(00:00:00) Live broadcast of the Minnesota (00:00:02) meeting are sponsored by the Twin Cities based law firm of Opperman wolf and Donnelly in recognition of its 100th (00:00:09) anniversary. It's a pleasure to welcome all of (00:00:14) you to Minnesota meeting today. We also extend a Welcome to our radio audience throughout the Upper Midwest listening to this live broadcast sponsored by the Oppenheimer wolf Donnelly Law Firm. Today's speaker. Dr. Walter Russell is best described as a renaissance man. He is well known for his service and the Eisenhower Kennedy and Johnson administration's and for his numerous Publications on economics history and foreign policy rastas career as an educator began in 1940 at Columbia University. He is currently professor of economics and history at the University of Texas in Austin. Recently, dr. Rosser husband pondering and an ambitious theme the critical challenge facing the west by the rapid application of high technology and our basic Industries and way of life. We look forward to day to an examination of this theme and it is my pleasure to present to you. Dr. Walter Rasta. If I qualify as a renaissance, man, it's probably because I'm the last of the silent movie piano players. I was asked the other day a question about the shop over which I once presided the NSC staff. And the question was what would I do if I had the power right now with respect to policy what aspects of policy that we pursued in the 60s when I was in that kind of business, how would I change the approach and I thought a minute and I my answer was that I would indeed change it because I have concluded that the most important national security policy we face is the fact that we're not paying our way in the world. And that we're not meeting the competition because I do not believe that the American people will continue over a period of time to support the national security policy. We require to do jobs on our behalf and those of our allies if our standard of living is eroding away and I simply begin with that point because it suggests suggest the depth of the issues that I believe are involved in the title of my talk, which is the US and the fourth Industrial Revolution. What I'm going to do is in the half hour that we have for before questions to define the fourth Industrial Revolution and its characteristics to suggest through briskly the what I think the U s-- strengths and weaknesses are in absorbing this technological Revolution. Third do Define the external challenges that arise in part from that revolution in part from the evolution of Latin America Africa the Middle East and Asia. Then say something about what I think we must do at home and do in foreign policy. That's a lot for a half hour on the other hand. I found that what I can contribute in this kind of a talk is much less things that you haven't occurred to you then perhaps to put them in a pattern and so I'll move through these Five Points rather briskly if we were on TV and I had a Blackboard as all professors sort of instinctively wish to have I would lay out the timing and character on the Blackboard of the the for industrial revolutions. The first came on stage in the 1780s and it was the match Factory manufacturer cotton textiles Watts improved Steve steam engine and making good iron from Coke rather than charcoal. The second came on 1830s 40s big Railway booms in the 40s and the American Northeast and and in Britain and Belgium and the railroads LED on to cheap steel which invented in the 60s applied in the 70s. So the Second Industrial Revolution was railroads and steal the third round about 1900 on either side of it was electricity internal combustion engine and a new round of chemicals. And that one if you were willing to extend electricity down to radio television earlier elect early computers, if you're willing to take the chemicals down to post-1945 Plastics synthetic fibers modern Pharmaceuticals that rather peaked out in the mid 60's as all leading sectors do and now About the mid-70s rooted in research science that had been generating over a longer period came the fourth which is micro Electronics genetic engineering new industrial materials. And the rest now the characteristic of this particular Industrial Revolution is opposed to the others I think lies in these elements first and perhaps most important its unique relationship to the basic Sciences. The new technologies are rooted in areas of science, which themselves are undergoing revolutionary change as I said to a group this morning if you want to contrast it think of the relationship that Henry Ford had with science he would never be would be caught dead talking to a professor and his greatest Innovation arose by analogy with slaughterhouses. Literally the moving assembly line and now however, the scientist is a working member of an osmotic and very complex team. If you're successful involving the scientist the engineer the businessman and the working force, which must be constantly retrained as the technology succeed one another with route very rapid rates of obsolescence. Secondly, the these this revolution is ubiquitous. It's going to revolutionize the old basic Industries agriculture animal husbandry. It is already forestry. And of course all the services the last perhaps being the most conservative all my profession teaching but it ought to revolutionize teaching to Third this is a revolution develop relevant to all the developing countries in different degree for Africa south of the Sahara than the relevance of these Technologies is real but limited I mean they