State of Green Business Forum

Keynote Interview: 

Gavin Newsom, Lieutenant Governor of California in conversation with 

Joel Makower, Chairman & Executive Editor, GreenBiz Group.

Joel Makower: About a third, 40 percent of the people in this room are not from California and even the 50 or 60 percent that are from California, i'm not sure know the answer to this question.

Gavin Newsom: How about the guy who has to be the lieutenant governor is not necessarily sure?

Makower: What exactly does the lieutenant governor do?

Newsom: Thank you. Yes. Oh well, I can do it with a deep voice to try to impress you, but that won't work. Um, actually it's interesting. I mean, all that, lieutenant governor, all that you do is pick up the paper and see how the governor's feeling. That's sort of the old pejorative joke. But, at the end of the day, there's two roles. One is moral authority, presumably, you try to exercise it. Then you have the formal authority that is prescribed in the constitution of the state and that's substantively the role that intersects with the conversation today. I'm the Chair of the State Lands Commission and anyone that's ever done business in the state of California, it's one of those boxes you need to check off and they usually get in your way, and if they get in the way, it delays you and it costs you an enormous amount of money, so anything you want to do that connects to state property, which is vast in the state of California, you need to go through that commission. There's three members in that commission so it's an inherently influential commission…so chair of that. I'm on the Ocean Protection Council, which is incredibly important, to preserve and protect our natural resource off the coast of California and the opportunities, the business opportunities, and green tech investment in terms of wave energy, ocean power, tidal, I think are extraordinary and I'd love to talk about that in a moment; things that I was doing as mayor that now, in that formal role, I can exercise. Third, I'm Chair of the Economic Development Commission, so presumably none of you have ever heard of that. For one good reason, that it's really not mattered. It's supposed to be putting together the strategic planning document for the economy, and the world's eighth largest economy, you'd think it'd be a central agency in terms of the implementation of our collective wisdom, not just in this room but across the state. It's frankly been an embarrassment, so that role needs to be exercised differently but substantively. I chair that. And finally and I think profoundly, in this room, I will meet every few months formally as a member of the UC Board of Regents and on the California State University System as well, so when it comes to , the investment in the most precious resource, which is people, human capital, the lieutenant governor has a very formal role. Again, those are the prescribed roles, the rest is the bully-pulping and it's how you exercise it.

Makower: Well, you've also talked about it in your very brief inauguration speech, was one of the few public statements you made about what you want to do, that you talked about renewable energy and green jobs and the economy and Governor Brown, in his State of the State Address the other day, two days ago, said that, "my intention is to make California a leader in renewable energy and state-of-art efficiency," and so those are obviously, and he did that quite a bit when he was my mayor in Oakland. What do you want to do number one and what are you able to do given the current budget?

Newsom: I mean, the budget's an excuse, you know. I mean, look, I was the mayor up until a few weeks ago and we always said 'oh we can't do this, can't do that because we don't have the money.' There's a gentleman in the back, I won't give his name, who just came up to me and said 'Thank you for the healthcare.' Someone who's working here can't afford healthcare that got healthcare because of our healthcare initiative in San Francisco. I say that not to impress but to impress upon you this point. We didn't have the money for that. No other city in America had ever done that, We have universal healthcare; we're not debating it. It's health care not health insurance. That's why we can afford it, different way of solving problems. You don't like the answer, ask a better question. And so, money's inherently the excuse, from my humble perspective, and that's an audacious thing for me to say, but I heard the word audacious come out of your lips and I like it. The fact is you got to think differently and act differently and that's the opportunity of this quote unquote fiscal crisis and the "fiscal crisis" in this state is so self-evident to everybody because we have a "fiscal crisis"; it seems like the governor's announced a "fiscal crisis" seven, eight years in a row and no one really believes it; no one fully appreciates or understands it 'cos, you know, at the end of the day, they seem to somehow to get out of it, you know, even it impacts us. So, my point of saying all of this long-windingly is we need to get through the crisis that is at hand, which is a budgetary crisis, but we need in parallel to be making investments in our economic fate and future. You talked about a dashboard. What's the dashboard of California's economy? What's our proximity in the context of our greatest strength, which is our regional strength as it relates, notably, to the gateway status we have to Asia, particularly China and India, and elsewhere, and what are we doing to build those attributes? Are we aligning a workforce to this new economic development paradigm and strategy and where's green tech play a role in that? And obvious to everyone is you got a governor, as you said, that in the '70s really set forth proudly the energy efficiency standards that have allowed us to lead the nation and as you would know in the last 30 years, our per capita energy consumption hasn't gone up, where the rest of the country's has gone up over 50 percent and people put that in dollar terms, anywhere from 55 to 56 billion dollars, you can imagine the economic consequences had we gone the rest of the way of the nation as opposed to our own way. And so, we've led and we continue to lead with the advent of AB32. We were able to keep Tesoro and Valero, the big Texas oil companies, at bay. 60 percent of the voters said we wanted to move down that path of getting to 1990 levels by 2020, not 25 percent below 1990 levels. It's not the highest bar, which is an amazing thing you know, everyone's sitting there, 'my gosh, what's California going to do? AB32's going to put our economy at a halt.' It reminds me of what Michaelangelo said, 'the biggest risk is not that we aim too high and that we miss it. It's that we aim too low and reach it.' I say, big deal, getting to 1990 levels by 2020, but boy, you talk to folks up in Sacramento and everyone's about how the heck we can ever achieve this goal. It's a very low bar, I guess, is what I'm saying, for this country, but California has the opportunity to continue to lead and we have the framework and the plan now that needs to be implemented and you are the ones that will implement it because without you, we don't have the capacity. We have the ideas and we're developing the details of those plans, but the broad strokes and we need that innovative ingenuity that is really what speaks to this conference to actually deliver.

