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>>CALL: Good afternoon. I am Steve Call. I am the president of the New America Foundation.
It is my pleasure to welcome you to this presentation by Eric Schmidt the chairman and CEO of Google.
The New America Foundation is a 10-year-old nonprofit, nonpartisan, public policy institute
that invests in new thinkers, writers, researchers, and scholars
whose work promises to bring forward new ideas and analysis to address the next generation
of policy challenges facing the United States. We have about 100 people working with us in
Washington and California. When I joined New America as its second president
about a year ago, I was attracted by the exceptional quality of our board of directors.
It includes writers like Fareed Zakaria, Jim Fallows, Dan Yergin, and Anne-Marie Slaughter;
economic leaders such as Roger Ferguson, Bernard Schwartz, and Laura Tyson.
Another measure of our good fortune is that Eric Schmidt has been an active member of
New America's board of directors since our think tank's founding 10 years ago.
At that time Eric had not yet joined Google, but was leading Novell.
What animated him then--and I think what you will hear animates him now--was an interest
in forward-looking and non-ideological thinking about public life and public policy.
Particularly, about those persistent challenges which have so often proved impervious to conventional
party politics. Such as the challenges facing our healthcare
and education systems, the challenges of climate change, energy policy, and foreign policy.
The need for an investment led approach to economic growth, and of course the changing
role of technology in public life. Today, of course, we encounter Eric as the
chairman and chief executive of one of the world's most innovative and influential technology
companies, Google. In his role at New America, however, our conversation
has not changed since the time that he was involved with our founding.
We are still animated by the same values. We are still recruiting new thinkers and new
writers who can reshape public understanding of the most important issues in national life.
I consider Eric to be one of New America's important thinkers, with the added bonus--from
my point of view--that he no longer requires a stipend.
[all laugh]
A year ago at my request Eric agreed to become chairman of New America, on whose board he
had so long served. In that role I found him to be an outstanding
partner, engaged but never intrusive, dedicated to transparency, a defender of intellectual
independence and academic freedom at our institute. Above all, he is one of the sharpest analysts
of complex patterns that I have ever had the pleasure to listen to.
I think you will discover that about him today. There is a certain rigor, frankness, and architecture
of thought that the very best scientists bring to discussions of public policy matters.
Eric's thinking, in my experience, very much reflects those qualities.
What you may not know about him is that he is also a local guy.
He is a product of a local public high school. I believe his mother is here today. I don't
want to embarrass her, but I hope you will all be suitably respectful when we turn to
questions.
[all laugh]
He graduated from Yorktown High School in Arlington.
He then studied electrical engineering at Princeton.
After that, he earned a Doctorate in computer science at Berkeley.
These days, in addition to his day job at Google, he is a member of President Elect
Obama's economic advisory transition team. I want to emphasize that he is not speaking
today in any reference to that role, but rather as a chairman of New American and as, of course,
the CEO of Google. Our program today has a very simple format.
Eric is going to talk for about half an hour, and then take questions for a similar amount
of time. There are microphones on the side. Please
remember as you address your questions to keep them short.
Avoid speeches, and also you are on the record throughout today. Keep that in mind if you
do ask a question. With that, please join me now in welcoming
Eric Schmidt to the microphone.
[applause]
>>SCHMIDT: Thank you. Thank you Steve very much.
I think you see with Steve's introduction why he has been such an effective and dynamic
president of the New America Foundation. It is an organization that I think is one
of the great things about America. A place where people gather, they have new ideas,
and I disagree with a whole bunch of them. To me that is the real test. Are they challenging?
Are they provocative? Are they really making a big difference?
Let me thank Steve for not just this event, but of course his tremendous leadership in
the last year. Of course Rachel, and the other folks who
put this together, and the whole New America staff.
What I want to do is actually talk about the relationship of technology and policy, economic
growth, and restoring trust in government. It seems to me that we are at one of those
enormously important periods. It is a clichÃ© to say that this is sort
of one of the great crisis that we face, but this may be the toughest economic time that
most of us will face in our lifetimes. Everybody here is familiar with the statistics.
People are unable to pay their mortgages. Mortgages are below water.
You have the credit crisis, and the fact that there is a liquidity issue--which is still
not completely resolved. You have issues of significant potential of
large bankruptcies coming online. You have this bazaar period of a transition
where we have a President and then we have a next President.
As Senator Obama says, we only have 1 President at a time in our country.
From our perspective, we have got to make progress in the short term, and we have got
to make progress in the long term. We have to address at some point, the healthcare
issues and the schools issues. These are issues, by the way, that New America
has some very interesting and innovative ideas about.
We have to do them in the context now. We have been delaying these things. We have
had all of these problems. People locked in various partisan battles.
It is time to sort of get forward on that. Let me point out that our dependence on imported
oil is just this huge drain. How many wars has oil created? How much of
our cost, how much of our infrastructure has this been driving?
It is time to address these issues. I am an optimist. It is important to say that
right upfront because America is in a remarkable place.
Unlike many other countries, we have the foundation, the intellectual foundation,
the leadership--literally the people in the room--not just to solve these problems but
to build an even better place. As a result we have these interesting capabilities.
Let's go through this. A hundred years ago nobody had information. Now, all of you are
significant users of the internet. In fact, in our lifetimes all people--it is
reasonable to say almost all people--will have access to almost all the world's information.
That is a remarkable achievement. Just think about it. This is on par with 7:10 [??good
verbible??] and all of that kind of stuff. I am not just talking about us, because you
already have that information. I am talking about the billion people who
will start getting electronic accessed information in the next 3 to 4 years using their mobile
phones. Think about what the arrival of accurate information
will do to their lives, to their culture, to their opportunity, to their rhetoric, and
I hope to their standard of living. Another thing that is going on is that essentially
every American now can create and publish their ideas.
Some of them are absolutely wacko. With that as our given, 2% are wacko and 98%
are good. The fact of the matter is that the power of
communication in everyone's hands. My underlying thesis: People do not understand
how powerful this is. I don't think our government understands it.
I do think they are getting it. I don't think we understand it.
