Renewing American Civilization: Class Five

Pillar Four: The Spirit Of Invention And Discovery, And The Development Of Pragmatism And Practical Common Sense

February 4, 1995

Reinhardt College

The following is a special program produced by RCTV, Reinhardt college television, in Waleska, Georgia. From Reinhardt college in Waleska, Georgia, this is "Renewing American Civilization." In this, the fifth of 10 class presentations, Congressman Newt Gingrich, an adjunct professor at Reinhardt College, will continue his course, which presents the foundational principles necessary to the renewal of American Civilization. This week's lesson, pillar four, the Spirit of Invention and Discovery, focuses on the spirit of invention and discovery and the development of pragmatism and practical common sense as key characteristics of and contributors to American Civilization.

Let me welcome everyone this morning. Let me, in particular, welcome the students of Mind Extension University.

And I say that because one of the Internet memos we got, or the e-mail memos we got this week was from somebody who has a totally different bulletin board in a totally different place who was asking could he take off the transcripts off of Internet and put them on their particular bulletin board, and the answer is "yes." We copyright so nobody can copyright it. That is, we wouldn't like to wake up Thursday morning and have somebody who had copyrighted the whole course and I couldn't use it, so we copyright it only for protective reasons, but, in fact, we encourage people to reproduce these things.

The framework of this course starts with the premise that America is a unique civilization and that it has five pillars: the historic lessons of American Civilization, personal strength, entrepreneurial free enterprise, the spirit of invention and discovery, and quality as defined by Deming. And that as we go through these five pillars that define how American Civilization works and study them, we will then, after we've spent two hours on each of those, apply them to four areas, and the four areas to which we will apply these pillars are, one, the third wave and how it will affect American Civilization. Two, creating American jobs in the world market. Three, replacing the culture of violence and poverty with a culture of productivity and safety. And, four, citizenship and community in the 21st century.

Now, today's topic is the spirit of invention and discovery, which is pillar number four, and we're going to talk a lot about the spirit of invention and discovery, but I can't resist, since just before the class started here at Reinhardt, I was asking y'all -- you know, I've been talking a lot about Peter Drucker's "the Effective Executive." Why you should buy it, why you should use it? For anybody who's watching us for the first time, this is Drucker's "the Effective Executive." It's available in paperback. It is, I believe, the best single volume on being effective ever written. I think as you all begin to encounter it, you're having the same effect.

One of Drucker's points is that Effective Executives monitor their own time. That they actually, by 15-minute increments, will record how they spend time just to find out: what are they really doing with their time? How many of you did that over the last week? Okay, almost half of you. What was your big learning? What did you learn from doing that?

>> I have a lot more time than I thought.

>> you have a lot more time than you thought.  Who else?

>> I didn't spend the time where I actually thought that I had spent it.

>> what was the difference?

>> I think the big difference was I wasn't able to focus on the priorities
>>that I thought that I was focusing on.  I need to refocus my priorities.
>>

>> who else?

>> I spent a lot of time in the car, and I found that by planning on doing
>>things, like taking tapes or taking my recorder or whatever, I can
>>utilize that time rather than just being dead time.

>> okay.

>> I find that the telephone is interrupting and sidetracking me to other
>>areas that I need to be not so involved on, to keep focused on what I've
>>got to accomplish.

>> who else?

>> I found that if I wrote it down, that I stuck by it.  If I had it on
>>paper, then I'd actually do what I was planning on doing.

>> yeah, but, you know, if you planned it in advance, if you planned it,
>>like, the night before, if you planned it out in 15-minute increments,
>>you got a lot more done the next day.

>> yeah.

>> but it's hard to stick to that 15-minute increment when things come up
>>in the middle of the day and you go, "oh, my gosh, I have to take care of
>>this and this," and that sets your whole schedule back.

>> now, let me ask you something:  if you found, as you kept track of your
>>schedule, that that was happening to you every day, what would you do?

>> plan in time to --

>> Right, start saying, "okay, I really know that I'm going to spend two
>>hours every day doing things I didn't plan on, so I will block in two
>>hours every day."  Because part of the message is you have a finite
>>amount of time, and so -- and you're going to lose a fair amount of that
>>time because things will come up you can't avoid, so you have even less
>>time than you thought you had.

So you'd better really decide: what are my highest priorities? And that's what you do during the time you have available. And then gradually, you'll get into the habit, as I am today, you know, I now plan my schedule on an annual, quarterly, monthly, weekly, daily, and sometimes hourly basis.

And I'll redesign my schedule three or four times a day and stop and say, "we've got to change this, change this, add this, move this," and the result is you're constantly coming back to first priorities: what are the things you have to get done? And Drucker has a rule that you get 80% done in 20% of the time. Yeah. And then the other -- the rest of the time you spend finishing it, and so his theory is if you get 80 done and then you shift and you get 80 done, remember, five 80s is 400. So in the length of time it normally takes a person to complete the first 100%, under the Drucker model, you're consistently dropping the 20% that's least important. So you're actually getting four times as much done. Do you all follow me?

And if you then set priorities so that you're actually focusing each time on the most important priorities, it is amazing how it changes your effectiveness.

So anyway I'm glad to see that at least half of you now are up to speed. The rest of you -- everybody ought to, just for a few days, track your time for 15-minute increments, and then look at what you thought you were doing and look at what you're actually doing, and I think you'll all be very surprised. And if you get in that habit and then the rest of Drucker's "Effective Executive" works just as well. That if you take each of the ideas and actually do it, apply it to your life, don't just go, "that's interesting," apply it to your life, you'll be shocked a year from now how much more effective you are.

Now, for today, though, we're going to talk about the spirit of invention and discovery. And we deliberately talked about it as a spirit, because it's not how to be a scientist or how to be an engineer or how to be an inventor. It's an attitude. It's a way of thinking about things. It's an approach to life that emphasizes Inventing and discovering. And in a way, I think that America's uniquely committed to this, because the pioneering spirit led to the spirit of invention and discovery.

Remember, pioneering occurs first in your mind. Very important concept. That what you have is a pioneer of the mind. You think about going west. You think about going to the mountains. You think about reaching the Pacific Ocean. Lewis and Clark started by visioning in their own head the idea of an expedition to the pacific. You thought about creating a wagon train. It's something you'll see again when you come to Deming next week. That the father of the quality movement talks about the idea that first there has to be a theory.

You know, your theory may be: if I put water on the stove in a pan and I turn the stove on and the water bubbles and I take an egg out of the cold thing called a refrigerator and I put it now on the hot thing called a stove and I let it wait three minutes, it will cook. That's a theory you have of how eggs get cooked. And if you don't have the theory before the action, there's no reason for you to take the action.

That's part of why when you're young and you're first learning how to cook and you don't quite get the theories right, like putting water in the pan, and then you have a whole -- and many of you probably had these kind of experiences. Or, you know, remembering that you're actually supposed to put yeast in with the flour so it rises, or whatever it was that you goofed up on when you were younger.

Now, if you think of all -- the American tradition is to be a pioneer in your own mind, which in a sense is a quintessentially American sense of a spirit of seeking the new. More than any other country on the planet, we have this constant passionate desire to reach out to something new. I mean, that's why New, Improved Tide is a term that's been used now for 30 years or 40 years. I mean, every other year there's a new, improved Tide. And it works. It works every time. That's why they've been successful for so long. But this is a nation where if you say to people, "wow, they're opening a new mall," or "there is a new" -- you know, "there's a new six flags ride," or "have you seen the new Nikes" or whatever, but it's a very powerful word, and it's because I think we are permanently intrigued with the idea of being at the edge of the future.

There's a fascinating book called "At the Edge of the Future" which argues that Los Angeles -- that Americans kept moving west until they reached Los Angeles. That you can't go any further on the continent, and so they sat around waiting for the earthquake.

Think about California. There was recently a James Gardner -- a "Rockford" movie where they had the fire and Malibu, they had the earthquake, and they had the riots all in one movie, and at the end of the movie, he's still staying in Los Angeles, and, of course, millions of people are, but there's a sense of overcoming that Americans are just remarkable at overcoming. You know, you know there's going to be eight inches of snow in Washington today. People will go rush about and overcome. I mean, it's automatic.

And so the sense of the spirit of seeking the new. I think that this topic matters because inventions and discoveries, science and technology change things dramatically. And this is a point I want to make just for a second, because it's one of the places where bureaucracies and academics least understand the world. People are used to this kind of a gradual change.

And when you read government reports and you look at most academic studies, they're talking about very, very incremental change. But if you have a stagecoach and then you have a railroad and then you have an airplane -- and this is what Drucker means by the word "discontinuities" -- that you can say over here: we're going to really improve stagecoaches, make them lighter, better wheels, you know, grow bigger horses, et cetera, train people so they can really change the horse teams fast. Then you get to a railroad. A railroad is not a better stagecoach. A railroad takes a huge capital investment. You've got to lay all the rails. You've got to build the engine. You've got to find a system of procuring -- early on it was wood, and then it became coal, and then it became fuel, diesel fuel, or oil.

Okay? So now you've got: well, we'll build better rails, they'll last longer. One of the early problems in the early American railroads, Boorstin's book "the Americans" really describes some of this. Early American railroads were built with very shoddy ties and with iron that wasn't strong enough, so they wrecked all the time because the Americans go very fast. Europeans complained -- would talk about how exhilarating it was to be on American railroads because it scared you to death and they wrecked all the time. Then you come over here, and the airplane is a totally different system. Doesn't require rails, but does require airports.

And it occurred to me the other day, I mean, it's just an interesting study, the fastest way to -- if you want to go from this point to this point and the airport is here, you actually move away from your destination to get there faster. Just think about the logic of that.

Each of these has its own objective requirement. Each of these is an invention. This one was invented probably by the Assyrians, who invented chariots. This one was invented, of course, by George Stephenson in England about 1820 and became very popularized. And this was invented by the Wright brothers. But what I'm trying to suggest to you is that inventions like this dramatically change our lives, and as you'll see later on, one of the great weaknesses of the modern period is when we run into a problem in the period of the counterculture, we just stop and get fascinated by the problem.

