And why the next Foreign Policy crisis for the worlds number one power might well involve the worlds number two power. But first heres my take. Now that president obama has won reelection, the debate in washington has shifted from whether we should raise taxes to how and by how much. This makes sense. With a deficit over a trillion dollars, we will need a combination of increased tax revenues and spending cuts. The president and his allies including robert rubin have made the case that eliminating deductions simply will not get you enough money. You will actually have to raise tax rates. Thats probably true as well. But lets not give up entirely on the issue of deductions and all those other hidden subsidies that the simpsonbowles report accurately called backdoor spending hidden in the tax code. In order to sound like theyre not spending money, congress often tends to grant special exemptions to pace taxes. In hids excellent book red ink David Russell points out if you get a 1,000 exemption, its exactly the same as being paid a thousand dollars by the government. The simpsonbowles commission pointed out that when you add up all these tax expenditures, they amount to over a trillion dollars in foregone revenue. Considering that the total revenues are just 2 pngt 5 trillion according to the cb o. Russell points out if you got rid of all that, we could lower the Corporate Tax rate from 35 to 28 . But the larger benefit would be to reduce corruption in washington. Congressmen get cash for their campaigns. And in return for this, they often give away preferential treatment in the tax code to special interest groups, to company, to lobbies. Tax expenditures are plaerly valuable because unlike actually spending, which has to be renewed in every years buchlkt tax expenditures are in the code and the benefit is received every year. Its the gift that keeps on giving. Now, since we cant do much about Campaign Finance reform thanks to the supreme court, why not get rid of what the cash often buys. The largest tax breaks are not to corporations. Theyre to people for things like Home Mortgage deductions. Even these are vastly overdone or should be limited or phased out. Britain got rid of it with no adverse effects. Canada never had one. And yet they have a similar rate of homeownership to the United States. But forget about the economics for a moment. Just as a corruption cleansing mechanism, lets get rid of tax expenditures. If korng wants to give you money, let them do it the oldfashioned way. Write a check and do it again err year. Lets get started. Captions by vitac www. Vitac. Com so lets get right into it with our guests robert rubin was treasury secretary for four years in the clinton administration. Prior to that he was cochairman of goldman sachs. Paul oneill was treasury secretary at the start of george w. Bushs first term. Earlier he revived the fortunes of the industrial giant alcoa as its ceo. Welcome back, gentlemen. Bob, lets first talk about the tactics. It does appear over the last day or two that president obama has taken a stronger position on the fiscal cliff on the explore rags of the bush tax cuts than he had earlier. Hes asking for more in revenues, he seems to be willing to let the tax cuts skpiefrmt is that the right strategy here . Well, it depends where youre trying to get. I think i happen to agree with president obama about where he is substantively in terms of what he needs to do to get an effect ivg program as far as our long term tra jektly. I think some of his tactics, its very hard if youre not in the room to know what to do tactically but what he says to me is different than what you said. He said i have an objective. We cannot get there with tax expenditures. With the tax reduxes. Right. If it meets with the longterm fiscal trajectory, you can get ourselves in a much better place for the long term and you can significantly improve long range terms. You put all that together. What he then said is im willing to sit with people and compromise to find common ground. Its sort of what he says but not quite. He says beall have to Work Together if were going to meet that objective. What do you guess . Is he playing too hard ball with the republicans or is there room for compromise . I think he shouldnt focus at all on the republicans. I think he ought to focus on the American People. Thing is a restart opportunity for president obama and an opportunity for him to educate the people and lead us in the direction we need to go. You know, when i look at the fiscal cliff and sequestration and all these other things, i say to myself, we need to start with this fundamental question. Do we the American People agree that we should pay for the things we want and need . And if the answer to that is yes, which i think it ought to be. Then i tlinks a related question and that is when are we going to start doing it, right . So by the simpsonbowles plan we would have the next balanced budget in 2035. You know, thing thats a little far out for me, if were really serious about paying for the things we want and need. And so a think he could do is educate people about the existing tax codes. Here are two facts. The tax gap, that is to say the amount of money we dont collect which is due and owing according to a brookings study is 400 billion a year. Thats essentially tax cheating of various kinds. Of various kinds. 