Transcripts For CSPAN2 Tonight From Washington 20120601

writing assumes when he reading would it goes back to the free falling in the forest of there's no one there to hear it. if you've written a really wonderful novel one of the parts of the process is that you want the readers to be enriched and enlarged by at you have to pull on everything at your disposal to do that. private enterprise exxonmobil and american power. he recently sat down with book tv to talk about the oil companies political and economic power and how it became the most profitable corporation in the world. >> hello, steve, thanks for joining us on "after words" today and congratulations on what is quite an achievement. fish i really enjoyed the book. it's like a novel. i mean, it really read like nonfiction in places which i'm sure that as a writer you encounter some of that feeling as well and i know as a reporter that dealt with exxonmobil to probe this company, so let's kind of start there. why exxonmobil? how did you come to this subject? and i know that you look at it previously in your career, but why this company come and how was it -- how did it differ from some of your other subjects like bin laden? >> guest: . as you point out, i started as a business reporter on wall street when i was very young and then i went abroad and worked more on international subjects. after 9/11 i wrote about the origins of the attacks in 20 years of american policy in afghanistan, and this book after that was over i thought, you know, i'm going to keep writing about america and the world after 9/11. just sort of asymmetrical strange men groping that we had as a country to understand what the attacks were about. what they meant to the united states, what is the relationship with the least, and that is a book intended to be about saudi arabia and its modernization and how complicated was for the generation of the oil boomers that osama bin laden belonged to in the 70's when the kingdom was just a wash and they had to go out and buy identities in the world and a lot of them became a story as terrorists and the others moved to florida and so forth. so that interested me and when i was finished with that project i really wanted to write about oil and american power in the post 9/11 context. so i started out. the project didn't begin as a book about exxonmobil come it began about oil and geopolitics. i wanted to essentially take the pipe, the book by daniel juergen that inspired me as a young man a while ago. i sort of thought of it as a great work of nonfiction about the area of discovery and what i want to do is write a book about global oil in the era of limits and constraints and climate and the rest of its. so i started out on the open free market and got six to eight months in the research and i thought i really need a subject here, i need a company. and once i came to that conclusion, then for an american audience i felt exxonmobil was the only choice. sort of backed into them as a subject but i didn't realize i was getting into. there were sort of forced upon me at least was my thinking of the subject i didn't know how closed the word. i didn't understand that much about the distinctive internal culture. so a lot of the three and a half years that remain was about discovering what exxonmobil really was. >> host: during the course of the reporting, the deepwater horizon still were you at that point like this like a rahm company? [laughter] >> guest: i joked my journalist friends their must be a word in german that describes what german must feel when other people suffer but you get an ending to your book and i thought well, this bill, the catastrophe of an environmental disaster on that scale even the what was at exxonmobil's response will become it did provide a kind of context of a bookend for the valdez spill which is a source origin story. it's a story they tell themselves that they tell themselves the story that they were scared straight by the valdez and they form themselves in a lot of who they are to the reforms that started so i thought well people in the accident could be a bookend. a dual and my regret the deepwater horizon maybe i should have done that. but looking back on it, it would have been too much reporting. i would never have gotten under the surface if i hadn't concentrated on one corporation. >> host: first talk about that because that's an interesting book starting the book out with of these. and to be honest, making it new. some of your narrative i thought made it new and then ending in the deepwater horizon and the gulf of mexico in april, 2010. as a person that really delved into -- i know you ready lot of the transcripts of the incident, did you see any parallels? because i did a little bit as a reporter i didn't cover valdez of gunmen. i did cover deepwater horizon and your description of valdez and exxon response to it i did see some -- it seems like bp turned the page a little bit on their playbook. >> guest: there were definite parallels. you probably see them more fun to come to mind are that in the decade running at two bodies there were warning signs that it was not operating in a consistent manner in a way that would give you the highest possible when for reassurance that such a catastrophic accident could not take place. in fact, in the decade before the valdez exxon cut some 80,000 out of 180,000 employees they reorganize their entire city department of the entire environmental department, and obviously the fact that a tanker captain with a drinking problem who had a dress was still in his job making more than $100,000 a year in that's not the exxonmobil you would expect today. so there was a series of warning signs that culminated in the accident. the same was true of bp. i had the impression from people that bp's record as a week operator the plant record, the fact that they basically had a culture and a strategy that emphasized the financial engineering at the expense of operating discipline was pretty well known in the industry and i sort of came to the conclusion after if you call people on the order of deepwater horizon said to them the full length in his hat and huji using was operating that platform and you would have gotten a strong majority for bp at that plant. so that was there. the second parallel was the preparation correctly mitigating the disaster. in both cases there were a lot of people plans saying we can handle this and then the reality is that they were not in a position to do so. and then the kind of public relations - and learning how to deal with all of the communities and the trauma i think probably bp had the benefit of 20 years of learning that the corporate crisis management at exxon in those days 89, this whole philosophy of how you communicated immediately grew up on television and telling people you were going to make things right that wasn't as well developed as a strategy did, but anyway. >> host: i agree. i think the aftermath of strikes me more than what happened before the disastrous in terms of, you know, as a reporter after deepwater horizon st bp had gobbled up like every expert on any kind of expert to save your life it wasn't on bp's payroll i think there's a control that emanated after bp in terms of kind of controlling the message and access to people that could independently talk to reporters about what happened and a very technical subject again. so you go everywhere in this book. you've been globetrotter and you also tackle numerous environmental issues from global warming to obviously the skill of the tanker to the leaky underground storage tanks and i covered in my early career in upstate new york the rest of folly to have connections to the oil company because its integrated and controls it from the cradle to grave. how do you pick up the anecdotes? and then goes back to the oil days. there's a treasure trove and as a reporter i know it's difficult. how did you pick up the anecdotes for this book? >> guest: i started with a map and i basically looked at the map of where the owned oil and gas and i asked myself as a reporter what kind of world is this? why are they there? and then i became interested in traveling across the map, and because as you pointed out earlier, there are a closed subject to date they were not excited to learn that i was doing this book. tauscher tuthill hid dewitt some projects nickelberry the more than usual but the ambition of the book while it was helpful everything that they offered was pretty limited. i basically had to go outside and. once i started with this in the process in the map the first year traveled in the field where they operated to try to understand their role in the world and sense of themselves as an independent sovereign why are they and some of these countries learning about the reserve replacement challenges, learning about why equity in the week states have sort of evolved as a part of their portfolio and so on. devotee back to the united states and i thought i have a pretty good first draft and how they operate abroad. but i really need to concentrate on the washington strategy and their lobbying and political strategy. so i then turn to the tools to use as a reporter to go outside and in the united states which is basically lawsuit and disclosures. so, i filed for the information act request for all the overseas work. but to get at the american subject i basically looked at all of the lobbying disclosures and matt those up and said okay what are they lobbying about and it sex symbol of something that popped out of that. in the summer of 2008 were all over that subject. so it was the data that said there's got to be something here. and to finish on the lawsuit they are sued by everybody over everything and it's a great tool of reporting to be able to look at the civil litigation because in those cases the records and testimony are produced even if exxonmobil's policies give interviews the executives have to testify if they choose to contest with. there were points in the entry and the one that i found was in the gasoline still in maryland where i realized searching the litigation records started with i fought my way down and finally realized there was a huge trial record against had been one of the largest gasoline spills in an area that depended on fresh ground water supply through the aquifer urs were a particularly dangerous still. and it had gone to trial and it was a massive record of testimony by exxonmobil executives and the documents that had been produced and it was just a gift. i went straight into the retell downstream division of exxonmobil in a way that i could have never done through interviewing. so opportunistic is the short answer for how you choose the subjects. you just keep working on the map and then you see a way to tell a story. >> host: despite how broad the r and in terms of geography and subject matter, the lesson i think is the same over and over again which is it comports to the public perception of exxon which is this company that is rigid that is all powerful that you don't want to mess with anything you can across surprise you or kind of sit outside of that narrative? because it seems to me in the book all of the stories kind of come back to that in different ways. each one has a different kind of take on it, but some of the parts are the image of the company that really comport with what it to be kind in their gut feels. >> guest: the reason that it's true is the same kind of decision making and the same kind of culture and in celerity rigidity one might say focus consistency is present in indonesia and new guinea and suburban maryland and the washington office is because they have constructed a global system and global policy is the verso unified and codified and distributed about all of their channels of operation. but i think more than any corporation i have encountered as a journalist everyone who works there gets up in the morning and is reading off of the same playbook. it's almost like a military aberration or a sports team that is exceptionally well organized around the same playbook and i think fear kind of self-conscious about that military metaphor. they are unusual about the ever was a tot the top 40 jobs and corporations you'd find a significant number of people came from a competing company literally live in their career most corporations are in for the top by at least some outside perspective that exxonmobil everybody turns up from college graduate school you don't become a marine corps general by having a successful career and then deciding when to go to where to stars on your shoulder you grow up together as a common view of the world is a lawsuit in venezuela or lawsuit or gasoline spill in maryland all the same way to enforcing their well and there's a reason for that a person discovered the energy and environment for as long as i have this surprise me you get into hydraulic fracturing it is actually going to put out some rules for fracturing on the public land. it almost makes the case that corporate philosophy gave them a blind spot when it can to hydraulic fracturing. even more surprising because you make it an amazing point and i remember this but rex tellers in the young engineer of the company actually was using a technique, do you think that one case that corporate philosophy of the manage risk with a certain return on what we do hinders them from tapping into what is now this huge gap and huge economic opportunity that natural gas? >> guest: they were slow with their often slow and then once they decide they want to go into a direction so they get to places late and then they buy their way in. that's the pattern. so they've never had a great reputation of the world's greatest oil and gas. i am sure they have some wins and they probably have a story to tell themselves about the successes of exploration. they have more discipline about choosing opportunity comes a generally if they fail to discover something for themselves they can buy it and that is what they did that's why with the conventional gas emerged after 2005 and 2006 increasingly looks like a real opportunity, and they were going out and doing that kind of land games putting it together one patch of the time but at the scale for them to be a player they needed to to. one thing that's interesting about this or another is the largest. islamic they made the decision. >> guest: $40 billion you can lay down you can come to the largest development but what is interesting and i wonder where you think about this because i think of the climate as a challenge of climate legislation causing pricing and in august strategic challenge that goes to the earlier generation where they dealt with resistance to their investments and their thinking with a pretty aggressive strategy. now, tracking is not just a business challenge or geological challenge it's not just an engineering challenge is also a political challenge. there's an enormous amount of anxiety building of in the country about some of these techniques in there and very little consequence is in the land use consequences the unknown. if it becomes the poster child of the region free corporate come every kind of stiff and profit driven approach to these challenges then they may strategically have a problem over time. can they actually adopt themselves to the kind of trust building and political coalition building but proved durable or will they take their systems approach our way or the highway and a sort of end up defeating themselves in some respect they could end up with a tough public response than they would otherwise get if they wear to suffered the other companies. >> host: they have seen in some cases in the book that they are now. they are kind of pursuing what they want to pursue and doing it their way to making no excuses for and which brings me i've had a conversation this morning with ellen jefferies who's the chief spokesman for exxonmobil. and i asked him about the book, and i want to get a reaction to his reaction from you would which i think you'll find every exxonmobil ask we see the book as an exxonmobil to safety and community. a man not be popular or fashionable approach. what we deserve good quality in the company of this type. so basically i said that's how they are and to get. that's what you're saying. so, that of the inslee does not surprise you in the course of this book. and they actually have read it and you probably know. what is your response to that? >> guest: i appreciate that he's dealing with it in a professional way, and basically about media, about journalists, about political opposition and environmental groups, they basically stay in their channel and that's what he's doing to be a we are who we are. that is essentially their strategic position. sometimes we are who we are feels a little bit like a defensive and that gets to the question can you really be -- have the source of strength of the operating system which is considerable. there's a future event, they are focused on operating excellence and so they have a pretty good reputation in the business as