can use some of the medical things and satellite Communications and and they're they're arranged but at the other end you've got South Korea which said about few years ago consciously to become a high-tech country and is well on the way there and the whole array of Technologies is going to be relevant and they're going to have the people trained to absorb it. So this is highly relevant to the future of Latin America Africa the Middle East and Asia. And finally, I think that this is a revolution so Diversified in each of its dimensions. That no one country is going to dominate it as the British did cotton textiles in the early days. And as we did the mass automobile their number of people in this room who know vastly better than I do that when you say micro Electronics, you're not talking about one field but a highly Diversified set of fields and the same thing goes for genetic engineering the new industrial materials and the rest in general. I conclude that we are going to be as affluent or is reduced as secure in the world or as insecure in proportion to how we not only generate the new technologies. But diffuse them and apply them now turning to our strengths our great strength. I believe lies in the fact that we have a tradition almost unique in the world the land-grant college tradition namely that it's okay for people like me professors that is people doing research and scientist to cross the barrier and work with the private business sector or work with government and work with politicians. It's a it's an enormous asset that we take this for granted in our intellectual life and it's very rare. If you go around the world and on the whole my guests and it's not the guess of a scientist or engineer but a historian Economist and to be you know, taking with appropriate skepticism. My guess is we'll hold our place tolerably well in the creation of the new (00:09:45) These (00:09:46) are great weakness is the pace at which we are applying them and especially the pace at which were applying them to the old basic Industries. I was questioned last night extremely well and ably and pointedly as to just how much of the old Industries we should retain and it's a complicated calculus. I do know that there's we have behaved quite unwisely and developing an attitude among some. Well we can't hold on to him. Let's just move offshore forget about him and we'll live in an information age or some abstraction of that kind which I don't believe in but the on the end we also at a very vulnerable period jacked up by our Economic Policy the value of the dollar to make the maintenance of these older Industries maximally difficult. And we got it our own manufacturing sector a sector excessively. The new technologies are going to can be applied and raise productivity and also in time some of our Rivals are going to experience higher money wage rates. So I think we should fight a really tough battle to hold on to those Industries and not do the easy thing for some entrepreneurs which is to offload them overseas and go into by UPS or something. Exciting now there I think our weakness lies then in application and steals obviously not going to be the leading sector it was in the railway age and among other things were developing some extremely interesting technological alternatives to steal and but there's no reason why we have done as poorly as we have in some of the old manufacturers given the potentiality of the new technologies if they're well applied we can go into this now the challenge the challenge I think is not merely the Japanese challenge. It's a challenge that lies in a revolution that has been very little noticed and I'm going to read some statistics here the come from the World Bank development report and they really describe a Lucien which has been virtually unnoticed Overall the proportion of the population aged 20 to 24 enrolled in higher education and what the World Bank holds lower middle income countries Rose from three to ten percent between 1960 and 82 upper-middle income for to 14% the increase in India with a low income per capita but a vital educational system. This is an extreme extraordinary achievement on such a big country went from 3 to 9 percent. Understand those figures the United Kingdom had nine percent in higher education in 1960 Japan 10 percent in 1960. The figures are higher now. There's also been a radical shift toward science and engineering. And I bet there's no one in the room who would have guessed this figure. I certainly wouldn't have until I ran it down and checked it in India. For example, a pool of scientists and Engineers has increased from about a hundred ninety thousand in 1962 2.4 million in 1984. That's a critical mass exceeded only by the Soviet Union in the United States. And in Mexico, despite all the recent vicissitudes the increase in graduates of natural science of jumped in 57 273 from three to fourteen percent per annum growth and Engineering from five to twenty four percent per annum growth. Now for those of us were development economists and know that these regions and Latin American particular. We long worried that they were putting too many of their young people through legal training and other fields that weren't really relevant terribly relevant to their development that is changing now, Those numbers by themselves are not definitive what they symbolize is the rise of a new generation in many of the developing countries a generation. That is much better capable. in science engineering and business and in the working force of absorbing the backlog of sophisticated