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Office of the Press Secretary

For Immediate Release April 5, 2000
                        REMARKS BY THE PRESIDENT
                         AND OTHER PARTICIPANTS
                        IN AFTERNOON SESSION OF

                             The East Room

1:56 P.M. EDT

THE PRESIDENT: Thank you very much. Well, I hope you've enjoyed the conference to date. I heard the breakout sessions were wonderful. One of the things that I have not yet been able to do, although I still have hope that quantum physics will enable one of my successors to be in five places at once, but I haven't figured out how to do it yet. I'm delighted that you're all here again.

After Mr. Greenspan speaks, we will have our two final panels, one on closing the global divide in education, health and technology; and the second on strengthening civil society and empowering our citizens with new economic tools.

The afternoon discussion will take up where the last one left off. This morning we had a panel which acknowledged that this new economy presents phenomenal opportunities and new challenges. The next panel will explain that the stakes are even higher for developing countries, and by extension, for poor areas within our own country. Today there are more phone lines in Manhattan than there are in all of Africa. So we can imagine what the information infrastructure could mean to that entire continent.

I want to discuss in the panel what we can actually do to help deal with a lot of these challenges, and I also hope in the second panel we will discuss not only how we, as citizens, relate to each other, our communities, and our government, but how government itself should change in the Information Age.

Now, I want to introduce Chairman Greenspan by saying first that, as far as I know, he was one of the first people to speak of the new economy, the impact of information technology and the extent to which it has rewritten the rules. Of course, he's done more than talk about it. His analysis has helped to shape the public's understanding of this powerful transformation, and his decisions have helped it to continue in our country apace.

We're grateful for his 12 years of stewardship at the Federal Reserve. We're grateful that despite the seismic shifts in the global economy, he's kept his feet firmly planted on the ground.

For seven years now, I've had elaborate instructions from the Secretary of the Treasury and from all my staff about what I was supposed to say and not say -- (laughter) -- about the Fed's decisions and about the Chairman of the Fed. One of our major newspapers ran a story a couple of months ago referring to us as the "Odd Couple." I took it as a compliment -- (laughter) -- and I hope he wasn't too chagrined.

Ladies and gentlemen, the Chairman of the Federal Reserve. (Applause.)

CHAIRMAN GREENSPAN: Mr. President, I took it as a compliment, as well. It's really quite a privilege to be here amongst this distinguished audience, and thank you, sir, very much for inviting me.

I'm going to cover some ground which most of you have heard me on, but try to put in a slightly different context than I usually do. It's certainly become increasingly difficult to deny that something profoundly different from the typical postwar business cycle has emerged in recent years. Not only has the expansion reached record length, but it has done so with far stronger than expected economic growth. Most remarkably, inflation has remained subdued in the face of labor markets tighter than we have experienced in at least a generation.

While there are various competing explanations for an economy that is in many respects without precedent in our annals, the most compelling appears to be the extraordinary surge in technological innovation that developed through the latter decades of the last century. In the early 1990s, with little advance notice, those innovations began to offer sharply higher prospective returns on investment than had prevailed in earlier decades. The first sign of the shift was the sharp rise in capital investment orders, especially for high-tech equipment, in 1993. This was unusual for a cyclical expansion because it occurred a full two years after the troth of the 1991 recession.

By 1995, the investment boom had gathered momentum, suggesting that earlier expectations of elevated profitability had not been disappointed. In that year, with inflation falling, domestic operating profit margins started to rise, indicating that increases in unit costs were slowing. These developments signaled that productivity growth was probably beginning to move higher, even though official data hobbled by statistical problems failed to provide any confirmation.

Now, five years later, there can be little doubt that not only has productivity growth picked up from its rather tepid pace during the preceding quarter century, but that the growth rate has continued to rise with scant evidence that it is about to crest. The acceleration of productivity stemming from the investment boom has held cost increases in check. Despite the surge in demand, unit labor costs over the past year have barely budged, and pricing power has remained well-contained. Apparently, firms hesitate to raise prices for fear that their competitors will be able to wrest market share from them by employing new investments to produce at lower costs.

Indeed, the increasing availability of labor-saving equipment and software at declining relative prices, and with improving delivery lead times, is arguably at the root of the loss of business pricing power in recent years. To be sure, marked increases in available global capacity and the deregulation of key industries have removed bottlenecks and increased the competitive supply response of many economies, especially ours, and these developments have been influential in suppressing price increases.

It would be an exaggeration to imply that whenever a potential cost increase emerges on the horizon, a capital investment is available to quell it. Yet the veritable explosion of spending on high-tech equipment and software, which has raised the growth of the capital stock dramatically over the past five years, could hardly have occurred without a large increase in the pool of profitable projects available to business planners.

As our experience over the past century and more attests, such surges in prospective investment profitability carry with them consequences for interest rates, which ultimately are part of the process that balances saving and investment in a non-inflationary economy. In these circumstances, rising credit demand is almost always reflected in an increase in corporate borrowing costs. And that has indeed been our recent experience, especially in longer-dated debt issues.

Real interest rates on corporate bonds have risen more than a percentage point in the last couple of years. Home mortgage rates have risen comparably. The Federal Reserve has responded in a similar manner by gradually raising the federal funds rate over the past year. Certainly, to have done otherwise, to have held a federal funds rate at last year's level, even as credit demands and market interest rates rose would have required an inappropriately inflationary expansion of liquidity. It is difficult to imagine product price levels remaining tame over the long haul had there been such an expansion of liquidity. In the event, of course, inflation has remained largely contained.

To be sure, the tripling of crude oil prices has left its mark on headline inflation rates and inflicted considerable pain on some sectors of our economy. However, there is little evidence, at least to date, to suggest that oil price increases have started to imbed themselves more broadly in the underlying cost structure of American business. That is, beyond the direct effects of the higher energy costs themselves. Nevertheless, despite the very recent declines in the price of oil, there are risks here that need to be monitored closely.

Given the persistent strength of private credit demands, market interest rates would have risen even more were it not for the emergence of a sizeable unified budget surplus following a long period of chronic deficits. More recently, the administration and the Congress have wisely chosen to wall off the surplus in the Social Security trust fund and to allow it to pay down treasury debt held by the public. This action will surely contribute to sustaining the rapid private capital formation we have experienced in recent years.

I see no reason that productivity growth cannot remain elevated or even increased further to the undeniable benefit of American businesses and workers. Achieving this outcome, however, requires that imbalances not arise to drive the expansion off course. Only a balanced prosperity can continue indefinitely; one that is not will eventually falter.

A change in market interest rates is an important element of the balancing mechanism of a market economy. Some misalignments have arisen over the costs of the expansion, owing largely to the increased rate of return on capital and a sizeable wealth effect. Overall demand for goods and services for the past four years has been growing noticeably in excess of the enhanced growth and potential supply, defined as the sum of the growth in the working-age population and productivity.

An increasing share of goods and services required to meet this extra demand has been supplied by net imports, with the remainder the result of an increase in domestic production, achieved by drawing down the pool of those we count as officially unemployed and those otherwise available to work.

Short of a significant opening up of our borders to more immigration, an increase in employment beyond the growth of the working age population is limited to what remains of our shrinking pool of available workers. Although the sum of the unemployed and those not in the labor force but who nonetheless are available for work is still about 10 million, the level has been falling steadily. This year, the figure has been lower as a percentage of the population than at any time in the history of this series, which goes back to 1970.

Should the pool of available workers continue to shrink, there is a point at which this safety valve for excess demand will effectively close, even in the face of accelerating productivity. We do not know where that point is, but presumably it would occur well before a full depletion of the pool of potential workers. When we reach that point, short of a repeal of the law of supply and demand, the scarcity of labor will almost surely induce a rise in hourly compensation gains that increasingly out-paces an even faster productivity growth, a condition that would cause unit costs to accelerate over time.

Moreover, we do not know how long net imports and U.S. external debt can rise before foreign investors become reluctant to continue to add to their portfolios of claims against the United States. At that point, the safety valve of net imports could narrow or close.

It is conceivable that these two buffers can continue to absorb an excess growth of demand over potential supply for quite a while longer. However, the significant uncertainties surrounding these new economic forces counsel prudence. We need to be careful to keep inflationary pressures contained. The evidence that inflation inhibits economic growth and job creation is too credible to ignore. Consequently, maintaining an environment of low and stable inflation provides the greatest opportunity for the dramatic increases in structural productivity to show through fully into higher standards of living.

In that regard, readings from financial markets, despite their recent upheavals, suggest that participants perceive the most likely outcome to be a gradual adjustment to more balanced, non-inflationary growth.

As I have argued previously, a substantial part of the excess growth of demand over potential supply owes to a wealth effect induced by the rising asset prices that have accompanied the run up in potential rates of return on new and existing capital. The rise in stock prices, as well as in capital gains on homes, has created a marked increase in purchasing power without providing an equivalent and immediate expansion interesting supply of goods and services. That expansion in supply will occur only over time.

The persuasive evidence that the wealth effect is contributing to the risk of imbalances in our economy, however, does not imply that the most straightforward way to restore balance in financial and product markets is for monetary policy to target asset price levels. Leaving aside the deeper question of whether asset price targeting is an appropriate governmental function, there is little, if any, evidence that monetary policy aimed at achieving that goal, would be successful. The risks of investing in equities come primarily from uncertainty about future earnings and about the rates at which those earnings should be discounted, and much less from changes in overnight interest rates, the principal tool of the Central Bank.

Consequently, even if we were to foster somewhat larger movings in short-term rates to address changes in stock prices, I doubt that investors' perceptions of equity risks would be much affected, and thus, that equity prices would be meaningfully influenced.

In short, monetary policy should focus on the broader economy and on pending inflationary or deflationary imbalances. Should changes in asset prices foster economic imbalances, as they appear to have done in recent years, it is the latter we need addressed, not asset prices.

In the economy, overall, one result of the more rapid pace of information technology innovation has been a visible acceleration of the process of so-called "creative destruction," a shifting of capital from failing technologies into those technologies at the cutting edge. The process of capital reallocation across the economy has been assisted by a significant unbungling of risks in capital markets made possible by the development of innovative financial products, many of which themselves owe their viability to advances in information technology.

