politics that have unfortunately not made that possible for the last 30 years. MR. LYNCH: Okay. Well, unfortunately, that takes care of the time we have. I’m sure we could go on all afternoon, but we are out of time. We’re going to have to wrap up. Congressman, thanks very much for joining us today. We’re grateful for your time. REP. KHANNA: Thank you very much. I appreciate it. MR. LYNCH: And up next, we’ll hear from MIT president Rafael Reif. So stick around right after this video. [Video plays] MS. KOCH: Hi. I’m Kathleen Koch. They say change is the one constant in life. Well, that applies in the workplace too. But as disruptive as uncertainty can be, new research by Adobe has found that it can also have benefits. Here to talk with me about that today is Todd Gerber. Todd is vice president of Adobe Document Cloud. Welcome, Todd. MR. GERBER: Thanks, Kathleen. Great to be here. MS. KOCH: Todd, Adobe just released its second annual Future of Time study, and I had a chance to read it, and I found it so fascinating. In particular, I was surprised to see how much concerns about things like economic stability, covid‑19, or even climate change are impacting people’s work experience. Tell us about what you learned. MR. GERBER: Sure thing. There are a couple of things that we wanted to dive into in this particular study. We looked at productivity, work culture, and innovation, and a couple of things that really popped out were that change is the new constant in the workplace. I mean, if you need to know, look no further than the news to see that every day there’s some‑‑you know, there’s wars. There’s weather. There’s winds blowing of recession and the like. The top two things that we saw pop out from an economic instability and inflation were the key concerns that employees and managers both cited, and the other thing that was really surprising was that both managers and employees, despite those distractions, found that work itself is a place of solace, a safe harbor, if you will, in these times of uncertainty. MS. KOCH: Very interesting. So being at work really is helping people get through these difficult times we’re in. MR. GERBER: That’s right, and I think part of it is it does provide a forum to talk with your peers and leadership. I know during the pandemic, we didn’t just jump right into a meeting. There was always a little bit of an informal wellness check of how are things, what’s going on in your life, before we would dive in, when everything was 100 percent virtual, and I think that spirit of that really has continued now that we’re in a more hybrid state with people both virtual and in the office. MS. KOCH: Well, it’s great to see that that is bringing people together. Today’s event is focusing on the pace of innovation. How would you say that the uncertainty that we just discussed‑‑how did the survey find that that is affecting the way that companies innovate? MR. GERBER: Well, it’s definitely connected. In times of uncertainty, it forces certain choices and to reevaluate how and the ways in which you’re getting the work done itself. Collaboration in particular is one that comes to mind. We didn’t all used to be on a video screen, like we’re doing this conversation. We would be in a physical room in most cases, and a handful of people would be on the phone. Now it’s a very connected, integrated experience where whether you’re physically in the office or somewhere else in the world, that we have the same types of tools, regardless of where you are, and it makes connecting and collaborating a lot easier. I think the other thing too that we found is that employees really valued their organizations that have invested in digital solutions, particularly because they experience a better work‑life balance. Now you don’t need to take that call from the car in the morning. You can take that from home, make sure that you still get the kids off to daycare, if you will, and then come into the office if that suits you at a later point in time and not miss out on the types of conversations or the decision‑making that is happening in an ever increasing, faster pace. MS. KOCH: And just why companies are investing more in digitalization, because I read in the survey that over 70 percent of employees felt that they were getting support in that way from their companies, support that they needed. MR. GERBER: That’s right, and digitization has been a longstanding item on a list of many IT and chief digital officer‑type initiatives but in the last couple years really accelerated the pace of that and prioritization of that, you know, everything from experiences like employee on‑boarding to filling out forms with a bank, all of that, if you think back not that long ago, might have been very paper‑intensive and required physical signatures, digitization takes that and makes it 100 percent electronic. You know, it’s an audible workflow, and oftentimes things that would take hours or days now is mere minutes when you take it to a digital‑type process. MS. KOCH: Let’s talk a little bit about productivity. What can companies do to help employees when they’re having a hard time focusing? Again, at the start of this, we discussed how people are really being distracted by all the breaking news, all this uncertainty, and I do think we’ve all experienced it. This just feels like one of the big challenges of hybrid work today. MR. GERBER: It sure is, and I think one of the first important steps is having that authentic conversation with your management team and your employee base. What problems are you trying to solve? Is it collaboration? Is it the way in which you’re coauthoring, say, a document? And so understand what the core needs are, like, productivity might be defined very differently from organization to organization, and I think you need to have that overall alignment on what are the types of problems that you’re solving so that you can evaluate the best set of tools that are going to be best suited to meeting those respective needs. And then test things out. I think the great thing about this age in which we live in is that there are a lot of options, and it’s easy to try and experiment and get real‑time feedback