I don't think we fully understand how liberating that is in terms of information, in terms
of transparency, in terms of building new systems, in terms of making things happen.
If you think about it, the Barish innovations, small business and so fourth, the cost of
starting a new company and so fourth is so much lower.
You have science and technological advances that are unheard of.
I will talk a little bit in a bit about the energy crisis and the amount of money being
poured into university research programs. The best and brightest are now going--20-year-olds
are going--into these fields, because they believe that they can change
the world, make their professional mark, and be hugely successful in something that
is critically relevant to our nation's future. It is a huge cause for optimism.
We have an opportunity, for example, to become the most energy efficient economy in the world,
with all sorts of really good benefits. As a result of the innovation, the structure,
the investment; and literally, the drive of American will.
It is interesting that technology makes a difference.
Technology always follows these curves where everybody says: "Oh my God."
The first sentence, the first telegraph message was "what hath God wrought," year 1844.
[pause]
This is not a new phenomenon. We are all ignorant of history, but these waves come over and
over again. When electricity happened, it is the same
thing. "Oh my God," think about what we can now do.
We have that in us, we have that opportunity. We have this balance now that we have to construct.
I think we have had sort of the most extreme version of the free market rules approach,
and we have seen some of its consequences. We have to balance, from a regulatory perspective,
the enormous creativity of the free market with some of its unfettered excesses.
What we have been doing here in Washington is having these debates.
As the symbol caricatures of free merchants--anything goes, versus socialists who promote 5 year
plans. The right answer is the balance between these
different groups. A balance that causes the outcomes that I am talking about.
That balance is achievable by people with judgment, as long as they understand the objective.
The objective is to win. I don't mean personally, I mean as a country; with the objectives that
we set out and things that we want to talk about.
What has happened, now, is that we are finding this balance point. We are finding it again,
as we study what has happened in the last few years.
Fundamentally we have to agree with the free market, which is fundamental to the innovation,
the capital formation, and so fourth. What is the proper role of government? I want
to talk a little bit about that some more. It is really important that the outcome here
is that small start-ups with funny names--the next generation of Googles--get founded, get
funded, and become successful in this new regime.
That is where the wealth will be created. That is where those 20-year-olds will go.
That is where the new set of innovation will be created.
It is always true, and it will always be true. The internet, of course, itself is an example
of this. Everybody here knows, funded through DARPA.
I was one of the recipients of some of the early grants, and it made a huge difference.
The fact of the matter is that it was a network that was designed through protocols and standards
without constraints on its ends. It is called the end to end principal.
What happens is basically as long as you are reasonably well behaved you can connect to
anything that you want. Look at all the things that people have connected;
some successful, some not, some hugely successful. It is that openness, the ability that anyone
can play, which is a characteristic of dynamic, scalable markets and networks which really
drive the modern economy. When these things grow, they grow very quickly.
They become these phenomena that no one really understood the impact on.
We were optimistic. We understood that innovation would flourish in it.
Why don't we do the same thing with the energy grid? Isn't it obvious?
You have a command and control structure designed in the 1960s. Why don't you open it up, allow
the innovation-- things like distributed cogeneration, those
sorts of things, and all these interesting notions of smart grids--
a classic example being the ability to use the battery that is in your car to provide
peak power. Literally, they pay you to provide peak power
because it is cheaper to get the power from your battery,
than it is to build a coal fire fuel plant which is a disaster anyway for peak power
in the middle of the afternoon. You can charge the battery at night when energy
is cheap. It seems obvious if you think about it. Why
can't we do it? It is just a design problem. Every aspect that I have just described has
been shown in labs, it is part of a technology mission, people are excited about it, and
it is easily achievable. It is just a matter of will.
That is really what I want to focus on today. If you are going to spur economic growth--literally
make it happen--you have to focus on infrastructure, research and development, and energy.
When we talk about twenty-first-century infrastructure--infrastructures like this is exciting or what?
It is really exciting to me, I'm sorry. Let's be very clear, you may like other things
but infrastructure is important. Infrastructure is the foundation upon which
wealth is created. I mean societal capital. If you don't fundamentally build that infrastructure,
you are not going to get the scale effects that I am talking about.
I am not just talking about roads and bridges, which are absolutely important and so fourth.
I am talking about new networks that can put tools of communication information in the
hands of millions. Take a look at broadband. Here we are. We
invented this stuff and we are now fifteenth in the world.
Only 55% of Americans have high speed internet connection at their home. In the rural areas
it is one in three. All of us do, but there are a whole bunch
of Americans who don't. It is a big problem. We have almost no competition
in many of these markets, most people--95%-- only have one or two suppliers.
There should be 4 or 5. Competition really does a great job of setting market prices.
We have to move from a regulatory framework. President Roosevelt took on the business of
rural electrification. In the 1950s President Eisenhower talked about
the interstate highway system, and built an economic framework; one which will drive the
development of this broadband infrastructure. We have to find this right balance of incentives.
If you look, the current Federal Communications Commission has done tremendously good work
on this. Against tremendous political and business
pressure, they decided to open up the spectrum and increase consumer choices.
Why did they do that: Because they read their charter. They said this is our mission.
Our mission is to make this infrastructure happen.
It is an act of remarkable courage from the standpoint of the FCC, and one which we applaud.
The decision to open up the white spaces; these spaces exist between television channels
roughly. It provides a whole new unregulated spectrum
which people can play with to develop new goods and services.
It is an enormous increase in bandwidth which is available that you didn't even know you
had. Now all of a sudden, by virtue of good regulation,
good judgment, and good insight they can pull that off.
Of course, we can do even more; even more effective use of underutilized spectrum.
Spectrum is everything in what we do because we are mobile. That spectrum is all around
us. As we look here in the hall, it is all around
us. Most of it is not being used at all, for various reasons.
Let's open it up. Then, a universal broadband strategy that
gets people more choices, more vendors, more platforms, and so fourth.
Literally, build the market by making sure that people really can make this thing happen.
My point is these are not a panacea. They really do enable a whole new category of platforms.