Historically, Americans immediately said, "so what's the solution?" And the passion was not for studying the problem. The passion was for finding the solution. And you're going to see that right now, because you're going to see a video about one of the most remarkable Americans who is almost never studied in the counterculture because all of his values are exactly wrong. He was successful, he was a work -- he was very work-oriented, he was highly creative. He was generous, and he was a unique individual who changed the history of America as much as any single person other than Washington and Lincoln. And so I'd like you to spend just a couple minutes now with Thomas Edison.

>> born on February 11th, 1847, in Milan, Ohio, Thomas A. Edison applied
>>for his first patent, an electrical volt recorder, in 1868 at age 21.
>>Before he died at age 84 in October of 1931, Edison had received patents
>>for an incredible 1,097 U.S. Inventions and changed the world we live in
>>forever.  Although he is perhaps best known for inventing the
>>incandescent lamp, which now lights the dark of night for people the
>>world over, Edison's genius gave us hundreds of other inventions that
>>have become indispensable parts of our daily lives, from simple
>>conveniences like waxed paper, band-aids, and the gummed envelopes in
>>which millions of letters are mailed every day, to major contributions,
>>such as the phonograph, the motion picture projector, the automatic
>>telegraph system, the universal electric motor for AC and DC current,
>>fluorescent lights, the alkaline storage battery, Edison Portland cement,
>>the fluoroscope, which Edison chose not to patent because of its
>>universal need in surgery and medicine, and hundreds of others.  Among
>>them are the first embossing machine, Edison's electric pen, the
>>mimeograph machine, and an early Edison ediphone.

Here we see a display on the invention that gave Thomas Edison the most difficulty, the storage battery.

In fact, after 9,000 experiments, all failures, his assistants tried to discourage him. "those are not failures," he responded. "those are 9,000 things we've learned that don't work." And after 41,000 more experiments, he gave the world his nickel alkaline storage battery, which for more than 75 years has been used on everything from London transit buses to the submarines of the U.S. Navy.

Thomas Edison gave birth to the motion picture industry with his invention of the kinetoscope, kinetograph, and kinetophone, which are displayed here and which combined made possible the sound movies we all enjoy today. Of all of his inventions, Edison's personal favorite was the phonograph, because the phonograph offered music in every home and he felt that music, next to religion, has done more to elevate man than any other thing since the birth of Christ.

Charles Kettering, famous in his own right as an inventor, said that as surely as if they were named in Edison's last will and testament, every man and woman alive was the beneficiary of the labors of this great man. For he was the founder of organized research and gave us the principles of modern electronics, and today as we watch television, listen to the radio, pound a typewriter, send a telegram, talk on the telephone, go to the movies, listen to recorded music, turn on an electric switch, take the waxed paper from a loaf of bread, or put a band-aid on our finger, we are in debt to the genius of Thomas Edison.

His friend and neighbor, Henry Ford, called him the world's greatest inventor and worst businessman. However, in 1931, the year that Edison died, businesses that were created by his inventions amounted to $25,683,544,000. This was twice the total of all federal, state, and local government budgets.

Edison said that anything we had the mental capacity to conceive, we had the physical ability to produce. To Thomas Edison, nothing was impossible. Yet all this man wanted was to make the world an easier, more enjoyable, and comfortable place to live. Edison himself said, "if I have spurred men on to greater effort and if our work has widened the horizon of man's understanding even a little and given a measure of happiness in the world, I am content."

How many of you had any notion that he was that broadly the base of your life? Okay. About a fifth of you. And there are a couple things here. One is, inventions change everything. I mean, the discovery of the polio -- or discoveries do. The discovery of the polio vaccine changed everything. The invention of the electric light which we're using, the invention of television which we're using, the invention of the satellite, which is how we're projecting the show -- this particular class is shown all over the country by things that are inventions.

So one thing, you know, that we're going to argue today is that you want to have a society which focuses again and again on inventions. But there's a second part: look how persistent he had to be. 50,000 experiments to get to the electric battery? 4,000 to get to the electric light. And think of what lessons children could learn if it was routine in third, fourth, and fifth grades to study Edison, and how much it would liberate you.

I mean, the fact that you may not be a great academic or you may not like sitting still or you may not like doing whatever it is that modern academics wants you to do, people like Edison would all have been considered hyperactive children. They were too aggressive, too energetic, too persistent, and far from seeing himself as a victim, I think it's a true story that Edison was very hard of hearing and actually used his teeth on the edge of the phonograph machine in order to check the records, because he couldn't hear. He was a very persistent man.

And think about all the habits we ought to be teaching ourselves just coming out of the life of this one man. He actually contributed about one-sixth of the gross national product came out of his inventions by the 1930s.

Now, to give you an example of how it applies to the modern world and why I'm an optimist. People -this is not just glandular. It's based on serious thought about how the modern world works. Bill Loughrey, who's a good friend of ours at scientific Atlanta, he has the following rule: the computer chip now has over one million times the power of a vacuum tube for the same price. If the federal government had improved in efficiency as much as the computer has since 1950, we would only need four federal employees, and the federal budget would be $100,000.

Now, the analogy's not actually -- is not actually a valid analogy, but it's a wonderful way of thinking about this. There's a similar version of that that talks about cars. You'd pay, you know, $300 for a car and would get 90 million miles to a gallon. That's how dramatic the computer chip industry is. You're about to have the same explosion in biology, as we'll discuss later. I mean, there are places where suddenly -- and this is why I talked earlier, people get used to the idea of, "okay, this is what my life will be like." And then suddenly you hit a discontinuity, and now it's here.

This is what happened to physics in the first half of the 20th century. >From Einstein around 1913 to the atomic and hydrogen bombs. This is what happened to the computer chip -- to the computer beginning about 1950 to the transistor, which was discovered in 1949. This is what happens right now. We're just seeing the beginnings of the DNA revolution in biology. It will do this.

And that's why sometimes what you're really looking for -- remember Drucker's "Effective Executive," you're sitting right here -- what you're really looking for all around you is: where are the places that are about to go through this discontinuity? Because that's where the big money is, that's where the big change is, that's where you have the real opportunities. Now, the point at one level of this -- of focusing in on this as a pillar is that as technology changes, we change. The technology has a tremendous impact on us.

I mean, why do more people move to Florida? Because of air conditioning. And try living in Florida in mid summer without air conditioning. It's a big factor in the rise of Florida as a year-round place that was the popularization of air conditioning after World War II. Similarly, I think you've got to look at the degree to which change occurs over time. One of the people -the person who is the center of next week is W. Edwards Deming, and Dr. Deming was born in 1900, and he is a man who taught the Japanese the concept of quality. And his lifetime was a lifetime of commitment.

I want to use -- next week we're going to talk about his ideas in detail. But what I want to do for a few minutes today is to get you to think about a lifetime, your own lifetime, somebody else's, because Dr. Deming, who is a man who really did change history. He taught the Japanese the concept of quality. He came back home and taught us a lot about it. He had a set of ideas that are very, very profound about how the world works.

And yet he is well worth looking at in his own right, but he's also a very useful analogy for us, because Dr. Deming was born in 1900. He was very, very active. He stayed very busy, and he was still teaching four days a week, 10 hours a day, when he died at the age of 93. He died in 1994 before his 94th birthday. Now, what I want you to think about is: look at 1900 to 1994 as a lifetime of change. I mean, think about Dr. Deming's lifetime. 1903, the airplane is invented by the Wright brothers. 1903, the first motion picture with a -- with a plot, first American motion picture with a plot, "the Great Train Robbery," was made, which you see at Disneyworld. 1903, Henry Ford begins his first mass-produced automobile and begins lowering the cost of buying a car. After that comes commercial radio, commercial television, microwave ovens.

I mean, just go down the list sometime. Dryers, refrigerators. I'm old enough, I still remember the ice man. That was the very end of the age of the ice man when I was a child. I know friends who remember when electricity came to their home. All of this occurred in Deming's lifetime, so if you will, I mean, think about the notion what a lifetime -- what an incredible lifetime that was and how much the world changed. And guess what? It's going to change for us, too. Now, to give you a sense of how -- in Deming's personal life, one lifetime, let's take a look at the spirit of flight, and look from the Wright brothers to the space shuttle, all of which occurred in Deming's lifetime.

We choose to go to the moon in this decade and do the other things not because they are easy, but because they are hard. Because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we're willing to accept, one we are unwilling to postpone, and one we intend to win.

>> altitude 4200.

>> you're a go for landing, over.

>> putting down feet two and a half, picking up.  Two and a half down, four
>>forward, four forward.  Drifting to the right a little.  Two and a half,
>>30 seconds, over.  Contact right. Tranquillity base.  The eagle has
>>landed.

>> that's one small step for man, one giant leap for mankind.

>> three, two, one, touchdown.

>> look at the sand! Man! [cheering and applause]

All of that is in one man, one lifetime. Now, which then leads you to ask about your own lifetime. You see, one of the great failures of the counterculture and one of the places where it broke with the American tradition, if you remember the thesis I've been developing that you've had a continuous American pattern of cultural thought up to 1965, then you had a discontinuity, a breakdown, and we are now beginning to reassert traditional American Civilization.

One of the problems you're going to see is the way in which -- and just think about all the news stories you see and all the analysis you see which is static, and let me show you how it works. The current counterculture view of technology is from us to the past. Okay? So everything is described as though the present is the end of history. In fact, the term "history," history means that's past, but so that, for example, my favorite line was a woman who wrote Wernher von Braun during the effort to get to the moon, and he was the head of the program at Redstone arsenal over in Huntsville, Alabama, and she wrote him and she said, "you know, you shouldn't try to go to the moon. "you're breaking God's will. "why don't you stay home and watch color television the way God intended?" Because wherever we are now is stasis.

Now, there's a very different way to think of it, and this is the way I think -- this is one of the things which has made American history, I think, remarkable, and it's a much more accurate view of technology. Notice where it puts you. The reason you study the past is to learn the future. You're in the middle. So not only do you look at Edison, but you say: okay, where are the Edisons of 1995? Where are the Wright brothers of 1995? Where is the -- what's our generation's equivalent of the Apollo program to get to the moon? So you're constantly seeing yourself in a continuum where on the one side is the past, on the other side is the future, you're in the middle, but it's a dynamic environment, because you always have this opportunity to invent the future.

And let me put it in actual terms. Take Deming's lifetime, 1900 to 1994. Imagine that a child was born last year and lived to be Deming's age, 2088. A way of illustrating that would be to do this. This is the amount of change in Deming's lifetime.