Makower: But you said before, that one of the things you were able to do with healthcare is to ask the right question, change the way you're thinking, the worldview of that. What's the right questions we should be asking around sustainable economy, green jobs, clean technology, that we're not asking now?

Newsom: Well, I think we are asking a lot of the right questions and that's what's exciting about California right now and you're seeing that manifest in very tangible ways. You're seeing that in terms of the job creation and I know your numbers. I've seen other people's numbers, but in '08, '09, we saw the green tech sector grow three times faster than the rest of the California economy and you go back in the extent of 2005, you see those numbers increase, go back to '95, they get even more impressive. The problem is they're still a very small percentage of the overall economy so you're dealing with a very low baseline and the opportunity is the endless opportunity to incorporate these strategies into everything we do so that green is not some separate department like San Francisco's Department of Environment. My job as mayor was to integrate that consciousness into everything we're doing from the Department of Public Works to how the library system works to our police and fire departments in terms of adopting and adapting a sustainable framework. Interestingly, and I'm very intense about this for two reasons, one I believe in it. Second, I think San Francisco has developed a framework, where we've established some evidence. You're in the greenest big city, arguably, in the United States of America, and that's important to note. We were able to achieve some extraordinary things easily. It wasn't that difficult. There's nothing particularly complex about this. We have the highest green building standards in the city than any city in America. We have the highest recycling rates of any city in America. You thought gay marriage was controversial? Try requiring composting in your city. That's real controversy. We have a requirement for composting. No other city in America does. We have now 77 percent diversion rates and by the way, those are old numbers. That's the new number that was just announced that is a trailing number. I imagine we are over 80 percent today.

Makower: And that's total waste, not just composting, that's total waste diversion, right?

Newsom: Total waste diversion. That's why we got into things like plastic bag bans, which offended a lot of the big mucky-muck lobbyists that get paid by those big companies and some, i guess, of their shareholders, though I don't think their shareholders were well-represented by that industry. We got aggressive on plastic water bottles. You know a billion plastic water bottles a year, I appreciate my friends at Coke and Pepsi, they're the biggest. You know that's New York tap water, Dasani and Aquafina. It's an amazing thing when you guys go buy Aquafina, Dasani, you're buying tap water from New York state. What you're really actually buying is a plastic water bottle that you're going to get rid of, 'cos the water you get out here is purer and cleaner, and the municipal tap waters are purer and cleaner. I'm not here to offend Coke and Pepsi. I'm sure there's some folks here from Coke and Pepsi, but it's one of the greatest businesses of all time. Congratulations. I am just stunned by your success. But a billion of those bottles, even if they're bioplastic, end up in our waste stream and end up in that gyre and that's significant. But you see it's the sum total, I guess in the long-winded point, of a lot of small decisions, you know, we want to be the electric vehicle capital of the world out here in the Bay Area and we're working with Tesla. We're working with and we're working with notably better places like . We actually got a federal grant, a stimulus. Again, we had an idea. If you have an idea, you guys know this in business, people don't just come to you with 'here's a hundred million dollars, now go do something with it.' You guys come up with an idea and the money flows if it's a better idea. Same thing with government. We got to come up with better ideas. We came up with an idea to create a ubiquitous infrastructure for electric vehicles, to create standardization between the ten counties in the Bay Area. We got everybody to sign off, our regional bodies to sign off, and a bunch of stimulus money flow, and then we got some regional money on top of that, and then we got some private sector money, and a better place as an example is allowing us to build out switch stations, those battery switch stations, so instead of having to fill up a tank of gas in less time, you'll be able to flip out a battery and put it into a new taxicab. We're starting with taxicabs. We already have, roughly, 70 percent of our taxicabs in San Francisco running on alternative energy, and because of that idea, it drove this idea and those federal dollars and the private dollars and those are the kind of things we got to be doing from a governmental perspective to create the incentives for business to participate in this new paramount.