Open systems--meaning my ability to interconnect, my ability to run an application of any kind
on any device-- is at the cornerstone of this, because we
don't know where the innovation is going to come from, but we are pretty sure it is not
here. It will be over there where we don't expect
it. You never know where your innovation comes
from. In an innovative model, you welcome it, you
expect it, you build a platform that can accommodate it, and then the rest happens.
These open platforms really drive choices. In many ways--if we go back to the wisdom
of crowds arguments--an open system means more voices.
More voices mean more discussion. More choices mean better outcomes.
A community makes a better decision than an individual.
The sum of all of those is one spectrum of ideas.
The alternative is the case of Ma Bell. You could have any telephone you wanted as long
as it is big, heavy, and black. Sorry that is not quite fair, big, heavy,
and expensive. The opening up, which as you know was fought
for 20 years, enabled this tremendous reduction is prices; lots and lots of choices.
This finally unleashed this enormous opportunity around information, which Google and all of
us are very much beneficiaries of. Open systems have this sort of very clear
promise of constant innovation and even greater choice.
Now we are about to go through another one, which I am not going to spend too much time
on. This is a shift to cloud computing. For those
of you who have not heard the term, cloud computing is essentially where the â€˜cloud,'--which
is the term that we use for the network--is where all the computation is done and where
all the information is. From your perspective what happens is: Here
you are; you are here in the hall. You take out your computer or your mobile
device, everything that you care about is already on the network, and brought to you
in a safe and secure way. It is just a better model. Every corporation,
even the people who built the last model, is moving as quickly as they can to cloud
computing. Why? Because the regulatory, the business
decisions that were made in the last 10 to 20 years have enabled us to build that infrastructure
and to get that information to you quickly over typically wireless communications and
open standards. It seems to me that this massive shift to
cloud computing has a number of other implications. For example, if you are a small business you
can now compete fairly against the big businesses. The old saying on the internet is that no
one knows you are a dog. Then there is a cartoon of the dog typing. I remember that from way
back. The important point here is that, on the internet,
you really can compete fairly. In a cloud computing model, it doesn't matter
how big you are; it really matters the service that you offer.
This is another example of this innovative open model that I am talking about.
When you combine that, you also have to focus on R&D.
The situation in R&D in the last few years has not been good.
It seems obvious, but let me state it: Why do we fund R&D: Because no one else does.
It is actually pretty simple. Businesses, by law, have to serve their shareholders.
They are not going to fundamentally invest at the level of pure research.
It makes no sense for them. Even enlightened businesses ultimately are judged by their
shareholders, by their rate of return, and by their capital requirements.
It takes government policy to take advantage of it.
When I was in graduate school, I was on a fellowship from the government. It made a
difference. Much of the work that I participated in, in
the 1970s, came out of some of the DARPA and NSF works.
I know how real and fundamental this is. If you take a look at most of the interesting
innovations, they have occurred not in large corporate labs--as much as I would like to
claim to you otherwise-- but typically in universities where the funding
has come from the NIH, the NSF, and other groups.
That model works. It is a core aspect of America's competitiveness. I would argue it is the core
aspect of America's competitiveness. In fact, in looking at it the budget for basic
scientific research went down last year, as if we don't care.
Do you think all interesting science problems have been solved?
I can make a long list of those which haven't. How are we doing against our target of solving
cancer, atomic issues, mysteries of the universe, transportation issues, energy efficiency,
and so fourth? Have they all been solved: Of course not.
Furthermore, you have an even greater opportunity before you.
Thank goodness President Elect Obama announced, as part of his platform, his proposal to double
the basic funding. It is long overdue. What would you do with this money?
Why don't we invest in science and math? Why don't we focus on it in an education context
as well? We are also falling behind, as you know, against
some other countries--in particular Asian countries--in this regard.
Do you think that this matters? Do you think that it matters that eventually not only will
the Asian economies have lots of smart people, more cash than we do because of the way they
run their industries, but also a whole bunch more technical people?
Do you think ultimately you will be dealing with innovations that they come up with, that
drive their economies, where you will simply be the captive consumer?
I hope that is not the only outcome of their global competitiveness.
I welcome what they are doing, but it seems to me we should get our act together right
now. Here is another example, just use incentives;
math and science undergraduates to pursue graduate studies.
I will come back to the fact that we then kick them out of the country if they don't
have the right visa, which is another disaster. The federal tax R&D credit has been extended
11 times since 1981. We just extended it for a few more years.
Just make it permanent, guys. What do we have to do here?
Here is another example, we train these people. We bring them to the country. We have the
best university system in the world, bar none. Then we won't give them the visa to work here
where they would then pay lots of taxes. Help me with this reasoning. I just don't
understand. I have yet to find anyone who can explain
to me, in a rational way, why we would not want the best and brightest to come to America
to create industries, invent new things, solve the various technical
and operational problems we have, cure cancer, and you name it.
Wouldn't you rather have them here? It is bazaar. It is disgusting. Sorry, I have
a strong opinion, so I'm not done. Then of course we have patent reform, which
has got to be on the agenda. Again, innovation is part of this.
What is happening are that there have been a series of very good patent reform bills,
which have not made it. The system is dysfunctional. It makes no sense.
Why is every case filed in the east district of Texas? You can't come up with a legitimate
answer for that either. It is just bad public policy.
I will let you check out that one if you have an opinion.
From my perspective, patent reform litigation and international property laws which allow
internet users to access things and get the appropriate compensation are fundamental to
this. Google, we are doing what we can here. We
believe ourselves to be one of the great innovators in this space.
We care a lot about it. We focus on innovation all the time. Let me give you some examples.
Flu trends: We think we can sense outbreaks earlier than anyone else by looking at what
people are doing in an anonymous way-- this is very important, in an anonymized and
aggregated way--let people know. How many lives will that save? Is it worth
doing: If it is one life, absolutely. If it is a next pandemic and it is a million
people, you bet. We are pretty excited about that. We will
see if that technology proceeds and how far we can take that.
I will give you another example: Universal language translation.
We have invented technology which uses a statistical concept which actually can translate from
language to language without a dictionary. It is bazaar. I cannot explain to you technically
how it works--although people have tried--but it works.