So you can make one of two assumptions. The Toffler assumption is change is accelerating. Now, if you think change is accelerating, let's say there's going to be twice as much change in the next lifetime. If that's true, then this would be the amount of change that the child born last year will live through. Now, when you start describing: what does lifetime learning mean, what should you prepare your life for, how will you earn a living?

I mean, can you imagine in 1900 saying to somebody that "by the time you're 27 or 28, you can go to work for eastern airlines"? "by the time you're 45, you can be flying routinely as a transcontinental pilot." In 1900, they hadn't invented the car -- I mean, they, hadn't invented the airplane yet. I mean, imagine you'd said to somebody born in 1920, the year that the -- the year before the first commercial radio station, KDKA in Pittsburgh, opened up, what if you'd said to them, you know, "you're now 3 years old. "you could have a future in television"? Which would have been, by the way, about right.

That's -- do you all see what I'm talking about? It's a dynamic. It's not a static. It's not past. You look to the past in order to create the future. And you're always constantly saying to yourself: wow, what comes next? I mean, how can you be a pessimist? If you think about all the breakthroughs of his -- of Deming's lifetime, which would be a great paper. I mean, the discovery of Penicillin, the invention of the Polio vaccine, or the discovery of the Polio vaccine, the inventions of new kinds of surgery, the development of the Cathode Ray Tube -- I mean, of cat scans. The development of all sorts of things that will -- remember, x-rays were invented when Deming was already a mature adult.

Now x-rays are something you get routinely when you go to the dentist. I mean, x-rays were very expensive in Texas in 1948. I talked to a doctor who brought the first x-ray to Dallas. It was a big deal. If we'd had the modern government controls, they probably would have only had three there today because it was expensive and it was new.

Now, one of the people who's trying to say to us, "be optimistic, be aggressive, be risk-taking, the world is changing," is George Gilder. And I want you to look just for a minute at Glider's very, very optimistic vision of the future, and then I want to share with you very briefly a point that Gilder makes about how big the change is going to be.

In the next decade, it's going to be possible to put a billion transistors on a single sliver of silicon. That will be shortly after the turn of the century. A billion transistors is equivalent to 16 Cray Ymp supercomputers that would cost some $320 million to buy today.

>> that's extraordinary.

>> that kind of computer power will be manufacturable for less than $100
>>shortly after the turn of the century.  That means approximately a
>>million-fold rise in the cost effectiveness of computing hardware.  I
>>think that during the next decade, the most pervasive personal computer
>>will be a digital cellular phone.  It will be as mobile as your watch, it
>>will be as personal as your wallet, it will recognize speech, it will
>>navigate streets, I will collect your mail, collect your paycheck.  It
>>will be a large variety of wireless devices that will transform America.
>>It will also collect your news, in all likelihood.  I think that what
>>they can expect in the future is that this industry will solve a lot of
>>the most crucial problems that Americans face.

For example, the home life. I mean, what the computer allows connected to fiber optic networks is a return to the home. The home can become the center of production in the society again. Each person with a personal computer can command the creative power of a factory tycoon of the previous era and the communications power of a broadcast executive. It empowers people.

Gilder is one of the great writers of modern times. His book on wealth and poverty is maybe the classic modern restatement of entrepreneurial free enterprise. This is "Microcosm," and if you want to pursue just the scale of the ideas, the sense of how big the change is going to be, just in one area, remember that there are other areas, like biotechnology, the DNA revolution, that are equally powerful, but he does a neat thing.

He quotes from people. This is from Carver Meade. "listen to the technology and find out what it is telling you." Let me explain to you about this notion of you let the technology draw you forward, let the technology tell you what you're doing. He then has -- and I'm quoting him from. Page 61, he quotes Victor Hugh go in "Les Miserables": "the common sand that you tread under foot, let it be cast into the furnace to boil and melt, and it will become a crystal as splendid as that through which Galileo and Newton discovered the stars." That is, the sand can be converted into fine crystal and into telescopes and other things. What else is sand converted into? Computer chips.

>> so that, in a sense, the center of national power in the 21st century
>>may be based on sand.  Which means that the geologic requirement for a
>>nation to be successful is universal.  But the sand only works if you put
>>what into it?  Human energy and what else?  Technology.  But what is
>>technology an outgrowth of?  It's different than just energy.

>> invention.

>> invention, which comes from where?

>> imagination.

>> imagination.  Which is based on what?

>> vision.

>> vision, I mean, but where does -- what organism creates the imagination?

>> human brain.

>> human brain.  So therefore, for any nation on the planet, the most
>>important natural resource is what?  People.  Humans.

>> ask the Japanese.

>> the Japanese, the Dutch, Hong Kong.  We talk about poverty, crowdedness,
>>the whole counterculture vision that if you're overcrowded, it's
>>terrible.  Go look at Hong Kong.  I mean, Hong Kong is one of the most
>>dynamic, active centers of productivity on the planet.  Look at
>>Singapore.  Depends on what you do with the human beings.  If you arouse
>>the human beings, if you create the opportunities -- and he quotes a law
>>which is almost never quoted by modern economists, Say's law, Jean
>>Baptiste say basically argues that supply creates demand.  See, no modern
>>bureaucrat can understand this.  Say's law is -- s-a-y, just like it
>>sounds -- that supply creates demand.

Now, a modern economist, because all modern government economists start, and all -- virtually all bureaucrats and academics start with the idea of continuities, so if you're going to measure demand, the demand is for postal service. Then you say: somebody invented the fax. But there was no demand for the fax. Because nobody knew it existed. The second they learned it existed, guess what? There is huge demand for the fax. Huh? Now it's e-mail. Cellular telephones. There were no cellular telephones. People had very expensive radio telephones which only very, very wealthy people or government institutions could afford, and then one morning somebody invented the cellular phone.

How many of you have a cellular phone? Look at this. I mean, what a -- now, granted, you're an upper middle-class group of people and you're all sort of semi-wealthy, at least by the standards of Bangladesh, but, you know, you look around, there are 20 -- I think the number now is 25 million people use cellular phones. 10% of the country has a cellular phone. It will probably be 40% by the end of the decade, and it's routine, right? I mean, there are now billboards telling you how to order your domino's or your pizza hut on the way home so it will be there by the time you are. I mean, just think about that concept. I mean, home delivery pizza was an invention which promptly found a demand.

It's very important. If the concept is that -- and this is why all modern liberal economics is essentially wrong. I mean, if the concept is supply precedes demand, then what you want to do is maximize the number of inventors. If the idea is that demand is a limited thing, what you want to do is what the federal reserve does, which is control demand. But, in fact, if you are an entrepreneurial, "spirit of invention and discovery" oriented society, you never worry about it, because you figure out people will come along and invent the next phase of winning. Microwave ovens, which are now invaluable.

>> could it also, though, be argued that there was already a demand for
>>communication?  There was already a demand.

>> sure.  There's a demand for eating, but that doesn't mean you can say
>>that therefore, we'll have a microwave.

>> well, I understand that, but as far as the supply meeting the demand --

>> No, of course, of course.  I mean, if you were to produce a supply of
>>something humans had no use of, it would sit in a warehouse.  So
>>obviously, lots of things are invented that don't create demand.  But
>>there's a very important question: which comes first?  And you'll find
>>that in all the big breakthroughs, it is the supply which precedes the
>>demand, so it's not just you've studied the market.  You have a vision of
>>the future.  You have a vision of what humans like.  You have a vision of
>>what they need.

Now, let me give you an example out of the counterculture of how different it is. I think of it as imagine that Thomas Edison invented the electric light today in the age of the counterculture. I think it would be reported on the evening news in a story which began, "the candlemaking industry was threatened today." Okay? Or imagine the Wright brothers going into EPA and OSHA to get permission to try to fly at Kitty Hawk?

Have you ever thought about what it would have been like, you know, having to do the surveys, having to -- you know, how unlikely it would be that they'd ever get around to doing it? What I'm trying to suggest to you here is that invention and discovery are a matter of mind, that they are a way of life. That, in fact, people -- you have to think about the eccentricity, the energy, the spirit, the attitude that led to this.

One of the really superb works on this is Peter Collier and David Horowitz, their biography of the Fords. This is quite a remarkable book, and I want to just share with you a couple of quick examples from the history of Henry Ford. This is the prologue: "Detroit, June 4th, 1896. "it was after midnight when a light summer mist started to fall outside the backyard workshop and Henry Ford began putting the final touches on the peculiar-looking machine which had obsessed him in one form or another all his adult life." Remember, this is June 4th, 1896. "on most other evenings, Felix Julian, the old man who lived in the flat next door to the Fords and had cleared out his half of the shed to give the machine more space to grow, would have been there too, sitting in a corner of the shed, watching the painstaking assembly in silent awe. "in fact, Ford had often arrived home from his daytime job" -- compare that to the modern world. He worked all day -- "his daytime job as chief mechanic at Detroit's Edison illuminating company, to find Julian sitting alone in the shadows staring at the odd contraption slowly taking shape, impatient for him to hurry through dinner and get to work. "But now on this night of nights, the old man had unaccountably decided to go to bed early, and so he missed the last act of the great drama. "It was almost 2:00 AM. When henry and his friend, Jim Bishop, finished work. "although he was haggard from having gone two nights without sleep, Ford's recessed gray eyes flashed with excitement. "his invention was finally ready for a test, but as he began to maneuver it toward the door, there was a revelation of the myopia everyone who knew him accepted as a paradoxical part of his visionary nature: the machine was too big to fit through the doors of the shop."

How would you like to have the modern media covering live this self-proclaimed genius's failure to measure his car? Can you imagine the ridicule he would have faced? And notice again, he didn't apply for a government grant. He didn't say, "I can't invent unless you subsidize me." He worked all day to go home and work all night. "without hesitating, Ford seized a maul and began to knock out an opening in the brick walls. "Henry rolled the vehicle he later referred to as the baby carriage, a light chassis on four bicycle wheels, out into the night. "the metaphor came naturally. "it was as if the womb of his creativity, gravid since boyhood, was finally opening. "

Ford would tell what happened next thousands of times in the coming years, never tiring of the repetition, always speaking in the tones of wonderment most men use to describe the birth of their first born. "as it became worn smooth with frequent retelling, the story eventually came to have the understated simplicity of a creation myth. "quote, it was raining. "Mrs. Ford threw a cloak over her shoulders and came outside. "Mr.. Bishop had his bicycle ready to ride ahead and warn drivers of horse-drawn vehicles, if, indeed, there were any to be met at such an hour. "I set the choke and spun the flywheel, and as the motor roared and sputtered to life, I climbed aboard and started off. "the car bumped along the cobblestones of the alley as Mr.. Bishop rode ahead on the bicycle to warn any horse-drawn vehicles. "we went down grand river avenue to Washington boulevard. "then the car stopped".