There are few, if any, indications in the marketplace that the reallocation process, pushed forward by financial markets, is slowing. While growth in companies' projected earnings has been revised up almost continuously across many sectors of the economy in recent years, the gap in expected profit growth between technology firms and others has persistently widened. As a result, security analysts' projected five-year growth of earnings for technology companies now stands nearly double that for the remaining S&P 500 firms.

To the extent that there is an element of prescience in these expectations, it would reinforce the notion that technology synergies are still expanding, and that expectations of productivity growth are still rising. There are many who argue, of course, that it is not prescience, but wishful thinking. History will judge.

Before this revolution in information availability, most 20th century business decision making had been hampered by pervasive uncertainty. Owing to the paucity of timely knowledge of customers' needs, and of the location of inventories and materials flowing throughout complex production systems, businesses required substantial programmed redundancies to function effectively. Doubling up on materials and people was essential as back up to the inevitable misjudgments of the real time state of play in a company. Decisions were made from information that was hours, days or even weeks old.

Accordingly, production planning required costly inventory safety stocks and back up teams of people to respond to the unanticipated and the misjudged. Clearly, the remarkable surge and the availability of more timely information in recent years has enabled business management to remove large swaths of inventory safety stocks and worker redundancies. That means fewer goods and worker hours are absorbed by activities that while perceived as necessary insurance to sustain valued output, in the end produced nothing of value.

These developments emphasized the essence of information technology. The expansion of knowledge and its obverse, the reduction of uncertainty. As a consequence, risk premiums that were associated with many forms of business activities have declined. In short, information technology raises output per hour in the total economy principally by reducing hours worked on activities need to guard productive processes against the unknown and the unanticipated. Narrowing the uncertainties reduces the number of hours required to maintain any given level of production readiness.

Because knowledge is essentially irreversible, much, if not most, of the recent gains in productivity appear permanent. Expanding e-commerce is expected to significantly augment this trend. Already, major efforts have been announced in the auto industry to move purchasing operations to the Internet. Similar developments are planned or are in operation in many other industries as well. It appears to be only a matter of time before the Internet becomes a prime venue for the trillions of dollars of business-to-business commerce conducted every year.

Not all technologies, information or otherwise, however, increase productivity that is output per hour by reducing the inputs necessary to produce existing or related products. Some new technologies bring about new goods and services with above average value-added per work hour. The dramatic advances in biotechnology, for example, are significantly increasing a broad range of productivity-expanding efforts in areas from agriculture to medicine.

Indeed, in our dynamic labor markets, the resources made redundant by better information are being drawn to the newer activities and newer products many never before contemplated. The recent biotech innovations are most especially of this type -- particularly the remarkable breadth of medical and pharmacological product development.

One last welcome byproduct of rapid economic and technical change that needs to be addressed is the insecurity felt by many workers. This stems, I suspect, from fear of job-skill obsolescence. Despite the tightest labor markets in a generation, for example, more workers currently report in a prominent survey that they are fearful of losing their jobs than was reported in 1991, at the bottom of the last recession.

The marked movement of capital from failing technologies to those of the cutting edge has quickened the pace at which job skills become obsolete. The completion of high school used to equip the average worker with sufficient knowledge and skills to last a lifetime. That is no longer true, as evidenced by community colleges being inundated with workers returning to school to acquire new skills, and by on-the-job training being expanded and upgraded by a large proportion of American business.

It is not enough to create a job market that has enabled those with few skills to finally be able to grasp the first rung of the ladder to achievement. More generally, we must ensure that our whole population receives an education that will allow full and continuing participation in this dynamic period of American economic history.

In summary, we appear to be in the midst of a period of rapid innovation that is bringing with it substantial and lasting benefits to our economy. But policymakers must be alert to the full range of possible outcomes. In the end, I do not believe we can go far wrong if we maintain a consistent, vigilant, non-inflationary monetary policy focused on achieving maximum sustainable economic growth; a fiscal policy that produces substantial savings to accommodate investment in productive capital; a trade policy that fosters international competition through broadened market access; and an education policy that ensures that all Americans can acquire the skills needed to participate in what may well be the most productive economy ever.

Thank you very much. It has been a pleasure being here. (Applause.)

THE PRESIDENT: Thank you very much, Chairman Greenspan.

I'd like to now begin the panel. The topic of this discussion is, "The Global Divide in Health, Education and Technology." This is something that, also, as I have said before, exists within each country. We have attempted to address it here and are attempting to do more with our New Markets Initiative and our efforts to close the digital divide.

But I think it's clear to all of us that we have a special responsibility and, indeed, a real opportunity to make a better world, including for those of us who live in wealthy countries by addressing this issue globally. The United States has supported substantial debt relief for the poorest nations. We have attempted to craft a response to climate change, which would enable sustainable economies to be developed in poorer countries with our help, and we have tried some microeconomic approaches with our aid programs.

Last year, for example, the Agency for International Development funded some 2 million microenterprise loans in Africa, Asia and Latin America. But there is a great deal yet to be done. And we have a truly amazing panel, and I want to thank them all for being here.

I want to begin by calling on Bill Gates, the founder and chairman of Microsoft. And I want to say, I have noticed in my many trips to Silicon Valley and other repositories of the new economy, that while there are a lot of people who have amassed amazing amounts of wealth, I see more and more younger Americans more concerned about what they can do with their wealth to benefit the society and to solve the larger problems of the world than how they can spend it. And the Gates Foundation has made some phenomenal commitments to the education of minorities in America and to dealing with a lot of our most profound global problems. And I want to thank you for that, Bill, and offer you the floor.

MR. GATES: Thank you. Well, it's an honor to be on this panel.

The pace of innovation and the breadth of its impact on our society are really unparalleled. It was 25 years ago when Paul Allen and I had a dream about the personal computer, and, today, the personal computer is an essential tool of the American productivity revolution. We've seen its power double every 18 months, its price fall and its importance grow as an empowering tool in our lives.

As Chairman Greenspan said, we're just beginning to understand how central the PC and software innovation have been to the creation of the remarkable prosperity that so many people are enjoying today. It's this pace of change and the contribution of these changes to our future prosperity that are changing our lives, not only here in this country, but around the globe.

It's so critical that we understand this -- that there is really an obligation, I think, for all of us to not only embrace the new technology, but think about how we can make it available to everyone, without regard to background or station or even what country they live in. And I think that's a key theme of our panel today.

There are so many statistics that could be cited about how technology has changed the economy. Just one that I looked at recently from an MIT economist talked about how all the investments in these technology innovations have more than paid back double what was put into the hardware and software. That means that the sum has been much greater than the cost of the parts.

Right now we're just embarking on electronic commerce. Again, Chairman Greenspan mentioned that this is going to reduce a lot of the overhead in the economy. A lot of the pushing-paper-around jobs that are not interesting and not value-added will be reduced in that those resources will be freed up for productive activities. One example of this is that processing a purchase order is going to go from being about a $75 cost to about $10, and that alone will add $1 trillion in benefits just in the U.S. economy.

Well, this change is not just good for business. In fact, if you had to pick who's the big winner in all of this, you'd definitely have to pick consumers. Technology is putting them in the driver's seat. Think about what electronic commerce does if you're trying to buy a product. It lets you go out to the Internet and look at products and services of every kind. Whether you want to look by price, by reputation, you'll be able to find products that never would have been available through traditional distribution channels -- products that are unique to your particular interests. And so it's the consumers who are in charge as price transparency climbs.

Now, that makes businesses innovate in a way that really wasn't necessary before, whether that's innovation in quality, customer service, or simply the price of the product. And it's that virtuous cycle that's allowed capitalism to work better in this era than ever before.

Just a decade ago, people wondered: Would the PC revolution eliminate jobs? Would it make jobs in some ways worse? Today, we know that certainly, on balance, technological advancement has led to lower unemployment that they've gone hand in hand. And so this technology revolution has been one of the greatest job creation engines ever.

We also know that the freedom enjoyed by the creators and innovators in this technology have been key to realizing these benefits. The Information Age is not just an age of possibility, it's also an age of opportunity. This is an era where any kid who has got a great idea can go out and start a company, and many of those will be very, very successful.

Just a second on some of the possibilities ahead of us. I'm often asked, are we at an end? Has that magic been created and now we have the benefits? The answer is that the magic has really just begun. We're looking at Microsoft on the next frontier of technologies. Breakthroughs that will allow computers to listen, to learn, to be in a tablet form, connected up to a wireless network that you just carry around with you. And so, all these new devices and the natural interfaces that we'll put on them will really drive this to a whole new level. So we're at the beginning of what the computer can do to change our lives.

The best is yet to come. Technology is creating the most powerful communications vehicle that we have ever seen. And it has the ability to wipe away barriers. When I walk the halls at Microsoft, workers at Microsoft who come from other countries are sitting there reading the newspapers from their country, listening to the radio station and being involved in discussion and debate with any sort of topic or any community that they want to be involved in.

Nowhere does this technology hold more promise than in education. The Internet and the personal computers are critical tools that teachers will be able to use in new and exciting ways. In this age, learning will be more student-centered and more global. Software will let teachers share best practices with each other. They'll let students reach out to find other students with common interests, and they'll allow the world of knowledge to be easily available.

One of the goal that the foundation that Melinda and I created have gone after is making sure that in every library in this country there's a PC connected to the Internet. And what that means is that in the same way we made literacy and access to books a priority, now the PC and the Internet will be available in the same way to everyone.

The collaboration we're seeing between teachers, libraries, students and parents -- it's very, very exciting. And yet, here, too, we can say that we're just at the beginning. Today only 14 percent of teachers are actually using the Internet as part of their instruction, and there's a lot we can do to drive this forward. There are some pilot projects that Microsoft and others are involved in where actually every student gets their own laptop computer. And the results of this, where the student feels a sense of ownership and can use it as much as they want to catch up or pursue things in their own way -- the results are quite phenomenal. And yet, we don't have the level of resources and training to make that a reality in all the classrooms. So there's a lot more that we can do.