Makower: So California is not San Francisco. You loved, as mayor, to go around saying that you were mayor of a city that was basically 49 square miles surrounded by reality.

Newsom: Yeah.

Makower: Alright, good line.

Newsom: It was a good line.

Makower: Always still gets a bit of a chuckle and it's probably true.

Newsom: In some ways.

Makower: But California is, suffice to say, a very, very different state, in terms of everything, the politics, the geography, the resource availability. It's much more dispersed than, obviously the very concentrated, a 49 square mile geography. How, what's going to be different now that you're trying to push this at a much larger scale?

Newsom: I guess what's different is I don't. I completely understand what you're saying, I don't buy it. I go up to Fresno town, I don't, I can't tell the damn difference between someone sending their kid to school in Fresno and my neighbor sending their kid down the block in Noe Valley. They care about the quality of their public schools. They care about being safe when they walk out and get the paper in the morning. They care about being able to breathe clean air as much or more than anybody else. So I don't necessarily buy it. I think they'd love the opportunity to try out a new electric vehicle. They're just worried about range anxiety. You know, 1800s, we would have been worried about range anxiety because there weren't gas stations. So you got to gas stations, they're charging stations. I just think that you got to show evidence in all these things and if you don't have evidence, you just have an intellectual debate and you do tend to lose those debates, so my job, as Lieutenant governor, is to take some of the things we've done. Again, we've got more solar in this, you know, I don't know if you know this, the largest municipal solar, municipally-owned solar project in California, is in foggy San Francisco. It just was completed. You fly over and you'll see this massive Sunset Solar reservoir. 5 megawatts, not a big deal, except it's the biggest deal in the state in terms of municipal ownership. If we can do it here, we certainly can do it up in the valley and other parts of the state. So, it's all about showing evidence and I remind people, you know, everyone got all frustrated and flustered when we started talking about Kyoto and obviously Democrats abandoned Kyoto, remember it was Democrats, not just Republicans, unanimously opposed the Clinton administration and Al Gore when they were advancing Kyoto. It was 98-nothing. The Senate voted against Kyoto. Wasn't that long ago and then everybody got all nervous about what was happening in Europe a year ago in the latest discussions, but no one really talked about those 44 countries that signed up on Kyoto, 44 wealthy nations, of which only four will reach the Kyoto protocols, and it's interesting. I think someone needs to talk more about this. What are those four countries? Denmark, Sweden, Germany, and the UK. And what did they have in common, before what we call, what I call Lehman days? September 15, 2008, when sort of the macroeconomics changed. But up until September 15, 2008, those four countries had lower unemployment than the United States. They had higher GDP rates than the United States and for me, as sort of a diehard Democrat, that believes the biggest risk to democracy is the loss of our middle-class. They had lower income inequality than the US because the way they dramatically changed their consumption and production of energy and the businesses that were created. You all know the German example. Why is the German economy outperforming all the other new economies so dramatically? I mean, people studied that. Why's their manufacturing base so strong? What are the disciplines? Deutsch banks done a lot of studies on this, so maybe one of you wants to produce that report. People should take a look at that. Even after you do all the subsidies and after the subsidies, the number of jobs created because their solar incentives produce this new economy in Germany. Why aren't we doing the same? Look at what Denmark did. I mean, 90 percent of their energy in 1973 came from the Middle East. Zero percent comes from the Middle East today. There's some basic fundamental paradigms here that have worked quite successfully and yet here in the United States and D.C., we're still debating these things. In California, we're still fighting big oil interest and my job is to convince folks all over the state that these pockets of innovation: San Diego, San Francisco, parts of the San Joaquin Valley, Orange County, and Sacramento; which are really leading this can do the same thing.