Again, imagine the modern media. "we discovered that one of the igniters had failed. "when we had it repaired, we started the car again and drove back home. "both Mr.. Bishop and I went off to bed for a few winks of sleep. "then Mrs.. Ford served us breakfast, and off we went to work as usual." This is the beginning of the second largest industrial company in the world, in his back yard, in a garage, in his spare time, after he works all day. He goes on to say, by the way, "the rest of the week, Ford drove all through Detroit. Jim Bishop bicycled ahead of him as a flagman, stopping at saloons and stores to tell people to come out and hold their horses. "one day, the little vehicle knocked a man down. "by the time Ford had turned off the engine and climbed down, the victim lay on the ground caught between the front and rear wheels. " Ford leaned over and discussed the problem with him. "should he start the engine again and finish driving over him, or should he try to move the car? "finally, another man appeared and helped Ford pick up the quadricycle and move it off the prostrate man, who stood up, dusted himself off, accepted Ford's apologies, and walked off, victim of the first recorded auto accident."

>> too bad an attorney wasn't around.

>> That's right. Just when you need a good trial lawyer, where are they,
>>right?  But again, we tend not to realize how different these things are.
>>"Theodore Roosevelt, the first president to ride in a car, although he
>>would be followed along the Hart Ford parade route by a horse-drawn
>>carriage just in case there was trouble, and would be praised the next
>>day by one newspaper editor for, quote, the display of courage typical of
>>him.  "by about 1900, there were, in fact, 4,000 cars that had been
>>manufactured in America.  Three-fourths of them were steam and electric."
>>

Again, if you'd had a government study in 1899 of the most probable system for propelling cars, it probably might well have come out steam. It would not necessarily have come out gasoline. It was not obvious in 1899 that gasoline worked.

There are a couple of other examples of this, though. In 19 -and this is, again, so hard to get across in the age of the welfare state and the counterculture. Success grows out of failure. Remember the Edison point, we've had 9,000 experiments that we now know don't work? That's progress? And think about the mindset. "in 1900, 38 new companies began production. "another 47 the following year, and 57 more in 1902. "but others were falling by the wayside. 27 companies failed in 1903, 37 more in 1904. "already in the field were Franklin, Pierce, Locomobile, Packard, Stanley, names to conjure with in the future. "in 1903, a former carriage maker named William Durant bought the Buick company and made it the centerpiece in a grandiose plan to assemble the combine that would eventually become General Motors.

"Ransom Olds," for whom Oldsmobiles are named, "stole a march on all the producers with his vision of a cheap small car, the curved dash two-seater Oldsmobile costing $650, including mudguards. "a friendly and familiar car of the sort that inspired popular songs. "at this historic moment, Henry continued to put his efforts into racing, hoping that a fast car would attract potential investors." Talks about how he built cars and he actually won races, and that was the beginning.

So here's a guy who has to win a race to raise the money to create the company which invents mass-produced automobiles, which lowers the price of cars, popularizes the automobile across the entire planet, and invents the modern automobile age. And he begins working at night after working all day in his garage. Compare that to the modern attitude: if you don't subsidize me, how can you expect me to do it? If you don't loan me the money, how can you expect me to do it? It's exactly wrong and exactly not the way the real world works.

Which gets me to the question I want to close with for this first hour: how does a pro-invention and discovery way of life work? That's what I want you to think about for -- just ask yourself for a second. I mean, think about the stories we've heard so far about Edison, about Henry Ford. Think about the models we've looked at in terms of change. What kind of attitude would you have if this was a society that every morning decided that we wanted all of our citizens to have a vision of themselves inventing the future? What would some of the characteristics be? Ask yourself: how would you wake up? How would you confront life? What would your mood be? What would you think like? Not necessarily what would you think about.

>> you'd want to get up in the morning.

>> yeah.  Huh?  You'd want to get up.  Now, again, psychologically, think
>>of the person on welfare who has all day long to invent the automobile,
>>but they have nothing to get up for, because we haven't found a way to
>>plant inside them this sense of wanting to get up.  Somebody said you'd
>>be optimistic. Of course you would.  9,000 down, 41,000 to go.  What a
>>great business.  You'd have a quest for knowledge.  Huh?

>> doesn't fear motivate sometimes?

>> sometimes.  What's a good example of fear?

>> hunger.  Afraid of --

>> hunger is a good example.

>> it is.  When you've got meals to put on the table --

>> that drives entrepreneurs.  Putting the meal on the table drives the
>>entrepreneur.  Show me a fear that would drive the inventor.

>> mortality.

>> mortality.  Can I discover a cure for cancer?  I mean, the number of
>>people who have a member of their family who get sick and that's why
>>they're research biologists.  Somebody who has a friend who goes blind,
>>and that's why they go to work on inventing a computer for the blind.  Or
>>somebody who has a friend who's in a car wreck, and that's why they go to
>>work to invent a better way to rehabilitate.  I mean, fear is a real
>>component. What other kinds of motivations?

>> curiosity.

>> that's right.  Curiosity.  I mean, a big motivation, we tend to be -- if
>>it's not beaten out of us, and the beating can be cultural.  One of the
>>great problems we have now in the inner city is that kids who do well are
>>often literally attacked by kids who aren't doing well.  So they're
>>psychologically under barrage.  I mean, you can beat out of people
>>healthy behaviors, but curiosity is a natural human behavior, it seems to
>>me, and it's one of the things that keeps me going, is I get up every
>>morning curious.  I'm just, you know, what will happen next?

>> looking for cookies.

>> looking for cookies.  I mean, since I'm psychologically 4
Years old and I'm always looking for cookies, you know, I wake up in the
morning and I think my aunts and my mother and grandmothers drilled into me
that there's always a cookie somewhere.  It's my variation on the old
Reagan story about the kid who was looking for the pony.  I mean, you know,
that I wake up in the morning and go:  not just cookies, but it will be
interesting.  A cookie will be under a dinosaur or something. We've got to
-- you know, so you know the cartoon about the kid who has the tiger?
What's the --

>> Calvin and Hobbes.

>> Yeah, Calvin -- I mean, my wife read one of those one day and said,
>>"okay, I get it" and handed it to me, because it was -they both become
>>-- they both had run back and they were being chased by a Tyrannosaurus
>>and they wererunning, that's how I live my life.  I'm permanently
>>fascinated.  I mean, I once had this fantasy I'd be Speaker of the House,
>>and it's -- you know, and so -- one of my best friends said I was the
>>only person he knew who walked into rooms and he heard trumpets whether
>>there were any or not, and so you have there this that comes out of the
>>idea of:  wow, this will be exciting.

But notice, see, in the modern age all too often, what we say to people is: well, be practical. Be reasonable. Well, look at the people we're looking at. I mean, do you think -- can you imagine a modern therapist dealing with Edison? "this fruitcake thinks that 9,000 failures is a great start." Or talking to Henry Ford. "this guy is so incompetent, he can't even plan a car small enough to get out of the garage."

I mean, he literally knocked down part of the wall of the garage. That's right. I mean, he was not a young guy. He was already on -- I mean, just think about all the things that your vocational counselor at school would tell you. "you really want to go off with your brother and fly what?" I mean, and this is my point: there's a dull grayness in the counterculture and the modern bureaucracy and the welfare state that says: "oh, don't break out. "conform." But out here -you can break out if you want to be a performance artist doing something weird. But don't break out if you want to be an inventor, or a scientist or a discoverer.

But the great breakthroughs are out here. They're the people who say: I think I'll be nutty for five years. I think I'll just go and work on bread mold, penicillin. Or: I think I'll go work on inventing an airplane instead of just being a bicycle mechanic in Toledo. Or in Dayton, rather. I mean, it's that -- it's that kind of thing.

So what I'm partly saying to you is almost all of the spirit of invention and discovery is in our minds, and our minds are shaped by our culture, and so the question is: how do we -and we're going to come back to this in the second hour -- how do we now come back and make American Civilization healthy so that every child in America, male or female, any ethnic background, could say: I could be Edison, I could be Carnegie, I could be the Wright brothers? Because the real answer is: why not? If that's the game you want to play, if it's the contribution you want to make, go for it. Have a great time. Not guaranteed to succeed. We're guaranteed the right to pursue happiness. And we'll pick this back up when we come back in a few minutes.

(break)

We were just talking during the break about Thomas Edison and the fact that companies were called, for example, Edison Electric. He didn't own them. But one of his major fights early on was Edison was a genuine populist. He wanted everybody to have access to power. And so Edison insisted on central generating stations so that everybody could have electricity. One of the arguments early on had been that -- by financiers that you could have a very profitable company that just made individual generating stations for factories and for rich people so that you would have bought your own small generating plant.

And there was a very serious debate for a few years about which way to go. And Edison was adamantly in favor of large central generating stations that would allow how everybody to have access to electricity, and he was a genuine populist.

Let me explain -- somebody asked me during the break what happened to some of these attitudes and ideas? Which I think if you were to look at America from really its founding up through the beginning of the Depression, clearly was a dominant attitude and remained, I think, the preeminent attitude till 1965, gradually being undermined to some extent, but was in many ways still the preeminent attitude until 1965, and then broke down.

And what I would suggest to you is that the spirit of invention and discovery is undermined by seven welfare state cripplers of progress. There are seven things the welfare state does to cripple progress: credentialism, bureaucratism -- we're going to go back through these in a minute -- taxation, litigation, centralization, an anti-progress cultural attitude, and just plain ignorance. Let me walk you through this for a second.