I think technology is a great change agent for democracy, whether in this country or in other countries. I think that it will increase voter involvement, voter accessibility to what's going on. And I hope that voter participation can rise as a result of that.

Now, I've talked mostly so far about computers and the Internet, and the great things they're doing. As I started my philanthropy a few years ago, I was thinking, boy, most of what I'll do is make sure that these advances are available to as many people as possible.

But the more I learned about what was going on, and what priorities we should really have in our foundation, the more I studied global health. And Melinda and I decided that global health would actually be our top priority. After all, as we think about it, having healthy children and families is more important than anything else.

And in parallel with this computer revolution, the biotechnology revolution is creating an opportunity to create new vaccines, to lower the cost of the vaccines we have, and do some amazing things. For example, polio will soon be eradicated from the face of the Earth. The President did his part just a few weeks ago in India, when he administered a polio vaccine to a baby -- although judging from the scream he got in return, I didn't get the sense his patient appreciated it at the time. (Laughter.)

In America, we take a lot of these great vaccines for granted. But that's not the case for millions of children around the world. So when we talk about these divides, yes it means the Internet and computers, but the technology gap of most importance is about world health. The difference between having a polio vaccine or not having a vaccine, or having the best equipment or not is a deadly difference. And that's a technology gap I'm very committed to lessening as much as we can.

One of the partnerships that we've gotten involved in is called The Global Alliance for Vaccines. This group has a really profound goal. Its goal is to take the 3 million children who die every year of diseases that they shouldn't die from because they don't have vaccines and making sure that's a thing of the past. It's a challenge that I don't think we can shy away from, but it's something that's going to require business, government, philanthropists, all to get involved.

In the last six months, I'm really pleased to see there has been on the part of this administration, on the part of the pharmaceutical companies, on the part of the health community, renewed commitment to this area. We also expect to see advances that will help in the battle against

AIDS. The International Aids Vaccine Initiative is hopeful that in the next 10 years, there will be an AIDS vaccine.

So these are amazing times. And I'm really proud and grateful to have had a chance to be a part of this technological revolution. It's at the heart of so much exciting progress, and the scope of change -- economic, social, and cultural, is even amazing to the people who have been involved in helping it take place.

All this power is rooted in the possibilities of technology lifting up people around the world. And because technology has the power to make such a positive difference, we have an obligation to make it available everywhere we can. The global divide must give way to a global connection. We can't be satisfied until computers in inner-city classrooms equal the computers in suburban classrooms; until the vaccinations children get in Ghana equal the vaccinations children get in Baltimore; until every person can participate in the advances the Internet will bring to our society.

Thank you. (Applause.)

THE PRESIDENT: Let me just say, briefly, we had a meeting here, as you know, I think, with the major pharmaceutical companies in our country not very long ago to discuss what we could do with them to give them tax incentives and other support to help develop vaccines in areas where most of the users will be in countries that are too poor to pay market prices for the vaccines. So I do think that we -- and I hope our European colleagues will follow us -- should take the lead in providing financial incentives so that these vaccines can, A, be developed and then be delivered. I think this is profoundly important.

If you just think about malaria, TB and AIDs, just take those three, the difference it could make if we developed the vaccines and then got them out, would be quite profound. And the fact that we have so much of a commitment from you I think will make a real difference and I thank you.

I want to call now on the President of the World Bank, Jim Wolfensohn, who from the first day he took office has really had a critical part of his mission bridging these divides in traditional and in new and innovative ways.

Mr. Wolfensohn.

MR. WOLFENSOHN: Thank you very much, Mr. President, and for the invitation, and to talk about the new economy, which I think I'm invited to extend to mean the global economy -- because our country is integrally linked with the globe in ever-increasing ways, and as we look forward to the new economy, it has to be perceived as a global economy.

As I think you know, we have 6 billion people on the planet today. And as we address the question of the divide, we have to think that 3 billion of those people live under $2 a day, and 1.2 billion live under $1 a day, in absolute poverty. So as we hear Bill talk about getting computers in every classroom, and 14 percent of the teachers only using computers for teaching, in many of the parts of the world we deal with there are no computers, and surely well less than 1 percent of the teachers are, in fact, using computers for teaching purposes.

But the issue is not just static, because as we look at the new economy, we need to project forward, if not the millennium, 25 years. And in the next 25 years we will add 2 billion people to our planet. And the 4.8 billion that now live in the developing countries will, in fact, grow to 6.8 billion, or just short of it. So the challenge that we face of this digital divide is not just one of measurement. It is one that really faces us with the issue of not only the interaction of that economy to us in terms of the impact on our economy, but will in fact be the determinant of peace and tranquility around the world. Unless we can deal with that issue of the divide as our issue in the new economy, we will fail in internal activities that we do here without regard to other parts of the world. So I make that as the first point.

Second point that I'd like to make is that we were asked to talk about technology, health and education. And indeed, these are fundamental elements in terms of breaking down the digital divide. But let me say that that needs to be looked at in a context, in a context first of all that breaking the divide will be dependent on economic growth in those countries. As our distinguished Secretary of the Treasury said the other day, if you have a discussion of these issues without talking about growth, it's talking about Hamlet without the prince -- and I quote him as he sits there. But, indeed, it's true -- the issue of economics is fundamental to what we're dealing with.

But interacting on economics are the issues of technology, education and health, and as we look at the developing world in which we're operating, there are, in fact, fundamental issues. But they also require a framework in which they can operate. In the countries in which we're dealing, we must have a legal and a governance system which works. We must have a judicial system which works. We must have financial frameworks. We must have fights against corruption.

I put that, Mr. President, because it's important to put in context that to bridge the digital divide is not just addressing the questions of technology, education and health; it has to be done within a context of a comprehensive review that either throwing money or technology or education into a system which doesn't give equity, which doesn't deal with the issues of justice and opportunity for people simply won't work.

In looking at the divide, we have recently done a study, Mr. President, of 60,000 poor people around the world. We've interviewed those people -- in a project called "Voices of the Poor." And what is fascinating is that they are not different from any of us in this room. They want opportunity for their kids, they want education. The biggest challenge to the livelihoods of poor people is, in fact, health. Because if you're living on a dollar a day and you get sick and you can't earn money, that is not just an inconvenience, that is a question of life.

So they want opportunities to have their health care protected, but they also want opportunities for themselves to get out of their condition. And this is where education comes in. Because education, within that framework, is the key determinant for people in poverty themselves to find their way out of their condition.

And so, for us, the focus of so much of our activities interrelates the health and the education activity. It makes no sense to get kids to school if before the age of four they're physically damaged because of lack of health care. The Bloom studies have shown that 50 percent of your intellectual development comes before the age of four, and that's before you get to school. So if you don't have proper health care to deal with people at that time -- and I know Bill Gates is so deeply concerned with these health issues -- this becomes for us a central focus of what we're trying to do in the digital divide question.

So there is a nexus between the health and education issue and, of course, there are the whole issues involved in getting an adequate level of education for developing countries. When Alan Greenspan was talking about the inadequacy of a high school education in this country, and the need for continuing education at community colleges, that is a fantastic dream. But our dream in so many parts of the world is to get primary education. Our further dream is to get secondary education -- for very few people is the opportunity for tertiary education.

And this presents us with an enormous challenge and an enormous sense of fear, which comes with the challenge of globalization. As we look at our country at the challenge of technological innovation as a challenge to losing jobs. Imagine what it's like in developing countries, as you see the digital divide presenting you with yet another mountain to climb before you can compete internationally.

And here, however, the story's not all bad. In fact, the opportunity exists because technology can both provide the challenge, but it can also provide the answer. And that is where I believe in this new economy we're coming into a new and highly positive phase in terms of the difference between the rich and poor countries, between the developing and the developed.

We have many examples of how it is that use of technology -- in terms of distance learning; in terms of information on markets; in terms of creating new markets with e-business; in terms of allowing people to have access to global knowledge -- may well provide the key for the breaking down of that digital divide. It is itself a challenge, but it is itself a great opportunity.

I may just close by saying, Mr. President, we had someone recently in Ethiopia who was there trying to determine how we could assist on the development of e-business. And he thought that he was going to deal with a group who had no idea of it, and he said to a group such as this, does anybody here know what a web site is? And someone put up their hand and said, well, I do; I have a web site. And he said, how do you have a web site in Addis Ababa, there are no connections.

He said, it's very easy. He said, in the United States, cab drivers in Chicago, New York and Washington are Ethiopian. And what they want to do is to send goats to their families in Ethiopia. So I've opened a web site in New York. I go to my cyber-cafe every day and I collect the orders from the cab drivers to send goats to their families in Ethiopia.

These opportunities, Mr. President, are there well beyond goats -- (laughter) -- well beyond goats, but if we can give the opportunities in technology, I'm a great believer, Mr. President, that we can help bridge the gap in education, health and in commerce, and I'm very optimistic. (Applause.)

THE PRESIDENT: To give you some idea of the dimension of the education issue, there are about 125 million primary school-aged children in the world who are not in primary school -- elementary school; 40 million of them in sub-Saharan Africa. That 125 million figure is about the same number of kids, the total number of kids in grade school in the United States and Europe.

So there is the issue of getting them in, then there is the issue of what their opportunities are when they get there. And I hope there will be more discussion about this. But it occurs to me that one of the things we always see -- I was in a little school in Uganda where they're very proud of the fact that all their children are going to elementary school. These beautiful children in their beautiful, starched pink uniforms were in this old school looking at a map that had the Soviet Union on it.

But if you could put a computer with a printer in every small village in every developing country, they wouldn't need textbooks anymore because, among other things, the Encyclopedia Britannica is entirely on the Internet. So we need to really be thinking about things like this in different ways.

I'd like to now call on Henry Cisneros, who did yeoman's duty in this administration's first term as the Secretary of Housing and Urban Development, and is now the CEO of Univision, where he has more influence than he did in the President's Cabinet, I'm sure. (Laughter.)