It works enough that you can figure out roughly what they are saying. It is not as good as
human translation. Why is this important: Because language causes
war. People don't understand, they don't try to
mediate, they get themselves into their hyperbolic states, and bad things happen.
Don't you think we would be better off if all of those books in the library of Alexandria
had been translated into English? Don't you think that we would be better off
if all of the enormously interesting works written in English had been translated into
Arabic? We can do that now systematically.
It seems like an obvious thing, and we can now do it at scale.
We are not done. What we really want to do--and again this is with your permission, with you
signing up, and with appropriate privacy-- is be able to answer questions that are more
interesting, rather than looking something up.
We want to be able to answer the question: What should I do this weekend?
The answer is: It depends. It depends on who you are and what you care about.
We are not there yet, but we are working on it.
We think technology can fundamentally change the way that you think about how you spend
your time and what you care about. You can be infinitely more educated.
I can tell you that from Google's perspective--from my perspective as a Google user--I am enormously
more knowledgeable at the things that happen in my daily life.
It is a wonderful way of living one's life, in my view.
I want to talk about energy as part of this. We have talked about technology. We have talked
about policy. I want to talk about energy, because we are
at one of those points where we have to get this right.
The argument, roughly, goes like this: Oil is infinite--oil is finite, excuse me, limited,
but information is infinite. How can you take information, how can you
take the structures and the kind of stuff that I am talking about now, and apply it
to something which is the life blood of what we do.
These challenges are very hard. They are certainly as hard as the information challenges and
the science challenges that I am talking about. They may be harder, because there are so many
players. We understand that energy is everything about what we do.
It is interesting that it is a trillion dollar industry, 1.5 trillion dollar U.S. industry.
It is a very large industry. You have a situation where you have climate
change, which can be argued as the other of the 2 threats against essentially global disaster.
The first being nuclear proliferation. Climate change is very real. It is very much
a threat in our lifetimes. You have all of the issues of the energy industry,
energy efficiency, waste, and so fourth and so on.
You have issues that are going on now with respect to pricing, pricing stability, incentives,
and so fourth and so on. Is there a way of solving this problem?
Over the summer a number of people got together at Google, and we said is there a silver bullet?
Of course the rule is that there are no silver bullets in life. Is there one?
Is it possible to come up with a solution to this question, which solves the climate
change problem, causes oil prices to go down, gets people to go to work, replaces our energy
infrastructure with basically fossil fuels, creates an export industry, and--by the way--we
can afford? By the way, if you ask the average person
anywhere in the United States--certainly here in Washington, certainly in the meetings I
have been in--the answer is no. Okay, but we have produced such a plan.
It is called the Google 2030 energy plan. It goes roughly like this.
When you look at the energy problem, you can divide it into 2 halves.
The first half has to do with electrical power generation, energy generation which as you
know is primarily coal. Coal is very bad for CO2, but very cheap and
very prevalent here and in China, and also natural gas.
The other half has to do with transportation. Most of the issues with oil are really transportation
issues. For various reasons you don't use coal in
your cars and you don't use gas and oil to generate electric power.
So divide the two. How do we address the fundamental issue of electricity?
We have a lot of ideas. The most important thing to do in our modeling is to make sure
that we have the same level of efficiency--that is consumption-per-citizen--now for the next
20 years. Well that is kind of wimpy.
An interesting fact is that the per capita energy consumption has gone up by around 50%
per citizen. This means that it is growing even faster
because the number of people in the U.S. is growing.
Except in states where the regulatory environment has decoupled utility profits to utility efficiency.
In California we started this in 1973 in an act of enormous insight, I think.
They changed the way they regulate the industry. They get paid based on the energy that they
save, not the revenue that they make. Interesting. Two thirds of states, now, in America, have
some variant of that, either in place or in legislation that is being discussed.
This is a very real thing. If you make that assumption, and you assume
roughly $3 a gallon gas, you get energy efficiency--literally savings from plants that you don't have to
build. Then you can build different kinds of plants.
The observation about plants, by the way, is that every plant we have now will have
been rebuilt in some form by 2050. You are going to have to rebuild them anyway.
So why don't you build them differently? Stop building the coal plants, and focus on
solar, wind, and enhanced geothermal. Solar: The sun is going to shine for the rest
of our lives, thank goodness. The amount of power that comes from the sun,
especially in the United States of course with our deserts and so fourth, is enormously
powerful. There are new technologies; these amazing
solar concentrators that take all of that stuff and really get it to wherever it needs
to go. Wind is almost approaching now--with these
huge turbines that move very slowly so the turbines don't hurt the birds--
the cost per kilowatt hour is very close to approaching the cost of coal.
By the way, there is a problem with solar and wind. There is no grid where the wind
and the solar are. The people are in the cities. The simplest
thing that we have to do is we have to address the grid problem.
This is independent of the smart grid. You just have to get the grid there.
In talking to the utility people, they are actually happy to build the grids but it takes
them 15 years because of the overlapping issues of government and so fourth and so on.
There is something called the High Plains Express. There is a wind tunnel essentially
that goes through Wyoming, Colorado, New Mexico, and so fourth.
They are trying to harness it, but they can't get the infrastructure approved.
Here is an example where good public policy, federal preemption, and all those kinds of
things, and incentives between these different players could really make a difference.
That is how energy plays out. I will take you through some of the ideas,
being more specific, in a second. There is the other half, which is cars. You
have to do both, by the way. What is the story with cars? We have these
CAFE standards. The automobile industry is in trouble and so fourth and so on.
Is there a solution? It looks like there is. It is called plug in hybrids.
What happens is you have a battery--the new batteries are phenomenal, getting better,
and there is a lot of battery research these days--with a small engine.
The battery is charged up for 40 miles or so. This is the Chevy Volt for example which
is going to be a great product. You drive around for your short trips just
on the battery which you can charge from your house.
If you need more humph to get wherever you are going the gasoline engine then charges
the battery, and off you go. When you do the math of those kinds of approaches,
you save half the fuel. All of a sudden your mileage in a Prius, for
example, goes from 50 miles per gallon to 100, pretty neat. Does that work for all cars:
Absolutely. There are many other ideas.