The first is credentialism. What did it take to be an inventor or a discoverer? It took inventing and discovering. I mean, it's very interesting that Bill Gates dropped out of college. That the founder of Apple Computers dropped out of college. I mean, the fact is a lot of great entrepreneurial inventors and discoverers just go do it. I mentioned the other week the author of "T-Rex," one of the leading dinosaur -vertebral paleontologists in the country was a college dropout. But he -- but he's interested in dinosaurs. I mean, he wasn't interested in learning all the other junk you have to get out. He was interested in learning about dinosaurs which he learned a lot about, and he's now a world authority.

And the reason I start from here is that in an earlier era, if you could do it -we had this discussion this week, in fact. We had 10 street salvation specialists. These are people who help drug addicts, they help alcoholics, they help prostitutes, they help teen gangs. None of them have a college degree. Many of them are former addicts themselves. And they were making the point that in the modern bureaucratic age, they are being asked by the government to hire somebody who has the right master's in social work, who knows nothing about the street, because the people they are hiring are all ex-addicts from the street who have no degrees.

So even though they're doing a wonderful job, they're saving people, and they have much higher salvation rates in terms of drug addiction and alcoholism than do the traditional government programs -- sometimes it's as much as 10 times as high, but they don't have any degrees.

Therefore, they can't really be good people, so the state says we have to hire somebody who has graduated from college, and this one guy said, "I only hire drug addicts and street people." So it's an interesting -- just a very different kind of way of thinking about it. Do you measure what people can accomplish, or do you remember what papers -- what piece of paper they have?

The second one is bureaucratism. I started earlier telling you about -- I want you to think now about the Wright brothers. They walk into the Environmental Protection Agency, Orville and Wilbur, and they say, "hi, we're bicycle repair people in Ohio, and we want to fly an airplane, and the best place to fly an airplane is on the Atlantic coast near Kitty Hawk where there are big sand dunes and lots of wind." Sand dunes? Just typical of those kind of Ohio industrial types, right? Don't even care. There's only about 1500 miles of sand dunes left. And, of course, the first key question: "have you done the endangered insect species form?"

You can imagine now these two bicycle mechanics, right? "what endangered insect?" "well, you're going to have this plane, it's going to go through the air, it's going to have a propeller, it's going to hit things. "how will you know whether or not you wipe out a species if you don't first check to see if there's a species to be wiped out?" You can imagine going through all this stuff, right?

Then they walk down the hall to OSHA, the occupational safety and health agency. Have you ever seen the Wright brothers' original flyer which was made of spruce and muslin? It's very, very light. One person lays down flat. The reason they had to find a windy hill was they couldn't get enough power for it to fly if it flew -- this is how light it is and how underpowered it is. Can you imagine what it would have looked like if OSHA had gotten done? The sucker would never have worked.

So you couldn't have flown anyway. You'd have had to take a train, unless in the 1820s, George Stephenson, when he was inventing the rocket, which was the first train, had had to walk into OSHA to get their approval for a train. Which would mean, of course, you'd ride in a stagecoach, unlessduri ng the Assyrian era there had been an OSHA which had said, "wheels? "you want people to ride on wheels? People should walk. God wanted them to walk."

Now, you may think I'm exaggerating. I can find you books that literally outline that kind of attitude. So bureaucratism, the idea that filling out the paperwork is more important. Can you imagine filling out 50,000 failed inventions, I mean, failed tests with Edison? Can you imagine the paperwork the modern government would want?

The third big problem is taxation. Now, why is taxation a problem? Because if the central government takes away from you the resources, if Henry Ford had to work so hard and had no money left after he got done working, he couldn't have invented -- he couldn't have built his first car. You have to have after-tax income in order to have the freedom to try to do the things you want to do. And if a government takes the tax money away from you to give it to a bureaucrat, you've taken it away from the inventor and the discoverer, and so you've actually lowered the amount of resources available.

Litigation. You know, we were kidding earlier, and several of you spontaneously said, when I talked about Henry Ford running over this guy in the first week, you know, "where's the trial lawyer?" But litigation's a major problem. Hi-tech companies will tell you that high taxes, raising the cost of capital to build the next factory, and litigation, particularly strike law firms that automatically sue them if their stock goes up or down, automatically sues them, that those are two major impediments to hi-tech companies in America today and that --

>> I'm sorry, you look at the current aviation industry, Terry and I both
>>can agree to that.  The current aviation industry is so saturated with
>>litigation --

>> yep.

>> -- about incompetent pilots getting killed because they flew an airplane
>>they shouldn't have been flying anyway.

>> aviation is just about extinct now.

>> That's right.  Litigation has driven the production of light aircraft
>>out of this country, to take an example.  So litigation's a major killer
>>of invention and discovery.

Centralization. Because what happens in centralization? Remember I drew earlier, it's a very important psychological model for you to think about. The more centralized you are, the more decisions will be political and obsolete. In other words, the bigger the centralized system, if you have a great idea out here but the decisions are made right here, and this is the decision point, it's inside this huge bureaucracy, you've got to somehow convince all of these layers of people that your nutty new idea is workable.

Now, can you imagine going to a modern bureaucrat in a big-government, centralized system? This is also true, by the way, of big corporations. It's why IBM didn't invent Microsoft, nor did it invent Apple. It's why General Motors for a while was too slow to understand what was happening with Japanese cars, because when you're a big enough system, you can protect yourself by staying inside the system, even if you're wrong.

Remember we talked about this last week. Well, if you're -- what you're trying to do, imagine the year the iron lung industry and Jones Salk shows up and says, "I have this great new idea. "let's eliminate iron lungs. "we'll just have a vaccine, and nobody will get Polio." Is that a good idea or a bad idea? Do you want to encourage the end of your industry, or are you really busy working on project 12, which is right here, which is the better, more portable iron lung, the aluminum lung? Which one are you going to invest in? So what you want is a society with many, many small institutions.

Now, another big problem is the anti-progress cultural attitude. You were laughing about when I said the modern TV would report Edison's invention as a negative, but isn't that exactly what happens? The O.J.. Simpson trial is big news. The breakthroughs in genetic biology liberating the age of molecular medicine and saving people with fundamental genetic defects doesn't get page one very often, and -- you know, and the news media can say, "well, that's because they don't read it."

Part of the reason they don't read it is because we don't report it. Remember, supply leads to demand, and that's part of why: what's the public reaction? You get Internet, you get talk radio, you get efforts. But because we've had such a deep anti-progress cultural attitude, I mean, "progress" was not even a word you were allowed to use for a while. It was -- you know, it was like, you know, you must be some kind of romantic, you know, highly self-deceptive person if you actually think human beings can have progress. And there was a period there when everything was terrible.

We talked about nihilism. I mean, you listen to some of the rock music in periods when there's a sense that there is no future, that it's not going to be any better. Meanwhile, all around us there's scientists and engineers and naturalists who are discovering and inventing a lot of things.

The final one, though, is just plain ignorance. The fact is, if you don't teach how to think scientifically and you don't think how to be a creator -- I mean, you don't teach how to be a creator and you don't teach how to discover, you don't teach how to explore, it shouldn't shock you that people can't do it.

It's a very major problem that we tend to consistently score 14th or worse in science and math. Because it means we don't have a basic -- we don't have the alphabet. We don't have the basic principles of being able to operate in a world in which science is important and which learning is important.

And in the 19th century, people like Edison, Carnegie, the Wright brothers, Henry Ford, all got a basic education, some of them by the 8th grade. It was sufficiently powerful that it carried them the rest of their lives. We now have some people who get through two years of college and are still illiterate. I mean, just a totally different attitude towards what real learning means, what you have to master in order to be effective.

Now, this does not mean, by the way, that I'm against government. I would say just the opposite. That government can play a powerful role in basic research and development, as long as it's willing to get -- get it out of the bureaucracy. If you go back and look at Powell's great trip down the grand canyon on the Colorado, which is one of the great journeys of discovery in American history, it was a government expedition. It was the U.S. Geological survey. If you go look at Lewis and Clark reaching the pacific, that was a government expedition. If you look at the Apollo program, the fact is, much of the progress on the airplane and the computer chip are financed by the government.

But the trick is to get it out of this big system over here as a freestanding, small project. You cannot successfully make big breakthroughs. You can have resources leave here, the big central system, and go to a point where somebody's doing something interesting, but if you keep the resources in here, if you tie them up in bureaucracy, you will guarantee that you'll get very, very minimal progress at very big expense. Now, government can do selected big projects well, again, if they're off to one side.

So let me draw two distinctions here. Government can do basic research and development, or government can come out here and set up the Apollo project. Remember, NASA was brand new. They built it up, they did it, and if they disbanded it at that point, I think they'd have been better off. And said, "okay, now what's our next project?" So you build a project team, you get the job done, and you close it down and start a new project team.

Because if you keep the people there, they become obsolescent and they become bureaucratic. And what you're looking for, remember, is not incremental change. You're not looking for a slow, gradual change. You're looking for the breakthroughs. How do we manage -- what is it that's worth doing that's big? Now, big projects must be focused, lean, and tightly managed.

We're going to look at the Skunk Works at Lockheed as an example, but it's a very important concept that they have to be focused, you have to know -- you know, in other words, why are we setting up this agency? To accomplish "x." Not to do 12 things. To do one thing. It's got to be lean, and you'll see what I mean by "lean" in just a minute. Very few people. And you've got to have very tight management. The fewest people possible working as well as they can, getting it done, and then getting it over with.

Now, I want you to look at Kelly Johnson, who's the father of the Skunk Works, who is, in a sense, to aviation sort of the Thomas Edison of modern aviation. Let's take a look at Kelly Johnson.

Lockheed was already swamped in terms of manpower, tooling, and facilities with wartime contracts. But this was a blessing in disguise, an opportunity to implement an idea he'd been pestering Robert Gross about for years. Let him round up a small group of talented people, designers, engineers, and shopmen, put them under one roof where they could all work closely together, and give him complete authority over everything from procurement to flight test. With no other options, Gross said, "go ahead." Stealing people from around the plant, just 28 engineers including himself and 105 shopmen, he also built a small facility out of discarded shipping crates, using a circus tent for a roof.

On June 19th, he laid down the principles under which the project would operate. In one and a half pages now preserved on old photostats, it formed the basis for how he'd try to operate for the next 30 years. He'd be responsible for all decisions. Paperwork and red tape would be cut to the minimum. Each engineer would be designer, shop contact, parts chaser, and mechanic, and each would remain within a stone's throw of the shop at all times.