and adapt along the way. And given that changes the new constant, I think we’ll continue to see a lot more of that testing and iteration‑type mindset in the workplace as well. MS. KOCH: One final takeaway, what would you say is the most important one from the survey? MR. GERBER: I think one of the key ones is really having a supportive environment between management team and employee, having those authentic conversations, to be able to have a clear understanding of what the concerns of the day are, provide space for that, and a technology environment that helps people be their best selves and getting their personal and professional work done. MS. KOCH: Great. Todd Gerber, vice president of Adobe Document Cloud, thanks so much for joining us. MR. GERBER: Thank you for having me. MS. KOCH: And now I’ll had it back over to The Washington Post. [Video plays] MR. LYNCH: Welcome back, and for those of you just joining us, welcome to Washington Post Live. I’m David J. Lynch, global economics correspondent here at The Post. I’m joined now by Rafael Reif, president of MIT, an institution that’s right on the forefront of science, technology, and innovation. President Reif, welcome. DR. REIF: Thank you, David. Welcome. Thank you for inviting me here, and I’m delighted to be part of a segment with Representative Ro Khanna, who has been such a great supporter for the innovation ecosystem that we want to establish and reestablish at MIT and in the country. MR. LYNCH: Well, we’re thrilled to have you with us. I want to go right to a question from a member of our audience, Stephen Tolle from Florida, who says some commentators claim that innovation in the United States has stalled since the turn of the century, a claim, Stephen says, that’s supported by the woeful state of productivity improvement in the country. What is your take on this assessment? Is the U.S. still innovating the way it once did? DR. REIF: Well, yes. The U.S. is still innovating the way it once did. The problem is that the way it once did is not good enough now. So we are still innovating. We’re still doing very well, but the environment, the ecosystem, the global ecosystem is much more competitive. Others are doing very, very well. Others are catching up or running ahead of us, and we just have to reassess our innovation ecosystem to figure out how to fine‑tune it to adapt to this new reality. MR. LYNCH: So how would you describe the formula or the recipe for innovation that the U.S. used in the past, perhaps at its heyday in the ’50s, ’60s, ’70s, whatever period you’d like to choose? How would you describe sort of the classic formula by which the U.S. developed the innovations that led the world? DR. REIF: Well, the classic formula really started, I would say, after World War II, by the way, but it’s very simple, and it’s a formula that other countries are also trying to copy from us. First of all, you have to start with supporting basic science, basic science research. I mean, advancing knowledge is critical. Without advancing knowledge‑‑the more knowledge we have, the more tools we have to advance technologies and do innovation. So supporting of basic science is critical. As a result of that, again, creative people in this country develop new technologies, and once you have new technologies, not every science would develop new technologies, but eventually they all engage and continue to develop new technologies. And then once you have new technologies, you have new tools to create, to innovate. You can innovate with Uber [phonetic]. You can innovate with Google or [unclear] changes. We can innovate with an iPhone. It all is based on existing technologies at the time which was based from science that was created‑‑developed before. So science is the foundation of everything. Advancing knowledge is key. The U.S. has been very good at it. Then comes technology development as a result of the advancement of knowledge, and then you leave the technologies to whoever people to come up with innovative ways, clever ways to use technologies to create new markets. That has been the model for the last 70‑some years, and that model still works. The only problem is that it does not move as fast as we need to move right now to be competitive with some other countries who are doing very well. MR. LYNCH: And so where did we go wrong? That model, as you describe it, was fantastically successful over the years. Was there a particular turning point that caused things to go in the wrong direction? How did we take our eye off the ball as a country? DR. REIF: We did not go wrong. It’s that others are doing much better. I mean, we have competitors now. We used to have the whole field for ourselves. It was a racetrack in which the only race was us. So we raced, and we won. And right now, there are other companies, countries racing with us, and that’s the issue. I think if you believe my simplified model that we have to advance science and then from that we come up with new technologies and from that we come up with innovation, what we need to do is do that even better. So advanced knowledge, well, that comes with research funding. We need to do more of that, and then we need to do more of the kind of advances of knowledge that can produce new technologies. And that is‑‑you know, we talk about science as discovery science, curiosity‑driven, and that has been traditionally what much of the federal funding of research does and has been doing for years, not all of it but a good chunk of it. So curiosity‑driven science is a very good thing. We need more of that. But the goal in a competitive environment is to come up with technologies. As I said, some of the science in the near term produce technologies. Some will produce technologies much later. We need to move that a little bit faster. For that, we need‑‑in addition to discovery science, curiosity‑driven, we need to do what I call or we call in the scientific circles “use‑inspired science,” so science which is driven for a purpose, science that is driven to develop new technologies. That is the part that we need to do more of. In fact, that is the kind of science that we had in the 1940s, mid‑1940s. The laboratories