400 billion were not collecting now. Now, according to art laugher and his group who studied how much it costs our society to administer the current tax system, it costs us 431 billion a year to administer this system. You know, so on its face it say s almost a monkey could figure out beater way to collect the revenue for the things we need and want than fixing the existing tax system. I think would be great if the president of the United States said we should reason together about an effective system that fairly collects the revenue we need and we probably ought to start out by saying were going to start with blank page. It doesnt mean we can implement it overnight, but nows an opportunity where he could lead us to throw away the broken things that weve evolved into and set out a new course for the United States that will give us high prospects of growth and better standard of living for all the people in the United States. Do you think that this issue of fundamental tax reform should be part of this negotiating situation or for now try to fix things, move on, and let that larmer discussion take place later . Let me totally agree with something paul said and take a slightly different view on another which is what you just asked. I think pauls exactly right. Weve got to address our fiscal trajectory. Its imperative. And you can accomplish both purposes, short term and long term. If you address this longterm trajectory effect live i, you have a chance with job creation. In the short term youve decreased confidence. Then youd have an upfront moderate. Moderate stimulus to further improve growth. On the point that paul raises, in effect i think hes raises a point. We have slieltly different views. These were designed with some purpose and what i think we could do is debate all these purposes. Think as a practical matter with the time frame we have we cant have a full debate. I think if grow through all of that, i think as a matter of sun stance, as a matter of the effects you would have, these are the real limits of what you can do, fareed or what squlould do. In terms of practical politics, if were going have the effective deficit Reduction Program we had before and if you take the position that we shouldnt increase taxes on the middle income people and you aim at a reasonable balance between tax cuts and revenues, i think most of this is going to have to come from increasing rates in the top two brackets. Thats what you wrote in the new york times. I wrote that. If you really look at the numbers, there are serious substantive issues i just raise and then i said when you look at numbers, you will inevitably have to raise something more of the majority from the reeve news. And the rest you can do by reducing reductions and the like. Would i by fair . Weve got to take a break. Would it be fair that the substance of what youre seeing seems to suggest that you would like a valueadded tax. Simple, efficient, easy to collect . Yes, i want a valueadded tax and i want to use it to replace Corporate Income taxes and individual taxes and payroll taxes. And i want to do this. I would like for the prlt to declare the purpose of the tax system is to raise the revenue we need. Its okay with me, im probably more liberal on some of these things than you are, bob. Its perfectly okay for me for us for we the American People to say we want to give people certain benefits depending on their status. Thats oklahoma with me. But i want to write them a check. I dont want to do it through the gauze of a tax system that doesnt collect the revenue we need and is inherently unfair. We will have to come right back and talk about were going to talk about what the experience europes experience in austerity tells us for American Growth when we come back. [ male announcer ] citi turns 200 this year. In that time thereve been some good days. And some difficult ones. But, through it all, weve persevered, supporting some of the biggest ideas in modern history. So why should our anniversary matter to you . Because for 200 years, weve been helping ideas move from ambition to achievement. And the next great idea could be yours. Up high ok. Dont you have any usefull apps on that thing . Who do you think i am, quicken loans . At quicken loans, our amazingly useful mortgage calculator app allows you to quickly calculate your mortgage payment based on todays incredibly low interest rates. Right from your iphone or android smartphone. One more way quicken loans is engineered to amaze. But they havent experienced extra strength bayer advanced aspirin. In fact, in a recent survey, 95 of people who tried it agreed that it relieved their headache fast. Visit fastreliefchallenge. Com today for a special trial offer. [ male announcer ] from our nations networks. To our city streets. To skies around the world. Northrop grummans Security Solutions are invisibly at work, protecting peoples lives. [ soldier ] move