Technologies and you can begin to see it when you find American Airlines flying Brazilian short-range feeder line planes. And of course, you're finding it with Korea and Taiwan already in computers. In other fields. India is already I gather in the software business in a quite serious way and in short what I'm saying, is that over the next 20 40 years. We're going to face a protracted strain and test of our society and competition not merely with in competition that we're familiar with Europe and Japan, but all Europe Japan and the United States and I would add the Soviet Union and Eastern Europe faced the rise of Latin America Africa and important parts of Asia to high-tech status and that is going to be a great test of our society. now on the domestic side What is the answer I think the answer is that we're if we're going to survive we've got to enter and I believe we are entering a new stage of Politics the first century of Western politics in the Industrial Age starting in the 1780s was devoted to debates about growth notably agriculture versus industry tariffs extent to which the government should engage in infrastructure investment for the late comers in Japan and Western in Western Europe to what extent should the government mobilize and the relevant Technologies and all the rest of it about 1870 that changed we had an obviously an ongoing system and politics in the increasingly democratized Western world. Focused on the extent to which public policy should temper the harshness has of industrial society or simply support the private sector and we've had about a century of that down to the mid 70s. I picked the mid-70s because there was an astonishing end to this welfare age between 1960 and 1975 the proportion of gross national product allocated to welfare Rose in the major oecd countries from 14 percent of GNP to 24% Now that's an astounding shift at a time of very rapidly Rising GNP and since trees don't grow to the sky obviously that was going to taper off and it ended rather dramatically because with the quadrupling of the oil price and slowing down the The Proposition 13 mentality spread from one end of the world to the other. Now, where do we go from here? The answer I think is that (00:17:47) we're (00:17:48) after shift from the zero-sum struggle. Which was conducted really rather civilized way in the advanced industrial democracies zero-sum struggle over the division of a pie that we all assumed expands automatically to a concerted effort to make sure that pie continues to expand and talking at breakfast this morning. I said the fate of our social security system and our amenities and indeed our physical infrastructure does not in my judgment depend on whether we elect liberal or conservative politicians in the old definition. It depends on whether all of us business and labor and both parties and the universities. Anyone else? I left out work together to make sure that that pie continues to expand because the our domestic life and our external position depends on the continued rise in our productivity now externally, what does that mean? I think that if we do mount a an effective Enterprise at home. If we make this change and let me say one word further about that change is a change that you cannot yet see in National policy. No political party has said this is what we stand for pulling the whole society together to deal with this great transition and challenge. I suspect seat of the Democrats and Republicans in this room either if you you know, if you want your party to take over this I guarantee you is the winning theme in the United States. And I have small credentials and saying that because I gave John Kennedy both let's get this country moving again and the New Frontier but the real reason the real the real reason is not that at all. It's if you go around this country, you will find perhaps not the communal Spirit as strong as you've got it here in Minneapolis st. Paul but what I found here and found very exciting is what I found in one measure in of the throughout this country when I've traveled at the state and local level of people already know the answer. That's why I think the right answer is going to be the party's going to win that builds on this theme and means it for the long Pole. So it's not the first time in our history that National politics politics was foreshadowed at the state and local level before it moved in and I think we're on the eve of a movement of that kind of spirit from the states and cities and I could name you Republican Governors Democratic Governors Republican mayor's Democratic who are doing saying the same things working in the same way building up a communal consensus and acting as if we all had a common stake in the outcome and that was overwriting that'll leave plenty of room for fighting over the margins, but that's what we got to do. Now if we do it and can stand before the world have any paying our way then I think we are in a position. To lead the way not in the sense that we led the way after the war. This was not a world which is capable of being dominated by any one country. And as it was by the United States and on the whole very constructively in the wake of the second world war right now. The leadership will have to be shared between the United States western Europe and Japan and Russia could join in helping if it finally came to realize that that is its best option. But and it's going to take a great deal of concert and skill to get us out of our short-run problems into what we call a soft Landing from the debt question the American deficit