One person, [indistinct], has actually done a calculation where you can improve if you
do things involving flexible fuels, the use of this hybrid approach,
new carbon fiber technology to make the cars lighter and stronger, and other aerodynamic
styles, he can get the efficiency down by a factor of 30--that is 3-0.
Think about what that does to our friendly oil producing states and their ability to
set oil prices, and have us go through the kind of teeter-totter that we just went through
in the last 6 months. Why don't we figure out a way to never let
that happen? The way to do it is to create other choices,
and let the market sort that out. How does the government do this?
The first thing is let's just have bailout programs.
Here is an example: Current government discussion about stimulus--by the way let's assume we
are in a pretty severe recession. I don't actually understand how they make
these decisions, but everyone assumes that we either in a recession or entering it.
As a result the government will probably do a stimulus program.
Why don't we use the stimulus money to get this initiative started? Why don't we get
a two-for? Let's get the stimulation, but let's also
get the infrastructure. Remember I love infrastructure. Let's get
it built. All of a sudden, instead of just a hand out
program or just a subsidy, let's get it done based on the principles of the kinds of things
that I am talking about. You do everything with private money at risk
too. You have matching programs and so fourth. There are smart people here in the room who
understand how to design these things so that the incentives are in alignment.
Maybe we could de-carbonize our economy. Maybe we could actually get started on a multi-year,
maybe multi-decade program which will ultimately produce the outcome.
For example, if you want to do stimulus, where do you do it.
Give matching funds to energy utilities at the federal level--so these are state utilities--for
energy efficiency programs which they already run.
They already have the legislation. They already have the standards. They already have the
costumers. They already have the people who talk to them.
It is a no-brainer. What is interesting about those energy efficiency
programs is how they do them. They hire local contractors.
What is happening in the housing industry right now? The contractors have no work.
A byproduct of this is a good employment program with a wonderful impact on energy efficiency.
It is literally a jobs program for people who are really desperate right now.
They went through the huge bubble, they all got laid off, and their employment benefits
are running out. Let's do it this way. Let's get them employed
fixing something. There are many examples of this, insulation
and so fourth. By the way, insulationâ€¦you install the
insulation in your house and it pays back next year, the following year, the following
year, the following year, the following year, and 50 years from now.
Oil prices are not going down. Another example: People are unwilling to do
improvements to their homes because they think they are going to sell their house in 3 to
5 years, which as we know is not true today. Nevertheless this is what they think.
A county in California figured out a particular kind of bond where you could take a loan to
do home improvement--you know green improvement for your home--and the loan goes onto your
title. When you sell the house, that indebtedness
continues at this very nice and friendly rate. All of a sudden people now have an incentive
to think about a 7-year payback, or a 10-year payback.
By the way, we all know that they are going to be in their houses for 7 years anyway,
so the city will, in fact, get its money back. It is a huge societal good.
You could imagine more interesting ways. You could fund the auto companies--going back
to the auto example. You could fund the automobile with bonuses
when they beat the CAFE standards. They are clearly going to needs some kind of support
here. You could have differential tax treatment
for efficient cars versus expensive cars. This is in fact what was done in Israel.
My point here is that these ideas have been around for awhile.
We talk about the smart grid, matching the smart grid. Federal preemption to try to get
the infrastructure built fairly quickly. Here is another example: Renewable portfolio
standards. About 10 states have renewable portfolio standards where they have committed
to get their energy portfolio-- A typical example would be 10% of their energy
is renewable by 2015. You have federal renewable portfolio standard,
which has been discussed. You could have incentives, for example the
government will help fund a transmission line between any 2 states as long as they have
a renewable portfolio standard. These are some interesting ideas.
Another thing you have to do is you have to get money going.
You have to get money going into the right places.
Tax credits--we talked about before--solar, wind, and geothermal.
How much tax credit should they get to offset the tax credits that the fossil fuel industries
have absorbed over the last 50 years? If you do the math you will discover any number
I give you is low. A calculation on the order of 10 billion would
be just fine, thank you very much. Another problem is getting money going into
the system. Money has dried up. We all know this. It is
very difficult to get a loan. There are ideas floating around. The cleverest
one that I have heard is to create a federal energy lending authority modeled on the Farm
Credit Act of 1916. In this idea, you create a federally funded,
that is, a capitalized bank. Under a set of assumptions, which need to
be worked out, makes low-interest long-term loans to people to do the kinds of things
and build the kinds of businesses that I am describing.
You do it with matching money, private sector, and all that kind of stuff.
Another example is that you can do that and you can tie that to an energy buying authority.
How much oil, how much energy do you think the federal government buys every year?
One number I came across was 40 billion dollars. I have no idea if that is correct or not.
My point is these numbers are large. You create a market. You create a lending
opportunity. You stoke the innovation. Put it all together and you have an opportunity
to really go. There are even crazier ideas.
There is a CO2 eating rock that if you take the CO2 and you pump it on the rock it turns
to marble. Let's find more of that rock and solve that
problem. Another person said the problem with the auto
industry is that the auto industry has 17 million capacity and they are selling 10 million.
They don't have enough demand is the problem. One way to have demand is to reduce the number
of cars people currently have by buying the polluting cars.
Getting them off the road creates demand. These are interesting ideas. I don't know
if they pencil out, but these are the ideas that need to become part of our public policy.
If you put all these together, the estimates are that these are jobs programs.
We understand, in a political context here in Washington, that jobs programs matter.
They matter a lot to our Congress, and they matter to our citizens.
Estimates are that there are 1 million, 2 million, even 5 million jobs being created
by these kinds of programs. We need to do these, and we need to do these
now. Putting all of that together, it is time to
restore trust in how our government works and how it makes this decision.
I want to return to the model of the internet and how people can use it to make decisions.
Everyone here knows that the internet is changing our nation. I would argue that the internet
was a big winner in 2008. There is no question that President Elect
Obama used the internet very skillfully, especially early on when he was not as well known.
He used the internet for fundraising, for getting his messages out, and for communicating.
Over the weekend he used, as part of his radio address, he used YouTube to communicate a
video image of him giving that--which was very successful.