project operators. and then if you and i were the code dictators of where we stand and we want someone to develop the oil and won the project to come in on time and on budget to get paid early, we would definitely entertain the powerpoint but basically they have a record of project management. where they get into trouble is they extrapolate these kind of operating systems as rigidity in to political affairs and human factor. things that made us change it and the own record for example as a social entity themselves is the corporation and the promotion of women or diversity, responding to the world but we live and. he can say that these conservative values are out of fashion but we think that they are powerful about crossing the t's on safety of the workplace. but can they really succeed with a strategy in the world where there's a closed by the change of the social makeup of who is the educated work force in the united states? it's mostly women, it's more and more diverse and if you work on exxonmobil and go home to your family's thanksgiving dinner and say i were on exxonmobil distain or worry. some have something has to give i'm not sure that they think that >> host: let's go to that because that is one of my questions, too. it seems to me that kind of we are who we are and take it or leave it we don't care what it reveals thinks about that. has that backfired on that? that could have been a force to cultivate more distrust and distaste and help make them as you say in the public enemy number one at points in their history. >> guest: it is a great question and a kind of complicated one. one of my goals was to try to understand as best i could and tried to think about what is it like to be so unpopular. does it matter? because of you, the default view doesn't matter just like we are who we are. but in truth there are consequences. in the real world of the year of spurring generation we can get away with just being sustained by anybody and the technological and scientific scientists are independent-minded people some may be willing to adopt to the economic rewards of the people not if it doesn't really feel like an open and changing place. if you only have one way of living in the world and problems and risk management are getting more and more diverse you can't afford to go into communities that already have a presumption that you are evil. yes they can appeal of these verdicts individual did then knocked down to zero but if you really want to go into every journey the have to overcome the presumption that you're evil there are consequences but the problem from their perspective is to what's think it's a way out of this box, one of the things they did is let's go back to the history. is there a golden age of the popularity the we could model for the more winning strategies? and the answer is no. so it goes to the basic question if we are who we are is there really a way to communicate about that the would change of remedies mind? this isn't just putting lipstick on the pages. shouldn't we just be straight forward and have a strategy that just says we are who we are again and again. >> host: going back to john of new york and excellent energy writer in your book. apple is now more valuable than exxonmobil and it's also secretive and thin skinned, but apple is coal. >> guest: everyone is going to cry -- >> host: and what a difference that was to that question of the full circle. it's kind of two-part which is to you think that exxonmobil strategy has a tarnished the rest of the business. in the case of apple the control is secretive and still really hip and cool for those who don't like you. >> guest: i mean one of the things -- i went back and looked at were the top five corporations in the united states in 1949 to the present and their distinct because they're always on the list and the companies around with -- the companies in the 60's that were number one or number two u.s. steel don't exist anymore. so when you get today apple and exxonmobil are one and two. ten years ago it was exxonmobil and wal-mart. microsoft was already in the mix. you look out 50 years further which is the one you think is less likely to be around, microsoft rebel? i read the jobs by devotee on walter isaacson, a terrific book, and it is striking both how completely different and how similar apple is to exxonmobil. what a country. only the united states can produce both apple and exxonmobil because on the one hand at coal was a completely california breath created 60's -- in the book there's a report that steve jobs used to go into interviews and ask serious job candidates if they had ever done lsd and the hope of the answer would be yes. .. and so, it is fascinating. the other point about exxonmobil and it's popularity is most big industrialized democracies because of the nature of our energy economy, the author takes state oil companies, so there's panamax, mexico, bp, to the industrialized west, the study states that privatize them, but even bp were partially stayed on this precise the 1980s. but only in america -- exxonmobil is our state oil company. there's much more coherent than anything the federal government does. that's for sure. they are just as powerful relative to the state and maybe even more so. and yet, only in america would we have a state oil company that lives in opposition to the state in which it resides. rax tellers and told his magazine to best his outlay shrug by eying brand. that was touched on and it's just an attitude of skepticism that say generously towards the government that is peculiar. not the equivalent company in france or italy or even in britain would've all gone to the same university as the president of the united states. they would be buddies. there would be an interim lock in a world view even they would work arm in arm with the french government abroad in order to secure interests. but you know, this country, we are skeptical of our government and the last irony is we are also skeptical of concentrated power. so hereupon exxonmobil is an institution with enormous concentrated power he cheated that you did vote that is basically about the dangers of concentrated power and celebrates it treat. >> host: one of the things that cannot pick as to what you just said about their influence on washington is really fascinating because out of one side of the map they say they don't want to play ball and yet we are playing ball harder than it is in some cases the furthest extreme of a waning days with dick cheney when he hops them and everything just to get out of geopolitical enclave. but one of the things that's interesting is that taxing your about politicians getting it wrong. i have to find the page number. it's even more apt today. yeah, your days. here's the quote from tellers tillerson. the most effective means of securities if it doesn't matter where you get a common fungus to get more oil and put it in the back that we more supply. in the global market for nationality are of little relevance. energy in america is not as important as energy simply made wherever is most economic. yet exxonmobil has carried that message for a long time. it goes back to raymond and tillerson. they are obviously communicating to republican allies at the point where lobbying is heavily skewed to republican side of the party. yet, that's how the messengers are hearing from politicians in an almost resource nationalists at first he was a mystic energy production all of venezuela. tesco exxonmobil is not to join in that. >> host: so it's kind of shocking to me and i think for an explanation here is how can this all powerful company with huge influence not have changed that political discourse to make it actually more serious to the facts of how the oil market works. we also engage in it as you say. >> guest: they've had influence on the elites and if carried out this very intense education campaign to try to bring with you call informed influentials around government media into their conversation about how the global oil markets actually work. most politicians don't have time or interest to study in depth these kind of complexities. one of the executives i interviewed told me that one of the world leaders who understood that other global oil markets really are integrated in nationalists and though it can be relevant is not what it seems, energy independence was tony blair. he says, you know, you're one of the few people who run the government who actually understands how the oil market works. isn't that a shame and blair supposedly said something you wouldn't want all the other politicians no one because then they would just think they could do something about it. host or as it's happening in washington right now both parties, both parties are trying to kind of get a handle and showed they are reacting to gasoline prices when it affects a very little power over castling prices. >> guest: discretion what are the benefits of energy or what is energy independent means, even though the wait is used political campaign is frustrating because it's a sort of divorced from actual subject matter, but there's a real subject that is important and interesting in this changing and exxonmobil's position in the quest for energy independence is also changing. basically while it is true that the net exporter or a net importer of oil is not really the not really the right way to think about energy security because everybody has a price taker, doesn't matter whether it's global price. that was more reasonably priced. there's been some evolution towards a more integrated gas market, but were not there yet. so in the united states at the onshore natural gas that's really cheap, that could make a big difference to the economy. it could change the energy mix in with its favorable in response to climate change. and while being a net importer for a net exporter may not matter if some of the way politicians talk about it, it does matter to the balance of trade to be one of dollars we spend abroad to unfriendly machines versus that we keep at home to reinvest. so if we do shift towards for energy independence, whether you call it nationalistic language or economic language committee would be be if the images. they are just not advantages politicians often described. >> host: one of the other current events i was thinking about in this book was going back to the days of iron mass diaphragm and for good reason. they're an oil company. so you know, they don't want to really hear about hydrogen or, you know, lecture cars but have you. it's an excellent point which is on my first real sense of how people mix the elect tri-city side of energy production. but i couldn't help think there's pieces in the book really ran in tax into the ear of alan greenspan and alan greenspan is on the hill and basically say lieberman's speech. it's on cylinder, which is the company that has grabbed headlines and failed. if big oil is behind that, given that their animosity for kind every new loopholes and subsidies renewables required. did she see any evidence of that? >> guest: to deduce the government. >> host: not to deduce the government, but fan the flames. >> guest: they are a fan of communications machine that seizes every opportunity and political allies to the same thing. but i think the underlying question about alternatives and exxonmobil is there are corporations. the question is this a country is do we want to create subsidies and incentives were shipped to alternatives to the long program ended up with the lender provided. why would we? if you look at it, we've been talking about how everybody in this country shares an interest in the lowest cost of energy possible consistent with a sustainable environment. that is the dilemma. you want the lowest cost energy come but she also wanted to achieve your goals. if you talk about a rapid shift in policy shift from cheap coal and oil and gas to more expansive and cleaner renewables, you better have a good reason to do that. another reason that is the most compelling is climate. so if you believe as they do come by for 97% of scientists and a warning sign in entirely convincing. so if you believe that, now you have a reason to endure short-term costs for long-term gain. but if you want to convince the public that there's no risk, then the case gets much harder, which is why exxonmobil's resistance to the basic finance of climate science after kyoto was so pernicious and so damaging because it's about the validity of climate science and climate threat. scientists tell us they shouldn't be these interested parties funded a campaign to plant that down. of course the americans are entitled to their own opinion, but that campaign is clearly influential. >> host: i thought that was an interesting part of the book because you make and i don't want to put words in your mouth, but to me about this almost as if exxon invented that strategy in exon with a company that really was then the scientific doubt. you know, funding research. i love that part with the noaa scientist at the prince william sound 12 years after the spill and they are being attacked by a god of exxonmobil who want to know what they're up to and criticize methods eventually trying to cast doubt for the oil was still bare after all these years. and i attacked it now seems ramping in our political culture as a reporter that pays attention, you're now seeing it where the science of climate change, you know, the theory by many, many people as a valid theory, now you see now you see it in areas that. there is politicians down on the floor talking about the linkage between smog and asthma. there's people questioning the cost benefit analysis of the epa when it drafts regulation. do you look at the exxon traffic and be like hey, exxon is responsible for that kind of tactic as it seems now is a very common one. let's not talk about the regulation. let's look at the regulation are trying to address. >> i think they really were a distinctive investor and that specific strategy after kyoto. because in the kyoto were signed, there is a lot of opposition to them in the united states and in the industrialized world on economic grounds, some of it was about the science really got urgent and we need to impose these costs on ourselves. but there were a lot of different groups that oppose kyoto for economic fairness reasons. but exxonmobil was very unusual in the aggression that they brought to the science part of the campaign, really funding groups whose principal activity was to communicate as nonscientists a narrative as mainstream science and that is a tactic that is more and more present for science and public policy and are set. and it's dangerous because our whole progress as an industrialized democracy depends on an honest argument and science and if we have in this fractured media times, it completely polluted argument for even the public is trying to act in good faith isn't sure who or what is damaging our society. >> now, this book makes clear that exxon is almost impenetrable fortress as a company. when he's not biased here because i'm at chunky, it really seems this really scares until then, there is one black swan intervention that could shift occurred of rising oil demand. a decision by governments to limit greenhouse gas emissions by heavily taxing the use of carbon-based fuels. is that a fair estimation? that issue because of what it could do is because of oil what is really chasms fiction in their boots. >> guest: i think is a conversation about how is a rare and essential threat. they had overcome the previous systematic threats to oil production in the world, which were supposed and environmental damage and the seepage of oil into water and drinking supplies and air pollution. all of that had been more or less brought into a sustainable compact and regulated. and they themselves have adapted. they had accepted the validity of environmental goals when it comes to spills and air pollution and so forth and they had impose costs in order to feel the sustainable compact peers are just at the moment they've got cruising fees on environmental issues that arose in the first three for decades. now comes the other existential or abstract oval challenge to the fossil fuels in our system. and i think that was one factor. we ran it as a trained chemical engineer and has a very direct and determined executive decided he would just say what he thought in his exxonmobil's resources to prosecute his dues. most chief executives that they have a connection but not act as aggressively, but that's who he was. you know, the book reflects i interviewed raymond and i asked him at one point, surely you could have handled the cost of modest carbon legislation. ligature profitability. you've adapted to air pollution regulations. you've adapted to spill regulations. you pride yourselves on your compliance with regulatory regimes impose costs on you for making industry sustainable. why not just adapt to these regulations? i found the answer that convincing. he sort of said, we got the cost of the whole economy which