out [ male announcer ]. Without their even knowing it. Thats the value of performance. Northrop grumman. So i brought it to mike at meineke. We gave her car a free road handling check. I like free. Free is good. My money. My choice. My meineke. And we are back with bob rubin and paul oneill. I say in my opening commentary, paul oneill says if you want to provide subsidies for people, write them a check. Why do it in this hidden way through the tax code which first of all is permanent and perpetual and secondly, youre not being up front about it. Two comments if i may, fareed. One thing its not permanent. You can always change it through legislation. Number two, even if youre right, which im not sure that youre right, were not going redo the federal budget. If you think its important, i think charitable contributions and health care are important, then you have to maintain it in its current form. You would try to get rid of the corporate side. I think its like the individual side yochl view to take each one of them and decide on an individual basis. In the long run, i think paul is right in one sense. It probably makes more sense to have it all on the spending side. On the other hand as i said a moment ago, think there are a lot of important issues being observend and were not going redo the federal budget in any time that is remotely related to what we do now which is to get on a sound fiscal path both for the long term and thank god the creators of our country didnt believe we had to start with a mess and live with it. Were being the naive optimi optimists. Let me ask you, paul. The whole point about this deficit redux, simpsonbowles, all that, i understand that, but what do you learn from the fact that the European Countries that have been doing just that from greece and spain to most dramatically britain, britain has really had a very strong austerity program. Theyve seen growth plummet and britain has contracted more than in the great depression. Is there a danger their any of these deficit plans are going too far right now given how fragile the economy is . You know, my own view is if we plan for a better fuehrture the structure that we set up and are disciplined about how we spend our money and have a Broad National agreement how to spend our money, its okay to phase it in. We dont have to do it in the next three months or six months because if people see were going to have a stable system thats reasonable, efficient, economic, the markets will take off. The thing that investors want when i was running a company, i wanted stability. I wanted certainty about the future that i was going to face, and one of the things thats really been holding us back the last couple of years is this uncertainty and bickering about every single thing. So i think if we could get ourselves to a position where, say, we started with a 5 valueadded tax to learn how to do it and we promised in two years we were going to eliminate the Corporate Tax, i think about eliminating the Corporate Tax system and the individual tax system. Then i think people would say, wow, were headed off to a better place and we understand it and were all going to be better off. How do we get unemployment down . All this is, you know, talking about ways in which we can deal with what is essentially a theoretical problem. Right now the United States has no trouble borrowing. In fact, were borrowing at loi levels. Thats very dangerous fareed. I think something paul said is really important. Whats happening in europe would be a lesson to us. We still have time to phase this in. If you look in europe the lesson ought to be if you dont deal with the problems the holes get deeper and at some point you have to take much sharper measures. That means that can mean that you have to go through a difficult period to deal with what would otherwise be a deeply dangerous longterm situation. The lesson of europe is act now. But the reality all said, phase it in. And i would at least defer the implementation for the limited period with an enforcement behind that. Will any of this improve americas employment picture . Yes. For the very reasons paul said. If you have a sound Fiscal Program that dealt with our longterm imperative, then i believe, just as paul said, that it would increase Business Confidence significantly both because right now theres great uncertainty about future policy and Economic Conditions and because theres real concern about whether or government can function. In addition, if you properly functioned it you could have a moderately up front service. I think its the most important thing you could do. Bob rubin, paul oneill, glad to have you on. Up next, what in the world. Why the next policy crisis may come from an unlikely source. Ill explain it. Tdd 18003452550 lets talk about your old 401 k . Tdd 18003452550 you know, the one thats been lying around. Tdd 18003452550 tdd 18003452550 rollover your old 401 k to a schwab ira, and well help you tdd 18003452550 find new ways to make your money work harder. Tdd 18003452550 so if youre ready to teach your old 401 k some new tricks. Tdd 18003452550 tdd 18003452550 talk to chuck. Tdd 