There'd be but one object: to get a good airplane built on time. He'd promised the airplane in 180 days. As would become his custom, he gave his men 150. The clock started ticking on June 23rd. Remarkably, the completed aircraft arrived at Muroc on November 14th, just 143 days after start-up. When he retired in 1975, Kelly Johnson had been on the cutting edge of an advance from 200 to more than 2,000 miles per hour. He'd been involved in the design of 44 different airplanes, many of them among the classics of aviation history.

And at the time, he was still looking very much into the future. He'd gotten the Skunk Works into a project which would bear fruit in the F-117-A, the world's first true stealth aircraft. What was his secret? Well, he had a remarkable capacity to take a complex problem, reduce it to its simplest components, and then take the most direct and sensible approach to its solution. Always a maverick, he was smart enough and tough enough not to follow the committee rule of conventional wisdom. This gave him remarkable freedom. With that freedom came a tremendous burden of responsibility.

Finally, and most important, he understood himself well enough to realize that with a few good people, you can do remarkable things. Kelly Johnson's greatest legacy wasn't just what he did, but the way he did it.

Let me give you a couple of quick examples of the Skunk Work rules, because this is what we ought to apply across the whole culture, I mean, to the federal government, to state governments, to private business, to universities. "first, the Skunk Works manager must be delegated practically complete control of his program in all aspects, complete control. "second, strong but small project offices must be provided by both the military and industry. "third, the number of people having any connection with the project must be restricted in an almost vicious manner. Use a small number of good people, 10% to 25%, compared to the so-called normal system."

Now, I just want you to think about that. This guy's saying: you take whatever a normal college administration is, cut it by -- cut it to 10 to 25%. Take a normal government bureaucracy, cut it tono more than 10 to 25%. "a very simple drawing and release system with great flexibility for making changes must be provided. "there must be a minimum number of reports required, but important work must be recorded thoroughly. "there must be a monthly cost review covering not only what has been spent and committed, but also projected cost to the conclusion of the program. "don't have the books 90 days late, and don't surprise the customers with sudden overruns. "the contractor must be delegated and must assume more than normal responsibility to get good vendor bids or subcontract on the project. "commercial bid procedures are very often better than military ones".

We could save, I believe, 20 to 40% of the Pentagon just by applying the Skunk Work rules to military procurement across the board. 20 to 40% on big projects. "the inspection system: push more basic inspection responsibility back to subcontractors and vendors. "don't duplicate so much inspection. "the contractor must be delegated the authority to test his final product in flight. "he can and must test it in the initial stages. "if he doesn't, he rapidly loses his competency to design other vehicles." Johnson required that he fly the aircraft so that he would have the feeling. You go through the whole thing. "funding a program must be timely so that the contractor doesn't have to keep running to the bank to support government projects. "there must be mutual trust between the military project organization and the contractor, with very close cooperation and liaison on a day-to-day basis. "this cuts down misunderstanding and correspondence to an absolute minimum. "access by outsiders to the project and its personnel must be strictly controlled, and because only a few people will be used in engineering and most other areas, ways must be provided to reward good performance by pay, not based on the number of personnel supervised."

So there's not an incentive to have more people under you so you get a higher salary. You get a higher salary for doing the job. Very different model from most modern bureaucracies. This is what Tom Peters in "the Heart and Soul of Excellence" said about Kelly Johnson: "Kelly Johnson was responsible for about one-third of what flies in the sky today. "right after World War II, he developed the first of the military jets, the f-80. "subsequently he developed the F-104, the C-130, the U-2, the SR-71, to name only a few. "at one time, Kelly took an ailing satellite program, which was behind schedule by three years and was 700% over budget. "it had, in just one part of the Program, 1271 inspectors. "for all this, its successful launch rate was 12 and a half percent. "Johnson reduced the number of inspectors from 1271 to 35. "getting the project back on schedule" -- "got the project back on schedule, began operating below budget, and increased the successful launch rate from 12 and a half percent to 98%.

"At one point, the Air Force sent a team to consult with Kelly as they were working on a project which was equal in magnitude and complexity to a project he was working on. "the Air Force was four years behind schedule, 700% above budget, and had 3750 people working on it. "Kelly Johnson's project was on schedule, slightly under budget, and had 126 people working on it."

Just think about that number, 3750 to 126. The name "Skunk Works" was taken from the Li'l Abner comic strip and refers to a half-licit, half-illicit innovative activity operating on the periphery of an organization. I think the Skunk Works was actually a still, wasn't it, in Li'l Abner?

The point is that there is a style here. There's a way -- it's not just that Johnson's an individual genius. It's a way of cutting through the baloney, eliminating the layers of bureaucracy, focusing responsibility, hiring a very few people who are very good and letting them do the job, and then holding them accountable for how they function so that they invest themselves in getting the job done.

This is part of why I think you can really think about a dramatically smaller system, is because when you look at what really works, it's very small. It's not some huge, complicated bureaucracy. It's a very flat hierarchy, with relatively few people.

Now, what you have to ask yourself about the future is: how much has changed and how much will change? And this is part of the point of Toffler's concept of the Third Wave of change, because the truth is, if you look at how much has changed in the 20th century, it's amazing. I mean, if you could go back to 1900 and show them a hologram and a videotape in color of everything that will happen in the 20th century, they'd be astonished. Well, guess what? More's going to happen in the next century. Change is accelerating. It's not even staying level. It is accelerating. There's no question change is accelerating. I mean, whether or not it accelerates in the U.S. Is -- I mean, the Chinese, the Japanese, the Germans, the Brazilians, the Indians, the second largest center of software in the world is Madras, India. Change is coming. The only question is whether or not America is going to be part of it, but the changes are coming.

Now, in that framework, I would suggest to you that every citizen must know the basics of science and technology. And one of the things we have to have, I think, in our generation is both a re-establishment, a reassertion, of what the minimums are that you need to know about science and technology to be functional, and I think we need to say that we are committed to going back and, in a sense, retrofitting adults.

I mean, how do we make it possible for adults to learn the basics if they didn't get it during school? This idea that we'll now teach this generation of second graders and 40 years from now we'll get there is nonsense. We've got to find a way to make it relatively easy and relatively accessible for every citizen to learn things. In addition, we've got to change the game so that every citizen learns to be problem solving, solution oriented, persistent, and strategically optimistic.

Now, I say strategically optimistic for a second, because I don't think you get up in the morning and go, "wow, everything will work well." But you get up in the morning and you say, "if the tire's flat, I'll fix it." "if the car is not working, I'll fix it." "if I haven't quite solved, you know" -- "if I'm losing hearing, I'll learn how to adjust or I'll get a hearing aid."

I mean, the whole notion that when you're faced with a problem, your first reaction is to start hunting for the solution is very different than the current system, where your first reaction is to relax and feel like you're a victim. It's a very different model. And I talked about specific skills here: problem solving, you've got to start -- these are habits. You practice solving problems, you learn how to do it. Automatically being solution oriented, which, by the way, means you have to be persistent, because the truth is, it's hard.

I mean, every time we say to people, "we can give you an easy solution," we actually weaken them. Which is why persistence matters. If you teach people to be persistent -- and again, Edison has probably -- I mean, we don't expect people to try 50,000 times. But how about five? I mean, this is a society where one is seen as an imposition. "you really want me to do that?" I mean, "I should actually do my homework?" "I should actually study?" "you want me to save?"

Now, in that framework, I think we've also got to recognize that we are now faced in a way no other society ever has been with lifetime learning. And I think lifetime learning is very, very important.

Every citizen must know how to learn new things as requirements and reality change. And we may -- and again, this doesn't require going back to school. It requires saying in the mass media over and over and over again: you ought to plan to learn all of your life. And there are lots of ways to learn. You can go to seminars, you can go to school, you can get audio tapes, you can get videotapes, you can check out books, you can play with the Internet, but if you aren't learning something every day, you don't get it, and this has to become almost a requirement of citizenship in our culture.

That we expect every American to learn every day, and so you ought to just relax and accept it. This is part of what being an American in the 21st century will mean. We also need, I think, to recognize what we mean by the spirit of invention and discovery. That is, a learning, attitude, perseverance, hard work and enthusiasm, that they are the keys to invention and discovery.

That's why we talk about the spirit of invention and discovery. You've got to have these attitudes in your head. You've got to be willing to get up and do it. Again, I mean, can you imagine saying to the typical teenager today: you want to be as famous as Henry Ford? Well, so what did you do after your job? You have all summer long.

I mean, it's part of why I'm somewhat resistant at times to midnight basketball. Not because I'm opposed to midnight basketball as something to do if you've already done everything else, but because I'm opposed to the idea that as a culture we would send a signal that instead of working hard, instead of studying hard, instead of, you know, going out and inventing your generation's version of the car, that recreation somehow is, in and of itself, a replacement for these other things. It keeps them busy.

And again, we're going to get to this when we talk about replacing the culture of poverty, but remember, the original midnight basketball was set up by the Salvation Army to attract people there doing what they currently do in order to save them and change their lives so they would do something different. It wasn't a maintenance program.

Now, I mean, if you say, "we're going to have this great midnight basketball league, and by the way, we're also going to read books and look at useful educational films and do other things," then I'd say: okay, now I get it. You're using their current behavior to draw them in to change their behavior. Yeah, if it's a stepping stone, it's good. If it's a stopping place, it is exactly the wrong signal. And again, I'm not talking about the people who already work, you know, 12 hours a day and they want to go play midnight basketball because they need physical recreation and they need mentally to re-create. That's what "recreation" means. But in order to need to re-create, you need to do something first.

>> you can't re-create unless you've created.

>> Right.  So, I mean, I'm as interested in:  what are you doing to create,
>>and how do we get you to that point?  I also think that it's very
>>important to have the old Reagan line:  you ain't seen nothing yet, or
>>the notion that the adventure is only beginning.  And I think this is,
>>frankly, one of the reasons that the "Star Trek" series has been
>>successful.

And the "Star Trek" series, I think, was a great shock because it didn't fit any of the elite culture's views when it first came out. It only ran, you know, for four years, and then -- but it wouldn't die. I mean, it just kept hanging around. I think part of the reason is that in American society, there is this innate sense of: the adventure's just beginning. What's going to happen next? Where are we going to go next? And that's a very deep part of how we operate and of what we look for. At a vision level, what I'm suggesting is that we want to have a pro-spirit of invention and discovery America creating a better future through better ideas.