question the Japanese Surplus question, and these other aching questions. None can be solved from RN unless both parties cooperate and all elements in the community and on a world basis. They can't be solved unless you get this concert now as for the relationship between the developing countries that Along, the Avis is closing in on hurts. I think the best form of organization is to proceed to make the Pacific Basin and intergovernmental organization within which we work with the Japanese Korea Taiwan and all the rest of the China. I don't know what policy China will follow but I know they're very much interested in the Pacific Basin as an organization. And unless there's some radical change. I would put a small amount of money on their coming into it if it really gets started as a serious operation. Because they're very much interested in trade with that hole with the whole Pacific Basin including ourselves in Canada and everyone else and the technology of that area region and within that kind of a club the including the the up-and-coming countries. Those are a bit slower but down the line as well as the more advanced countries. I think we could find a framework for solving these trade problems and others that might arise in a constructive way the same thing goes for the Western Hemisphere what I said when I was asked to talk in Washington recently on the anniversary of the alliance for Progress was that I didn't come all the way to Washington. At the join in some sentimental nostalgic occasion celebrating how smart we were in the 60s that that the most dangerous thing we could do was to try to repeat in the 80s and 90s the sort of thing. We did in the sixties partly because Latin America is a totally different place in terms of its stage of growth and the kinds of people that has kind of technological capacities it has but what we need is a another club like the Pacific Basin in which has advanced and less Advanced countries in working together on the transfer of Technology reconciling the frictions over trade Capital movements and all the rest, but I would underline that we can only play that kind of role. in that sort of Club if we do so from a position of dignity and strength where we're paying our way in the world and we're not dominating the new technologies, but we're proving that we can make this adjustment and in talking about this in Japan on the future of the Pacific Basin in the world economy ended up in it delighted me to do. So with a quotation from a most unlikely source to be reading in Japan David Hume as of 1758 David Hume who was among the wisest of men I think over the centuries the great philosophers psychologists historian, but also a first-class Economist he got into this question of what happens the more advanced when the less Advanced come along and pick up the tricks. He said The more advanced stir a fermentation in the less Advanced and and he didn't quite get was it your phrase the right Harlan the revolution of rising expectations. Well, he got I don't think you got it from him, but he had the fermentation which is not too bad and he said that he resisted the mercantilist. Poles to throttle the up-and-comers in their cradle and he said this was not right and he said that the we're an open communication is preserved among nations. It's impossible. But the domestic industry of everyone must receive an increase from the Improvement of others and he's been proved right the rise of new nations increases the volume of trade. Compare the situation of Great Britain at present with what it was two centuries ago. Every Improvement has arisen from our imitation of foreigners nor need any state entertain apprehensions that their neighbors will improve to such a degree in every art and manufacturer has to have no demand from them Nature by giving a diversity of geniuses climates and soils the different nations has secured their Mutual intercourse and commerce as long as they all remain industrious and civilized and I ended up my talk there as saying to a specific Basin then of open communication industrious and civilized and I don't think any of my Japanese our other friends and colleagues there on that occasion. Not one of the Misunderstood the extraordinary relevance of Hume, but I close by coming back to National Security. I've looking back over my life. I think that the most important three weeks ever spent in the public service was very odd in this is the first time in a public occasion I've ever mentioned it I was not involved in the Bay of Pigs operation that Mac Bundy and I split the crises. I got southeast Asia for my sins and he got he got Cuba when but the I did volunteer to help in the mop up and I can tell you that mopping up a mess like that is is interesting Duty and some of my friends were bit out of combat for a bit and I worked very closely and with President Kennedy closer than I ever had before although we've been good friends for about three years before he was president and in one Day, I still remember it. He it was the day that there was total failure and they Castro had captured these fellows and he felt a very deep personal sense of responsibility for everyone. He was a small unit Commander not a big time General and they mattered to him and he was hurt and he folded the newspaper in a crumble on the floor, but then he turned to me and he said, you know when the British had a nervous breakdown over Suez, we could cover for them and they could have a nice time of being sorry for themselves. And he said now the French are having a nervous breakdown over Algeria and we can