ira get a chance to look at a lot of young people who don't thank i am a crazy nutcase. i just spent all semester convincing them that their different ways to think other than the dominant level ideology. ii know how edge it gets so i would like you all to stand for just a moment if i could. we are going to do something completely crazy that i never get to do. we are going to say the pledge of allegiance. are you ready? i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god indivisible with liberty and justice for all. thank you. >> it's nice they knew the words. >> how many of you said that when you were in gradeschool? did you mean it lacks raise your hand if you meant it. i want you to think about that. the united states actually does matter. i don't agree with 100% of the things the previous speaker said and they will not agree 100% of the things that i have set but the great thing about america is that we have the first amendment that allows us to have a disagreement and an active discussion so our nation can move forward. we don't always move forward and sometimes we'll move back which as we discussed but each time we do that we find a way to move forward. this can happen in a country we are going to talk about now come to china because despite anything else they might be doing they are not allowing freedom of speech. so i have got to display on the side. who knows what 61398 is? you have probably seen the news story about the chinese government hacking american corporations, go write? anybody? 61398 is a signal corps unit in the people's liberation army in china. this is a division of the chinese military financed by the chinese government. a brilliant report was put out that showed basically 70% of this significant hacking that is going on for a decade against western corporaticorporati ons primarily the united states and united the united states government is coming from this building and the blue dog district of shanghai. this is a problem. my estimate was that this is costing america 400 billion dollars a year. this is costing america 1 million lost jobs per year at a time where we cannot afford that at all. john huntsman the former ambassador to china and obama administration employee did a report recently and they came up with $300 million and 1.2 million jobs. the point of this is that's a lot of money. it's hundreds of billions of dollars in its more than 1 million jobs. this is greater than the impact of 9/11 indirect economic terms on the united states. it happens every year and it's done on purpose by a foreign military. i personally believe that this building here on the display was the iranian republican guard unit in tehran that building would be a smoldering pile of rubble before it had a chance to testify to congress or speak to to you about this problem but it's not. that begs the question why. that brings it up, why are we best frenemies with these folks? we have this thing called the engagemenengagemen t policy that the nixon administration put in and i come from yorba linda california. just down the road from the library. please come and visit. we developed this policy with china called the engagement policy and the goal was we would seek liberalization and i mean liberalization in a good term. i'm actually a fan of mr. locke and i believe nobody's perfect but the point is we would have a government that would become more tolerant and all the things we respect in our constitution and our bill of rights. we would develop a huge export market for the united states that would create wealth in the united states or a relationship with china. that we would get geopolitical for a private company in china. flat. yes there are a lot of a lot of new fiber in companies run chinese because they are good as this people and they just can't get it because the topline the one that is a hockey stick is the average access side of the the -- size of the chinese corporation. the people of china are repressed economically by their government. they are being used as a tool. their hard work is being used as a tool to knowledge into china to empower large state-owned companies which includes all the banks in china. if you look at the list of the 25 biggest companies in china every single one of them is a state-owned enterprise. do you know why? the biggest retailer in china is a state-owned enterprise. it is not the vibrant economy that you think you see when you go there. if you go to shanghai you see a building that says general motors on the side. general motors opened these buildings while they were receiving tarp money from the federal government and closing plants in detroit which is now bankrupt so they could open plants in china. cars rolling out say buick here that plant in the joint partnership with the chinese government forces them into his 51% controlled at the shanghai automotive operation which is controlled by the communist party of china. the only gm input with all of the money and technology and the know-how. the chinese run it and in the long run own it. i want to show you something. it was an oath mandated last year for all lawyers in china. i swear to faithfully fulfill the sacred mission of legal workers and socialism with chinese characteristics. i swear my loyalty to the people to uphold the leadership of the communist party of china and the socialist system. that doesn't sound like democratic reform to me but i don't know. i would like to point out something. socialism with chinese characteristics and we talked about national socialism. china is nationalistic and socialist. this is a fascist governmengovernmen t. it calls itself -- but they are essentially fascist. so we are supposed to get an export market. i could go on about this as an economist but this thing here this slide the ghosts appear like a hockey stick is our deficit with china. according to -- this shouldn't happen. this should self directing a number of different ways but it doesn't. we have been doing this for 30 years and i'm a free trader and a free marketer but you don't do business with criminals to get a good deal so for 30 years the difference between our revenues and our costs of doing business with china have been negative. what do you call that in a business? you call it a loss. that doesn't seem to make sense. a ford unfortunately some of my conservative friends who want to keep doing this because any moment now something magical is going to happen and we are going to have this wonderful global -- globalized peaceful super capitalistic economy that will make us all rich. it's making the chinese rich. you need to be aware of this. if you run a loss every year for four years would you keep doing the same strategy and business? would you keep appointing the same ceos? i don't know. this is the free tarried for fairytale. this textbook written by glen hubbard was the chief economic advisor