What has not been as noticed is that as a result of that people are now debating it.
It is causing engagement. On YouTube you can not only just see his talk, but you can say
whether you agree or disagree. You can produce videos that say he is wrong,
or I don't like it, or what have you. This notion of engagement is fundamental to,
I think, how we get through this. Historically how is legislation done?
You have smart young staffers who sit there. You have all the politics among all of this.
It is done in the corners and so fourth. Then all of a sudden they unveil the legislation.
Instead why don't we move to much more of a consensus building model, which is what
the internet allows. Why don't we get people more engaged? Yes,
you will get your 1% crazies. The fact of the matter is a lot of people
want to participate. What is interesting about it is that--I will
give you the negative example first. Why did we not have more of the tremendous
scandals in the last year? The political scandals where there was this issue and that issue.
Many of them were based on falsehoods, and those scandals didn't occur because when a
falsehood was asserted by somebody, it was corrected quickly by what I am going call
the police of the internet. People care so passionately about these things--and
they obviously have a lot of free time--
[all laugh]
that they tracked each and every thing that everybody said.
If you are political leader and you make a statement and it is not true, you are going
to hear. Especially if you say something which is at
odds with what you said the hour before. People are watching.
That level on engagement is a permanent change in our political thing.
Even if you don't really care about the internet, you think that we are all crazy, and all that
kind of stuff, as a political leader, you know this matters because you have seen your
fellow members be caught in it. They have been caught in the business-as-usual
model, when this new model is happening. How can we take that? How can we take that
forward? With this enormous accomplishment of the first
African American President in history, 40 years after Martin Luther King's assassination.
This is an amazing achievement for America. We should all--whether you support President
Obama or not--you should be proud of that. How can we go forward with this idea?
It seems to me that you want to encourage debate. More debate and more voices let the
truth emerge. Basic information that the government uses
is not available. You still can't fundamentally see the information sources that are used.
There have been a series of Acts which have tried to open this up.
The vast majority of information is still not searchable or findable, either because
it is not published or because it is on websites which the government has put up which no one
can index. That is our job.
These are easily solved by legislation and by a focus on getting the information out.
It is better to have all of those people with you, than to shut them out.
The people who have lost in the last some number of elections, and political leaders
have learned this. You embrace them, you don't shut them out.
How do you embrace them? For example: We can stream almost all of the
public meetings on technologies like YouTube, YouTube's competitors, and so fourth.
The bandwidth is there. We built all of it. Why don't we get people more involved?
Warren Buffett writes in his manual: "Our guideline is to tell you the business facts
that we would want to know if our positions were reversed. We owe you no less."
Why is that not also true of our government? Government has not embraced, generically,
the tools that we all use everyday. They have not embraced blogs, video, and all
the information sources. It is time. It is time to do it and to do
it right. Other countries are doing this better.
Britain for example--I was looking for examples here in the US.
Arizona has a particularly good one where real estate agents can actually now figure
out what everybody is doing, what the rules are, and so fourth.
There are examples, but it is no where near where it needs to be.
There is no particular reason why it can't be done very quickly.
Waiting until the eleventh hour to solicit for input on the Bills is crazy. Why don't
you start? You will get a better Bill, and you will certainly
get more buy-in if you get earlier. Yet culturally we don't want to do that.
Here is another example: The patent and trademark office which is as overloaded as it has ever
been. They are running a very interesting new experiment
where they publish the patents early for public comment.
Guess what; all the players who care deeply about these bazaar and nerdy patent really
go after it. There is no way that their patent examiners
can fundamentally get all the insight that the wisdom of crowds can do.
Why is that not true of every branch of government? It makes perfect sense. Use all of those people
who care so passionately and who have a lot of free time to help you.
I want to finish by saying that--let me put this in the context.
I am very much an optimist about this. You sit there, you read the paper, and think:
God, should I wake up in the morning or should I just take the day off.
You feel like turning it off while it is all happening.
I don't know if we are at the low yet, or if there are more lows coming.
I certainly don't think anybody else does. I do know that the country has faced many
more significant challenges. Let's start with World War I, World War II,
and you name it. Let's take the crisis, let's take this huge
set of issues that we face, and let's deal with it as an opportunity to get the structure
right. The aspects of this have to do with communication,
policy, and the proper regulation. This financial crisis that we are facing today,
to some degree, will force all of these people who have had such a good time arguing about
tax policy in 2011-- this is something which is not particularly
relevant today--to force them to deal with the reality of the choices they face.
The choices are not easy. They are very hard and very subtle.
Figure out a way to get the population involved in those in a way that is much more immersive.
There is recognition among Americans that you have to have private sector and public
sector involvement together. There is not a silver bullet of just government
or just private freedom to do whatever you want, regardless of its costs.
This framework gave rise to the internet. Remember the government funded it. The government
helped in its creation. It was designed by scientists. It created
a business opportunity that was open. That is how scientists think.
The openness created business opportunities that created huge corporations. They changed
telecommunications. They changed modern life. It brought us, I think, to a much better understanding
of each other. To me, my optimism comes from a rock solid
view of the genius of the American people and the power of technology.
This is how I live my life every day. I am convinced that, armed with the internet
and sister technologies, we can get our country back to work.
We can get really outstanding solutions over the long-term.
We can face these challenges, and we can face them head on.
Let me close with a quote. There is a Mr. de Tocqueville said--I will paraphrase because
this is a French writer: America will do well because of the optimism
of its people, its abundance of land, and its absence of a king. This was said in 1831.
Let's listen to that. The optimism of its people: That is what I am talking about now.
The abundance of its land: Think about all of that solar, all of that wind, all those
people, all those cities expanding, all that growth that is within us.
Its absence of a king: Think about the peaceful transition of power to a new government. One
with a new set of opportunities to succeed, and we hope them very well.
Thank you very much.
[applause]
Go ahead, yes sir.
>>FOSTER: Hi, my name is David Foster and I am with the social security administration.
A pleasure, I very much enjoyed your talk. We have one of the largest IT centers in the
world. We are also leaders in health IT. We pump out a billion dollars a day to the American
people. In many ways we are the face of government.