MR. CISNEROS: Thank you very much, Mr. President.

The challenge of this panel is to discuss ways to harness the new technologies, to bring those who are left behind -- both domestically and internationally -- into the sphere of the new economy. And I would argue that we have to be somewhat sober in our assessments because the gaps are very large and because the scale is huge, and that there is a temptation for those of us who work in this new economy and in technology development in the symbolic world, in the electronic world, to forget how huge those gaps are and what the scale is in the rest of the world.

I will always remember the vivid imagery of Governor Cuomo some years ago who, when the early discussion of the new economy and technology began said, yes, but what will it mean for the guys that I know who have thick fingers and rough hands who have just lost their jobs at a closed industrial plant in Rochester? Well, those fellows may be working today; maybe they're driving for UPS or they're doing construction in public facilities in Rochester, or maybe they're installing telecommunications, or something. Perhaps they've retired by now. But for them and their families and their lives, there is a real gap between the economy we're talking about and their world.

And it's even more graphic in the central cities where the dropout rate continues to be too high, where the levels of crime and difficulty and public housing and central city situations, Mr. President, that you allowed me to work in, in the first term.

In the Hispanic community that I now, where people work in restaurants and are construction laborers and agricultural workers in places outside of Los Angeles and Texas and New York now, working and making carpets in Dalton, Georgia and working in meat-packing in Western Nebraska, and we hope that their children will connect to this world, but the gulf is vast and it's easy to forget and it's easy to overlook. And the income effects are serious.

That gap is even wider on a global scene. Some years ago, I had the opportunity to accompany a group to Guatemala to think about microenterprises. A microenterprise in Guatemala means a $200 loan to a woman who is working in a marketplace. And it struck me that these were two ships passing in the night that would never sort of meet. The imagery that came to my mind was of the Star Wars movies, when they hit hyper-speed, and sort of one economy is gone, and the other is left behind. The problem of AIDS in Africa. Indian engineers populate Silicon Valley, but you just saw the vastness of poverty on the Indian subcontinent.

I don't want to be a Cassandra, but it's sometimes too easy to take a few anecdotal cases of instances where the Internet is reaching, or technology is reaching, and suggest that that constitutes a massive wave, when we know, as Mr. Wolfensohn has said, that the numbers are so massive and the need is so great.

We also know that the anger, the resentments and the insecurities reach our world and our conversations, as at the recent WTO meeting in Seattle, or the speeches of developing country leaders at Davos, or the jobs that go offshore to make our quality of life possible in some sense, where people work for a few dollars a day or even a few dollars a week. So, as Chairman Greenspan said, it is important that policymakers remain vigilant, because it's easy to get euphoric about this and just sort of forget the reality of what's there.

In our own country -- I looked at some numbers last night -- our own Commerce Department says that for people who are above $75,000, they're 20 times more likely to have Internet access than people at the lower rungs of our own economic ladder. Nine times more likely to own computers, above $75,000, than those at the lower rungs.

I did the numbers myself last night from another source, and above $75,000, Internet access in America is about 60.3 percent of households. Under $25,000 -- and that includes sub-groups that are below 25, below 20, below 15 -- it averaged 8.7 percent. So the gulf is pretty wide.

Even at the same economic level -- this is families between $15,000 and $35,000 -- computer ownership for whites in that economic strata is about 32 percent. But for black and Hispanics, 19 percent. So even when we don't think of it as an economic issue, but look at it across racial and ethnic groups, it's a serious gap. Internet use for whites in that strata was about 17 percent; for blacks and Hispanics, about 8 percent -- this even in light of the facts that those 50 million under-served Americans -- in terms of computer use and Internet use -- have about $300 billion in purchasing power. So there's a market there if we can figure out how to reach them.

Now, apart from access, in terms of the hardware and Internet use, is the issue of the inadequacy of content. The Children's Partnership just put out a study about two weeks ago that suggested that the real problem is the inadequacy on the Internet of addressing the needs of low-income people, their needs, but also addressing them in appropriate formats -- many who don't speak English, there are some 32 million people in our country whose primary language is not English. The Children's Partnership surveyed a thousand cites and found that only 6 percent covered such subjects as housing or jobs or had effective multi-lingual formats.

So the need on the content front is to create search engines that help people with these particular needs to provide translation services, to provide multimedia that's user-friendly -- audio, for example, instead of text for people who may have trouble reading text; interactive devices that are more engaging; and to use people from communities who know what the needs are and are actually designing the sites that people can utilize.

Mr. President, clearly this speaks to your oft-stated list of policy initiatives that computers with Internet access be in every classroom, that we train teachers in the new technologies, that we integrate computers into the academic curriculum, that computer learning centers be located in needy communities, that Internet access be provided to every household, that every student be computer-literate by the 8th grade as a national goal, that we think about how to wire homes for technology, even homes for poor people, that we look at the pricing of computers. More and more, we're seeing computers as a commodity that ought to be very low-priced so that people can utilize the technology on the other side, and then even on the global scene, urging these policies globally, including low telephone access charges.

In the final analysis, it seems to me that there is a convergence of sort of three initiatives here that are in the public domain. They are, one, how to make educational content available -- that's a public issue. Secondly, how to make the technology as available as possible and relevant as possible -- that's a public issue. And then, how the government can play the role of broker, organizer, to create the partnerships that bring the entities together.

Let me just expand for one second. First of all, with respect to education. Someone said this morning that this country has always been adaptive where education is concerned, and it's true. In the 1800s, we created the public school model. In 1862, in the darkest moment in American history, this country passed the Morrill Act that set up the land-grant college system. Darkest moment in American history, was not clear how the war would end, yet the country knew when it was over it would have to build roads and dams and farms, and build an agricultural industry, and we did it. At the turn of the century, the philosophy of education was geared toward the industrial era, but it created a model that exists to today.

So the capacity of this nation to adapt its educational systems, now, to a new set of realities that involve new technologies, is clearly possible. It requires a lot of work, but it's possible.

Similarly converging, a second theme, is the adoption of technology -- of, as I said earlier, audio, video, streaming technologies, interactive processes, games, animation, any number of things that can be adapted to this process. In some respects, there are a few countries that are doing a better job in distance learning than we are. I understand the Chinese have some 3 million people involved in distance learning via television and the Internet. The next largest number in any educational system like that is in Great Britain, where 250,000 people are involved in a similar system. We've just created our first university in this country doing that, Regents University in Albany, New York, but we're a long way from sort of the state of the art that is developing in other parts of the world.

And then the third piece is government as broker, as organizer, as builder of partnerships. I do believe the government has to play a role here, because the job is huge, the scale is large, the investment has to be substantial. And it takes patient money that most corporations just can't do in a market environment. The broadcast model of doing this in return for advertising or for e-commerce probably isn't right for education. It just takes too long and it costs too much money.

The Marco Foundation has put a million dollars into this to try to spur content development, but what's a million dollars against the scale of what's involved here? Columbia University just announced a new initiative in education the last few days, very early; Milken has UNEX; there are other models. But the fact of the matter is that our government has a long history of doing things that are in the public interest that spin off into public applications and private sector opportunities.

The NIH shares biosciences advances. The defense technologies in countless instances have been spun off into private, money making opportunities, including ARPAnet itself. Public television was an investment that has resulted in educational television. So it strikes me that the opportunity to bring educational advances, technology advances and the role of government as partner to sort of seed some of these things, learning from this entrepreneurial era that it cannot be the old bureaucratic model, but something new, some kinds of new partnerships -- but I'm just contending that the content gap is too great to leave it be and hope that somehow it solves itself, or hope that the profit-making broadcast model of selling advertising or e-commerce will get it.

The stakes are too large, both within our own country to close this gap on content and the contribution we can make in the world by our leadership on this issue is a tremendous opportunity, as well.

Thank you, sir.

THE PRESIDENT: I'd like to now call on Dr. Amartya Sen, who won the Nobel Prize in 1998 for his magnificent work on poverty, ethics, and economics, and who has come from Cambridge University to be with us.

Thank you, sir. We're honored to have you here.

DR. SEN: I'm delighted to be here. The subject of the panel discussion, of course, is quite vast, and I was told that we each have four minutes, which is not a very long time, though I was very encouraged to see that four minutes could be interpreted rather imaginatively. (Laughter.)

However, I'll confine my observations mainly to really one central point, which I think has fairly extensive implications, which I won't be able to explore here. But I do believe it has a fair amount of reach on other fields.

The main point is this. I think we live in a world of many interactive institutions -- the market, the government, the democratic process, the media, the NGOs, the research institutions, public and private, and so on. Each of them can play a major, but complementary role in enhancing the well-being and freedom of the individuals in the society and in the world at large. The closing or even narrowing of the global divide requires -- an understanding and informed views of this institutional complementality.

For example, the democratic process is important not only because political freedom is valuable in itself, but also because it provides political incentives to the government to prevent insecurities and crisis such as a famine. Indeed, famines, which I spent some years studying at one stage -- it's interesting that no famine has ever occurred in any democratic country. They all happen only in colonial regimes or in military dictatorships, or on one-party states, like the Soviet Union in the 1930s, or in China in the early 1960s, in Cambodia in the 1970s, or in North Korea right now.

Furthermore, during the recent Asian economic crisis, the newly dispossessed people in Indonesia, in South Korea and elsewhere, experience the penalties of inadequate democratic rights, and suddenly miss the effective voice that these rights give to the deprived. Democracy, as a result, has become a big issue in these countries now.

The complementality between different institutions demands a fuller recognition in the making of public policy. The market mechanism can provide an enormous opportunity to raise incomes and to expand living standards, and yet, there can remain major gaps. For example, special incentives may have to be created by public policy to make private funds develop and deliver the goods and services needed particularly by the poor with inadequate purchasing power. Bill Gates has already discussed the issue of vaccines in that context, and his program connected with that. And that, of course, is an extremely important initiative.