And we want this to be an active, positive commitment, where our attitude is, when we bounce into a problem, "wow, an opportunity to have better ideas. "I wonder what we should do to solve this one?" Which, if you think about the tone, is a totally different tone and is an energy-creating tone. I mean, if being hungry is an excuse to bake a cake, that's a totally different thing than being hungry being an excuse to sit and whine. One depresses the energy level, the other increases the energy level.

Now, there's a book on it called "Learned Optimism" which argues that leaders consciously know how to increase the energy level by deliberately being optimistic. In addition, let me suggest to you that we ought to have a vision that the goal of a free society is not an American dream. It is to have 260 million Americans dreaming. I mean, the whole neat thing about being an American is that each of us gets to pursue happiness. Each of us gets to go out and define who we are and what our future is.

There's not "the American dream." Rather, there are 260 million Americans, and the truth is, how many of you've had several dreams already in your life, where you thought you were going one way and now you've gone a different way? Seriously, raise your hand. How many of you found -- okay, so the 260 million Americans dreaming, that's why we didn't say there are 260 million American dreams, because any individual American might have multiple dreams, right?

I mean, I want to be a dinosaur collector, I want to be a zookeeper, you know. I have five or 10 other things I won't bore you with right now, at least three of which my wife will shoot me if I say in public. But the whole point is that people are allowed to -- and particularly if we're going to live to be 90 or 100. I mean, why not go for it? Have three or four or five dreams in your lifetime?

Now, if that's our vision level, it seems to me our strategies ought to be to have big goals, to have a cultural change in attitude and understanding, to rethink government so it encourages the spirit of invention and discovery. And to have changes in learning, a pro-invention, pro-discovery tax code, set up prizes, set up x-projects, have a common-sense legal system, encourage small business, and encourage genius.

Now, this is a lot, so let me just walk you through some examples, but you'll see how some of them fit together. First of all, we ought to set big goals for our generation. I mean, I think we ought to certainly have a permanent base on the moon in the next few years. We ought to reduce the cost of space travel to a point where it becomes a reasonable alternative to a honeymoon at Disneyworld. I think that we ought to certainly be on Mars within 15 years, maybe less.

I think that we ought to design an information system in such that every person who gets ill, if it's a serious illness, you can access through the Internet all the current data on your disease so you can learn about your problem, because you're going to study it a lot more than your doctor is. I mean, just -- we ought to have a whole series.

We ought to have a lifetime learning system so that it's easy access for every citizen, probably through the libraries rather than the schools. So we have -- so we don't have a teacher-dominated, bureaucratic, credentialed model. But where you can say, "I need to learn 'x.' "I think I'll go check it out."

We ought to have huge goals. We ought to eliminate poverty in America by being serious about reaching out to help the poor instead of just sending them a check, and we ought to say: here's what it takes to eliminate poverty in America. You've got to be persistent, you've got to work hard, you have a sense of the future. I mean, these are -now, there will always be a willful minority who say, "I don't want to." Fine. Those -- I mean, you are in a free society allowed to not be part of the common culture. But then we're going to say: okay, that's your choice. Now you have consequences. It's a very different model than the current model.

Now, so let's think about big projects. You know, what if one of our big goals was to find five Edisons in the next generation? Think about what he contributed. If you had five in parallel each in their own zone playing their own game? Think of the -- in a sense, Bill Gates is like that, but smaller than Edison. I mean, Edison truly was a historic phenomenon, but what would a society be like that encouraged that rather than discouraged it?

Look at just the scale of change at the DNA revolution in health. We're entering the age of molecular medicine, but it's combined with an explosive capacity to share the information through the computer system. So literally, it's conceivable in the next 10 or 15 years, if every citizen could have access, it is conceivable that you'd have just a remarkably different environment. And that as each breakthrough is occurring, you could be applying it in a very different style than we've ever thought about in the modern age. But there's no reason for doctors to have a monopoly of knowledge. It's just a question of how you want to organize it. Yes, sir.

>> although I have not read the article in this morning's
>>"Journal-Constitution," the CDC, Centers for Disease Control, is now on
>>the Internet, and one can access CDC research.

>> Which is good.  It's the beginning of the new way of doing things.  And
>>you can design expert systems where you literally enter it and it will
>>ask you questions and it walks you through a lot of self-diagnosis that
>>helps you begin to think about:  what do I want to do?  I'm just
>>suggesting it's a very -- I have several friends who are pretty
>>sophisticated whose children have very, very rare diseases.  They found
>>the right doctor somewhere on the planet because they went through all
>>the various libraries that are on line.  It's a totally different way of
>>thinking about what you are doing.  Now, and also, by the way, the
>>molecular -the age of molecular medicine is going to be as different
>>from what we do as what we do is from the 18th century use of leeches.

I mean, you are not going to recognize medicine 30 years from now. It's going to be that big a change. Now, notice also the DNA revolution in agriculture. Huge breakthroughs in productivity, in how long you can keep things, in how you design things. Consider the next phase of the information revolution. Rising power, declining costs, worldwide networks, and real-time information.

Nobody yet -- and this has been -- it's been fascinating to me, and people like George Gilder come close, and Alvin and Heidi Toffler come close, but nobody's yet quite been able to figure out how to describe the scale of this revolution and how it will change us. This is going to literally bring to you -- remember what Gilder said. You're going to carry a cellular telephone, which is also your computer. It may also be your portable television. It may also be your Walkman. May also be your checkbook. I mean, you'll have all sorts of conveniences, many of which did not exist 25, 30 years ago, in one hand-held device, and you'll be able to -- you know, you'll access all your friends' telephone numbers, and you can also then call them.

And in that kind of setting, have any of you noticed, there's one -- I can't remember now which of the computer companies has a commercial on now where the person is sitting at their computer console watching the television and talking on the phone while typing simultaneously, and she changes the price on the menu because she gets a good review in the local TV, you know -- I mean, it's a great example. Well, that's the beginning, and it's going to be available to everybody. And we don't have a clue yet how that world's going to work.

But let me give you some examples, because it will change your life as profoundly as the automobile liberated North Georgia. Remember, back when you had to use a horse and buggy, the reason county seats aren't very far away is it took you all day to get there. Now, in the length of time it took your great-grandparents to ride in a buggy to the county seat, you can drive across three states or you can fly across the whole country. Well, this is about to happen to information in a big way.

Some examples: self-learning and distance learning. Nobody's really thought through yet. We can liberate the smallest, most rural school in America. We can liberate the poorest child, and we can liberate the busiest person. I mean, people say, you know, welfare mothers have to stay home and take care of the kids. Fine. Then let's build a learning module so while the kids are asleep at 3:00 in the afternoon, the mother's learning, but let's set standards of behavior.

Let's do something, but let's not say to people: why don't you waste 20 years of your life? Why don't you sit around and do nothing all day? Soap operas are fine. I mean, why do we have so many people who watch soap operas? Partly because we've set a cultural standard that says: killing time's fine. You're probably bored. Why don't you watch soap operas. If instead we said: why don't you take at least three hours a day to learn, if we're going to pay you full-time to do nothing?

I feel the same way about unemployment compensation. If you can't find a job and we're going to give you money so you're being paid to not do anything, then why don't you learn something 40 hours a week, and why don't we make it freestanding and easy so it is self-learning, and if you want to interface with somebody, why don't you just pick up your phone, turn on your TV, you know, turn to cable channel 65, dial them up and you talk to them direct then, and so you don't have to schedule: when do I drive to the campus to see the advisor?

None of this stuff's very far away, and some of it's actually happening all across the country in pilot projects. But it requires rethinking institutionally how we function, and rethinking how we score things and how we measure things. It means you don't measure how many people are at average daily -- average daily attendance, which is how schools get money. You measure: how much did your students learn this year? I mean, right now, if you have a big average daily attendance, even if nobody in the room learned a thing, you get the cash. Now, that's got to be about as dumb a way to measure as you can get, and if you taught all them calculus in three weeks, think of how much money you'd lose? I mean, what's the incentive plan for the school? Keep them. Don't let them get out. You'll lose the money.

>> in classes, like, in some schools, if you go to class all day, you can
>>exempt your final exams.

>> Uh-huh.  Because they made the money.  Think about it.  I mean, think
>>what the incentive systems work.  And what we ought to be doing is saying
>>to people:  you want to go to Panama city, Florida, and relax for five
>>days, but you're willing to guarantee you pass your chemistry exam?
>>Here's the material.  Now, you don't pass the chemistry exam, you're in
>>big trouble.  But it's a totally different way of organizing.  And it
>>also means you're 40 years old, you never did chemistry, you decided now
>>you need to know chemistry, here's the material.  And if you can only
>>study it on Saturday mornings and Sunday mornings, fine, we don't care.

I mean, I was looking at some of Dr. Minnix's lectures, which I thought were marvelous, on World War II. I learned a bunch of stuff last night just looking. You know, we're at the point now where we can produce materials that is freestanding sitting there, you pick it up, you don't have to drive 55 miles to be at point "a" at 10:05 for 55 minutes. We could mail it to you or Fed Ex it or UPS or whatever. It's a different way of thinking. And then test: did you learn it or not? Which is a different question than: did you sit through it? Similarly, self-health and distance medical care. Why shouldn't you be able to diagnose a lot of things? Why shouldn't you be able to simply, if you're in a rural area and you need the best doctor in the country -you know, the army's now working on this.

They have a system which they call Jumping Echelons, where the field hospital with the person with the unique injury skips every hospital in between and goes back to Walter Reed or goes to the best brain surgeon in America, and they in real-time look at the materials electronically, and the field hospital is getting the best advice from the right specialist to save the life of this young person. Why can't that be true everywhere in America?

Now, it's a totally different model, it's a totally different way of thinking about things. But I'll give you the parallel example: how many of you now pump gasoline for your own car? Go back sometime -virtually all of you raised your hand. Go back sometime and read the arguments in the late 1970s about why we could not allow self-service gasoline. People wouldn't be able to do it. They'd spill gas all over. There'd be a fire hazard. I mean, go back and read them sometime. Trusting in people, sharing information, broadening out the base of everybody having a chance to play is very, very important. Now, really radical idea, probably get in trouble again, but I can't help --

>> sounds like it.