for gw g. w. bush and the first administration. he has a little sidebar in the book talking about the market system in action and how do you make an ipad? >> says foxcom based in taiwan assembles the ipad using chin jin and chengdu and ships them to apple for sale to the u.s.. they sure do. then he says of course the market conditions arbitrate where they are -- ipad is made essentially. let me show you a little video. i shot this video in beside foxcom city and ching jing where they have 750,000 people making products for apple and motorola pouring your investment dollars into china. this is an executive from foxcom taking around on a tour of the worlds largest factory. listen to what he has to say about why the ipad is made where it is. audio. i am glad they put subtitles in there. i'm going to try to run it again and see if i can do that. [videotape] is that the free-market? know. if you do business with the mafia you empower the mafia and you empower crime. we have laws against that for a good reason so frankly i advocate laws that restrict our economic relationship with china because it's a criminal regime and we get taken advantage of and they cheat. my free-market friends say american consumers like it because we get you consumer products. it's true. i love my ipad -- iphone 5. how long does this last? this is good for 18 months until the next one comes along and then it's a hazardous waste. then it gets shipped off to china words recycled. what do the chinese get? they get a factory. they get billions of dollars in american capital and they get all of our technology. is that a fair trade? cheap consumer products for the engine of wealth? i don't think so. they are very naïve view of how free trade works. how many have you had been to china? it is beautiful. i want to be clear i actually like china. they are vibrant things going on there and people there who am i friends. unfortunately many of them are in prisons but nonetheless to go there and see these fabulous things. they did the whole olympics thing to add legitimacy to themselves. they have to build giant towers that are psychological symbols of some sort and then there's this thing. great. we are all impressed. you look across the pudong and it's beautiful but how did that happen? i want to borrow something from our president. they did not build it. this is foreign direct investments and all the countries in the world for the united states over time. guess who built those buildings? while detroit went bankrupt it fell into decay your 401(k) dollars in the money you put into american banks are fed into big investment banks and shipped over to build china. in less you honestly the state-owned enterprises run by economists regime are more efficient than the american economy you have to accept that we are the ones -- [inaudible] there is a great little story from my neck of the woods. code of automotive and i want you to listen. this company exists in los angeles and was really supported by all the good democratic politicians in california as a green company that was going to create jobs in the united states with their miraculous electric car. let's listen to what one of their vice presidents of marketing had to say when we confronted him at the l.a. auto show and note the subtitles. [videotape] the audio does not kick in for a second. >> we are all-american all electric car company and we are coda based in los angeles. what makes us special is that we are the first all electric all-american car company to have a range of 150 miles in a five passenger four-door sedan and we are headquartered in downtown l.a. where sales marketing engineering finance is all headquartered and we actually assembles his car and finish it in california. california in the bay area. this car will have a u.s. stamp and we are selling this car in washington state oregon and california sir launch markets and we will be selling it to fleets across the country as well. we are the fastest growing job employer in los angeles county, coda itself. a couple of weeks ago we had the mayor of california -- pardon me, the governor of california mayor of the arico so congressman assemblyman phil barr said he and many other politicians and stakeholders from the local political and government affiliates that were here in downtown los angeles. since this car is assembled in the u.s. we believe we will have significant impact on the automotive industry. >> so you employ mostly americans. >> correct. >> we have an american staff who works on the car. >> they send americans to china to make this car. that gets a little -- you may not want to put all that in there. see how many overseas? >> i'm not sure but i will just use the l.a. number. >> it's 65%, no it's 100% in the u.s.? >> stop for one second. [laughter] >> we are not going to tell you that on film. this car is made by state-owned enterprise that among other things does things like sell landmines and ak-47s to africa and owns a company called aramco that was busted for importing ak-47s to street gangs in l.a.. who would back an organization like that? the gentleman with the white hair sitting next to him at the summit is a guy named john bryson who was the director and helps work the china deal. i want you to notice the u.s. china economic cooperation with the chinese flag is placed. if you know anything about the symbolism of flags that tells you who is in charge literally. john bryson is appointed commerce secretary to the united states by obama after he left coda automotive. it's like having the foxes watch the henhouse. other people involved r will carty president clinton's former chief of staff. i could go on. we were supposed to get geopolitical cooperation. i could go through the list of friendly people who the chinese government support to undermine the united states around the world including -- who traded a million dollars worth of elephant ivory if there are any environmentalists out of their four ak-47s. we are supposed to get human rights. yesterday i happened to be in congressman chris smith office who i think is a great american hero and the congressional china commission mentioned there was a falling -- on the mall. i went over there and some of my chinese dissident friends asked me to talk. it was miserable in the 102-degree heat standing out there but i was happy to stand in front of people who truly appreciate what freedom is. they probably don't share their religion of anybody in this room and i don't understand their belief system but i do respect their right to believe that if they choose to and to go about their business peaceably. while we were there though a group of chinese tourists and you might've noticed there are a lot of them in d.c. a group of kids led by their teacher were walking behind us towards the washington monument and they saw that there was an anti-communist party protest