cover for them and they can go through this great pain, but he said if we have a nervous breakdown no one's there to cover for us. So we'd better get with it. And the truth is that despite the rise of Japan and Western Europe that if we fail to maintain a viable Society at home if we fail to carry our essential security burdens in the world And this is a remarkably hopeful time in my view if we do maintain our strength and Poise and reach out in certain correct constructive directions, if we fail there's really nobody behind us. And so I think it's not merely the affluence of our society and the amenities we've built up over several centuries and the ambience that's possible in an affluent society, which can share its Bounty. All of that is at stake. Everything that goes into humans word civilized it's take but also our national security. Walt rostow is speaking live at Minnesota meeting Well, I'm at your disposal now for questions. I haven't been well instructed to make my responses terse so we can have a maximum number of questions and I shall try all of the natural unit for Professor is 50 minutes. (00:30:39) Yes, sir. I can repeat the question. (00:31:08) The question is how can we have the Japanese do more in the military without violating their own Constitution? Because the judgment is that they do not do enough. I think that they can do quite a lot more. in conventional air and Naval Defence I think that and that that has happened since the Russians have taken over the basis. We built a camera on Bay just opposite Subic Bay in the Philippines and they denying Airfield complex. Just opposite clarkfield the whole of Asia. If you're out there feels that there is a different balance and Japan is doing more in that conventional way if the threat gets to be more acute if the Russians push harder, I think that we might do something which I would certainly not recommend now, but it's what I would would recommend if security problem became more acute namely to move towards an integrated defense in the region. I think the neighbors of Japan still with some memories of the second world war might take the same view that the Europeans did about Germany that they would very much resist a national rearmament in Ban, but in a collective effort that's enlarged within a very tightly controlled Club perhaps with an American Commander or something like that. They might accept it but I think that for the moment the Japan should do more and you know is he that's they feel very much the pressure out of Russia the Russians over fly them and they feel across the Japan see the presence of the enormous Naval and Air Forces divided vostok the they can do more in that area. But I think they should use their resources for equally important purposes of Untied Aid, you know Aid not automatically tied to Japanese exports and other more benign usages unless a greater communal defense is required in the Pacific then I think we should go for Collective defense. (00:33:27) Yes. (00:33:38) We're gonna ask if those are have questions that they would find one of the microphones so that our radio audience can also participate or listen to the question without having to be repeated. So John if you use the microphone there appreciate thank you, press the rest. Are you talked about two communities forming in the economic world at least around the Pacific Basin and perhaps in the (00:34:00) Western Hemisphere and I'm curious about (00:34:03) the Atlantic Basin what what role does Europe really have to play and can they get organized above their sort of intramural struggles among the countries and work in this environment? I think Europe can do a great deal. The movement forward in European Unity has moved sporadically they've been spurts when they have moved forward and it's easy looking back to say. Well we still don't have after all these years a single partner to deal with which we'd like It'll take perhaps more acute crisis to make the move deeper. Although there's a silent powerful Trend in the young people of Europe. Whatever goes on in the EC and what they do or don't negotiate it Brussels or when they have these Summit meetings, which have been pretty much dialogues of the death lately. The young people of Europe are European. They move across those Frontiers from the time. They're very young with great lack of self-consciousness. And and I think that the the foundation the psychological and human foundations for forward movement or there and even then they can do some things together. I guess they got some Airbus has built and they know that in the technology, they'll have to cooperate and they're trying Moreover in Central Banking in certain Essentials. We've managed to hold together the Atlanta Community tolerably well and we take NATO for granted and occasionally kick it around and bellyache by under estimating. Usually what the European countries contribute to Nato and steadily, but I think that it's really no mean trick to have an alliance in being in vital a military Alliance 40 years after the second world war and it it represents very deeply rooted common interests that are and abiding ones. We work together in a lot of Aid Consortium still. And so I think that you mustn't count Europe out and I think when I was there in 1984 in early in 84 there was there were in meshed in what I might call a high-tech Blues they felt the Europeans and the Japanese and Americans had gotten out in front and they were going to be left just with some nice tourism and cafes and pubs and three-star restaurants or something that's changing and they're