I think we have to think innovatively about these issues. And there are other issues. One of the interesting suggestions came from my friend, Michael Kremer, who I believe is here, who has argued that providing public commitment in advance to purchase substantial amounts of particular vaccines -- against malaria, TB, HIV, for example -- as and when these vaccines are actually developed could be very important from an incentive point of view.

Just as democracy creates political incentives, enlightened public support can create economic incentives of a very vital kind. Indeed, the complementarity between different institutions -- or to say it in another way, between different kinds of freedoms -- economic, social, political -- is one of the major lessons of modern development experience.

For example, the expansion of educational arrangements for women, a crucial social freedom, has been observed to lead to remarkably diverse and far-reaching achievements, on the basis of quite extensive statistical studies -- including reduction of gender inequality, of course, but also stimulation of economic growth, sharp fall in child mortality, rapid reduction in fertility rates, and a broadening of the reach of the political process.

I was delighted to see, Mr. President, in the newspapers the pictures of you mixing with and encouraging intrepid rural women in Rajasthan, given the fact that Rajasthan has been one of the most backward parts of India in terms of women's education and gender equity, really one of the absolutely near the bottom. These sights were certainly, for me and for many others, extraordinarily heartening.

One final point. The nature of the global divide can be very complex, as I have tried to discuss in my recent book, Development as Freedom. For example, not only do African-Americans in this country, as a group, survive to less mature ages than the American whites, they are outlived by the population of many of the poorest regions in the world. For example, China, in the case of men, and the state of Kerala in India, in the case of both women and men. And, yet, African Americans are enormously richer in terms of market-generated income than are the Indians or the Chinese. The need for making use of institutional complementality to supplement the market mechanism by other social institutions apply to America, as well. There is certainly, I believe, a general lesson here for working against divides of all kinds.

Thank you. (Applause.)

THE PRESIDENT: Now I'd like to call on Marai Chatterjee, who is the Secretary of the Self-Employed Women's Association of India. I met her recently in Mumbai, when I took a couple of hours just to have a little roundtable with some of the younger people that I believe are shaping the future of her country. And I'm very interested in her comments not only about what she is doing, but about how her efforts might be amplified by the availability of new technologies.

Thank you for coming this long way to be with us.

MS. CHATTERJEE: Thank you very much, Mr. President. I'm very honored to be here. It doesn't matter that I came a long way, I've learned a lot this morning already.

I would like to share some experiences from the Self-Employed Women's Association, which is a union that I represent of quarter of a million very poor women workers who are earning definitely less than $1 a day, more close to 40 cents a day.

What we have learned in the last 30 years of organizing women is that work and employment are central to poor women. As my sisters in SEWA again and again say, if we work, we survive; if we work, we can eat, we can feed our families. They work hard and long hours and are ready to maximize any employment opportunities that come their way that are available. But despite this, I'm sorry to say that the income divide for my sisters in increasing both within India and across countries.

This morning, in the panel, we heard very eloquently from the panelists how the human development report has also brought out the income gap increasing between the poorest countries and the richest countries. And this is so also within countries, like my own, India. The good news is that while income inequality is increasing the divide, even in poor countries like mine, in health and education is narrowing down. If we look at infant mortality in the last 50 years since independence, we have been able to half our infant mortality, from 146 per thousand to 72 per thousand live births. It's still far beyond what we would like. And, similarly, education gap has been narrowing. But the income inequality gap is increasing. And I think we need to look where is this divide happening, where is this inequality happening, where is the arena for all this.

And if we look, it's very clear, it is happening in the informal sector which is the source of employment, income and survival for the mass of the world's working poor. If we look at the figures in Latin America today, about 50 percent of the non-agricultural work force is engaged in the informal sector. In Asia, it's 40 to 60 percent; and in Africa, 75 percent. And in my own country, as I was sharing in the roundtable in the pre-lunch session, the figures are 93 percent -- a full 93 percent of the Indian work force is in the informal sector. They are vulnerable workers, they have no protection, they have no labor legislation. They are the poorest. And this is where the income inequality and the divides are happening.

And, yet, it's a very vibrant part of the economy. I mean, 63 percent of GDP is accounted for, Indian GDP is accounted for by the informal sector. We also account for 55 percent of national savings. So it's a vibrant, dynamic, growing sector, although it is the poorest.

So what I'm trying to say is that there is an overlap between informality and formal arrangements of labor and poverty. There's also an overlap between gender informality and poverty, and I'm sure this audience is very well aware of that. We heard about it this morning also from the President, and it's very true in our country that women get the worst work, and for the same work we do not get equal wages, we do not get equal income. And also, we are not skilled, we have not been to school, and there are so many such problems.

I'd also like to talk about two or three key issues which impact

on this divide, and -- well, have the potential both to close the divide and to force the divide open further. One is the impact of globalization and liberalization. And as most of you would know, we are one of the last countries in the world to open our economy. Our experience with globalization is about 10 years old.

And from the point of view of the poor it has been a very mixed experience, and it has also in some ways enhanced the divide, in some ways closed the divide. If I look at the positive impact, one is that we have our own Women's Cooperative Bank in India with 125,000 woman depositors. And with globalization and deregulation, we've been able to get financial services more and more to our rural members.

Also, those of our members who are involved in production and in small businesses have been able to, for the first time, dream of having access to markets of the North. My sisters who are producing exquisite craft products -- embroidery, textiles -- they're able to now, equipped with an export license they proudly sell their products all over the world. And of course, this has resulted in higher incomes.

If I speak about some of the negative impacts, or the impacts which are reinforcing the divide, one is that we no longer have access to raw materials. Those of us who are primary producers -- weavers, hand loom weavers -- certain industries are almost going extinct, because we are exporting to the global market, and primary producers simply cannot afford, for example, cotton yarn.

The other issue that we have been hearing about on this panel, and I think is very important, and I know that the President himself experienced this in India, is the whole rise of the infotech sector, with tremendous possibilities even for a poor country like mine, tremendous possibilities for even closing the divide. But so far, we find that this sector is mainly linking those who have access to this technology, and it leaves out and even de-links those who don't have access, the poor.

I'd like to give a few examples of how in my own organization we've been trying to close the divide and increase incomes through use of information and technology. One, as I mentioned, Sava Bank, which is our cooperative bank. And through the use of computers, we've been able to rapidly expand the number of poor women self-help groups to almost 2,000 small groups of women who are saving 30 cents per month, 40 cents per month. But these are small beginnings, and they're able to buy a buffalo, they're able to buy their work equipment, and they're able to have assets for the first time in their own name.

Similarly, the economic organizations -- and there are over 1,000 small collectives and economic organizations that we have promoted in Sava. They're able to produce better, have contact with different markets through the computer and through the Internet. Even a simple technology which you know for many years in the U.S. but is still new to us, the telephone, has revolutionized the lives of many of my rural sisters in Sava. Recently one of our members took the plunge, as they always do, and took a loan of -- what was it -- I think four U.S. dollars, perhaps, to get a telephone. And now, there's a rush of people trying to get a telephone, because they found that their income was enhanced just by this one technology. But this all can happen.

Infotech can increase incomes provided we set up the infrastructure. For a poor country like ours, the hardware is still far too expensive. The software has to be appropriate, it has to be in our languages. Most of us don't speak English, we don't work in the English world at all, and we also have to have training and backup services. What happens if something crashes, suddenly, in a remote rural village?

So there are the kinds of support that we need. But we have a lot of -- what shall I say -- we are also excited by the infotech revolution, and so we have been using satellite communication to reach out to large numbers of women. We have been using our own government -- SATCOM, we call it -- to have training. And for the first time, rural women are able to pin down and speak to government officials who they have been waiting to speak to for months through the satellite communication.

The other point that I would like to make which is -- well, keeping the divide open, and we've heard about this already -- is the health sector. Both the issue of access and affordability. I mean, we are very heartened by this development of vaccines and these important developments in science, but again, the question, always, is, how do we reach these exciting developments in vaccines, in information and technology to the poorest, the last women in the most remote village in countries like mine. We have to develop mechanisms for that to happen. Otherwise, what we see is whatever little our members earn is just frittered away in high medical costs and medical bills. And, of course, it also affects their productivity.

One thing we have been trying to do an experiment with is training a large number of women as paramedics. Many of them are midwives. We are upgrading their skills. We call ourselves "barefoot doctors." And we have now over the last 15 years trained about 500 barefoot doctors who are providing lifesaving information, simple dos and don'ts, and curative care to their sisters in other community in the villages.

They're also running through their own cooperatives, which are like little businesses, their own low-cost pharmacies, at the same time providing medicines and then also making a living from this. They've also organized health insurance, which, contrary to what the expectations were for the insurance companies in my country, have been viable, because they are run by women, controlled by women, and women are very interested to see that it's a viable activity. And they earn from it as well.

I'd like to just close my remarks by a few points on what we have learned, from women and work in my country and other countries, as to how we can actually close the divide. One, and very importantly, Mr. President, which I also suggested to you when we met in Mumbai, is the increasing of employment opportunities. I was very happy to hear this also this morning in the panel, because we are also saying the same to our government. Full employment and regular, continuous work, an increase in the number of employment opportunities -- we have found that labor-intensive employment is the surest way to fight poverty, to attack poverty, and also to close the divide.

Just to give you a small example, there's one desert district in my home state of Gujarat, which was written off as a basket case, as hopeless. And the government turned to us and, based on their pre-existing skills, the women's existing skills of craft, agriculture and forestry and livestock, we were able to, over 10 years, turn around the scenario to the extent that now 80 percent of the out-migration to the cities has been halted -- just by promoting local employment activities, and different opportunities.

The second way that we have learned all these years of closing the divide is capitalization of the poor. Promotion of capital formation at grass-roots level -- and particularly with women -- we have learned that asset ownership is one of the most powerful tools to attack poverty and close the divide. And I think this is now well known, so I will not dwell on this point.

The third point is capacity building of the poorest, even if they're illiterate, they're unschooled -- we have learned the that poor have tremendous hunger to learn, particularly women, they want the opportunities, they need the capacity building and the education to stand firm in the competitive markets, to have access to information technology, science, education and also management skills. Because women and the poor, we have learned through SEWA, want to develop their own economic activities and they want to run their own organizations.