be to create, but there is a visceral reaction to kyoto that exxonmobil had that was kind of out of line with their actual businesses. i would understand if you're a coal the kyoto comping and this really could be existential. but the oil industry, because of the mix of gas, which is a lower footprint, they had an opportunity to adapt this sort of more forward leaning way and print with your kid company saw that in a public sorority they are amended with much more in depth and. postcode now, another idea i found really interesting in the book as you face a couple times, at least twice that i can remember, that you're not hearing it all break down washington is regulating gasoline prices with electricity and how we'll want the lights on and how we regulate out because he got out of control and the prices soared. people wouldn't be able to turn the lights on. why are we hearing that more when it comes to gas? and should we be hearing it more as a solution as in the government could do? >> guest: is a very serious question that the reason they don't hear more is in fact the political arguments during campaign season about gas prices and there's no reason for a serious policy questions into debt. the point you make is very important. a switch on the flip into the power to company processed or not use the power. that company is the utility regulated by a public standard in every state or jurisdiction separately but the public standardbearer. and that is our history the provision of electricity. the thing is so important to them is so fundamental and so inescapable that would require profitable companies to meet certain public interest standards and be accountable to the public for their performance in the cap their profits. now, and exxonmobil's case, there are global companies discovering oil under ice and season so forth. no one is going to regulate them in the public interest. but in the provision of gasoline, it is a similar utility function. in fact, if you are a committee construction worker to drive 60 miles a day to pickup truck to a job site can be coded to pump any kind of choice. you have to put it into whatever prices they are and you can understand why you have no accountability and control over the track figurine. i think it is a serious -- it's an action of history that we treat the provision of gasoline as an entirely free-market function without oversight basically in some taxes and environmental regulation. but we treat public electricity as a public utility. they organize things differently. i don't know if there's any easy to fix this, but exxonmobil recognizes the problem because they're in popularity rises from the fact that they're bringing this to stuck on his palms or people are angry. no business deliberately tries to put its customers into the position of paid water stare at their brand. >> host: that's actually the only way they're visible because otherwise people don't understand the oil process. people are drilling holes in the ground or a teapot shorter or dictatorial jimmy as he traveled the book. all we really see of them is the tiger in the chain and their brand names. just go towards the end of his career says to the board, for all the reasons you just listed, but i get out of the gasoline business and be like dupont. nobody gets up in the morning saying du pont is evil. the du pont is a huge industrial corporation at whatever strength and weakness is its invisible by comparison. >> host: one of the other points you make in about an reference to the discussion about energy and policy and the lack of the u.s. policy or they stay coherent ones and you make a point earlier that really exxon is the u.s. energy policy, that politicians had kind of struggled with that because at the end of the day, it requires a public to make some sacrifice and they really don't want to step there. they don't want to go there because once you go there, people start to say hey, i don't want it to die. every poll was done at "the associated press" always says yeah, we want to reduce the rest of climate change we want clean air, really don't want hover electricity bills go up to do that, which is a consequence of any kind of market scheme and also a consequence of the carbon tax and that cools down to the consumer and changes have it. so to turn the tables a little bit, xm is the bad guy, it seems that our inability to make public sacrifices to access more beholden to these companies who don't like. >> guest: is interesting. i try to think about this question at this price it would have to pay to address climate change in particular. and i think one no public in any era wants to volunteer for higher prices in their household expenditures, our politics shows where the public site thread two generations a day that their children were more likely to get asthma or develop respiratory disease to present their pollution unaddressed or that their children was more likely to be exposed to cancer as a result of pollution and water supply that people were willing to pay a price, whatever the price was to protect her living generations from that danger. the problem with climate is it's over the horizon and the dangers they are serious but abstract. so you may be motivated to think i do want to put my grandchildren and a world brothers three degrees celsius higher than we have now and rising seas, but you know, it is not the same. so the cost-benefit equation is part of the problem. and the other thing about what you observed his theories in a government in the world where politicians don't want to make gasoline is cheap as possible. it's two chickens in every pot. most of the world governments over subsidized gasoline just so they don't have to do with the public's anger about what the gas would really cost if they let caprices rule. and so here with that market prices rolled to a point and then we add a bunch of taxes for remediating some of the environmental cost to try to reduce driving and so it's expensive already. so you go to politicians and you say i have a plan to make gasoline even more to and you're not going to find a big cost finding that. >> guest: >> host: the quote from obama somewhere in california where he says as a result of cap-and-trade gasoline doesn't necessarily skyrocket. he's been honest. they're going to have to go up if you put a price on carbon. but that is come back to bite him over and over again. on subsidies, let's talk about that. you mentioned subsidizing gasoline. we obviously have a disdain it very clear in the book for renewables need to be economic and exxonmobil is a company with any kind of crutches. but there's crutches that oil has. i mean, it's a huge debate right now in congress and the president is pushing to end tax breaks to oil companies have enjoyed and they make these enormous profits and why should they continue to have them? to back him up in your conversation with raymond at all? it's kind of play now kind of a little bit of hypocrisy i think they are. >> guest: well, i sort of felt stalemated. i still feel like i don't quite know what to think about it. i don't know what you think about it, but it's basically there are some tax breaks that oil companies alone get through interpretive appeals of how the oil industry is specific terms is located. but most of these allowances are manufacturing allowance is. they just happen to me manufactures of gasoline is supposed to track user something else. so okay, we can say less discriminate because i'm making too much money people are paying too much gas. but to eliminate subsidies and rebate the drivers to work. that's a reasonable public policy. but to just say these are subsidies only for the oil industry, i'm not sure that's even. that's a reasonable public policy. but to just say these are subsidies only for the oil industry, i'm not sure that's even. that's a reasonable public policy. but to just say these are subsidies only for the oil industry, i'm not sure that's even part of the reason why this keeps happening is because it is great politics for both site and there's no danger of sure that's even part of the reason why this keeps happening is because it is great politics for both site and there's no danger of these thoughts passing. you can say whatever you want about them. i think it's a serious question as to how you should restructure american energy policy and i'm all for imposing greater costs on exxonmobil. i think they should be doing more to facilitate a national energy policy goal of addressing the serious risks of global warming by moving as rapidly and economically as possible to new energy. but i don't think the stripping of manufacturing subsidies in every purpose and those funds to achieve a national goal is necessarily very persuasive. the first thing to do is put a price on carbon in a substantial in predictable ways that all companies can respond and we can get the same in the direction we need to go. >> host: we have a few more minutes and i have to get to canada. i found the canadian section later in the book really interesting. again in light of modernization. it's very clear from what you write that prior to keystone xl, xm was infuriated with the u.s. approach to canadian imports because they're from a tarzan finance both you and i know, energy intensive to the start huge amounts of greenhouse gas emissions is an extraction process. but now, i guess the keystone after the book was written kind of that's right to the heart of that. you know, obama rejects the keystone pipeline heard environmentalists were furious because of the climate change issues. i am assuming that he would conclude that exxon is also as furious as it was back then. >> guest: i would just think they to quite know what to do with the keystone pipeline because in their book it is so irrational that they almost can't overcome their own sort of indignity about how disconnected the politics of the pipeline is from the underlying question of climate change regulation, the tarzan's for the oil sands and on the global oil market. the keystone pipeline is a continuation of things made earlier. it's basically just trying to attack the problem. book, even environmentalists would admit, i am sure, that if they could enact at universal priceline carbon as the basis for addressing climate change and the dangers, they fail to do that. they couldn't get a bill to congress comes another that understandably to keep issues i've been looking for opportunities to call attention to the problem and keep challenging the status quo. they have chosen the oil sands because it's available, not because it is their preferred solution to global warming. but they've made an example and basically they are trying to leverage the unpopularity of pipelines in general and not in my backyard politicscommon in the united states to keep this issue moving. and you know, from canada's perspective i'm sure it's aggravating from the oil industry's perspective it's definitely aggravating because the pipeline that would otherwise make economic sense has been punished for a campaign reason, not because of some policy framework overall. and i mean, the truth is that if keystone -- and as soon as this election is over, either president obama would reverse the judgment or get through this campaign one way or another or the romney administration will build a pipeline. that and $3 for a cup of coffee at starbucks is my prediction. even if keystone were built, the canadians who just export to china. it's actually not that big of a deal. a host of the greenhouse gas is going way. >> guest: and less candidate changes the fans. >> host: thank you very much. i really enjoy the conversation. congratulations on the book. >> guest: thank you very, very much. >> write an essay transactional process. writing this since reading. it goes back to that question about, you know, tree felling in the forest if there is no one there to hear it. you know, if you have for any wonderful novel, one of the parts of the process is you want readers to be enlarged and enriched by it. and you have to pull in everything at your disposal to do that. >> bryce hoffman covers the auto industry. his book, "american icon" explains how ford motor company overhauled its operations and made itself the only one of the big three automakers they didn't need to a government bailout. he spoke about the book earlier this year in michigan. [applause] >> thank you very much for coming in thank you for watching, viewers at home. i just wanted to start out by talking about how this book came about. i've been covering ford motor company for the detroit news since 2005. and from the beginning when i started covering for it, i knew that i was really witnessing an incredible story. i didn't know how it's going to win, but i knew was happening in dearborn was either the death of an american icon or its resurrection. embolus privately rooting for the latter is going to write the story either way. so as i followed the two-day event of a turnaround for the detroit news, i also in the back of my mind was writing this book. and in 2010 when it became clear that ford had turned the corner and saved itself and data without taking a taxpayer bailout i might add, i approached bill ford, junior, chairman and ceo alan mulally with a proposal to write this book to tell the real story of ford's turnaround. i really felt this is a great american story at a time when so many corporations have kind of gone to washington with their hands out and asked the american people to save them from their mistakes. here is at least one company that had taken on its own problem and fix than the self-importance of up by his bootstraps the way we were all taught things were supposed to work. i thought it was a great example and kind of a different sort of story from a lot of that negative news we hear so much from the business world. i also thought that there was a lot that other organizations and companies and other organizations could learn from the fourth story. what i had witnessed here in dearborn was really one of the most amazing transformations i've ever seen of any organization and i think america -- you know, taking a company that was really a company of war with itself and turning it into really a model of teamwork and efficiency and really kind of proving to the world that at least one american company could pick itself up and compete with the best in the world and win. so you know, i made the pitch that the best way to tell the story was that they would let me tell it and all. i asked for access to the comp any, to all of its executives, board members, company documents. and to their credit, ford understood that. i told them i won't give you any say in how this book turns out, but we'll know it's a fundamentally positive story and it's that much stronger if you let me tell it in its entirety. and they can't do any kind of let me inside a glass house to see how this all happens. i can tell you what even as someone who has spent the past seven years of his life following forward every day, i learned a lot. there's a lot that happened behind the scenes that nobody knew about. there was a lot that happened behind the scenes that people in the company when they heard about it were surprised about. and that is what i tried to get to in the "american icon." so i thought that i would start just by talking about how i went about researching this book because it was a little bit of an unorthodox process. most of the people who were central players in the story still work for me. i wanted them to be able to speak candidly to me about the struggles that they went through to save this company. and so i made the same do with everybody from bill ford junior two people i talk to on the factory floor. and now with this, anything we talk about can be used in this book, but i won't identify the names of anybody whose torso was. the only time that will directly quote from people is when i'm reconstructing conversations that have been and that will only be when i'm able to talk to benefit people with direct knowledge of those conversations. and those are the ground rules that lead most people to feel like they could open up a little bit more than if they are talking to a newspaper reporter and anything you say can and will be used against you in the court of law with your name attached to it. and the other thing was there's one point where he broke from that and that is in the final chapter of this book. at one interview with alan mulally out of several a day for this but i asked them to do it on the record so to speak because i wanted him to be up to speak to you directly about what he experienced in what he learned and what he thought the big learning of ford's turnaround work. so that was the one exception to that. and i guess what it's like to do is for people who haven't read the book, just kind of go through some of the different high points in the fourth story to give people an idea and talk about why i think these were important. so i'm going to start at the beginning if you will. which