beginning to pick up and I really believe my generalization that no one country is going to dominate they'll get into this in an effective way bit slowly. So there's a lot of things that I'd like to see different at the moment in Europe. I think there are high rates of unemployment or scandalous ours is pretty scandalous. But Japanese run about two percent unemployment, but but still don't count them (00:37:22) out. Professor I'd like to know my name is Aida Maury. I'd like to know the importance of the economic development of Latin America to the National Security of the United States. You know, what do we need to do to help Latin America or is there something that we can do that will prevent a lot of what's been going on as far as getting other forces like Russia involved in in Latin America? (00:37:57) I think Latin America is remains as it has been since the 1820s extremely important to the National Security of the United States. And if anything increasingly, so with the passage of time as we learn in the Cuban Missile Crisis, the argument that of the Monroe Doctrine that it was no longer appropriate for Europeans to have an effect military bases in this hemisphere is even more relevant now than it then was in my view and it's very important for Latin America. Latin America could be turned into a Bear Pit very easily. If it let major external Powers come in at the moment the total military expenditures Latin America average 1.5 percent of GNP as opposed to I don't know what 10% in the Middle East and 5% in Asian 4% in Africa, and that's because we haven't OAS which partly constrains the United States from excessive and over-exuberant interference and partly maintains this consensus that major external Powers should not intervene now on the economic side, is he important because Latin America is basically at a stage when it ought to be enjoying a very high rate of growth and that could be very good for American exports. On the other hand is going to compete with the United States and we'll have to adjust as we will other countries, but I think that you ask what can we do number one, we've got to run a higher rate of growth in the United States for everyone. I don't know the figures but the the exports from Latin America are extremely sensitive to our rate of growth and if we grow slowly we hurt them. Secondly, we got to get interest rates down, which means we got to balance the budget. We got a shift from having excessively High interest rates and desperately unbalanced budget to a balanced budget and low interest rates that would help the debt problem enormously. I think a combination of a higher rate of growth and much lower interest rates would take would begin to cut into the Latin American debt. In addition. We may want to consider some form of surgery as opposed to the Dance of the seven veils we are now conducting with respect to these debts and their rollovers pretending that those debts aren't going to be written off. They're going to be written off not totally how much they're written off depends on our Economic Policy, but we want we want to preserve the mythology and and there's something in preserving the mythology of the debt structure, but we shouldn't kid ourselves and there may be ways of cutting cutting our losses and giving them a chance to use their foreign exchange. Not merely to repay the banks but to buy new things for manufacturers which might be more wholesome but that's really what's at stake in a lot of this. We have conflicting interests in the United States and how that thing has happened and I think we ought to talk about it much more honestly and candidly and and terms of our interest in their interest in getting on with the now in addition. I think there are a lot of things that are revived hemispheric organization bit about the inter-american bank in the OAS could do and But I might answer is too long and I'll send you a paper I've written out. Professor Estelle Yes, you'd mention about the education Revolution and the numbers of people being educated in the Third World areas in the technical fields. And you stated that in a term of as being a potential but also in being a potential threat to the US has predominance in a lot of areas within the the world could this not also be a possibility given to us to be able to teach ways of cooperation rather than competition so that instead of setting up the Dynamics of competition in the win-lose concept. We begin to induce more of a Cooperative sense. I believe that's the sense of your speech this afternoon if you were able as a professor to be able to sit down and write a curriculum in some respects for those third world universities that were pumping out the the technicians that would begin to get. These individuals to anticipate a Cooperative World rather than a competitive one. What would be the parts of that curriculum? What would you emphasize how would you redesign the way? The message of education is given to these people to anticipate the type of world that you would hope would come. Well, I start them on my stages of economic growth. That's a that's about 1/3 2/3 joke. Actually, I don't think books are that effective? I think what what the best way to is it work convey a sense that cooperation is possible. And the mutual advantages for us to behave along with others to set up a framework where cooperation is conducted. And the I think that some of that was done in the 60s, I think President Kennedy's Peace Corps conveyed a sense that transcending whatever the tensions might be between nations and the competition. There