had produced a semiconductor that is the parent of everything we are doing today in the electronics and photonics and just about every product we use today, the chips. All we are talking about comes from that use‑inspired science of the 1940s, late 1940s. So I think we need to go back to doing more of that, not to stop doing discovery science. That is extremely important. That is the mother of all developing of creative‑‑creation of knowledge, but we need to do more use‑inspired basic science so that we can move more of the research of science into advancing knowledge into technologies. That’s the first element, the first part of the ecosystem we have to tinker with, and in fact, the science part of the CHIPS and Science Act is actually driven, the whole idea of that is to address use‑inspired basic science research. And that is what Representative Ro Khanna also pushed in the House with what we called the Endless Frontier Act, which is to focus what ended up being the science part of the CHIPS and Science Act. MR. LYNCH: I think many Americans have also seen that a link between the ability to innovate the nature of a society, free or controlled, and have believed that over time, free societies, democratic societies, will inevitably do better because people are allowed to pursue their research and their innovations, no matter whose ox gets gored or no matter what a government leader might think. And, in that light, I want to ask you whether that’s at all naïve or whether it remains the case, and second, how you would assess the current technological balance between the U.S. and China and where is‑‑where is the U.S. most at risk of being overtaken by Chinese specialists. DR. REIF: Well, I think‑‑I think, yes, I agree that a free society would produce more innovation, and I don’t know that I can tell you. I’ve done experiments with that, and I know the results, and I know that I’m right. But I think evidence, historical evidence has shown that that is the case, and I strongly believe that that is the case. So I think that I don’t have any issues with that statement. I fully agree with that. So, in the long run, if the countries that want to compete with us, they want to compete with us by having central control of what they do, I think at the end of the day, the U.S., the system of just being a little more open and more liberal in terms of research, will win. That’s my strong belief in that. In terms of technology, look, there are some areas‑‑countries like China are focused on advancing some technological areas. They are focusing on advancing, whether it’s chips from manufacturing or whether it’s communications, 5G communications. They focus on addressing whether it’s pitch [phonetic] processing. They focus on those areas. So because they are so focused in some of those areas, they are, I would argue, even ahead of us. But I think that is because they are particularly focused. I think, in general‑‑in general, we are‑‑the U.S. as a whole is ahead of them. Let me just give you an example of something that I heard. I was in a hosted‑‑at a dinner event. It must have been like six years ago, seven years ago in China, in Beijing, and there were at the time captains of the industry being there at the dinner. And I was kind of their guest. And they said two things to me at that dinner. They said when it comes to scale, “The U.S. cannot compete with us. We’re going to beat them every time because we have much more market, much more‑‑in terms of scale, we’re going to‑‑we know how to do that much better than the U.S.” And I felt, boy, that’s pretty arrogant, but, you know, I guess that’s true. And then they said right away after that. They said, “But when it comes to innovation, when it comes to creativity, we will never beat the U.S.,” and I said, “Wait a minute. How come you said to me‑‑you were so arrogant on the first half and so humble on the second half? How do you explain that?” And they said, “Because the U.S. is heterogeneous. You bring the best brains for the whole world that come with different ways, different ways of thinking, and come with new ideas. We are much more homogenous.” This is them telling me. So even they believe that when it comes to being very creative and very innovative, the U.S. will always be ahead. I think the question is that is a fact. We recognize that; they recognize that. So how do we take advantage of that fact? And that’s the key issue here. MR. LYNCH: Well, in that regard, tell me a little bit about turning innovations, scientific breakthroughs and the like, into marketable products that people can benefit from in their daily life? I think you have some experience with that at MIT through something called The Engine. How does it work? DR. REIF: Well, it’s working very well, but that is the other‑‑that is the other fine‑tuning that we need to do in our ecosystem. The first fine‑tuning that I’m suggesting is that we need to continue to advance and to have federal support and all sorts of support for basic science, for basic research, for advancing knowledge, but all of it cannot be just discovery curiosity. We have to do use‑inspired as well. That’s one fine‑tuning that I would like us to do, and that’s what the Science Act‑‑the science part of the CHIPS and Science Act hopefully will address. The second issue is exactly the point you made. So, okay, you have advancing knowledge from science. You have technologies. From technologies, you start innovating. Well, in our ecosystem, the way America works, you can innovate in the software space, in a digital space. You can innovate products that you know very early. Investors can tell very early and they will be very successful or they will fail, and they can just cut the funding off. So it’s a much faster way to get a return on the investment, and that produces all these large companies that we have today that we invest so heavily and so successfully. But there is this other kind of investment based on new science, based on new technology that society needs, that society needs to address climate change, to address a variety of issues, things that are not just digital, things that you have to build, whether it’s a new way of