18003452550 rollover your old 401 k tdd 18003452550 to a schwab ira tdd 18003452550 and you can receive up to 600. Tdd 18003452550 see schwab. Com tdd 18003452550 for terms and conditions. Tdd 18003452550 call, click or visit tdd 18003452550 to open an account today. Good boy. [ male announcer ] you build a reputation by not breaking down. Consider the silverado 1500 still the most dependable, longestlasting fullsize pickups on the road. And now weve also been recognized for lowest total cost of ownership based on important things, like depreciation, fuel, and maintenance costs. And now trade up to get a 2012 Chevy Silverado allstar edition with a total value of 9,000. From outstanding value to standing the test of time, chevy runs deep. Anyone have occasional constipation, diarrhea, gas, bloating . Yeah. One Phillips Colon Health probiotic cap each day helps defend against these digestive issues with three strains of good bacteria. Approved [ female announcer ] live the regular life. Phillips. And you pick the price that works for you. Great. Whoa, whoa, jamie. Watch where you point that thing. [ mocking ] watch where you point that thing. You point yours, i point mine. Okay, llets stay calm. [ all shouting ] put it down be cool everybody, just be cool does it price better on the side . No, it just looks cooler. The name your price tool, only from progressive. Call or click today. I got you covered. Thank you. Oh, youre so welcome. Now for our what in the world segment. If history is any guide, second terms are often disrupted by a Foreign Policy crisis. Its easy to see how that might happen over the next four years with iran or syria, but theres a distinct possibility that the next big Foreign Policy crisis will take place somewhere else. Perhaps thousands of miles away in asian waters over five islands and three barren rocks, all uninhabited except for a few goats. For months now, chinese and Japanese Naval forces have been con flonlts each other in the east china seas. Both countries claim a tiny set of islands. The japanese call them the sin ka cue islands, the chinese, the diaw use. The dispute involves energy. There are immense amounts of natural gas under the china saes. But above all it inkrofls history. Its two greatest powers, the two largest economies and militaries have an unresolved bitter relationship. China and japan have never had to occupy the global stage as equals. One has always dominated the other. For most of the past years china was the leader and japan accepted the role of a distant empire. That changed in the late 19th century as japan became the first asian country to modernize its economy and society and catch up with the wift. After the formation, japans military strength grew, and in 1895 it defeated ching dynasty, china. Their sovereignty has been in dispute for the la 40 years with china asserting its historic claim and japan its modern possession. Over the past two months both countries have acted in ways that could easily spiral out of control toward conflict. The result has been frequent encounters between japanese and chinese ships as they patrol these waters and riots and protests within both countries wrks the populations in each getting more nationalist. And there have been few efforts by either government to defuse the situation and move toward a diplomatic solution. United states gets involved because it is bound by treaty to come to japans aid and washington has confirmed seneca cue islands are covered by this obligation. In other words if one of these navt ones go awry, the United States of america could well find itself involved in an asian war. I realize that this sounds farfetched, but given the extremely bad relations between china and japan, it is possible that honor, pride, miscalculation, or a simple accident could get us there. And, remember, we are in the midst of an enormous leadership change in china, one that is far more significant than this months election in the United States. We now know the identity of chinas new president , xi. It need as new kind of economic development. Its political system needs to be reformed. At the very least tackling corruption but probably more radical changes are needed. Finally he will have to find away for chinas rise to take place without unsettling its neighbors and maintaining a cooperative relationship at the same time with the United States. All this makes president obamas job seem a lot easier by comparison. For more on this go to cnn. Com fareed for a link to my Time Magazine column. Up next, an interview with bill gates on the economy, on education, on politics. Right back. [ female announcer ] born from the naturally sweet monk fruit, something this delicious could only come from nature. Now from the maker of splenda sweeteners, discover nectresse. The only 100 natural, nocalorie sweetener made from the goodness of fruit. The rich, sweet taste of sugar. Nothing artificial. Its all that sweet ever needs to be. New nectresse. Sweetness naturally. [ gordon ] for some this line is a convenience. How you doing today . Im good thanks. How are you . Im good. [ gordon ] but for others, its all they