We are very interested in terms of what you were talking about. In terms of changing the
structure and getting it right. We have an IT advisory panel. We were wondering--any
help you could get us in terms of getting these new innovations into government would
be extremely helpful for us.
>>SCHMIDT: It is interesting that social security, I think, is probably the most successful large
IT project in the United States. For about 20 years, as best I can tell, the
IT department has been--as far as I know it is the largest operational such site. It does
it with enormous accuracy. I don't know how you all do it. It is sort
of the interesting case.
>>FOSTER: I would also like to add that we are actually the lowest funded IT agency of
comparable size.
[all laugh]
>>SCHMIDT: So now we understand how to do it. Maybe because it is done so professionally.
Maybe it is its mission. To me the social security thing is a good
example where you can build a government system that is federally funded that really does
provide things which are highly measurable. What I would suggest is that the opportunity
with all of that data is to make as much of it available--again in generic forms--for
people to analyze, to understand, and to open up some of the information that
you have to get others to be able to help you.
The only suggestion I would make for the social security administration--because I think you
really are the best of the best-- is how can you get the other people to help
you do an even better job. That I don't know, but I would encourage you
to think about it.
>>FOSTER: Any of your colleagues would be terrific.
[all laugh]
>>SCHMIDT: Okay, will do. Thank you. They are here.
>>SIMPSON: I am John Simpson. I am with Consumer Watchdog. I was fascinated by your quote of
our success coming from the fact that we don't have a king in this country.
I guess I would fear that perhaps you have become the king of the internet. That has
all sorts of terrible implications for privacy. We are very concerned about the way many people
enter into Google's web without even realizing that they are having information go in.
We have posted 2 videos about that, which are available on our site: consumerwatchdog.org/google
strangely enough. We encourage everyone to look at that. Specifically
for you sir, we wonder why you haven't responded to us in over a month about these.
These are very well documented situations. How you essentially look at people's email
even if they haven't opted in. How you are now marketing all of your Acts
to Congress without really talking about the kind of necessary security that is there with
cloud computing. We have issues with the privacy things. What
you are doing with Congress could potentially, it seems to us, be a breach of security.
We are very eager to work with you. We think that much of what you do is fantastic.
It has to be done in a transparent way. People, as you said, they have to opt in.
Most of your material now I would suggest that the default does this to you and there
is no easy simple way for instance to opt out of Autosuggest.
We have some specific suggestions. We look forward to sitting down and talking with you.
I ask you today: When can we do that?
>>SCHMIDT: This is not the best time to set up a meeting with me.
[all laugh]
We can talk about it afterwards.
>>SIMPSON: We can talk about it afterwards. It is not easy for me to do this in front
of 200 people. This is not my preferred method.
>>SCHMIDT: I have actually read your letter very carefully.
>>SIMPSON: Thank you.
>>SCHMIDT: I am generally sympathetic. You make a set of specific suggestion which have
to do with SSL, HTTPS, and so fourth and so on.
>>SIMPSON: Exactly.
>>SCHMIDT: Our general approach would be to do all of those except that they make things
slower. For example, in most cases the specifics that
you talk about--we have the opportunity but the default is not to use the most secure
form because it slows everything down.
>>SIMPSON: It also advantages your marketing efforts. Let's have a transparent conversation.
>>SCHMIDT: Again, I can assert to you as a matter of fact that this is not something
we think about. What we do think about is latency, literally
speed. We are looking at the specific ideas that
you talked about, but ultimately we are not, I think, going do anything that disadvantages
speed. What we will do is things which advantage
communication. I applaud your publishing your analysis, your
area of concerns, and so forth. We are very focused on this from the standpoint
of both the combination of performance and privacy.
Some of the other specific things that you talked about: For example you talk about email
and sender versus receiver. I am going to have to take those as product
suggestions and/or that is not how our systems work.
We can do that offline.
>>SIMPSON: I would look forward to doing that offline. Thank you very much.
>>HOLFERD: Dr. Schmidt, esteemed members of the media, honored colleagues and guests.
My name is Elizabeth Holferd and I am with Neutral Net.
I would like to shift the conversation back to infrastructure.
Distributed energy as well as smart grid applications like automatic outage notification, truly
advanced meter reading, and those types of services require a robust
twenty first century 2-way communications fabric in the electric utility industry.
At the same time things like cloud computing as well as Telemedicine, Telework,
and things that we talk about reaching into rural communities and really allowing people
to function at very much higher levels than they have in the past.
This requires again a robust 2-way communications fabric.
The company that I am involved in does that. One asset addressing both of these aging infrastructures--
I want to go back to the infrastructure issue because you talked about encouraging and restoring
confidence in the government. What are your suggestions, as somebody that
is a chief development officer and as somebody who is getting a lot of feedback from the
markets right now. How do we restore market confidence in investing
in infrastructure and investing in innovation? Right now, all of us realize that there is
money out there. The investments are going are into distressed assets, assets that already
exist. People plan to turn those around in 2 to 3
years. It is not an investment in infrastructure or innovation.
It is an issue for us right now. How do we restore that kind of market confidence?
>>SCHMIDT: I think partly we have the correct President to do this in the sense that President
Elect Obama has indicated his support for the notion of a smart grid.
There are in fact task forces being assembled that are looking at this question and are
thinking about it in the context of short-term spending versus long-term.
One of the problems that we have is that we can't do--infrastructure spending doesn't
generate enough stimulation. In my conversations I will say: Well you know
have we spent a billion here on that. They are talking about much larger numbers
in order to get the country moving again. I think our problem fundamentally is that
we are not a big enough target. The technologies are not mature enough, they
haven't scaled enough yet, and there is still more technical work for example to be done
on smart grid. My message has been more R&D funding in it.
We, Google, did a bit partnership with General Electric on precisely this issue to try to
get more momentum. It sounds like your company is pushing very
hard on that as well. I think ultimately we have to create a bigger
target to get the stimulus to actually include it.
That is, I think, part of our joint goal. I missed somebody in the back. Yes sir?