The fourth way we have learned which helps close the divide is providing Social Security, or what the ILO is now calling social protection, but which we mean at least health care, child care, insurance and shelter, or housing services, to face the chronic risks and shocks and the huge economic costs that the poor are constantly facing in their lives.

And the fifth and, in some ways, from my perspective as a union, the most important is collective organized strength through people's organizations. I mean, perhaps my being here is testimony to the fact that when some of the poorest women on the Earth come together and organize something very powerful happens -- they get access, they get representation in boards and committees and panels, in their own country and also overseas. And, importantly, also, that they must control the very poverty alleviation programs that are meant for them. Without this control, planning, monitoring, then it is not possible to close the divide and attack poverty.

So just to summarize, we have learned all these years that these five components which I've just mentioned simultaneously and in combination, whatever the poor see fit -- sometimes little more of one, little more of the other -- is what makes sense to close the divide. And one without the other won't yield results and also won't make sense. Also, all efforts at poverty alleviation should be through people's own organization, what we are now calling in India the people sector. There is the public sector, there is the private sector and there is another sector which we call the people sector. And this is people themselves becoming the owners, managers and users of their own programs.

Essentially, Mr. President, this is a process of self-empowerment and group empowerment. And this is what we think eventually will close the divide. Thank you very much. (Applause.)

THE PRESIDENT: Well, I have a couple of things I want to say about that, but I want to wait until our last panelist has a chance to speak. And, again, I thank both of you for coming such long distances to be with us.

I'd like to now call on Bob Chase, who is the President of the National Education Association, and has been a leading advocate for closing the educational divides in our country.


MR. CHASE: Thank you very much, Mr. President. And than you for the opportunity to share some thoughts today. I can't help but remember the comment that was made by Secretary Summers this morning, when he spoke and talked about the importance of social policy on the whole issue of the economy. And certainly the panel this afternoon must deal with that issue very directly.

This conference on the new economy and closing the global divide on education could not be more timely. This week, more than 200 teacher organizations and children's interest groups around the world are launching a campaign to advocate for free and compulsory education for every child. Both the NEA and the AFT are part of this global campaign for education in a global economy -- an economy that demands more highly educated and skilled populations than ever before. And certainly all of the panelists on this panel have spoken to that, as well as Chairman Greenspan and the panelists this morning.

Obviously, every parent -- whether in Tokyo, Topeka or Togo -- knows that education is the critical factor in determining the future of our child. Ensuring that every girl and boy on this planet has the opportunity to attend school, to learn the basic needs of reading and numeracy, as well as an understanding of science, will make them much better in whatever opportunities they have, as well as being, eventually, better parents and citizens.

It's a little bit disconcerting that a decade ago representatives from more than 150 nations met in Thailand and pledged that every child would be able to attend primary school by the year 2000. Regrettably, that goal has been missed, and missed terribly. In 1995, the nations moved the target date to 2015, and we are, I believe, in danger of missing that goal as well unless we really act. Today, as you said, Mr. President, there are about 125 million children out of school. Another 150 million will leave their classrooms where they exist without gaining basic literacy skills.

The future of our planet literally rests and lies in the hands of those children. And I don't believe that we can sit by when one in three people of the developing world is growing up illiterate. We cannot arm 880 million people for competition in a global economy without first helping them achieve basic literacy, not even talking about advanced literacy.

Investment in education must be the cornerstone to achieving more rapid and equitable growth around the world. Without this investment, there is no way that we can hope to reduce poverty or to reduce inequalities in economic growth, nor can we develop globalization that is shared and fair.

Conquering the global education divide is obviously a very complex issue. We recognize the reality that prevents many countries from providing the most basic education systems. Where there are schools, where there are schools, too many of them lack such essentials as books, maps, computers are dreams if even though of. Some class sizes average anywhere between 80 to 100 students per classroom, and these classrooms are exceedingly small. Too many teachers are poorly trained and poorly paid.

In some cases, the rush to keep up with new technology is compounding the education divide. We learned at a recent meeting in the Caribbean, one held just this past February, that more and more governments are investing in technological hardware without training people on how to use it. So technological hardware sits there, unused, and making a situation even worse. This certainly is a short-handed approach, and short-sighted approach, rather, that will not help students gain the skills that they need to succeed in order to move beyond poverty.

Another challenge stems from U.S. domination of the software industry. Because the software industry is produced in this country, too often -- or much of it, anyway -- too often people cannot obtain software in their own language, or obtain software that is in any way culturally appropriate for the people we're talking about. And when in fact that is the case, then it's just not helpful to these folks. We must approach technology intelligently and responsibly.

We must also correct problems left standing for far too long. The crisis in world education cannot be attacked without continuing the global march against child labor, which hits girls much more than boys. Two-thirds of children out of school are girls. Very often, these girls are recruited to work as domestics, or in agriculture, as early as the age of four. And such enforced servitude is totally unacceptable, and cannot in any way help us to cross this divide.

Conquering the global education divide also requires that once we get children into the classroom, we teach them what they will need to compete in the real world and in the real marketplace, which means for many of the developing countries it's vocational education that is an absolute must. But first, as has been said by many panelists today, we must provide food and basic health care, and the work that's being done by Bill Gates, not only in health care, but also his foundation work in education, is particularly appreciated.

In countries where malnutrition is rampant and where vaccines are not readily available for easily preventable diseases, achieving basic education for every child is extremely difficult if not impossible. If children are not fed or healthy, they cannot think clearly enough to learn.

The connection between education, health and technology is obvious and clear. These are difficult challenges. Guaranteeing a free, compulsory education to every girl and every boy is an enormous undertaking. It will be expensive. It may cost as much as $8 billion a year for the next 10 years to guarantee that every child has the opportunity to learn, but the cost will be much greater if we don't make this commitment to our kids.

When you consider that $8 billion is less than what North America spends annually on toys, and what the world spends on the military in under six days, this investment in our children is money well spent. We in the NEA will kick off this week, by talking with about 1,500 to 2,000 of our members who will be meeting in Atlanta this weekend and trying to expand their knowledge on this issue. And you, Mr. President, and the Secretary General of the United Nations will probably be getting some postcards and so on from these folks asking that this issue be in the forefront. We will be reaching out to our members to make sure that we understand the true nature of this.

Jim Wolfensohn said education is the key determinant to move people out of their poor conditions in life. There's no question about that. It's also the key determinant in assuring a world of peace and a world of justice. This spring, in April, there will be an education forum in Dakar, Senegal, that will be the successor to the meeting that was held in Thailand. And then, in the later part of June, the United Nations will hold a summit on development in Geneva, I believe.

I don't believe that any of these meetings, including ours here today, need to establish new targets or promises. What we need to do is develop action plans that will in fact make a difference and make things happen. And that will be brought about by partnerships with the people in this room, partnerships with those in civil societies, which we're talking about next. And as an educator and as a citizen of this country, I can't help but believe that we as a nation who is as wealthy and as powerful as we are cannot do anything but accept our moral responsibility to do what we need to do to make a difference.

Thank you. (Applause.)

THE PRESIDENT: I want to call on anyone who has a question or a comment from the floor. But first, I'd like to make four points very briefly about what our panelists have said, because I find this not only fascinating, but profoundly important to our future.

First of all, with regard to the health issue, while I think the vaccine matter is terribly important, we haven't mentioned something that may be even more important: Clean water. We should all be investing more in clean water.

I visited a West African village on the edge of the desert in Senegal where Dorothy Height, a great American citizen and her United Council of Negro Women had joined with our government in building a new well and securing a fresh source of water so that the children could be healthy, and there was a sustainable agricultural environment. And all of a sudden, all the young people started coming home from Dakar back to their village to work and live -- sort of like what Mirai told you about the Indian village.

I think that if you look at the number of children who die from diarrhea every year, it is inconceivable that we can meet this health challenge without both a commitment to the vaccine issue and to clean water.

The second point. Dr. Sen, you talked about the importance of democracy in India and throughout the world. And then you thanked me for going to Rajasthan and talked about how backward it used to be. They are convinced that people in the little village of Nayla I visited that the reason that things are happening is because of the local government law, which was passed a few years ago, which guaranteed that various tribes, various castes and a certain percentage of women would be represented in every local government.

And when I was there in this very poor little village, among other things I saw that they had a computer that operated in both Hindi and English, and they assured me they had the software to put it into other languages, that even a person with basic literacy skills could operate. And I saw a young mother come in and call up a web site from the Health Department in India on what you should do in your children's first six months, with very great software visuals. And they had a printer. So she got to print out information that looked to me to be about as good as she could get at a doctor's office here in Chevy Chase.

And I will say again, their goal is, in the state, to have one of these in a public place in every village in the state of Rajasthan within three years, that has all the information from the national and state government on it. The same principle would apply if you could have one in every village for the school children, with a printer. Somebody has to pay for it, somebody has to pay for the paper. But it's still, the economies to scale are much different than they would be otherwise.

In Hyderabad, which is a wealthier place, obviously, the chief minister there has a goal is within a year and a half to have in every village every state service on the Internet. For example, as poor as India is, a lot of people own cars and you can now get your driver's license over the Internet -- which as I said already a couple of times since I got back, any American governor who did that would find all the term limits laws repealed, he'd be elected for life. (Laughter.) This is very important.

So I think we should -- I say this to point out that the local governments work. I also saw in this small village a women's dairy cooperative. They had a simple little machine that tested the fat content of their milk. It doubled their income. They also entered all their transactions on a computer. They got computerized records every week. And they were making lots more money than had ever been made in this modest industry before because of technology and the women's self-help organization. So I do think democracy and local government have a lot to do with it.

The third point I'd like to make is that the reason I wanted Mirai to come here is that in the seven years I have been President, I've been privileged to represent this country -- as my critics never fail, tire of saying -- in more nations than any other President in history. And in every continent I visited, the self-help organizations of poor people are the most impressive groups with whom I have met. And they overwhelmingly village women.