is, i think an important point that i wanted to make, did much to dwell too much in force history except the books have been written about ford motor company and henry ford. but i thought it was important to make a point about ford. and that was that ford was not the famous general motor and chrysler. it hasn't unique issues. searches for the briefly like to read the opening paragraph of the book, which kind of addresses those in a nutshell. while many ford motor company's problems are shared by the rest of the troika in the dearborn also face challenges on its own. for as well as have not begun with the arrival of the japanese 1960s or the oil crises of the 1970s. the company had been struggling with themselves and henry ford started on june 16, 1903. it invested massively in game changing products and then did nothing to keep them competitive. the locals a personality to form a larger-than-life figures, but drove away the talent needed to support them. it allowed a cost of corporate culture to eat away at the comp me from the inside. these are the birth defects that can be traced back to the automaker's earliest days. henry ford like to boast he created the modern world. in many ways the head, but it also created a come to me that was worst enemy. i think anybody who has worked at ford or spent time at the company in the years before its recent turnaround is just how true that is. i mean, as i go on to describe, this is a company where time after time, going back to the days of the model t., they've really hit the ball out of the park with one product. you know, they just didn't invest in that product. they didn't keep it competitive and make a pass by other automakers. they did that with the model t. and the ford taurus in the 1980s. who is also a company where there is just really ramping careerism, where people put their own careers ahead of what was best for ford in the bottom line of let alone the customer. and you know, some of the stories i talk about in here as i was researching this book sort of toggle the mind. there was a decision of one point a few years ago about a product, a small car very competitive and actually ended up becoming the siesta on sale today. it was a visually designed so that could not be sold in the u.s. because a person in charge of the division of the time didn't want the u.s. division to get the color and get the benefits of that because they were competing for his would be the best so as a company that wasn't competing with toyota or general motors. it was competing with itself. and obviously have a lot of people here or in the shadow of world headquarters know that they can't meet that by the middle of the two cousins was really headed down the tubes. one of the things that i discovered, you know, working on this book was just as serious a situation had become. by the summer of 2006, the board was actively looking at bankruptcy. they were looking at private equity firms, kind of circling around dearborn like vultures trying to pick up parts of ford. the same elected taking it private at one point. and nothing seemed to be working. though ford had really tried to turn things around, but he just couldn't cut through the culture that was so entrenched in dearborn. and so, in july 2006 there is a pivotal board meeting at which bill agreed to step aside in make room for someone else to take over. as he said, which i talk about in the book, it's really a moving statement. is that i have a lot invested in this company come but the one thing i don't have invested is my ego. he stepped aside and they began a search for someone who could save the company. and as i talk about, did already tried to go after the big names at the out of en route recruit that is the advantage then turned on so they looked aside the auto industry and the guy whose name is at the top of their list was alan mulally, so i will just read a little bit about mulally and where he was coming from. as the head of the boeing co.'s commercial group, alan mulally has spent the last 10 years fending off disaster after another was somehow managing transformed the divisive culture and trade model of corporate collaboration. under his leadership, boone had survived an unrelenting support by the airbus industry with dominic douglas and sales have slowed the terrorist attacks on new york and washington d.c. in 2001. mulally turned what could have been a fatal blow into an opportunity to fundamentally transform the company into a leaner, more profitable enterprise. by 2006, the jet division was on its way to record sales, revenue and earnings. mulally credited to a team-based approach he called working together and it learned many of its principles from ford motor company. mulally success of going to start making them something of a corporate celebrity, but he hardly acted the part. so that's like an older version of richie cunningham, which people in the room who is seen in probably know exactly what i need. the wholesome protagonists on the television sitcom happy days. mulally at the same reddish blonde chair, put a chain and she was grand only mulally suggested he knew more than he was letting on. it was the only hint there is something were to hand him his awe shucks backslapping demeanor suggested. it was as though he had an ace up slate whose only barely managing to conceal. otherwise he came off like a boy scout seasoning his conversation with words like neat, cool and absolutely. while most executives favored tailor suits and expensive cufflinks to trademark a tour of going with the wind breaker. his idea of dressing up with a blue blazer and tie and set up an expensive pen used as a cheaper attractive ballpoint he could buy by the box a major is smiling jumbo jet under his name whenever he signed it. the seattle times called him mr. nice guy. tran was like was evident in dealings with other people. a formal events he showed little interest in the rich and powerful referring to mingle with those less interested in comparing resumes or other measurable is. he asked more questions than the insurgency and jim mckinstry said about the legacy of the world leaders are waitresses. he may point of remembering something that everyone he met them in often astonish underlings by recalling some scrap of information about their lives they shared within months or years before. he was also big on hudson had even been known to plan attacks on the cheeks of men and women when he was in a particularly exuberant mood. all this new mulally adored and kept his rivals of balance. they could never quite figure out how much was the night and mulally like to keep it that way. so bill ford pried mulally here to michigan and i just want to read a little bit about their first meeting. on saturday, july 29, 2006, ford senecal stream to pick up allowing in seattle. on the way to michigan he pored over the thick file of data he collected on the company at the research you'd be doing him for it since the first locally generated a myriad of questions and he was about to meet the man he hoped could answer most of them. he began writing questions on the back of a copy of force most recent annual report. the plane landed at will is an airport built by ford during world war ii and the company was in the balmy business. when mulally stuck his head into the humid summer air come they found a driver waiting for next week ford expedition. the man took his bag and opened the rear door, the mulally climbed into the front passenger seat. as the big sport-utility vehicle navigated the winding road to the woods near ann arbor, mulally found himself growing excited. he tried to temper his enthusiasm. i'm just here to gather information mulally said i'm not deciding anything. mulally admired the leafy estate and recognized he was in the domain of the truly rich. as the expedition pulled the front door county was surprised that the lord of the manner and a shorts and polo shirt accompanied by his wife, lee said. mulally surprise of force by crediting him with big hugs. that gave mullally a brief tour of the grounds and invited him inside. they sat down on couches in the living room and start of the football. they post new the seattle seahawks and soon got down to the business of the business itself. four started by outlining history of this company from a sunny day henry ford through the heady days of hank the deuce to the debacle that was jack nasser. culminating his own frustrating efforts to say that he talked about the competitive landscape railing against toyota which he accused of working the japanese government to manipulate began an order to boost exports and other practices. he told mulally the upcoming 2007 negotiations with united autoworkers to be critical to the company's survival and outlined the concessions he hoped to rush for the union, which has become a competitive rules and enter the jobs bank were idle workers continued to collect benefits from the centers for years while waiting for positions to open a open a period of four cannot get concessions and i'd have to move most of its production to mexico. mulally seemed hooked. clearly there were a lot of challenges and yet a lot of questions that needed answering before he would consider taking charge of such a travel company. he was a chance to fight for the very soul of american manufacturing. if i'm going to do this, i need to know everything he thought. so mulally began his interrogation. why are there so many brands? what is the strength of the dealer network? via route these different organizations? why haven't you been leveraging global assets? ford was taken aback by mulally's intensity, but he asked every question put to him. he told mulally about the dream of building a house of branded and knowledge they were too many dealers and told mulally about his own push to globalize development. until we do that, nothing else will work. our costs will be too high, product would be too slow goodridge is going to fall further and further behind. why haven't you done it already mulally mass graves for expanding on a tuba was getting pushback from executive seaside is a threat to their own regional breakdowns. if mulally took the job, he would have to find a way to overcome the existence. that would be the neighbor to get everything else done. if you can't do that, for ticket that will just be whistling past the graveyard. the internal politics troubled mullally. yes bill ford for more details. ford grabbed a piece of notebook paper and sketched out the organizational structure of black and come a family tree of sorts which showed who reported to who. the operating people are quicksands ford told mulally. i need help. mulally willis for his problems were serious but did not know they were this bad. bill ford was clearly an oversight and did not try to get to it. mulally this but i self-awareness and can of the word about portrait for this painting of the company. if they had a chance to save itself, this visit last. but as the two men matt and i talk about this more in the book, mulally couldn't stop himself from using the word we. he kept saying this is why we need to do to fix the company. how about if we do this? at the end of the first inning with go forward, he was hoped. he really wanted to me to dearborn and try to save ford. there is a lot of wrangling back and forth to get them here because llosa wanted to stay a boeing. but in the end, as we know, he came to dearborn. i want to jump forward and talk a little bit about mullally's first day the world had orders here. at 2:20 p.m., we then pulled into the garage and a fraud headquarters like a smuggler. as i started down the rows of bosch washed and jagr is the land rover is the preferred risa for his executives to make sure none of them were about. mulally noted the lack affords them against. bill ford was waiting when they pointed to the entrance way. he was a little surprised to see is the ceo of march for the land rover wearing a blue blazer and a button-down shirt teletype. this is dearborn, michigan, not silicon valley. mullally was about to establish a new normal. he was wearing but was soon be recognized as is customary uniform. and it is to come he might accept that the way shirt and red tie, maybe even gray trousers. a mulally but not on a suit, even when he visited the white house. waiting next to bill ford with karen hansen coming out vindication executive he would be to meet a handler slapped a blue oval pan on his lapel among the two ministers for a photo shoot in the company lobby. once again mulally is overcome by sense of history and felt the lump in his throat as you say that the model t.'s, mistakes and other vintage fours. he smiled as he passed a portrait of henry ford. serious employees balked by one into the burning guy was posing with bill ford. when they were done, and the group heard into the executive elevator and ready to the 12th floor. mulally followed for which occupied the northeast corner. he pointed to mulally so not just a few steps away through the two suites are separate only by waiting room. i'll be right here when you need a ford said. the company's senior executives are crammed into bill for its private conference room. the overseas chiefs were listening in on speakerphone. at 3:30 p.m., ford and mulally boston in the room fell silent. ford explained that he was resigning the ceo and introduced mulally as the new chief executive. as a tax, all eyes were on mulally. he did his best to smile back despite the growing intensity of their stairs he had never felt so scrutinized. mulally.about shouting to a mental and the seriously can executives, don't worry, it's going to be okay. but he restrained himself. mark field guide mulally's outfit. is here to meet the press and is wearing a sports coat. this is going to be different. his first impression of mulally with you as corny and not the only one who felt that way. mullally's farm boy demeanor surprised many in the room. he doesn't look like a hammer. he'd he'd gotten is that in google mulally before heading to bill ford's conference room. bannister was hoping for some of the demographic. he was fed up with the dear born and thinking of quitting could elect mullally, but wondered if he was tough enough to do what needed to be done. mulally seemed more like a politician then mark scholes. why did you leave knowing he asked? this is an opportunity to help another global icon mulally replied, at least one person authorized. it is not a warm reception. former senior executives for a cutthroat corporate culture. they were accustomed they were custom designed the new king can use them as they plotted to nice. mulally was an outsider's very presence testified to the fact the bill for the lost all confidence in his management team. they did not take long for someone to note that mulally do nothing about the automobile industry. we appreciate you coming here from a come to boeing, but you've got to realize this is a very, very capital intensive business with long lead times on the technical officer richard parry jones. it's made up of thousands of different personnel have to work together flawlessly. that's really interesting that mulally replied with a smile. the typical passenger jet and is just one of them fails the whole thing falls out of the skies, so i feel comfortable with this. that shut them up, the mulally got the message. they don't believe i can do this he realized. i need to convince them i get this. that's really not just a case of ford, but that is the case at gm and chrysler, too. there were a lot of jokes and 10 about the return of the car with tailspin or the flying car. there was a lot of skepticism. the key to mulally's turnaround at ford was really changing the way the company operated at the top. the way that he got through kind of all the nonsense and all the obfuscation and the faxes by this kind of famous thursday morning meetings, we made all the executives come together, sit around a big roundtable and go over all the information that the company's operation every week and it was all color coded. green then everything was fine, give him that something might be in trouble and fragment a problem. there is no debate about whose fault it was our way was this way. they would discuss how to fix it later. it was to make sure the new was going on so they could fix it. so the problem was that once they learn how to do it for the next few weeks all the flights were green. everything seemed to be fine. and yet, mulally new ford was losing billions and billions of dollars. so finally, after a few weeks at these meetings, mulally asked everybody, isn't there anything going wrong with this company? were going to lose billions of dollars. something can't be right. the next meeting was a pivotal point because after that, mark fields, head of ford's americas division decided he was going to take a chance with honesty. at the time, a lot of people thought mark fields was going to be out pretty quickly. so the class has was the most obvious threat to the new ceo, so would only be natural