was a authentic strand of human Fellowship involved in joining in the adventure of modernization. And I think on balance the countries that received our Peace Corps volunteers benefited and I'm sure the United States benefited. I think it was we have a generation that learned a great deal from going out into the villages in the slums and government offices there and that's really I think that it's by that I think that the alliance for progress with all its vicissitudes on balance left behind a residue including an institution which doesn't get any attention because it's so constructive the inter-american Development Bank. It's very much a Cooperative Venture that it's not a simply a u.s. Venture and it does immensely constructive work in this Hemisphere and puts out enormous sums in both social investment and tough-minded economic investment. So I think it's by By works rather than by preaching probably and I hope that this is one reason why being a long-winded Crusader and having worked on regionalism since the end of the first second World War I continue to believe that these Regional organizations in the Pacific Basin and the atmosphere and elsewhere could make a great contribution including a contribution to a problem. I didn't mention I said that the bulk of the population of the developing world is now in countries in what I call the drive to technological maturity there Beyond take off their more advanced can absorb more Technologies, but one of the things that we and they should work on together that is the more advanced developing countries and United States western Europe and Japan are the hard cases left behind. Places like Haiti in this hemisphere some of the Caribbean islands the Pacific Islands. In Asia helping Burma if it's ready to be helped and I think it probably is some of the Middle Eastern cases when they're ready and so on and above all Africa south of the Sahara. So I think that these Regional organizations is nothing I think would be more healing and make your point more effectively than if the whole world Community saw that the countries who've gotten over the hump through takeoff, they have vicissitudes, but they're now, you know making computers or what entered along with Japan Western Europe United States into helping the kids who were left behind. But I believe in general in Works rather than preaching in this field. Yeah Professor. I'm wondering if with so many countries having achieved take off. Should we quit giving them foreign aid is the rationale for that gone now and with our responsibilities just in the world to maintain our leadership and security and the world economy. How should we allocate what foreign aid we give to the to the countries that we need for that? We find as being valuable for security purposes or countries that can absorb our money the best ER or just what? Well the we the fact is that There's been a big shift in the sources of capital. From the post takeoff countries. India is a special case because it's still a low income per capita country and draws quite a lot of what's called official development aid, but in general part of the debt problem that we worry about so much as a product of the more advanced countries drawing their capital from the private Capital markets and a number of them have sort of had their withdrawal pains in her taking relatively little foreign aid. They may need it for some very big project. But and there may be occasions, but they should be shifting and I think they are perhaps a bit a bit faster and I think that we've got to be careful. I don't in places like Africa or Haiti it's going to take more than just putting money in. To get them into a phase of successful modernization in Conformity with their history culture and people a lot of patience is going to be required. Not merely money. So the orders of magnitude of foreign aid or not, very big big money, but with the kind of budgets, we now got a trillion dollars or some such number that none of us understands total foreign aid is probably a clerks error. And you know, that's the order of magnitude we're talking about and so sure we want to use it intelligently and not waste it because every dollar is a real dollar and it's somebody's tax Dollar in the end. But what I'm saying is that we are undergoing a shift to private financing there may be additional places we can use Official Financing and we shouldn't just put it out because it's been voted or we do it by automatically and if necessary, we could bring down the total if there's not an authentic demand for it and that would be a sign that we're making progress in the world and we should remember that a higher rate of growth in the United States and lower interest rates in the United States is a very good substitute for (00:49:38) foreign aid. I think that we shouldn't let you get away today without some you're saying something about the goings-on in the White House these days you were the assistant to the president for National Security Affairs and good part of the 60s. You must have watched this the build-up to the what is now regarded as a scandal or a crisis. The what's wrong with the picture question and what do we do at now? What do we do about it? Now? You must have thought about all those problems with it kind of special interest that the rest of us can't possibly summon. Can you Tell us what you think. (00:50:30) Yes, I can tell you what I think I think three things are wrong that I can perceive even sitting under the big blue sky of Texas and privy to know information. Won the National Security Council staff