I'll never forget the people I visited with in Africa, this women's group that ended the genital mutilation practice in their village and how they brought the handful of men who supported them to meet with me, because Hillary had previously met with them. This is very important.

I visited with Mohammad Yunus and people from the Grameen Bank in Bangladesh, and you talked about the telephone . The Grameen Bank is actually trying to finance a cell phone in every village in Bangladesh -- because they it's a money-maker and it connects poor people to the rest of the world. You just think about it, if you had a cell phone and, where there is electricity, if you had just one computer with a good screen, easily accessible, with good software and a printer, what a difference it could make.

The final think i'd like to say, to echo what Henry Cisneros and what Bob Chase said is, the United States and other wealthy countries have got to start looking at this as a form of our future security. We don't spend nearly enough money on this stuff. I said I'm proud of the fact that AID, since I've been in, we've shifted our emphasis and we financed 2 million microenterprise loans last year. We should have financed 20 million microenterprise loans, or 30 million or 50 million.

People come to Mr. Wolfensohn all the time, other leaders in developing countries. They want him to finance big power plants and big projects. What we really need to do is to take these things that work to scale. That's what Henry's talking about, and what Bob's talking about. How can we take these things that work to scale?

And we've got to build, in our country particularly, a bipartisan consensus that recognizes that we'll get a lot more security out of financing more of these things than we will an extra fighter plane, or an extra missile, or an extra something else. (Applause.)

And I believe I've earned the right to say that, because I've supported increases in the defense budget every year I've been here. (Laughter.) I supported improvements in the quality of life for the men and women in uniform. But, you know, this is pocket change in the United States, to make a sea change in the rest of the world. And we have got to develop a global consensus for it.

And I think that the wealthy countries also need to consider whether we should increase the financing of the World Bank, because they're in the position, the people who work for the World Bank understand these things, they have the expertise. They should be doing it. We don't have to all do it through our national efforts.

But anyway, those are my observations. This can be done -- I'll say again -- the biotechnology of the 21st century and the information technology, if we can take it to scale, can close the divide. And if we don't, it will get worse. And no matter how you cut it, the wealthy countries are going to have to pony up most of the money.

And then, the people that run these governments in the developing countries are going to have to understand that the opportunity returns of efforts like yours or greater, sometimes, when the opportunity returns of big projects that look bigger. The President of one African country, I think is one of the best-governed countries in Africa told me that until I took him to a little village to show him the microenterprise projects, he didn't even know about it. He was too focused on how he was going to get financing for the next power plant.

Now, in his defense, ever since then, he's been a great promoter of this. But we -- not to start thinking about taking things that work to scale. If we really believe that technology can help developing countries leapfrog a whole generation in what was otherwise a predictable and unavoidable pattern of economic development.

Who would like to say something? Yes? Please stand up and identify yourself and ask your question.

Q Thank you. My name is Nick Rauf (phonetic), and I'm the CEO of a company called People PC. My question, I guess, goes to the heart of what we've been talking about. We've heard Chairman Greenspan speak of education and knowledge as one of the few irreversible assets. And Mr. Chase, you spent a considerable amount of time talking about this, as did you, Mr. Wolfensohn. We spend a tremendous amount of effort monitoring the flow of dollars across the globe; and yet, it seems that it's the flow of information and access to information that ultimately drives prosperity, opportunity, et cetera.

And I'm wondering if there might be an opportunity for us as a nation, and for us perhaps as a global community, to begin focusing on how we make access to that information available both to communities here in this country, as Mr. Gates has focused on, but also to communities across the globe -- because I believe if we fail to do that, we will see both an emerging class system in this country, not defined by wealth, but defined by access to information, and a class system that will expand globally, and potentially create a degree of unrest and discord in an economy that we heard earlier today is constrained currently only by labor markets and the productivity of those labor markets. And I'd love to hear your view on that.

MR. WOLFENSOHN: Well, Mr. President, I think you know that we're currently working on exactly this issue. We believe, from the Bank's point of view, that money is one asset that can be transferred, but equal with it is information. And so we're looking at the notion of providing what we call a global gateway to information on development, so that the people with computers in the villages, or the governments, or the local authorities, can have access to information which is available here -- but more enriching than that, so that the information base that we get can be enriched by experience in the field -- the sort of experience Ms. Chatterjee has has applications in many places -- so that the notion of information flowing out is much enriched by the notion of gathering of information in the field, which is applicable to the conditions in which it's operating.

And so the notion that we have is to put together really what amounts to a global alliance, so that for people that are concerned with information needs -- whether it be in schools or in local governments, or in development institutions or in women's cooperatives -- that that information can be brought together. And our country is in a magnificent position to give the lead in the methodologies on this, and I'm already talking to Bill and a number of others as to how this thing might come together. So your point is very well taken, and it is something in which the United States can take a lead, but which requires international involvement and ownership.

MR. CHASE: -- when the Telecommunications Act was passed a few years ago, it included the e-rate, which now is helping to wire schools and libraries in this country. That, believe it or not, has an enormous impact on the access to knowledge for a whole host of kids who just did not have that access before. So it has already begun here.

When we start talking about education and the quality of education, not only in this country but especially was the sake of discussion on this panel, I mean, it's the one resource that can't be taken away from someone. When someone is educated, they don't lose that knowledge.

What you do with it, then, becomes extraordinarily important. And as our guest from India indicated, the importance of capacity building for people once they gain that knowledge and what can be done with that knowledge is enormous. That's a key component of capacity-building -- providing that opportunity for individuals to gain not only knowledge, but knowledge about how to access knowledge and the ability to access that. And I think you hit on a point that's extraordinarily important.

THE PRESIDENT: If I could just say, I think that if someone from another country were to ask me how they should structure their information dissemination based on our experience after the Telecom Act, I would go back to the first conversation I ever had with Vice President Gore about this, when he said, you know, the two things we have to do is make sure that there are discounted rates so that every school, every library and every hospital can access the information.

And the second thing we have to do is to make sure that it's a pro-competition set up, so that people -- no matter where they are, no matter how meager their resources are -- have a chance to succeed as entrepreneurs, because they'll have an explosive impact. Those are basically the only two things we fought for in that Telecom bill and I think the results, in our country, at least, speak for themselves.

Yes, sir, you had a question back there?

Q I'm a professor of economics at Harvard University, and before that I taught high school in Kenya. As Bill Gates has pointed out, vaccines are one of the key technological challenges facing developing

countries. And it's very exciting to see this panel, because some of the key steps to increase access to vaccines are being taken by people on the panel.

Mr. Gates, the work that your foundation is doing to bring vaccines to children all over the world is literally saving millions of lives, so thank you very much for that work.

Mr. Wolfensohn, in a recent Financial Times article based on an interview with you, there was a statement that the World Bank is planning a billion-dollar revolving fund that would help developing countries purchase specified vaccines if and when they're developed or invented. Such a plan could provide incentives for private firms -- pharmaceutical firms, biotech firms -- to invest in developing vaccines for diseases like malaria or tuberculosis, which kill millions of people in developing countries, but for which there wouldn't be a big market in rich countries.

And, Mr. President, the tax credits that you've proposed could have a major impact. They could effectively double the market for new vaccines for tuberculosis, malaria and HIV. And in doing so in a way that would harness the energies of the private sector, rather than establish a new government bureaucracy to try and develop those vaccines. This would be a plan that would provide these incentives to private firms if they succeed in developing the vaccine, and not otherwise.

My questions are for are for Mr. Wolfensohn and for Mr. Gates. For Mr. Wolfensohn, do you expect to bring to your board in the next year a plan based on the ideas that you discussed in the Financial Times interview, which would specifically incorporate a commitment to help purchase vaccines for specified diseases if they're invented?

And for Mr. Gates, my question is, if a safe and effective and cost-effective malaria vaccine were developed, do you think that your foundation would be likely to consider buying this and making it available to developing countries? And, if so, might you consider announcing this fact in advance as a way of encouraging biotech and pharmaceutical firms to start investing in the R&D that would be necessary to create these vaccines?

MR. WOLFENSOHN: Well, the answer to your question is that we are actively considering that issue. And I think you know that it's an incentive which it has been thought may encourage vaccine manufacturers to provide the vaccines.

What we've learned is that it's not just the availability of the vaccine which is the problem. It's the systemic health system which is needed in addition to that to ensure the distribution and delivery of the product. So I believe that it's useful for us to deal with the question of supply of vaccines.

But the issue of distribution, delivery and engagement in health services is, I think, a parallel that we have. And so we don't underestimate that in Africa, where less than $10 per head is spent per person, per year on health. The availability of vaccines is clearly an important issue, and we will be facing it, and we will be bringing it to our board.

But I think we shouldn't underestimate, in the case of vaccines or in the case of delivery of retroviral activities for AIDS, which may well come along quite soon in terms of availability, that the systemic problem in terms of many countries is the great inhibitor, even more than the vaccines. So it's both together, and the answer to your question is, yes, we will be bringing it to the board, but only in conjunction with systemic reform.

MR. GATES: Yes, in terms of malaria, you probably know it kills over 1 million children a year. And it's actually fairly scary in the fact that the goals of eliminating malaria have not been achieved; it's actually back in some areas where we thought we'd eliminated it.

So we see two roles for the foundation. The first is actually funding malaria research, and we recently put $50 million towards that. And the other is exactly as you suggest: taking this global alliance for vaccines and having it make a commitment to say that when the drug becomes available that it will finance for the poorest countries the purchase of that drug. And so it won't just be the recipients of the research money, but anyone who can come up with that solution.

That's a tough one, because there really isn't much of a market in the developed countries. But I think we will see a response to it, and it's right there at the top of the list.

Q My name is Judy Brewer. I'm with the World Wide Web Consortium Web Accessibility Initiative. Part of overcoming the digital divide is not only ensuring economic access to the technologies, but ensuring that these technologies are usable by all. Accessible Internet and web solutions for people with disabilities who may not be able to see, hear or manipulate information in standard ways on traditional desktop computers, these accessibility solutions also support device independent access to information over mobile phones, hand-held devices, TV or automobile access to the web. They also support better internationalization of information, including access to information regardless of somebody's literacy level.