to take it out. that was how things have been done in dearborn for as long as anyone could remember. those thoughts were weighing heavily on field's mind as he prepared the slides for the next bp are meeting. when he got to the one showing the program seedpods. as usual, they were all green. he stared at the lines of the new ford edge due to launch in a few weeks. production that are to be done at the company back sharing, but there is a problem. the day before fields received a call from denny fowler, for its quality chief. his people assigned of them is certified and was okay to begin shipping cars to dealers for the first word to be loaded onto the train in canada as they spoke. now fowler in form fields for a test driver had reported a grinding noise in the suspension technicians examine the were unable to figure out what was causing the problem. we don't know what it is fowler told fields, but we need to hold the car until we find out. the patch was for its next big thing from its first crossover and squarely at the hottest new segment. feels me with its plan to launch may bring down to get unfathomed raft of new ceo. then again shipping a vehicle with a potentially serious problem with certainty do that. it was the end of the year, the time of ford executives traditionally pulled out all the stops and have whatever corners may be necessary to hit their sales targets. but that was the old ford peered mulally had our demand clear he did not on any vehicle ships that were not ready. okay, let's hold the launch told fowler. i don't like it, but i want to be safe rather than sorry. it is a tough decision, the fields now face an even tougher one. it was wanting to delay launch. telling everyone about it in the next thursday meeting was something else entirely. before mulally would have been like throwing chum at the shark infested waters. besides, maybe the noise to turn out to be nothing on the crossovers of the other way to share rooms before anyone outside his own team to even notice the delay. but then again, maybe not. but by wednesday, fields is going over slides with his new head of manufacturing, joe hendricks when the site popped up on the screen he looked stunned. he pointed to the red rocks next to the ford edge. are you sure you want to show that he asked? joe, is there bad? yeah. well, that will call it like it is. .. i wonder who will get the americas. suddenly someone started clapping. mark, that is great visibility. who could help him with this? to send his quality experts right away tony brown forced vice president in charge of purchasing to conduct of the relevant suppliers and ask them to check their components. now we are getting somewhere, he thought. malawi would later call this meaning of the defining moment in the turnaround. he always believed he could save the ford motor company. now, he knew he would. all he needed was a planned and as many people know keep his plan together on a card and was really simple. it was the restructure the company to profitably to operate profitably at the demand ex of the development in the cars and trucks people actually want, finance the planned and work together as a team and the rest of the book pretty much tells the story of how they did that and how they were able to use this crisis without taking it to the bailout without going and asking washington to fix their problems for them, doing it themselves their old-fashioned way and that is the american icon. so -- [applause] thank you. with that, i will take questions anybody might have. >> they are trying to become globally and his efforts in the asia-pacific and south america and europe with your opinion, how are they when they stack them up? >> welcome you know, a big part of his turnaround strategy was bringing the company's global operations together which have really put it in the second company around the world almost since its founding and now it's operating more as one company that there's a couple of problems. one is ford was leaked to the game in asia so that a lot of ground to makeup to become the biggest car market in the world and europe has become a problem for all automakers even the european auto makers because europe is going through the u.s. was the winter. the debt crisis in their economy is collapsing and people are scared to buy cars and spend that much money so ford is struggling with the rest of the industry in europe right now to, you know, hold its own. but i think it's important to recognize that all of ford's problems haven't gone away. the problems in dealing with today are the problems that any company deals with in the course of doing business. it's not fighting for its life anymore. it's not dealing with the same problems that halted back for decades that they've never been able to overcome it. that is what is different now. >> i'd like to thank you for the irony in the book regarding the breach because a breach brought forth from general motors and in the book let me back up the irony is the aircraft industry because when they left ford she went to twa and put them on the map but when he can't afford in his what he says to about himself the best thing that happened to ford motor is the day they hired a breach. does he in your interview even suggest the best thing that ever happened to ford motor is that they hired him? >> i think he knows it. there is no question that if he hadn't come to the company was going to go out of business but it's kind of funny because i think one of the fundamental point i try to megabucks and it's a bit of a paradox is that ford wasn't saved just because a guy rode into town on a white horse. a lot of things he would do to turnaround work plans all people have already come up with that they were trying to implement. but on the other hand, if he had didn't read into town on a white horse ford wouldn't have been saved because they would have never come to fruition in the time he had left. i know that at one point when i was interviewing people for this book i was toying with of the head of the product development for ford and he really had this whole kind of strategy for globalizing product development in place before malawi can on the scene today he couldn't get anyone to take him seriously they started down this road already. but i asked my said derrick, what would happen if she hadn't shown up? would you have made it or run out of money first and he was quiet because he said i don't know. i think that's how you have to look at eight. >> i am fearful that an engineer at the motor company i have two questions if you could. what is your comment on the appropriateness of the compensation and did you ask him why he didn't with his family here? >> sure. it's funny about the engineer said in ford motor company. all i remember the first time i ever interviewed him at any links was about six weeks after he started and came down to downtown detroit to meet with us of the detroit news he's got to keep that in mind. remember. he was talking about how she was going to empower in juniors which i assure you experienced firsthand. but those are good questions. i mean, he is one of the highest-paid executives, he is the highest paid executive in the auto industry, and i asked him about that. he believes that it is a testament to his lawyer that he is contributed to the company. on the other hand of people draw the beagle lost their jobs in this period and it's hard for some of those people to see him making so much money. as far as moving his family here i think that's a good question. to be honest folks key is a seattle likes. he spent 30 years of his life at boeing and when he is done at 40 is going to go back and retire because that is his home, but he knew she was coming here to the job and going home. >> anyone else? >> in your interview swift allan mulally in knowing his previous boss is now in jail, in your conversations with him, did you escorted he somehow indicate that he was upset with losing the top all the jobs at boeing? because my understanding from reading the 21st century jeter about the triple seven is that allan mulally tried to fight for that job and got set aside. is that a fair assessment? >> i will be honest if you ask him that question, which i have come he will tell you that he's not. he's just happy with how things worked out, but i think he is. everybody thought he was next in line to take over and the reason he didn't become the ceo of boeing is because in part the former head of boeing who was his boss that he had nothing to do with it was involved in a corruption scandal what the pentagon and they didn't want that cloud of landreneau for them so they made a condition with future business bringing in an outsider. this is a guy that everybody thought would save the company. and he didn't get the top job. i think that if he had obviously he would still be there and not here in dearborn. so for the michigan economy that gets a good thing he didn't. [laughter] >> box anybody else? i had a quick question about his relationship with the detroit area does he have part of this area and in seattle because i've lived in both places. i grew up hearing and was born here and i lived in seatt and experienced the technology seen and see that area as very influential but this difference is if he lives on mercer island how does he somehow transfer that to the beach area? have you talked to him about how she could do that? >> i think it's clear that he came here to fix ford and not to fix detroit. i think that he certainly sees it is a stronger benefit to the local area but the reason he came here is to fix ford. anybody else? have you received any response from the management of the way down? >> i have talked with pretty much everybody in the book and i would say that to sum it up there is at least one thing in the book everybody doesn't like and it's everybody's different but it does a pretty good job of telling the important story. it's uncomfortable to be under this sort of scrutiny, but you know, as i've told all of the people that are talked about in this book, you know, it was important to be honest and looked at this thing in its entirety. >> to piggyback on the question what did bob kaine and ron gettelfinger think of the book? >> i haven't heard from bob or ron but it is obviously a big part of this book and what the uaw did with mulally to change the rule of the game and allow ford to build cars in the country and profitably was the key to turning the company around and getting it to where it is today. just before the microphone. >> i was wondering, it was no surprise that to people in the industry that the although business was very inefficient and competitive, and the fact that the government was able to turn general motors around very quickly i think is evidence of that because they brought in people in the investment business. why do you think tweeting you have an opinion as to why it took so long for built ford tough to find somebody that could handle the job? it took an outsider to take a hard look at the problems that all of these companies were facing. you know, the way that i like to explain it to people is -- and i know a lot of executives who try to save ford and other companies before hand and it's like people were under the hook tightening the belt and changing the spark plugs and things like that but nobody believed that you could just pull the engine mount and rebuild it from top to bottom without killing the whole enterprise. but he didn't know that you couldn't do that. he saw that it didn't work and he was like we are going to fix it then. i remember one of my first interviews with him. a lot of people in this town say what do you know about this? you build airplanes. why should people think that you are going to be able to fix this? said you know, your right. i don't know anything about how detroit works, but i know that it doesn't work and that is the key. when you talk about gm being saved an interesting thing is as an anecdote i talked to someone who was in a meeting in the government of a bill task force in charge of saving gm and chrysler they went to a meeting there shortly after the government bailed out of the companies, and on wall in the meeting room was spearman mulally's plan this card was on wall and they were using it as a road map for fixing gm and chrysler. is it a lot of ways a lot of the learning about came from ford's turnaround were us gm and if you look at what they're doing right now a lot of it isn't doing exactly what was done in ford. >> one more. last question. >> if you think about he really has to fix detroit as well or he will close the capabilities in this area. if detroit is so close to this crucial bankruptcy hiring the city manager doesn't he feels that if you were to lose that capability in detroit that he would lose a lot of his technology and just engineering resources here that are so localized? >> i think they want to see michigan be strong and they want to see all of michigan the strong. ford doesn't really have a lot of operations actually ayaan in detroit. but the whole reason needs to be strong to support these companies through education, through job training. right now there's a shortage of engineers and things like that. even getting people with the skills to work on the assembly lines, these are not jobs that can be filled with people without the right training. and so, obviously fixing the problems of southeast michigan as a whole are critical to the sustainability of the auto industry. i think that -- i don't want to keep people that want to get a book signed waiting for too long, so i think we will start there. thank you for your questions and for coming. thank you for watching. [applause] writing is a transactional process. writing assumes reading. it goes back to that question about three falling and the forced to leave to foresters no one here to hear it. if you have written a wonderful novel then one of the parts of the process is the you want readers to be enriched by it, and you have to pull on everything at your disposal to do that. washington as the author of deadly monopolies the shopping corporate takeover of life itself and the consequences for your health and our medical future. she writes that 40,000 genes have been contented and concludes corporations, not people, control most basic process ease of human life. >> good afternoon. thanks for coming out this afternoon. i know that there are so many events taking place all over the campus, but this is a very special one. my name is pat thomas. i teach health and medical journalism at the university of georgia's great college of journalism and mass communications. so pleased to see so many of my colleagues and students here today. the author. washington is very special to me. she and i met 20 years ago when we were both at the harvard medical school. she was on a solution to there and i edited the harvard letter. we connected and we have been friends ever since. it lost time that she was a the university of georgia she was touring behind her remarkable for stomach medical apartheid but on a slew of awards on the national book critics circle of the best nonfiction of the year award. we are pleased to bring her back this year with her second book and that have made her visit possible the university of georgia office of diversity, the graduate programs, the professional program for the journalism department and my own graduate program in health and medical journal some. is a journalist who morph into an author who gained an international reputation as a medical moral high thinker. she is the voice we need to hear in the public dialogue and on a practical level she helps explain to us why medicine works the way it does and why tall costs so much. let's welcome harriet washington [applause] >> good afternoon. good afternoon. [laughter] all right. thank you so much. is my heartfelt thanks for bringing me here yet again. in more ways than one coming here is about coming home and for that i am very, very grateful. i have a lot to say to you today. i'm not actually going to get to all of it, but i just want to caution you that if i should skip over a slight as i am speaking and it's something you were fascinated by be sure to ask a question about it in the q&a section. also i'm not in the habit of reading my slides. you are academics you can read them for yourselves. i'm interested in touching upon things hopefully will have a little more depth on what you can read. that is what i'm going to talk about my most recent book which is actually a critique of american medicine that's a multilayer critique. but i am principally concerned about is the ethical and moral consequences of the corporation's alliances of medicine. although they may or may not have been well-intentioned, the consequences seen and unforeseen have been disastrous for american medicine for all the fuss and i hope to eliminate exactly why. i liked data. i'm going to try to eliminate wide by showing you figures to show why medicine man not be exactly the way they appear either in the