can afford. Every day nearly nine million Older Americans dont have enough to eat. Anything else . No, not today. Join me, aarp, and Aarp Foundation in the drive to end hunger by visiting drivetoendhunger. Org. Theres natural gas under my town. Its a game changer. It means cleaner, cheaper americanmade energy. But weve got to be careful how we get it. Design the wells to be safe. Thousands of jobs. Use the most advanced technology to protect our water. Billions in the economy. At chevron, if we cant do it right, we wont do it at all. Weve got to think long term. Weve got to think long term. [ male announcer ] its that time of year again. Medicare open enrollment. Time to compare plans and costs. You dont have to make changes. But it never hurts to see if you can find better coverage, save money, or both. And check out the preventive benefits you get after the health care law. Open enrollment ends december 7th. So nows the time. Visit medicare. Gov or call 1800medicare. [ male announcer ] jill and her mouth have lived a great life. But she has some dental issues shes not happy about. So i introduced jill to crest prohealth for life. Selected for people over 50. Prohealth for life is a toothpaste that defends against tender, inflamed gums, sensitivity and weak enamel. Conditions people over 50 experience. Crest prohealth for life. So jill can keep living the good life. Crest. Life opens up when you do. So i brought it to mike at meineke. We gave her car a free road handling check. I like free. Free is good. My money. My choice. My meineke. Im Candy Crowley with a check of the headlines. Prime minister Benjamin Netanyahu is prepared to escalate the military operation against palestinian militants. They have sent more than 900 rockets into israel but says it will consider a ceasefire if israel lifts its blockade at gaza. Egypt has sent envoys into gaza to try to broker a truce between hamas and israel. President obama said earlier this morning that israel and hamas need to make a serious effort to work toward middle east peace starting with no more missiles being fired into israels territory. Theres no country on earth that would tolerate missiles raining down on its citizens from outside its borders, so we are fully supportive of israels right to defend itself from missiles landing on peoples homes. And workplaces and potentially killing civilians. The president is in thailand ahead of the east asian conference in cambodia. Divers recover the body of a man missing from the explosion in the gulf of mexico. The explosion occurred about 20 miles off the louisiana coast. One other crew member remains missing after the friday explosion that triggered a fire and injured 11 people. The cause of the explosion remains under investigation. Those are your top stories. Now back to fareed zakarfaree gps. Bill gates was the worlds richest man. Then he gave away billions of dollars to eradicate diseases worldwide, to fight hunger, foster economic development, and to improve our educational system here in the United States. So now hes only the second richest man in the world. Earlier this week i sat down with him in washington, d. C. , for an exclusive interview on the election rng on the economy, and about why gates is now worried about College Education in america. Welcome, bill. Great to see you. Are you happy with the outcome of the election . Well, we had uncertainty about whos going to be in the leadership. Theyve got a very challenging budget situation. Im quite hopeful that theyll find a way to reach a compromise. While not cutting the key investments in the future, whether its helping poor countries or Funding Research in the u. S. , funding the education system. You know, now weve got several months here of very important negotiations. When you look at that issue of investment, are we going to have enough money to spend on key investments and Science Research and technology . Were doing less as a percent of the budget than we did a generation ago. Im quite worried about that. The election didnt get very specific about how people are going to cut Discretionary Spending without cutting into these things that are absolutely critical. And thats where we need to get. Weve got a gigantic deficit. The only way you deal with it is either through revenue. You know, think people agree theres going to be some of that. If youre looking over eight years at 8 trillion to 10 trillion, can that be over 20 , 25 , so then youve got cutting entitlements. How willing are people to cut those on the medical space, and do they have really good ideas. And once you get past those two, then youre down to the discretionary, a lot of which are basic programs. And we fund the medical research through nih. Our foreign aid budget is treating 45 Million People for aids. Were ground to fund the eradication of polio. And so now were going have to get concrete. It was all generalities about, oh, its easy to cut these things. Well, its never been easy to cut the budgets. People are going to have to say which parts they think are unnecessary. And yars like education, i just dont see room to cut if were going to take the young people