Based on the comments today, with the exception of Secretary Summers and Mrs. Cisneros, I would guess that the 20 percent of the U.S. population with disabilities, and the millions of people with disabilities internationally are not seen as part of the marketplace of the new economy, nor as one of the largest untapped pools of potential workers for the new economy. And yet, we are.

Ensuring accessibility of our new technologies is an important way to tap into that dual potential. Among your panelists, for instance, Mr. Gates of Microsoft has been supportive of the Web Accessibility Initiative at W3C. However, implementation of accessibility solutions with Microsoft's own technologies is lagging far behind what is needed. Ensuring economic access to technologies to inaccessible technologies still leaves many people behind. Can any of the panelists tell me where this is on your agenda?

MR. SEN: I'm not sure that I am the appropriate person in the context especially of adapting things, but you know, disabilities -- of course, one of the things that's been very central in -- I'm an academic economist, and I can only respond to that -- is being a very central concern in my own writings and that of many others, in fact. I mean, we'll call it "economic inequality" -- much concern with these issues.

But you see, I think you are not really asking a question to an academic. I think you would be very disappointed just to be told that academics are quite interested in it. You want them in a practical world to respond to it. So I think, to them, it has to turn.

Q Any response in terms of any of the parties would be helpful, actually.

MR. CISNEROS: Mr. President, I just would add one thought, and that is that I suspect that the issue is going to be even more important, given aging trends in our own country and in the industrial world, where a larger proportion of the population will be aged and suffer disabilities -- sight and others, stroke and any number of other things that leave people essentially healthy. Their basic systems allow them to live to 80, 85 years of age, but they will be disabled for a longer period of time or incapacitated for a longer period of time. My guess is this is going to be a huge -- we know it's going to be a big issue in terms of health systems and medical costs and so forth.

It just strikes me that it's probably going to be an issue in terms of information access. People can live a relatively good quality of life if they can read, if they can get access to -- my father is 82 and suffered a stroke 20 years ago; this year, we invested in a device that allows him -- he's an avid reader, just losing his eyesight. So there are devices now that you can magnify the size of print. That's a simple thing. He tries to use a computer. He has a difficult time with it. But my guess is, this is going to be a bigger issue as opposed to --

THE PRESIDENT: I can only tell you for me -- I have supported every initiative of which I have been aware that would increase the access of disabled Americans to the workplace, and I believe that technology in this area will become more and more user-friendly, including user-friendly to the disabled. I think there are just -- there will be, by definition, a market for it. And I think it's terribly important.

I noticed -- it's interesting -- when I was in Mumbai, I stopped at two different schools for blind students and said hello to them, and I was thinking about that at the time. But I think on balance we should see this as a positive thing to the disabled community, because it's far more likely to bring more disabled citizens of the world into the new economy than it is to keep them out, as long as we make sure that as user-friendly technology is developed, it's made available on the most equitable possible basis.

MR. GATES: Let me speak a tiny bit about it. This is a very important area to our employees. In fact, we have a large group which is our accessibility group. And there has been fantastic progress over the last five years.

Accessibility comes in many different categories. Making it so that you can use different types of keyboards, that turned out to be a problem that was relatively straightforward to solve. The keyboard, the mouse, getting rid of audio clues that were a problem for people with limited hearing.

The one that's been very tough, and we've -- I'm very proud of the work we've done, but there's a lot more to do -- is dealing with people who have visual limitations. We have things like magnifiers in the product, so that if you just need bigger fonts you can get it. But the toughest of all is that when the graphical interface was invented, we used that computer screen, and there were a lot of things happening up there that made it tough for -- particularly for blind users.

We have a lot of relationships -- one is with a group in Spain called Onse (phonetic). Spain funds programs for blind people probably better than any country; they devoted the lottery, which at the time they may not have realized what a benefit that was going to be, to this organization. And so they've had some really smart people working on this.

And so that type of accessibility we have a long ways to go to have full fidelity there. But even today, there are in this country thousands and thousands of people who have jobs because computers, and the platform that's been built, allows them to get at activities that wouldn't have been possible without technology. So I'd agree with the President, it's an opportunity. It's one that we can't lose sight of; we've got to keep it as a priority. But already I'd say there is fantastic things that have taken place.

We're also the creator of a group of employers that have gotten together to make sure there is visibility, so to speak, of the fact that there are these people with these talents, and what are the barriers to helping to get them into the work force. The energy has not gone into that and so even once the technology is there, getting that focus on the hiring has turned out to be important, as well.

MR. WOLFENSOHN: I just want to say that I chaired my first conference on technical aids for the disabled 20 years ago. And when I came to this job I discovered that the issue of disabilities in developing countries starts at a very, very low level. So that the notion of jumping to use of computers to the creation of job opportunities is a monumental leap.

What we're working on at the moment is the issue of getting services provided for the disabled in many of the countries in which we're operating. The very poorest countries are not providing for people with disabilities in mobility, wheel chairs or the most basic requirements in terms of hearing and visual impairment. The thing that we're trying to do is to try and build allocations of health and other social services for persons with disabilities.

I do not exclude the use of technology. In fact, I welcome the opportunity. But I don't underestimate in many of the countries in which we're dealing -- would hope that you might bring some action on it, as well -- that stage one is to get recognition in many of the countries of the grouping of persons with disabilities as having special needs. And I must tell you that that is quite tough in many of the places in which we're operating.

MR. CHASE: -- there is probably no other public institution that is doing more in this area than public schools -- not enough, so I want to make sure that's understood. And part of this is a result of IDEA that was passed 25 years ago. What we are seeing in many schools -- still not enough -- many schools, is the use of technology to meet those needs of disabled students that have, in fact, been highlighted through the use of IDEA and IEPs and the whole process there. Still not enough, but moving certainly in the right direction.

THE PRESIDENT: I have to bring this to a close, but let me tell you what I'm going to do here. We're going to have about a 15 minute break between now and the start of the final session. And what I would like to encourage you to do, if you have more questions, is to come up and talk to our panelists during the 15 minutes.

I wanted to close by giving our guests who have come the furthest away a chance to answer this question. Dr. Sen and Ms. Chatterjee, if you had $2 or $3 billion to spend on this topic, closing the global divide, how would you spend it? In India.

MS. CHATTERJEE: Well, if we had that kind of money, two or three things. As I said, we believe in the convergence of these different activities to close the divide. So one thing we would definitely do is to try and help use that as a revolving fund to help women develop their small businesses and their employment, and also promote capitalization. And also encourage them to get some sort of social protection, some sort of social security.

But we would also put it into developing information technology and the idea of vocational schools, which we are developing very much. So education, but with the support of information and technology.

DR. SEN: Well, I agree with that answer. In a very tiny way I used my Nobel money to start up a educational foundation for -- especially for girls, but mainly for rural children. It is, of course, a tiny amount of money in comparison -- in this table with Bill Gates around, one couldn't even mention numbers like that. (Laughter.)

But I think that to a great extent, based on the idea, there are three priorities I put there. One was the elementary education. The other was elementary health care, including the point you mentioned about clean water being one of the central aspects of that. And third was gender inequality, which I think is a big prime mover of change. I think if there are changes that we are going to see in the developing world, perhaps nothing is as important as the access of women to the economic opportunities like microcredit, employment opportunities, in which, of course, Mirai herself is very strongly involved -- but also education and so on.

And the radical change that women's education has brought -- you see, India is very interesting if you contrast it. For example, Mirai mentioned that infant mortality has come down from, say, 145 to 72. Now, if you take a part of the country where education is more well-developed, like Kerala, the infant mortality is 14, compared with Seychina's 30. So, you know, you're really dealing -- you see the impact. It's not only education, but I think that's the primary factor.

I think the difference that women's education can make is really truly dramatic. So I would have thought, possibly these three priorities are the direction I would go.

THE PRESIDENT: Last comment, for Mr. Gates. The information technology revolution has created more billionaires in America in less time than ever before. And we have just scads of people worth a couple hundred million dollars, which to people like me is real money. (Laughter.) And what could I do as President, or what could we do, to encourage more philanthropy like the kind the Gates Foundation has manifested? And what can we do to make sure that we leverage all this so that there is some synergy in the movement of the philanthropic world toward this?

You know, 100 years ago, when J.P. Morgan and all these people made all their fortunes, they built great monuments to our culture -- the great museums, the great public, the great libraries. But now, we have all these younger people who made lots of money who really want to transform society itself -- really without precedent. We've always had some foundations that were interested in doing this. But the potential we have to leverage private wealth here through philanthropy to transform society, I think, is without precedent in history. What can we do to see that there are more efforts like the one you're making?

MR. GATES: I think that's a very good question. And it's one that I think about a lot, and don't have as good an answer as I'd like to have.

There are some foundations that have a lot of resources that are starting to do some exciting things. The Packard Foundation is fantastic. The Eli Lilly Foundation, the Welcome Foundation over in the U.K. And all these new foundations are learning a lot from the existing foundations, people like the Rockefeller Foundation, that have been out there doing fantastic things for decades and decades.

That still doesn't really get into this new generation of success, and how we can make it exciting for those people to get involved. I have to say that as I learned more about it, I've gotten more excited myself. So a little bit I just need to reach out and spread that excitement.

When you're making money, it keeps you very busy, it's really a full-time thing. (Laughter.) And sometimes, you think, boy, does all that giving really have an impact? Is it money well-spent or not? Because your whole job is to be skeptical about what things really have impact, and what don't. And I'm pleased to find out that philanthropy, if it's done the right way, can have a phenomenal impact. And everybody gets to pick their own area. As we've seen on this panel, there's not going to be a shortage -- if these people turn to philanthropy, it's not going to be something where we say, "No, that's all taken care of." (Laughter.)

And so, how can we encourage them? I don't know. I need to think about that some more. I think there's some leadership to be exercised here.

THE PRESIDENT: Let's give them all a hand. We'll take a 15-minute break. Thank you. (Applause.)

END 4:11 P.M. EDT