congressional media or in medical journalism itself including peer reviewed medical journals. but first i want to go back in time a little bit and think about what medicine once was. i'm not pretending there is any kind of golden age of medicine during which there was no grafting after money but as a culture of madison was once very different from the corporate culture. it was probably an illustration of that and the fight against polio which opened up. in the march of dimes. i remember as a student coming to school every fall and we have apprehension about who would not be there, but desks would be empty. there were always kids missing and they often had polio. and when i got a fever orchil or stomachache my parents first thought was always i hope it's not polio. polio in many ways occupied the area of culture that a document today to read as a scourged, it was mysterious, carrying out parts of the population and we were hellbent on trying to put an end to it and we did, not one but to actually. he appeared on the show and they asked him what are you going to do now? we have this vaccine devotees went to want it. the demand is went the incredible. who holds the patent? he said the american people i think. could you patent some? this was not unusual. this was the mentality and the american medical research culture. the feeling that grubbing after money, seeking profit, the maximum profits from the patents on the active molecules and medicine was not really noble calling of research. it wasn't what the research is all about. it attracted -- research was interesting in that it required a long arduous course of studying. and it attracted. brilliant people. it was very competitive and very difficult and yet it didn't go very well. these people were not motivated by money. they were motivated by things, the intellectual competition. they wanted to be seen as benefactors. they wanted to win prizes. these were all the motivations that drove them and drove them very well and to the modality seeking a lot of bad answers to our medical crises. penicillin, st etds, streptomycin, of course the polio vaccine many important medications were devised by researchers who were not concerned about money. they worked in universities and universities themselves or different. they couldn't have looked more different. corporations still seek to maximize their profits. universities were actually centers of science in the public interest. they were centers of research at the was clearly focused on the society beat a medical, social, what ever, and it attracted people who were drawn to that role. so the university had a unique role in pursuing the public interest and there was true of medical research as well. in fact there were laws and regulations that band the universities from using the discoveries made with government subsidies but couldn't license in the corporations or sell them to corporations in most cases, so there was a very, very clear member and ten corporations and universities. it's not there anymore. i'm going to talk about what happened when it dissolved. so, one of the consequences also maybe not the most important consequence is the cost of medication. i think i noted here that when medicaid and medicare were passed in the 60's it's interesting there was no provision there for the cost of medication, the health of the elderly and the encore paid for their drugs. why? because drugs were so cheap. it wasn't needed. drugs were cheap because university researchers working in the university's device to them, they were then marketed and there was an animus against this and there were some in that that had a hard time when he actually sold his patent to the university he then took it back because he was afraid of what people would think if they knew that he had sold his drug to a profit-making company. so, drugs were cheap. they are not cheap anymore. there's also ha a innovation. if you look at the patau figures you would find that depending on the year, the trend where hundreds of drugs were devised every single year. hundreds of new drugs. and yet there was a mentality among the corporations, and among the legislators for whom they were whispering. that that wasn't enough. because there were lots and lots of molecules that were not being made into drugs. many, thousands of them as a matter of fact. and so there are rows and ms that we had all of these patents on drugs lying fallow and there wasn't anything with them. we need to have hospitals and medical centers partly with corporations so we can do for love of these drugs that are lying fallow. rich was a center of indiana, and he was a senator who listened and he began complaining on the floor of congress that we have got 28,000 patents made in the universities that are not being developed. they're just lying their collecting dust. we spent $30 billion collecting. 30 billion-ton 1985 become and so he sought to convince his fellow congressmen that we need a wall to ease the corporation of universities and she was successful but he was successful under a very strange pattern because initially it was voted down. initially congress wanted no part of it and more importantly derry to become very powerful senators were against so following the lead senators voted down. but, even though he lost which bayh went on to lose the election, not a good year for him, and jimmy carter was a lame-duck. at the end of the year there's an emergency session called specifically to pass the financial legislation, and bush wanted to reinvigorate the law. he wanted another try at getting this act passed because bob dole was his partner. but he was worried about long, he was in opposition to him, and for his part he commented to people i think i will give him a break. he's leaving office. he's been a good boy, so he calls him and says you know what to take that patent bill. you've earned it. very interesting language. he tells him he's got the bill passed before there is any vote. but he was right because of the very end of the year in the last hour the bill was in the past. they would sell to the corporations. now they were going to have the 28,000 patents made into medications with all these new medications with all of these off. not exactly. because what happened is that the university's and corporations did indeed partner and they did indeed make a lot of money by doing so, a lot of money that did not translate into more and better medications for you and me and part of it had to do with some cultural changes in medicine the resulted. unfortunately madison began to take on more and more of the coloration of the corporate mentality. now researchers like the corporations became jealous of their patents. we can't work together with the university of researchers on the same problem because we want to have the patent only on the patent can we sell it to the drug company and make a great deal of profit. we cannot share of information with them. any collaboration must be done internally, and even then the profits are actually lawsuits when they are set to collaborate. also, when drugs were the highest and assigned to corporations, the corporations now paid researchers to do research. some of the research departments of many medical schools begin to look more and more like a department of a corporation. they are receiving the funds for research, the research dollars are actually paying the salaries of the researchers. where did the loyalty why? was it with the american people or the loyalty with the corporate need to maximize the patent profits? also, what happened to all of these new medications? to the of thousands of drugs a year instead of hundreds? no. instead of using the innovation decline. can anyone is approximately how many new drugs were accrued last year? there were hundreds of drugs accrued in the year before 1980. during the ball park. there were 21. the year before, 26. some years have been even more because you can see it in 2000.. innovation has dried up. so come on to become although this change in medical research was sold on the basis of having access to new and better drugs we have access to fewer drugs and are those drugs better? are they better? not exactly. one can't generalize that important drugs have been developed but a lot of drugs that have been developed are neither new nor are they better. there are many more copycat drugs that have already been tested and approved for indication and the corporations seem to patent the don't want to move the grip on the patent covered a lot to maximize their profits. what do they do? to take this molecule and they tweak it slightly. when i see slightly i mean slightly. the changes. is it a molecule are left-handed and right-handed version? they see if the right and the diversion would also work or maybe an extra of the left and right handed version might work. if so they have a new drug and a new patent. so this is not exactly a new drug is a copycat. we have five fewer drugs devised every year and they tend to be for more trivial disorders i'm glad to discuss a bit later. so the bayh act was not the only law passed in 1980. also, there were the decision by the supreme court that for the first time a product of nature can be patented, a living thing can be patented. now begin to get patent held on a gene on a genetic sequence, on a biologically important animal programmed to always develop, on a plant. so the fact that something is losing was no longer to patenting. things had been patented sporadically for the rauf and legal challenges. it's eliminated the legal challenge. i don't know if any of you have read about it or followed it, but very recently the supreme court said that the case on the breast cancer gene patents. these patents could be affected because of the law passed in 1980. liked the fact that made it much easier for the universities to partner and john, a patent was actually taken out on this human being the product of his body even though his doctor never told him when he moved his spleen she is doing it for research. he told him he was doing it to treat his leukemia. when his doctor to cut the spleen and isolated she took out a patent on the product of his body, a very pretentious president i think. i love this quote. it really sums up what happened since 1980. the use of science this appears to the detriment of the interest of society. it's now the patent at the center of american medical research. what do i mean and i say that drugs are we too expensive? i suspect you already know without me telling you that drugs are too expensive. but even on a was completely staggered to see how extensive they are. we're talking about hundreds of thousands of dollars for treatment. how did this happen? drug companies want to deny their everyday expenses. they explained they have to be expensive because they invest so much money bringing them to market, and in 2001 to report that sort of the interest by the pharmaceutical manufacturers claiming every new public can cost $102 million to bring to market. i was advised reports to a billion dollars. two years ago it was upwards to billion dollars. on the claim by the drug companies is $2 billion for every new drug on the marquette and that's where the medications are so expensive. economists looked at this and said no i think the figure you want is closer to a hundred million dollars. they said that's not chump change its ought to billion dollars either. there's 150 come 240 million public citizen's even lower, 110 million. so, why the white diversions, why do they claim the responding to billion and why are the groups providing low-cost indications to people here claim that it is so much cheaper? because the report is deeply flawed. it's not accurate. when they look at the cost of drugs, they look at the very atypically expensive drugs even the drugs that are brand new they are not copycat drugs the spoke of, the new molecular entity of the totally different totally new drugs. those are expensive and rare most drugs do not fall in that category. they also get a small subcategory of the drugs, the few for which no money in its development. that is also rare because the government will invest money in the research and university and when the researchers find something that is worth defending only then do they stay in as a partner and start controlling the additional research needed for the approval of etc. so, a few drugs, relatively few don't have that initial support so they look at that small segment also the report didn't correct the industry from the of the largest of any industry in this country and they are so high that for every dollar they spend the only lose 66 cents. so these are big benefits and they do not figure into this report. also, the charge an opportunity cost. i'd never heard of opportunity costs before. opportunity costs for by john stuart mill's and in the financial sense that you pay if you surrender to pursue activity in one direction at the expense of another. if i have $10 i guess i'm going to go to the movies with him and by a movie to get ahead in my savings account would have earned interest. that is my opportunity cost. if i had invested for long enough, the interest would have doubled the $10 billion that is exactly what he did in this report. they said these drug companies spend money on research. they could buy a stock in starbucks with that money or on a global hunger relief and they would have benefits from it but they are giving that up to devote their funds to the drug development. isn't that what the exist to do? if these drug companies were to expend the resources and starbucks or global hunger relief they wouldn't be drug companies anymore and that is the opportunity cost does not apply to read what they receive a tax benefits and actually it's not an investment for them to drugs it's part of what they do. the cost doesn't apply. this would cut the remaining figure in half. so we can see how easily you can fall from the 2 billion figure to something that's closer to 100 million that's why the claim is baseless. what do the high drug prices mean? you know what they mean. if we are that we know somebody or close to somebody who can't buy the medication who can't get care, who can't get health insurance or who live haven't had a test or treatment they need? so we know that this is really significant but here it is quantified of it. half the people in this country fall into one of those categories. even those people are employed and have health insurance are not immune because employers have been consistently making employees more and more because of the research -- i'm sorry because of their insurance and medications. so now we have the background and we see what happens and we understand what this was in terms of drug costs. but interestingly, this confluence of industry research organizations designed only of the pages but researchers itself, and this is the thing i felt was deeply troubling and i wonder why people are not more aware of this. chris perish as a researcher at the australian university and he has endured his entire career 20 years to a liver cancer drug is very promising liver cancer drug at this stage 3 trial doing extremely well called pra 88 and it looks promising. he had acquired a corporate partner to was very happy about that. because his corporate partner allowed him to finish work on the drug, it funded his research. he didn't really care, he said, but when he partnered with this group in his university, they told him look, we have to excel the patent to this new pro-forma, this new company. so you no longer own the patent to rely just what the drugs and he did. at the end of the stage 3 trials right before it was about to obtain approval they shut it down. they ended the trial if it were not going to pursue the drug we don't like it and we aren't going to market. why did they want it? the liver cancer drugs and although it isn't a large problem in this country liver cancer is the number three killer globally and there aren't that many good drugs for it, desperately needed. they said we are not interested any more. why? because two other drug companies are devising the cancer drugs that would compete with it in the marketplace. they said we don't want this drug unless it is going to be a blockbuster. it won't be a blockbuster because of the competition of other drugs therefore we are going to pursue something else not worth our time and money to see this to the end. what is a blockbuster rug? a blockbuster drug is usually a drug that takes a net least $1 billion of profit a year. we're talking about a 310 billion-dollar industry. so, that's actually, you know, that's the watershed if you do not take a billion dollars a year it is performing and you are not worth our time. the interest of the liver cancer patients around the globe don't back into the corporate model. what other thing have we seen with devising new and better drugs? are the drugs really better? that all depends on your point of view. the drug companies certainly think so. but looking at it