in our future and do what we need to do. When you look at the world economy, europe is in a mess and is buying some kind of salvatiosalvation and china has slowed down, brazil is having its own problems. Do you feel like were entering a new phase of perhaps significantly Slower Growth than has been the case for the last 20 years . I think definitely for the next five years were still dealing with the overhang of the problem we had and this problem that europe is getting through where, you know, a fixed currency rate with different competitiveness has created a real contradiction unless they have large large fiscal traps fehrs. I dont, however, i think that gdp figures really show us whats going on in the sense that gdps a measure. You know, when we cure a disease, when we let people have the internet to learn things in a very flexible way, when were improving life, it doesnt necessarily show up in gdp figures. Now, over time gdps gone up and life has improved. But those things dont proceed in lockstep. So the kind of in ovation that makes me feel like Living Conditions for everyone, 10 years from now, 20 years from now will be a lot better, that innovation is happening faster now than ever before. When you look at that kind of improvement do, you think that Technology Companies will be as vibrant and dynamic and, you know, kind of moving the u. S. Economy as they were in the 80s and 90s when you were running microsoft . Oh, absolutely. The idea of how do you revolutionalize education, were just at the beginning of that. The progress were making on a malaria vaccine, that stuff is happening in a fantastic way. The Technology Companies, you know, speech recognition, visual recognition, that those tools that empower us, let us collaborate and create, those are improving at an amazing pace. But, you know, there are people, like economists Robert Borden and tyler who have written these papers and books who say, look, youre having technological progress, but its not like it was before. You had kind of seismic changes that were taking place before, and now what youre having are margina margin marginal, incremental, and theyre not going to have as much impact on gdp and peoples lives and their income. I believe they are exactly wrong. That is that the opposite is true in a very, very big way. The digital revolution is just at the beginning. How much as it affected education . Not much for the individual learner. How much has it allowed science, to make scenes in this magical way. How much has it let us come up with new materials, new catalysts which we need for these Energy Breakthroughs . All of this stuff is really happening right now. And although each of these individual things are high risk, you cant say, this guy and this place, but because there are four times as many of those energy innovators, there are 20 times more education innovators, there are, you know, more i. Q. On important vaccines and getting them to be cheap, i see that were going to surprise ourselves, just like the great work that was done in the 80s, is what led to diffusion of technology in the 90s. I see now great work being done in all these innovation sectors. So, you know, there could be no greater contrast than between what i believe and what those people were talking about. And i just dont see how they can keep a straight face. I mean when you revolutional ooize education, youre taking the very mechanism of how people be smarter and do new things and youre priming the pump for so many incredible things. And, you know, that over the next decade at all levels in all countries, thats going to change quite dramatically. All right. When we come back, were going to ask bill gates exactly how he would like to revolutionalize education. This is what hes been spending a great deal of his time on, when we come back. If you are one of the millions of men who have used androgel 1 , theres big news. Presenting androgel 1. 62 . Both are used to treat men with low testosterone. Androgel 1. 62 is from the makers of the number one prescribed testosterone replacement therapy. It raises your testosterone levels, and. Is concentrated, so you could use less gel. And with androgel 1. 62 , you can save on your monthly prescription. [ male announcer ] dosing and application sites between these products differ. Women and children should avoid contact with application sites. Discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or, signs in a woman which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. Men with Breast Cancer or who have or might have prostate cancer, and women who are, or may become pregnant or are Breast Feeding should not use androgel. Serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. Tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. Talk to your doctor today about androgel 1. 62 so you can use less gel. Log on now to androgeloffer. Com and you could pay as little as ten dollars a month for androgel 1. 