>>TRUMBLE: Hello, my name is Will Trumble. My question goes to utilizing bridge technologies
to the point at which then we can assume using plug in hybrid vehicles and the electrical
grid that we are hopefully going to generate through
the wind turbines and solar technology in the future.
The immediate threat which we hear come out of folk's mouths day in and day out is that
we are transferring wealth to parts of the world in the forms of oil revenues.
Rather than shipping our wealth abroad, we should keep it here.
What is your stand point and view on utilizing natural gas as a technology, as a bridge technology,
until we can create the infrastructure to live off the renewables?
>>SCHMIDT: Natural gas has been called the crack cocaine of the energy industry because
it is extremely attractive. It is an easy conversion for traditional operators.
Its CO2 emission is half that of for example coal.
You would clearly prefer that over coal in the current pricing regime.
There are many problems with L&G and sort of the infrastructure that makes it, the number
of players, the number of sources, and the global supply.
What will happen of course it that as we move more and more to that, prices will go up.
This neutralizes some of its cost advantage, which is why it is so attractive.
I would prefer to have us focus on de-carbonizing the economy with an understanding that if
we do use L&G and C&G, we do that in specific areas.
The most obvious is in fleet transportation for trucks and buses.
You have a single source of filling up, it is a local market, it is highly efficient
for that use, it replaces an oil source which is worse for the environment etc.
I don't think that, if you scale the model of the amount of power that we need, I don't
think L&G and C&G fundamentally make up enough of a gap to be the solution.
They bring with them still a significant carbon footprint.
>>TRUMBLE: Thanks
>>SCHMIDT: Go ahead.
>>DAMASHEK: Hi, my name is Robert Damashek from the binary group. I am a strategic advisor
to the DOD and army CIOs. We have been doing work, you know, inside
of government. You mentioned the inside and the outside connecting
on trying to leverage the Web 3.0, Web 2.0 technologies to connect people together to
increase transparency and all. It is hard to know how we connect with the
transition team. How do we connect with the folks to share our lessons learned?
I can give you a white paper. What do we need to do in order to help make the inside of
the government work more effectively with the outside of the government?
>>SCHMIDT: I don't know exactly. I want to let--since I am not speaking for them--I want
to let the transitions speak on how to best communicate.
I will tell you that in my contact with these people, they are very smart, they really are
listening, they really are looking for new ideas, and they really are in a hurry because
of the issues. I think this is a good time to be getting
those ideas out there. I know that they would welcome yours.
Down here, yes sir? Oh did I miss. I am sorry. I apologize. Way up there.
>>SACS: My name is Vicky Sacs. I am from MIT. I did my PHD in management. I met a directory
from NSF and I was speaking to him regarding the MIT lab producing a lot of interesting
projects. I am curious, do you guys offer support for
projects like those? For example, I did a project with a friend
of mine developing Telemedicine. He developed a polymer.
If a patient is traveling abroad or something, the polymer allows a doctor millions of miles
away to transfer the medication to terminally ill patients and things like that.
>>SCHMIDT: We have been doing funding in 2 areas. In basic computer science we will work
with innovators in computer science and faculty at the leading universities including MIT.
We have also been funding in energy. We have made small technology grants to do precisely
the kinds of things that you are describing with respect to alternative fuels.
We have also been investing in companies that we think are particularly promising for the
energy future. That is an example. We have not been investing
so much in the healthcare because we don't understand it as well as we should.
Yes sir?
>>CLARK: I am Charlie Clark, an editor with Tax Notes. I was interested in your plea to
make the R&D tax credit permanent. I was wondering if you could speculate on
any specific projects that either Google or some other major corporations would be ready
to roll out if the R&D tax credit were made more reliably permanent.
>>SCHMIDT: As you know it was just extended for some years. My argument was more of a
long-term. Certainly in the short-term we are going to take advantage of the R&D tax
credit that is already in place. It does, for us, make a difference because
so much of our expenses are tied up in our innovation.
I can't give you a specific because it was just extended, as you know.
It looks like we only have time for a couple more. Who did we not call on. Down here, we
will go ahead.
>>TUCKER: Thank you for coming today. Bill Tucker is my name. I am a consultant.
If you mentioned it, I missed it. How do you think nuclear power would figure into providing
power? It is one of the most efficient means that we have and is nonpolluting.
>>SCHMIDT: Nuclear power is a sort of rat's nest of issues. The first set of issues has
to do with safety, long-term storage, and the ability to do reprocessing.
Those are largely, I think, political issues not so much--they are technology issues but
they are fundamentally political issues that we face.
There is a debate as to whether there should be a federal national reprocessing center.
That has not been resolved. I don't have a strong opinion on that.
I think those issues weigh on the industry as a whole.
The second problem is an economic one. Not only have there not been any new plants
in the United States since the 1970s commission, but the cost estimates for the plants that
would be built now exceed the capital capability-- literally the ability to fund those plants
by the utilities. Nuclear power in the United States will not
happen in my view until you solve both problems. The second, there is a proposal--a working
group, for example, at one of the national academies said there are roughly 4 or 5 different
interesting new nuclear power plant designs. They can never get funding because of the
number of billions that is required to do speculative funding will never happen.
We as a country need to make a decision as to whether we want to take that expense.
It is not for me to say. I think it is easy to say you are pro-nuke or you are against
nuke. When you compare nuclear power for example
to wind, you would build more wind farms and connect them to the existing grid quicker
than you would build a nuclear power plant. Obviously you might want to have nuclear as
well. Prioritization is such that nuclear does not
come first. The model that I talked about in my talk does
not include any nuclear. It does not include the shut down of any nuclear either.
Nuclear, if it works, just like carbon capture and sequestration--if it works isn't that
positive to the model that I am talking about. We can achieve our energy independence without
resolving the nuclear fight, and without resolving the carbon fight if we focus on these other
renewables. That is what I think was so interesting about
the idea.
>>TUCKER: Thank you.
>>SCHMIDT: It sounds like we have to go. I apologize to those of you who had questions.
Thank you very much.
[applause]
>>CALL: On behalf of New America, thank you all for coming out this afternoon. We will
see you next time.
[applause]