and globally it seems clear they are not better drugs because if you look at the disease that killed people in the greatest numbers across the globe these are the diseases that they are not at all interested in devising. and the answer is very simple. malaria which is quite prevalent affects people who are poor and can't afford the drug is and therefore they aren't making the assessment. though malaria drug recently guess what kind of drug it is its to treat malaria for the wealthy western travelers to help them avoid contradicting malaria. stevan when the drugs are devised in the developing world they are to protect people like us wealthy westerners. succumb if you look at the sleeping sickness i think that is a perfect example because there are only a handful of drugs most of them are as bad as a disease one of them is a compound of arsenic into trees and you don't have to be a chemist to know that that is bad news. what happens is if you are desperate seeking treatment in western africa your -- the drugs may kill you, and i think it's like one in four people like julie bye from the treatment. moreover, if you -- if you're to the point you go into a coma and is a drug cannot bring you back to the brink. it can help people that go into the final stages of the disease. so this is a tragedy to the absolute tragedy. however, a job was found that only not treat people safely but it would bring them back to the brink. this is wonderful. the company i'm not going to name right now because i don't want to spend my time in litigation with the company decided to call it for awhile in partnership with doctors and borders a very good thing the company extra partnered with doctors without borders in order to make sure that people in west africa have access to the drug. but they only did that for a few years because after while it was quite clear that no one in that part of the world could afford thdrug they were losing money. i think it's wonderful that they were willing to do this, they were willing to make sure people had the drug problem of course is in very difficult they did it for short period of time it wasn't nearly enough to treat the problem with a handful of people. so they withdrew from the african market. that doesn't mean --. it doesn't mean that you cannot buy the pharmacy. anyone of us can get it there is no sleeping sickness in this country so why would we need? if you leave it is being marketed for women who have facial hair the commercials come on tv sometimes. if you are embarrassed by your facial hair and don't want to use a razor, get this. it's a cream you put on your face, it's $50 a month with a prescription and will banish your facial hair. so the western women can buy this drug for their facial hair but west africans cannot obtain it and that is what is wrong with medicine today. that is wrong with the corporate partnership. i would take a minute to say these corporations i criticize them heavily. i think they deserve it but i also want to know that they are not in business to promote health no matter what they say, no matter what those heart wrenching commercials say they are not in business to maintain or restore health. they are in the business to make a profit. so i do criticize them, but i have more criticism from the government because the government is a debate is supposed to protect our health and involved here. it's our tax dollars to fund initial research. we have an investment here. as pointed out we end up paying for our drugs twice. whatever the initial development of the tax dollars and when it was on the market we pay the prices. so the government should step in and other countries the governments have stepped in and say the company drugs are too expensive or if you are not going to distribute this drug at a price people can afford, we are going to take that from you and give it to somebody else. that could be done in this country for the radio receivers come for certain television technologies but not medication. so there's a shared responsibility here. the government has a response ability to do this. and why don't they do it? in my opinion this is not being done because of a very cozy relationship between these companies and legislators. the lobbying is completely out of control. the have the highest number of lobbyists and pay them the most pivotal and a lot of these lobbyists are former legislators. here they are cutting deals with former colleagues to make sure that the drug prices don't go down. to make sure that we are locked into paying high prices, and to make sure that they are permitted to sell the trivial medications and ignore critical health problems without any adherents from the government. >> also about the fact there are so few medication for these killers, but part erectile dysfunction we've had 14 drug since 1996. and it doesn't kill anybody, although almost 600 men have died from taking them? so, it's very sad where our priorities seem to lie or the pharmaceutical company's priorities seem to lie >> so of what effect his corporate control research had on the deval the world? for anybody these are the children that have been a result of taking full of light. it was just turpitude in europe and was treated pretty widely peter was given to pregnant women as and a sedative, and for their sleeping problems. but after a while even though it had been improved in europe, the children were born that had a devastating birth defect. everybody knew their articles were even as a kid you couldn't avoid them. this will never happen again. we can never allow this to happen again. now, why were american people affected because there are only 11 children in this country were with this and thousands abroad because of the fda. frances kelsey the test point correctly i'm not convinced the drug is safe. the drugmakers said we are going to sue the fda if you don't approve them everybody else is selling it won't you? they said no we are not lead to do it. and of course americans were safe from tragedy but what has happened today? the picture on the right is also the picture of a baby with this and he also has it because his mother was given this medicine. it is being tested only in the developing world. only in brazil, cuba, other parts of africa, it's not being tested in the west. it's a horrible ethical misstep. it's not only that these people assume all the risks. and none of the benefits of testing. what they have said to me when i asked about it is leprosy is rampant in places like brazil and nigeria so we are doing them a favor with a new drug. no, we are not. because this drug efficient treat these conditions would never make it to these people. they can't afford it. and more to the point of the pharmaceutical companies cannot devise drugs for people in the developing world. for a long time researchers told me that there was an unspoken kennon that you didn't test for use of the tropics by the developing world. people there couldn't afford it and they didn't even want to explain why they were not using the drug there. but the data will also tell you the economist michael kramer route 333 drugs tested by pharmaceutical companies within a 25 year span guess how many were developed for the people of the developing world for the people that live in the tropics? so, these people are not a pretty but they are a priority for the testing of these drugs. so, the testing is done by european and american researchers in these countries and there are lots of social justice violations. for example, for what might when it is prescribed to people in the west for a condition like leprosy they are warned that you've got to take the two forms of contraception. you can't be pregnant on this drug. they are also labeled with the picture of a deformed baby, but i don't think that labeling is the most clear thing. if you don't already know, you might wonder what it is you are looking at. there's the picture of a baby on here but what does that mean? so these people are being warned. however, it's quite certain that in some trials people in the developing world are not warned. for example, the packaging material in west africa until 1978 described as completely harmless without side effects. and many of these people are delivered. the of the unborn to the women and they were distinctly traced to the women that had been given this. there's no question about it. this also the question whether it might be excreted in scene in which means that men might take precautions, too. so they have all of these violations of the developing world. the developing world women might be told, they are told to take the contraceptions to read it can't go to the drugstore and buy them and many contraceptions are beyond the financial reach and also there are cultural reasons they cannot obtain the contraceptions. they are illegal or the religious leaders for beta their use. so, these are people who are not able to protect themselves and get this is where the research is being carried out. one might wonder why. you know, i think the west would be more logical place because here at least they can protect themselves. as you can see the developing world is not the market for these companies. the problem is, the problem is, but the decision has been a financial one. the journal shows pharmaceutical companies conduct one in every three trials in the developing world and the was more than a year ago. it may be more now. why? they can conduct cheaper trials, faster, important for fda approval, and they are higher quality in the developing world they can get a better quality and more experience. although a lot of our discourse providing jobs to the double the world has been well we can't afford to do this these people are so poor that's why they can't afford health care. the support they can't afford drugs and we can't afford to be the world's beneficiary and give them free drugs which can give drugs to these people but we can't afford it. i say we have a debt here. these countries are setting us a lot of money by allowing us to conduct cheap trials so we are in their debt. we have an obligation to provide them a family with free drugs to offset the excess risks and as i mentioned in some cases we shouldn't be conducting the trials of people can't protect themselves if you get the disease burden around the world is a very interesting pattern. very, very high when it comes to infectious diseases. yet all of these medications that are needed are missing. a lot of the focus is on the hiv as it should be, there are other things that much easier and cheaper. for the civil, vaccines in the developing world, vaccines are very easy and cheap because you don't have to make a diagnosis you don't have to have a lot time or monitoring. it's a one-shot deal. every child gets a vaccine it's easy to administer and it's not very expensive necessarily because the bill gates foundation has partnered with the drug company among others to provide a very cheap vaccines to the building world. we have to keep in mind it's not a matter of importing western vaccines and medications. the special challenges in the developing world include the fact that the health care practitioners are scarce. you don't want it to be intractable. you want the refrigeration is not always an option. so these things have to be kept in mind. even so they were able to take a 70-dollar vaccine and distribute it for 50 cents in the developing world and it's important to me that for was a local companies are part of the partnership. and in my opinion this is where the future lies for them. because as i talk about how this new model doesn't work for patients and it doesn't work for the researchers because they run the risk of having the plug pull on them. to think about what it means to them to have to drive the pipeline of drugs, 15, 26 drugs a year that's not nearly enough for them to make a profit. they see in the patent expired. a blockbuster drugs come up with rapidity in the last few years and the drug companies are suffering. there is still making a great deal of money but the fall from the number one spot to number three spot in just a few years. the system isn't working terribly well for them either. i think that they should become aware of the fact that the developing world is a huge untapped market for them. instead of thinking in terms of charging the serious crisis and bankrupting people charging hundreds of thousands of dollars a year for drugs the should think about the fact that providing the relatively cheap drugs to many people in the developing world can prove a ultimately as lucrative. and there are people like the impact on our of yale the economists are actively working on these kind of models they might consider adopting. and as an ethicist i am deeply concerned about the effect of the corporations on research ethics. research a fix has been informed by corporate control. even those that are supposed to be the guardians, the watchers, people that critique everything. even they are in beijing when i consider very troubling activities. more and more are joining the ethical board of the pharmaceuticals. and i see this as a distinct problem. you know, if someone is doing things that are resulting in death of people, resulting in people not being a to afford their drugs and people going bankrupt trying to pay for their drugs, i am not going to be on their corporate board or any of their boards. i'm not going to advise them. .. another disturbing new trend is the fact that corporations have discovered that recruiting people for clinical trials takes a lot of time because you have to explain the trial and you have to pay your commission and for four and consent in nutshell. when the principle tenant was the voluntary consensus of the subject is absolutely essential but that is not true today any more. to getting in 1990 continuing in 1996, a series of changes to the code of federal regulations set of allowed researchers to conduct research on people who do not give their consent. if you are unconscious and a trauma victim you can be enrolled in research and people like that have been enrolled in research without your consent. they don't have to tell you about it afterwards and they don't have to obtain your family's consent. it's very easy to look up if you look under regulations, 21, 50.23, 50.24 there it is in black and white, very chilling development and american laws. it is remained under our radar for two long. i read a few articles about it. i am deeply concerned about this and the largest study ended in 2007. 20 people around this country and the artificial blood it was testing turned out to be harmful. it turned out more people who received it suffered heart attacks and deaths than people who got the standard of care. you would think this would lead to more research without consent but instead a new study was approved that enrolled 21,000 people. from 700 people to 21,000 people across this country and canada. number one trauma centers and they are testing wide varieties of emergency agents and people who have suffered traumas. traumas, anything from a gunshot went to a car crash to a heart attack. 