62 . What are you waiting for . This is big news. But they havent experienced extra strength bayer advanced aspirin. In fact, in a recent survey, 95 of people who tried it agreed that it relieved their headache fast. Visit fastreliefchallenge. Com today for a special trial offer. And were back with bill gates talking about education and other things as well. Bill, other than eradicating disease and hunger, your biggest focus, particularly in the United States has been on education. People see this as something that is absolutely crucial, we cant compete in the new, you know, knowledge economy and this new globalized world, and yet most people are very frustrated and pessimistic. They feel as though somehow year after year you talk about reform but nothing really seems to move the needle. What do you say to them . Ill be the first to admit that the Overall Results and u. S. K through 12 education have not improved dramatically yet, but i do think there are things being done about helping teachers improve, better kruk limb, and the use of technology that will take that space and allow it and do a far better job. Thats an optimistic statement, but were seeing in boths as we apply these new approaches, were seeing a very big impact. Youre now focusing your attention on what people tend to think of as the crown jewel of the American Education system. Everybody thinks of k12 being at the bottom end but College Education, were supposed to be the World Leaders at. But you say not so fast. Well, certainly in terms of the top 100 institutions in the world, the u. S. Dominates that list. In the rankings, you get anywhere from half to 80 of the top 100 institutions here. And, you know, they have been so small because they have philanthropy. Thats working great. They turn out great research. Thats not the engine of equality. Its more the twoyear community colleges. Its the fouryear colleges that are largely state associated are where the majority of kids go. And there if we look at completion rates, do the kids get the degree that they want to get and if we look at how much they learn in those institutions and if we look at the cost trends where because state support is going down, the Sticker Price is going way up on those things, the trends are very scary. So i think this is a muscle we need to renew, look at the lone progr loan programs and Grant Programs and what kind of incentives can there be for really having excellence. Not just is that you admit Good Students but actually theyre smarter, more able to do jobs when youre done, and that they get all the way and complete their degree. Do you think american universities focus enough on that question of actually teaching the student as opposed to producing research and things like that . The bulk of the universities are about teaching kids. The science departments of our lead institutions have this duo role, but the education piece, because we dont measure whos doing it well as much as we should, you know, the kind of prestige ranking, u. S. News report or whatever you look at, they look at how much you spend as a positive thing as opposed to saying, oh, you had a low psat score, spent little money and now hes fantastic at doing these jobs that are open in america. Theres no output measure. Youre saying youre measuring everything when the kid goes in, but you measure nothing when they come out of college. Right. So our foundation is challenging the experts in this field to balance these input measures that are leading to, you know, sort of just competition for the kids that would go to some school to kind of broadening, adding scale, being willing to admit kids to should all kids go to fouryear colleges or have something streamed such as twoyear colleges, oneyear diplomas and skills. Certainly not everybody going to go to four years dwoechlkts have the capacity nar. We have lots of jobs that dont require a fouryear degree. The number that require Just High School or that a High School Dropout can do, those are shrinking a lot. And we do see a shortage in the fouryear degree area. So we need to shift people over. But not everyone. We need great twoyear programs. And a lot those are actually the best because theyre so connected. I need well ders, i need, you know, pilots, i need nurses, you know. Its wonderful to see when theyre so intouch with the employer that its not some abstract thing about the degree. Its really okay. I hired your kids and they were good at this but they werent good at this. Change your courses an ill help get the equipment. The twoyear sector is very, very important. How transformative disruptive do you think these what are called moocs which many viewers have seen are these m. I. T. Courses or stanford courses where you can just watch the whole course . Well, turns out once you graduate from college, the number of people im in that market, but its very small. So then they made them free and still it was a very small set of people who benefitted from those courses. Now its been added in the last couple of years, which is causing this change in energy is two things. They dont just have you sit and watch a lecture for 30 minutes or 60 minutes. They do a few minutes and then they engage you. So like a physics course, ph100 is a great example where he makes physics fun and youre always thinking do i understand that or not. Let