is too damn big. It's gone from about a dozen maximum including some liaison officers in my time. We cut it down to that from about 50 and Eisenhower's time. Which he approved incidentally in his later Reflections. It's gone from that to about at least 50 and I don't know how many others they've got in there because they draw them from other parts of the government and the Devil Makes work for Idle Hands. It was blown out by mr. Nixon because he hated the state department. I'm being very blunt because there's no other way to make this point about which I feel very strongly and somebody ought to have the wit to pass the kind of law that restrains the size of the Council of economic advisers. I think they were dozen Apostles and that's about enough and that's that's point. One point two is one that I don't know how to solve. I don't think you're going to get a first-rate man. To run that staff unless he can report directly to a president and not through a chief of staff. Now that means you have a president who wants to have him report to him. And and that's a I don't know. Mr. Reagan. I his style is different and every every president has his own way and you have to try to adjust to it, but it's a problem. If the president doesn't actively engage and regard this staff as a personal instrument. Third. You've got to be extremely careful as always about balancing Your Privilege with your responsibility. The great privilege of the National Security aide is that he is not cleared by the Senate. He's not responsible to the Congress. He's responsible only to the president and a confidential capacity and so is his staff. Now the responsibility that goes with that is that that staff had better damn. Well, keep out of operations which run under the law of the Congress and are normally under some kind of supervision from the Congress. I think it's insupportable to have that staff doing business which is possibly outside the law and in any case it should not engage in operations. This was a line very closely adhered to in our day and I will tell you there were Exceptions there were very few exceptions and they consisted of cases where often at the suggestion of the Secretary of State. There weren't so many so it's not so often but there were occasions when the Secretary of State or the president would say to the secretary. Should we ask Walt to do this that that was a diplomatic contact rather than having it run through the department because the danger of leakage. But those were the only exceptions in my time to having the responsible agencies of government all of whom have to report to the Congress conduct the operations of the US government. Now, this is not a trivial question because in 1980 there was a Resolute act of Congress put up senator who was going to make the National Security aide to the president subject to confirmation by the Senate. I think that's wrong. He should be the like the other aides to the president in a confidential relationship. But the consequence is he shouldn't be a major operational figure. He should keep the lowest profile. He's capable of and which isn't always easy because the president uses you for certain purposes which elevates your profile for good or ill but still he should be a low profile presidential aide. And remember who the secretary of state is the senior Foreign Affairs officer who speaks in the Congress for the president and around the world doctor. I think we have time for one more question and then we'll (00:54:51) we'll have to be will conclude. I believe you were first. (00:55:02) I'm concerned with the number of scientists engineers this country. They're in the defense (00:55:06) industry. Can we remain (00:55:09) competitive with the rest of the world with their increasing supply of scientists and engineers and still have enough for both the defense industry and the commercial (00:55:20) industry. (00:55:23) I think your concern is is a legitimate one. I'm not one to arbitrate it. I do know that a good many of the a good deal of basic research done in this country for civil as well as military purposes financed by the military and some of the things generated by the military have civil applications. So it's a hard division, but I regret every dollar that goes to the fence and wish you could go somewhere else but that we live in that kind of a world and we have those responsibilities on the other hand. I would say From my perspective, which is not didn't come down from a mountain in Marble like the Ten Commandments from my perspective. The critical job in the United States is the pace at which we apply existing Technologies. And that is much more a question of the the mindset and training and attitudes of the CEOs in the key companies in the lagging sectors. Then it is a question. I think of an absolute shortage of our D Personnel in a good many Industries. We've got a lot of our D Personnel but historically their bosses pay them. No, never mind and that I suspect is the biggest problem. We got overcome. Thank you doctor rostow for very very stimulating discussion on crucial topic. They might hear. You've been listening to Walt rostow former National Security adviser to presidents Kennedy and Johnson. He spoke at a Minnesota meeting which took place today at the market in in Minneapolis prior to the question and answer session. Mr. Rosso spoke on the topic of the United States and the fourth Industrial Revolution live broadcasts of the Minnesota meeting are sponsored by the Twin Cities based law firm of Opperman wolf and Donnelly in recognition of its 100th anniversary.