creating energy like fusion energy or new storage device, things that you need to build based on new technology. Those take time, and by and large, our market economy doesn’t have the patience to invest in products that take time to develop, even though society may need them. And I think that’s the other area which we have to fine‑tune. I saw that years ago. I saw that many of the ideas coming out of this space and other places like this one, like MIT, they could do wonders for society. They would not get venture funding because they would take too long to develop. If you have money to invest, you put it in areas in which you are going to get a quick return of the investment. Why invest in something which may take them years? Society needs them, but you want to invest in what gives you a better, fast return. So The Engine that we created here was to address that, what I call “market failure,” to address companies that are going to produce products that we need them in society but that the capital system, the risk capital of today or of five years ago, even today, is not willing to invest heavily on them because there are other avenues in which they can get a return faster. That’s why The Engine was created. I want not just for those products to reach the marketplace. I want the young people here at MIT and other universities to see that their ideas can change the world, change society, and improve standards of living. They can find a way to the marketplace as opposed to being filed away. That was the heart of it. The Engine is funded. It’s another‑‑it’s funded by private capital, investors that want a return on their investment, but they can be patient. They don’t want it in three years or five years. They could wait ten years. That is the other part of our ecosystem that I think needs a little bit more attention too. MR. LYNCH: Interesting. I want to ask you about the partial decoupling that we’re seeing between the U.S. and China, most notably in the technology arena, barriers going up just this week to the sale of sophisticated semiconductor equipment to the Chinese. U.S. and Chinese scientists working together in recent decades have collaborated on a lot of important work. What sort of impact will the separation of these two countries into different realms, if you will‑‑how much of an impact do you think that’s going to have on our ability to innovate and innovation globally? DR. REIF: Well, time will tell, but in my view, it’s going to hurt both countries. Of course, China needs these kind of products for them to advance faster, but we also need to sell these products so we can continue to innovate. So I think, you know, it remains to be seen. I understand the policy. I understand some of the reasons for doing it, but I’m afraid that I don’t know which country is going to hurt the most because for us to advance our technology, for us to keep producing the next generations of technology‑‑and we’ve been doing that for decades‑‑we need to sell the products to customers that want to buy them. So that, I’m actually concerned about the impact of that to our own economy, to our country, and to our own technology development. MR. LYNCH: And I’m curious. I want to ask you in the time we have left about one specific area of innovation, which deals with the climate crisis. As every year goes by, we’re sort of missing a chance to do something about greenhouse gases. Can we innovate our way out of climate change? DR. REIF: I’m certain we can innovate a way out of climate‑‑I’m certain of that. We have‑‑in The Engine‑‑you mentioned that earlier, David‑‑there are 38 companies support it and that a large a number of them are basically in the climate space. So I think we can innovate through it, but they will have to believe me, that we have to support them. I mean, I’ve been saying for a while that we need to advance on two separate tracks to address climate change. One is we have technologies right now. We have renewables. We have solar. We have wind. We need to figure out how to employ them as fast as possible and introduce them to the market and as affordable as possible. That is necessary, and that is doable if we are committed to it, but that alone will not get us to zero carbon by 2050, which we have to get there. So we need to‑‑we need the Track 2, which is basically advance these technologies and get them to the marketplace as soon as possible. That will take a little longer, but if Track 1 can move very fast as we should, Track 2 can take a little longer, and we still can get there by 2050. So can we innovate a way? Yes, we can, but we just have to do the three elements that I talked about. We have to do the basic science. We have to let that basic science lead to technologies, and then let the technologies lead to innovation. That has worked always in this country. We just have to fine‑tune that a little bit more, a little but further for this to work this time around as well. MR. LYNCH: Interesting. We’re coming up just against a hard stop here, but I did want to ask you. I understand you’re retiring as president of MIT at the end of the year. What’s next for you? DR. REIF: Oh, that needs another half an hour. I think, number one, calendar ‘23‑‑I mean, I’m staying in my job until the end of calendar ‘22. Calendar ‘23, I’m going to take a sabbatical, and then most likely, calendar ‘24, I’ll get back to MIT. I think I want to use my sabbatical to figure out‑‑I’ve been enjoying myself while at the same time driving MIT to be the place it wants to be, which is the place where good things for the world happen. Now I have to learn in ‘23 how to do that without doing it with MIT but doing it on my own. Lots for me to think about, so maybe a year from now, we can talk about this. MR. LYNCH: Fair enough. Well, Rafael Reif, thanks very much for your time today. A very interesting conversation. I wish we had more time for it, but thanks for stopping by. And thanks to all of you for joining us in this conversation. You want to see what’s next for us, head over to Washington Post Live for a list of upcoming programs. I’m David J. Lynch, global economics correspondent here at The Post. Thanks again for watching.