me go back over it. So that interactivity piece is new and clearly phenomenal. The other thing is if you have a lot of kids taking the same course, you use collaborative tools like Bulletin Boards for reviewing each others work and answering each others questions. And the paid staff is extremely high. They review this peeronpeer enga engageme engagement, making sure its correct and not going off course to make sure theyre getting an education. Its very promising. But we have to admit the last time people thought technology would change the space, it didnt happen. So far the courses have been taken by a fairly elite set of people. So im a huge believer in it. The foundation is funding a lot of the activity. And it does feel like the answer. Given the picture youre describing is one where education is really important. All of that is drying up and here you have this own e vative technology that can allow you to achieve scale and get these courses out. Thats going to be inevitably the place we go. I agree. But, again, the status quo is very pow irful in education, so going to a university and saying, hey, these online courses are so good, we dont need you to do lectures anymore, so all of yourtown euroed nontenured staffers who do lectures, youre out of that business because that will keep improving online. Youre more for the counseling sessions and the lab sessions. There are very few universities that are at such a tough place that theyre willing to kind of go, wow, were going to, you know, do it over. And the ones at the top are not going to change. In fact, they probably dont need to. We need, you know, some sort of state schools that say, okay, theres a crisis out there, and so were going to adopt these new techniques. And were just barely seeing that. Bill gates, pleasure as always. Thank you. And we will be back. [ nurse ] im a hospice nurse. Britta olsen is my patient. I spend long hours with her checking her heart rate, administering her medication, and just making her comfortable. One night britta told me about a tradition in denmark, when a person dies, she said, someone must open the window so the soul can depart. I smiled and squeezed her hand. Not tonight, britta. Not tonight. [ female announcer ] to nurses everywhere, thank you, from johnson johnson. On gasoline. I am probably going to the gas station about once a month. Last time i was at a gas station was about. I would say. Two months ago. I very rarely put gas in my chevy volt. I go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and its not just these owners giving the volt high praise. Volt received the j. D. Power and associates appeal award two years in a row. Ooh baby, can i do for you today . [ female announcer ] need help keeping your digestive balance . Align can help. Only align has bifantis, a patented probiotic that naturally helps maintain your digestive balance. Try align to help retain a balanced digestive system. Try the 1 gastroenterologist recommended probiotic. Align. We have so Much Technology in our store to really show the customers whats going on with their bodies. Now you can feel what happens as we raise your sleep number setting and allow the bed to contour to your individual shape. Oh, wow. That feels really good. During our semiannual sleep sale, save 500 on our classic series special edition bed set. Plus special financing on selected beds final days. Sale ends sunday. Exclusively at a sleep number store, where queen mattresses start at just 699. The eyes of the world shifted briefly this week from the American Election to the leadership transition in china. Visions new leaders were, of course, not sub jeked to a national ballot. And that brings up my question of the week. Approximately what percentage of the worlds nations are electoral democracies. Is it, a, 40 , b, 50 , c, 60 , or d, 70 . Stay tuned and well tell you the correct answer. Go to cnn. Com fareed for more of the gps challenge and lots of insight and analysis. You can also follow us on twitter and facebook. Remember, if you miss a show, go to itunes. Com fareed. Youll find free audio podcasts or you can buy the video version. This weeks book of the week is nick lal ebber stats a nation of takers. While the romney and ryan ticket lost, one of the main arguments of their campaign does have some merit, and eberstadts book is the best datafilled analysis about the rise of the entitlement state in america. All western societies will have to confront this problem as the baby boomer reese tire and these costs sky rocket. Now for the last look. Last sunday was probably the worlds biggest ever shopping day. Dont worry, americans. You didnt sleep through some new prethanksgiving sale. This event was in china. As many of the biggest things seem to be these days. Millions of people sent gifts to their loved ones, clogging up the postal service. The event, a madeup holiday. Chinas bizarre rowe version of valentines day, referred to as singles day. It falls on 11 11. Get it, 1, 1, 1, 1, singles. Those single men had better be sending renice gifts to the on jektss of their affection. The chekt answer to our gps challenge was c, according