going on so the teacher began to lead them in a chant to try to overwhelm the speech that congressman ted poe was giving there. the arrogance of bringing children to the united states of america to supposedly teach them about what america is about and then to use your communist ideology and rhetoric to fight against freedom of religion right there on the mall in front of the u.s. capital and to try to haggle a united states congressmcongressm an astounds me that the chinese feel very free to tell americans how we should be running our country. the last slide. when henry kissinger went to meet with -- back in 1972 zhou said to henry kissinger perhaps it is in the national character of americans to be taken in by those who seem kind and mild. this is the story behind our engagement policy with china. kissinge to undermine the long-term prospects for both the country and their nation and that can be achieved in china so it's a matter -- we have a total double standard when it comes to cuba and syria and any bad behaving country except for china. >> i think what you are saying is trade with china is not really free trade. >> it's doing business with criminal calls and we need to reevaluate that. when we have free trade which we now have 100% free trade that but we have reasonable relationships with their european countries and canada we create wealth but when one of the parties as a criminal regime using slave labor inside prison camps to compete with us and willing to make the air in beijing so thick you could chew it and that's a problem. >> could you talk about how those in the republican party and media pretend that trade with china is free? >> there are great exceptions and i mention chris smith and ted poe and dana rohrabacher understand what's going on in china but folks in the republican party hierarchy are so into the word free i think that the idea of free trade within a country regardless of how absolutely despicable their behavior is seems justified. we did this before. i think our guests with earlier would let you know we did this with -- henry ford and other businessmen ran to germany in the 1930s. they were in hamburg with the german miracle of turning the economy around. they open plants there which the german government rent nationalinationali zed and turned into weapons systems aimed at the united states and our allies. we have been here before. when you do free trade with criminals you were not doing anybody any good in the long run. >> my name is robin and i'm from howard payne university in texas. in my economic development class we wrote a ocala call bad samaritans and it talked about western imperialism and how the u.s. and great britain kind of imposed their western views on other countries and how they are bad samaritans in that way. it talked about state-owned enterprises and how those can be beneficial in some cases. i was wondering in your opinion is there ever a time when the state-owned enterprise can be beneficial at least to get it started and is it possible for them to become tightly owned or is it that for a good or is it always -- see excellent question. benjamin franklin started the u.s. postal service and i wrote an article a couple of years that got me in a lot of trouble. the postal service has degenerated into unfair -- like ups and fedex in the delivery of junk mail that no one wants in subsidized prices keeping 300,000 trucks driving around government so other trucks can take it to a landfill. there is a role and this is the area study in my relationship with government. for the government to be a primary customer in industries industries -- mr. franken failed to devise a way for the postal system. they are the cases where it went well. the united states government subsidize the construction of the transcontinental brevets and develop the internet and handed over to the public. it developed a global position since the interstate highway system so there are times when i honestly do believe the government has a legitimate role but no i don't think a long-term enterprises anybody's interest and when they see one you will find corruption behind it. >> i'm going to mcs this phone it would seem you touched on one a little bit what it said. it would appear the united states government has been taken in by the chinese government's nicety per mr. mao's statement. why do you think united states companies and governments have gone along so willingly with what has been repeatedlrepeatedl y exposed as you have done today as -- >> because they make money. it's that simple. there was a famous bank robber in the 30s and he was asked why it was that he robbed banks. he misunderstood the question and he said because that's where the money is. we have created an environment whereby ceos support companies to meet their goal for return on investments to shareholders and must take advantage of this unregulated buy-in with china. we have regulation and the world's highest corporate tax rate and when i'm in california and i think we have got a personal federal income tax that comes close to france. we need to reform our rules. not force companies that we need to reform the rules in the niceties of the motivations are to technology and capital reinvestment in the united states. instead we have created an environment where short-term asaph accounts. part of that is the quarterly reporting put in the 1960s and then we created the tax system that says please go anywhere else and do your business. >> one more question back there. >> hi. we are in a really bad debt crisis right now in california. why does the honorable governor, y. first off when we need jobs in california why is he giving them to china and second of all especially when working conditions are so bad in china? >> his idea of creating jobs is to create a place that employs 200 people in the united states intends of thousands people in china and undermines a great american industry in order to create 200 jobs. we only count one side of the ledger. we don't count the jobs destroyed. a very famous busti a quote about what what is seen and not seen so we don't see the destruction this continual focus on short-term job creation creates instead of laying an economic landscape for long-term prosperity in the united states. >> thank you very much for a very informative talk. [applause] >> host: joining us on both tv is sarah weinman who is the news editor for publishers marketplace to help us preview some of the fall 2013 bucks. sarah weinman what kind of grade would you give they prop coming up this ball of the book? >> guest: this years looking really strong and certainly looking over the nonfiction that is about to come out great as always there is a heavy political fence but i feel like it's especially important to remark on the plethora of looks that surround the upcoming 50th anniversary of the assassination of john f.