21,000 people and yet when i have spoken to ephesus and said are you disturbed about this until you find it disturbing what i heard most often was yes but you have to understand it's very rarely used. this is not something that affects most people. is really rarely used. i don't think 21,000 people is rare and i don't think that is an ethical defense. if i kill somebody i can go to court and say but i very rarely kill people. wrong is wrong. and yet this is being done and offended. informed consent is going the way of the dodo and one troubling aspect is if you look at these consents i am seeing a a lot but of the word consent that when you read the descriptions they are united by their failure to provide consent, their failure to allow a person to say yes or no to medical research, very troubling trend in american surgery at my concern is that we don't stop it now, it's going to continue to escalate before most people are even aware of it. i want to wind up soon because i do want to leave time for questions but again i really want to summarize by saying that in my opinion pharmaceutical companies have been responsible for a lot of pain and suffering, and a lot of unnecessary heartache and they have a chance to redeem themselves now. if they take the opportunity to embrace new research that will benefit people in the developing world, they will benefit more people in this country. to change their focus from maximizing patent profit to maximizing distribution of their medications at a lower profit, they might ultimately make our money. and if they don't see things that way it's the responsibility of the government to do so. the government should exercise its power to force these companies to do what is right if they choose not to do the right thing. that is essentially what i have to say to you. thank you so much for listening to me. [applause] i was told if anybody has questions and i hope a lot of you do, just time for the mic to mike to get over to you. so we can be sure to record you properly. >> i see motivation is a big factor and less motivation switched from the incentive for research and collegial competition to profit. what happened was profit went down, but it's hard to take us out of that mentality. other than saying because people would get angry at the government, i mean the incentive to get out more medicines is going to increase your profit and we are finding the same thing in the american economy now today. corporations want to make more money, but they can only do it if they recognize that we are a team working together. there is no middle classified annex, how can i make more money? is? is there any kind of broke graham or understanding or push other than little groups like this to try and bring this awareness about? >> i think it's really important for people, especially groups like this to try to make their legislative are aware of the fact they are they're concerned about many developments because in california xavier becerra after being a constituent actually drafted the law and dave wheldon joined with him and it was a law against gene patenting. that is only part of what has to happen. this issue began in the log has to be ended in the law. the big hurdle is congress because right now we have legislators who have not been paid as far as i know actually, these legislators have been elected by us and get their behavior is squarely in line with the interest of the pharmaceutical companies and against our medical interest so we have to get rid of these lobbyists. we have to outlaw them. they have no place in health care design. they have no place in decisions about medical care and yet they are observing a huge influence. get rid of of the lobbyists and lecture legislature know that you are concerned about this. i always tell people you know, i tell people to take action where they are. whatever group you are involved with, that is a group you should try to tell your outrage about this and have them approach your lawmaker and of course they won't do it on their own. i think the law will be where it ends because companies are not going to do the right thing of their own volition. if that had been the case they would have done it already. they do it occasionally and sporadically but not in the consistent way that we need. >> the fda came up with a statement that says that only drugs can cure illness, and i was reading a book by jeffrey trudy and it went into the statement that you made about lobbying and congress and the pharmaceutical companies. what do you think about the idea of revitalizing the option of natural supplements in this country, because that is revising herbal options and that sort of thing to help with curing illness. >> that is a very insures in question. i am not aware of the book that you were alluding to put the question about alternative and complementary medicine, in the closet earlier today we were discussing this very issue. my take on it is alternative and complementary remedies are only all tentative until they are shown to work and then they are absorbed by conventional medicine so the demarcation between the two is actually artificial. i ashley, me, not public to most people but i view it as not alternative and complement to conventional, i look at what works and what doesn't work. to me that is -- and to know what works one has to tested vigorously. there is some sentiment that i don't agree with that alternative and complement j. medications don't have to go through western-style testing in order to be thought of as efficacious. i don't agree with that and interestingly if you look at germany they have a long tradition of rigorous testing alternative supplementary medication. and it has been very useful. they have a good body of evidence for things that work and things that don't work. that is what we need to do. the way that alternative remedies are too often promulgated is not evidence. it is simply anecdote. people will say i have used this for 20 years and it has worked well and they chart outpatient a and give it praises. that is not evident. it may not be accurate and it may not be applicable to other people. everyone deserves to have medications that we have done our utmost to make sure they are effectively safe and that is the only way we are going to get them no matter what kind of education it is. >> i have a thalidomide question. if they are testing it in third world countries for diseases that primarily affect the third world like leprosy and the example that you mentioned, where's the economic incentive for them there in testing with thalidomide? >> that is a good question and to me, what i ask is, is this actually the reason it is being tested? is this the application they have in mind because the figure i gave you about the foreign medications, the 4300 odd, that would indicate it would not be used but that is a useful thing to say when someone like me asks why are you doing this research in nigeria but not in connecticut? i wonder if that is the real indication. [inaudible] i was wondering what you think of the ethics behind that in the second question i've have is once a drug becomes extremely profitable what is the impetus to ever have a become obsolete so if like a disease were to be cured would we not know about it because the drug is so profitable? >> right. the director consumer as to what you're talking about where pharmaceutical companies bypass a physician and go right to you, the television viewer and they sing the praises of their drug and then they deal with the side effects and problems we too quick way for mortal man to read or hear. and then what happens? you go to your doctor and demand that drug. that is the way it works. no country except the u.s. and new zealand allows this. other countries to not allow this because they understand that if you are bypassing your physician, these companies are not informing you correctly about the drug. they also know the capitalizing on lay christians lack of information, and they also understand there is an obscure but very subtle, very strong pressure on physicians. physicians will prescribe these drugs partly because they are human and they understand that if you don't get the drugs from them you will get the drugs from someone else so it's an enormous amount of pressure on them and that is why other countries don't remitted and that is why we should not permitted either in my opinion. >> i am interested in curing the disease. the disease -- would that not dry up their revenue stream? that is a perennial question and quite frankly i don't know the answer, but i do know that for whatever reason, to be honest with you, don't think that is a question we really need to answer because i don't think we are in much danger of these companies devising new drugs that are actually going to cure disease. for a much more direct financial reason and that is these companies are much more interested in a quick return in a big return on their dollar and that often doesn't mean finding cures. that means finding -- devising a test for a particular drug, a genetic element, utilize a test for the ailment and take out a patent on that and now no one else can use your test. when pie round device to test for hepatitis c, the price of the hepatitis c in london and great britain skyrocketed six times as high. why? chiron's lawyers said cease and disist, we own the patent. you have to user test and that is what they did. i think the app is a son cheaper and patent explication devising tax, devising lifestyle disorders, gastric distress. the dtc ads never tell you if you have daily gastric distress, stop living on pizza and hamburgers. they don't say that. they say take our pill and they capitalize on people's insecurities. toenail fungus, dysfunction. they have half the men in america convinced that their normal occasional failure to function is a disease which is very profitable for them so i think because of that focus i'm not sure we have to go to the point where we say was it worth their while to find a cure because it wasn't worth their while to find a treatment for a certain illness. is worth there will while to find cheaper experimentation. >> we are on the university university campus and technology transfer has been very good to the university and universities are always striving to make it better by transferring these corporate entities. should we all be disbanding our technology transfer activities? by kami go back? what i'm asking is can we go back to that time when researchers actually had to make a choice between academia and business and they couldn't actually devote -- can we ever go back there? >> we could go back and i think it would be a good thing to go back. whether we will go back i don't know because its true universities make a great deal of money. very successful universities but unfortunately, the method does not filter down to people. the people who don't need money but need effective treatment that they can afford. so, we could repeal it which i propose to my book that i propose it, i'm pretty sanguine about the chance of that happening. i am not thinking that is going to happen anytime soon. it would be a good step. i think sometimes we are so afraid of not being progressive, not going forward. there is a nigerian proverb, and what is says is, it is not wrong to go back for that which you have forgotten. in this case we have forgotten something. in our zeal to make money we have forgotten to put patients at the center and i think it would be a very good idea to basically effective divorce between corporatns and universities. now, that may not happen and is probably not going to happen so what should we do? i think that the government should observe very serious pressure -- might exert very serious pressure on pharmaceutical companies. first get rid of the lobbyists. like in shakespeare, first kill all of the wires. vana exert very strong pressure on these companies to partner with groups like doctors without borders which have been occasionally able to do it wholesale to adopt new marketing like the health impact fund which does that instead of charging a lot of money for a drug. you are going to be paid for your drug based on how many lives you saved, based on how many people you have helped. that is a beautiful motto because not only does it guarantee a windfall, but in not model every life is the same. the same with saving lives with americans -- africans. the government shoots put serious pressure on these companies to adopt these models and if they don't, the government should force them. they should only funds the companies that will adopt those models. that is what i think should happen. >> how corrupting if at all do you think the massive amount of advertising dollars have on the news industry? >> the news industry, not medical but news industry? >> well yes, because if you look at the nightly news for example, i mean two-thirds of it are drug advertisements. what would happen to that and do you think that has an impact on coverage? >> i'm not in a position to say for sure. i will say i would be surprised if it doesn't but in terms of the massive media i would not single out drug advertisements, because money in all its forms can address the influence if you're not very careful and of course you know the news media are a pearl so it varies from publication to publication. you have some publishers who have a strong sense of wanting to keep a journal's independent and and and then you have publishers who are, i don't know, what did they call it in l.a., the serial killer because he was -- with a serial fortune and people were claiming it had effect on the news coverage there so it varies but definitely advertising is a way of exerting pressure and in my career i have actually seen it done. i've seen a case where we did not run stories as a result of advertising so i can't speak with any authority about exactly how often it happens but i'm sure that it does happen. >> what has been the most tangible, hopeful result of your book from the drug companies, from lawyers, from the government? >> government? >> they love it. [laughter] the most hope will? i wouldn't say that you know the most hopeful reaction has come from the drug companies at all. i think they have actually been very smart. they have not reacted much to it which is the smart thing to do. they want to draw as little attention as possible to it so you know they have essentially ignored it which is fine with me. the most hopeful aspect of what i have discovered is certainly seeing that these partnerships between drug companies and groups like the ones i mentioned, doctors without borders, the gates foundation, they are ephemeral. they never last very long but we have seen some examples of them doing what they set out to do and i dream of a world of which these companies will work hand-in-hand with these groups who are devoted to the health of people and we hit some kind of healthy medium. i'm not against them making a profit. i am just against them making such a huge profit on the backs of other people that other people suffer and die. that is what i'm against. there is a happy medium there and whether we will achieve that i don't know but that is the most hopeful thing. i'm hoping i am hoping things work out that way. mentioned earlier the fact that you can make effective vaccines for 50-cent windows and i don't know if you are thinking of the meningitis vaccine initiative. >> that was one of them. >> but there was a transfer in intellectual property from u.s. government to an optional drugmaker, a true partnership and funded by more than $100 million of gates foundation money and they made a 50-cent vaccine that works the same, plus 80 to $100 it does in the pediatricians office in the united states. so that brings to my mind the idea of offshore drug manufacturing. we know that india, it is an enormous drug manufacture now. do you think these international drug makers are part of the solution, part of the problem or where do they fit in? >> unfortunately, they are not doing very well right now and part of it has to do with the scripps agreement, the world trade organization has laws dealing with intellectual property that they have imposed on developing world. india was able to duplicate important drugs that they are keeping but he can do that legally anymore because india's laws governed patents on manufacturing processes, not on competition so they could duplicative drug legally, you'd now and distribute it. what they have to change was the way was manufactured that tripp has forced india to adhere to the patents of the west where the competition of the drug is what is protected so india can no longer duplicate the drug as cheaply as it used to and this i think is an enormous problem, imposing a patent scripture supposedly to protect our intellectual property but as i say in the book i don't think a lot of this is intellectual property. a lot of it was raided from the third world to begin with so for that reason i think it is the law as it is going to make it very difficult are the offshore companies to work unless they are working in concert with the american pharmaceutical companies who are now part of the problem. so the trip trips back laws need to be -- they need to be eastward developing countries so they can find their own way of providing drugs to the people since we have decided not to do that and they should not be forced to respect our patents when we are not forced to respect their patents. now it is not reciprocal. they should be able to ignore our patents of impunity. that is only justice. >> no this is, you have said a lot of unpleasant things about large pharmaceutical companies and i'm not questioning what you said, but you said to me privately that there have been moments of generosity and moments where we have seen drug companies behave in good ways. would you mention one or two of those ways? >> talking about the partnerships that they made for example, with the gates foundation and with the impact fund and with others that are dedicated to the health of the people and developing worlds. as you mentioned low cost vexing, i mentioned all of these things and i think these things are very important. the problem is it hasn't been a sustained partnership but that is what i want to happen. they will be able to make a profit and stay in business so that is what i would like to see and i expect that is what they would like to see as well, i hope at least. anybody else? thank you so much. [applause] 1xhhhhhhhhh >> riding is a transactional process. writing assumes reading and it goes back to that question about a tree falling in the forest, if there is no one here -- make there to hear. if you've written a wonderful novel the one of the parts of the process is that you want readers to be enlarged and enriched by it and you have to pull on everything at your disposal to do that.

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