>> self-law.  If you and your spouse decide to get divorced, why do you
>>need a lawyer if you both agree?

>> because the state defines the marriage.

>> the state is, but why is the lawyer?

>> because you need a lawyer to discern what the legalese says.

>> why?  But that's because the way they write the legalese.

>> and because most people don't have access to that kind of information or
>>know how to find it.

>> you need a lawyer to fill out the paperwork.

>> right, but what if we organized a system that said:  here is your
>>self-enhanced guide to getting a divorce?

>> so what is their possible incentive to let go of that kind of control?

>> I didn't say the lawyers would like it.  I mean, you think the gas
>>station owners in the late '70s liked giving up full-service gasoline?

>> no.

>> right.  They lost.

>> right.

>> well, that's what life's about.  Sometimes you win and sometimes you
>>lose.  Imagine blacksmiths the first time a car came through.  I mean,
>>blacksmiths took it on the head.  Buggy whip manufacturers hated it.  Do
>>you know how seldom you ever see anybody using a buggy whip on a car?

>> I hate it when that happens.

>> I mean, just think about it.  My point is if we're talking about
>>self-learning, if we're talking about self-health, how many things that
>>are currently part of our legal system could, in fact, be done if you
>>built expert systems and you made it available and knowing adults read it
>>and said, "I am willing to sign a bond that I accept this.  "I don't want
>>to worry about a lawyer.  "I'll just bond that this is okay."  And how
>>many things could you do that on?  Simple wills?

>> courts don't allow that.

>> you can do that on your computer.

>> I do that myself anyway.

>> see?

>> I've done it several times, and it's not that hard.

>> yeah, but speaking of court actions, there have been time and time
>>again, and you can research this, where couples go in and they tell a
>>judge, "we've already got it worked out.  "just sign it.  It's written."
>>"no, you can't have it this way because the law says that you need to do
>>this and you need to do that."

>> no, no, no, you're talking about the world as it is today.
I'm talking about the world as it can be in the information age.

>> so how do you step from where we're at now to  where --

>> you do it over time.  You do it politically, you do it culturally.  You
>>teach courses.  Stay controversial.  You know, really, this is how you go
>>through an age of change.  I mean, you just -- first of all, you talk
>>about it.  Remember, supply leads to demand.  People suddenly go, "oh,
>>yeah, why can't I do that?" And you begin to say to people:  why
>>shouldn't you be allowed to have conflict resolution without a lawyer?
>>People start to go: oh, yeah.  Particularly since a lot of lawyers
>>actually make their living by increasing the conflict level.

>> we're already working with the helicopter, though.  We're taking a
>>television camera out, and our field medics can actually televise a
>>patient condition and a doctor doesn't have to --

>> right.  See, the real time and media capability in the field -- I mean,
>>you are a living example because of what you do with rescue medicine.
>>You're a living example of what I'm talking about.  That we're seeing
>>breakthrough after breakthrough after breakthrough.  Now, let me carry it
>>a stage further.  Public safety in the information age.  You have a
>>particularly dangerous store, you put a camera in it.  You have a
>>particularly dangerous street, you put a camera on it.  You release a
>>felon on parole, you put an ankle bracelet on them that is exactly the
>>way you used to track elk and bear and other things in biological
>>surveys.  You track them by computer, and if it turns out they happen to
>>be at the 7-eleven exactly at the time there was a -that there's a
>>robbery, you have a theory.

>> aren't we getting then towards Orwell's "1984"?

>> You are if you're a felon.  Yeah.  But, I mean, you are, in that sense,
>>in Orwell's -- you're always potentially in Orwell's "1984," because you
>>always have the potential power of the state to do that if you let them.
>>The question is -- I mean, the other option you can say to the felon is:
>>you don't want an ankle bracelet?  Fine.  Stay in jail.  But if we're
>>putting you out on parole and we know that 65% of the people we put out
>>on parole who were convicted of this particular kind of crime are likely
>>to do it again, why can't we protect ourselves?

And the other option is just not let him out, which I'm equally willing to do. Which, by the way, if you think about distance work as one reason prisons ought to be made to pay for themselves. I mean, prisoners ought to work 48 hours a week and study 12 hours a week, and you'd have a different world. You'd also have a different prison, because they'd be busy 60 hours a week. Just a different system.

Okay. Let me talk about another one where -and this is one, if I can slightly cross the bridge to my other job, this is one where we first started talking about three years ago, and I am really excited about this particular one. We have the potential in this information age with the spirit of invention and discovery of fully enhancing the potential of every challenged American. Now, this one, to me, is really exciting. And we just agreed at a meeting yesterday to set up a task force to do this.

I believe if you talk about the severely challenged, people who have genetic problems, who have been in a wreck, people who are in wheelchairs, people who are maybe born with down's syndrome or born with a variety of problems, I believe we're on the edge of a revolution. And part of what we're going to do, and this is part of why I teach the course, and this is one where I can actually tell you, we've now gone from idea to conceptualizing it in more detail to beginning to move it into the legislative process.

What we want to do is take this body of people and talk to the best rehabilitation people in the country and the best technical people in the country and say: if we bring to bear all the computer revolution, all the information revolution, all the DNA revolution, how can we improve their lives? And my theory is this, that when you talk about welfare, that there are very different populations engaged. And that for most Americans, this goes back to Deming's notion that you have to start with a theory.

For most Americans, when they talk about wanting welfare reform, what they're talking about is three groups: those who are able but not willing, those who are able but don't know how, and those who are truly challenged. People with severe disabilities. Now, I think for most Americans, you can draw a very sharp line right here, and you can say: for those who are able but don't know how, we're going to massively invest in helping them get across the line. Most of that investment is spiritual. This is where we'll talk about later on when we get to this section of the course, Marvin Olasky's great work "the Tragedy of American Compassion."

For folks who are able but genuinely not willing, this is what the Victorians called "the Undeserving Poor." In the 19th century in America, if you were homeless, you could get lunch, but in order -- or a meal, but in order to get a meal, you had to chop wood. You chopped wood both for yourself and for a widow. That both gave you dignity and it proved that you were willing. If you weren't willing, they would resolutely refuse to give you food. They'd say: no, we're not going to give you food. Because they had a profound sense that to give people who were not willing was to subsidize their self-destruction.

Yeah, so think of this as subsidized self-destruction. And, in fact, I had a man the other day -- and we'll talk about this more later -- who said when -he had a friend -- he was at a press conference. He had a friend who was -- who got his first supplemental security income check just at Christmas and was able to shift from drinking cheap wine to bourbon and had a heart attack on the second bottle. He said: You and the government killed him. He said: let me tell you -he said let me tell you: you should not give money to people who are not able to govern their own lives, because they destroy themselves.

This group, we want to reach out and say: here's how you work, here's how you learn, because they're really willing to, but they've had no background, no cultural framework. They've grown up in a culture of poverty and violence where they literally don't know what to do. But they're willing to do it if somehow it's not 200 families to one caseworker, it is one to one, or one to two, and we're helping them learn these new habits. This is actually very solvable. But this one's different. Here what you want to do, I think, is you want to invest in technology, in rehabilitation, and in maximizing opportunities. And you want to say -- and this is almost case by case. You want to say to somebody who's going to spend their whole life in a wheelchair or somebody who's born blind or somebody who has a particular problem of great difficulty: how do we maximize your chance to pursue happiness?

And I believe most Americans would, in fact, want to increase the resources applied here, because all of us recognize that this is through no fault of their own and that this could happen to any of us. Any of us could have a child that has a problem. Any of us could have a relative. Any of us could have, you know, the Charles Krauthammer effect of diving into a swimming pool and breaking your neck or being in a car wreck. So here I think we should actually increase resources, but in a very focused, very spirit of invention and discovery kind of model.

>> and also, you never know what one might have to offer.

>> Yeah.  There's some very great creative people who come out of this
>>background.  Now, last example is telecommuting.  That you literally will
>>see, I think, a decline in rush hour traffic in the 21st century, because
>>people will just stay at home and work.

You'll see actually a substantial drop in the number of people who go to work. Not that they're not working, it's just that they get up and they go into their office, which is in their house, or they go into a room in the basement or they go across the street, but it's a totally different model, and we have not thought very much. If you had to spend the next billion dollars on highways or on telecommuting, which would be better? And, in fact, the IRS has adopted exactly the wrong rule, because it has made it harder to have a home office, not easier, okay?

>> but you can file your tax return electronically.

>> right.  Well, you can, but I met with them the other day. It's still not
>>as easy as it should be, and actually, we ought to let you have half the
>>savings.

>> sure.

>> If we said, "if you'll file electronically, it will be $20 less, take
>>$20 off the bottom," you'd have 90% of the country filing electronically
>>within five years.  Today there's no value, yet you are saving the
>>government a lot of money, and it's more accurate, according to the
>>government.

All right, as we look at the spirit of invention and discovery, remember, we want to think through applying what's our vision of getting there, what are our strategies for getting the culture to move in that direction, what are the projects we want to use, and what are the tactics we want to use?

Now, as you go through that planning, remember that the next phase then is you think you've gotten the breakthrough, you go out and you do what we're going to do with disabilities, you start listening to people who are in the situation, you try to learn from them, so they're telling you about their world. If you listen to them and learn from them, you can begin to help them, and in a rational, healthy society, people who know that you'll listen to them, learn from them, and help them want you to lead them.

I believe if we can apply -- if we can begin to shift the entire culture into a spirit of invention and discovery, we'll be shocked how big the impact will be, we'll be shocked how much we invent, at how much we discover, how much more dynamic we are, and how much progress we've made by about 2020. And so it has to be a culture-wide basic shift in attitude and in approach.

Now, next week we're going to pick up pillar five, Quality, Customer Orientation, Team Work, Continuous Improvement, Systems Analysis, and the spirit of Edwards Deming, the man who taught the Japanese the concept of quality. I think you'll find it very useful. Next week's reading, Kenneth Delavigne and J. Daniel Robertson, "Deming's Profound Changes," Chapter 3. And this is all being given out to you here. Lloyd Dobyns and Clare Craw Ford-Mason, "Thinking About Quality," Chapter 3. And Peter Senge, "Building Learning Organizations," from the "Journal For Quality And Participation," March 1992.

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