Makower: Well, I think that's an important role and one of my contentions about why we haven't moved as quickly, as fast, and as far as we could is that leaders, political leaders in particular, but also business leaders and civic leaders with a very few exceptions, Van Jones being one of them, have not really gone out there and helped us create a vision of what happens if we get things right.

Newsom: That's right.

Makower: And, it seems to me that that's an opportunity for you with this great passion, this incredible knowledge base, and this track record in San Francisco, is that even a role that you can play because that's important?

Newsom: Yeah, you just. Again, people need to see evidence in life. I mean, it's still an abstract question and we're now moving away. Global warming, you can't, politicians can't even bring it up. Two things you can't even bring up now are healthcare, which is pretty damn remarkable, since no one got that new health insurance that's been promoted and promised and I don't know if you saw the numbers today, how many kids in California don't have health insurance today, one of the worst states in America. You can't talk about that 'cos it's politically unpopular and you can't talk about global warming any either. You saw that big wind in 2008, we were all talking about that, and money flowed, and there was energy and excitement and enthusiasm. And now everybody is sort of running away from it, notably our president. I get it, it's about politics, you got to get reelected, but let's talk about clean air 'cos I'll tell you what, you ever been up to Bakersfield in the summer? I mean, this is serious. I mean, we have some of the dirtiest air in the world, here in California. You'd think, a coastal state, the free flow air up off the coast would clean this place up, but we're breathing a lot of air coming over from China and elsewhere and all those cult plants they're putting up every two weeks still despite their good five-year plan, which is moving very quickly towards renewable energies and green tech. So that's, you got to just find people, where they still are, which is concerned about those basic things, and connect this issue in a different way than the issue that was connected with the polar bear on the cover of Vanity Fair. So we've got to sort of realign ourselves, but for me, it's an economic issue. It's an economic engine. I mean, we know the here, you made the point about all the patents, we know the here, we know California's historic leadership, This is a godsend for us. Where is California going to lead in ten years? I mean, seriously. I mean, if we're cutting higher education, and we're cutting UC, and CSU, and community college, I mean, what's going to lead California's economy in the 21st century truly in a global perspective. It seems to me the obvious answer is in this area, green tech, but you got to have those price signals and that's what AB32 will provide us and you've got to have that leadership, which requires politicians of all political stripes to put this in practical terms in people's lives. I don't have a problem paying more for energy. I just want to pay less in my energy bills. And so we have to sort of have that debate. I don't want to pay as much. I love PG&E. I just don't want to have a bill that is bigger. I want it to be smaller. I don't care about the unit cost as much as I care about the overall cost and if we can have that pragmatic debate, that sort of household across the dinner table debate about what all this means in people's lives, I think that things can finally change.

Makower: I want to get to questions in a minute, but, from the audience, but I think, a lot of people have asked me to ask you. What are you specifically going to do around this?

Newsom: Well, I'm a fanatic. Look I want to -- for four years, I've been trying to get this damn wave or ocean project off the coast. Now I get to be State Lands Chair and on the Ocean Protection Council, so we're gonna do that. We're going to have the first commercial ocean probably and you know, everyone's going to do a little Google, if you have a little thing, you'll see someone who's been more maligned about that than anything I've ever done. You know this fanciful wave energy thing, they think I'm a nut, it's too expensive, all the experts say, same thing they said about solar, same thing they said about wind.

Makower: But the amount of power coming through the Golden Gate. You know the statistics better than I do. It's a tremendous amount.

Newsom: I don't and tidal, you see, is where it all started. I love failure. It's the secret of success as you all know. I think Winston Churchill said it best, 'The secret of success is moving from failure to failure with enthusiasm.' Well we did a tidal, I came up with this crazy tidal idea about the Golden Gate, so that it would flush in and out of the bay. We'd basically take a wind farm, put it underwater, harness that dense energy coming out. Turned out it was very expensive, but what it did is the study actually opened up the new idea, which was ocean power about four and a half miles off our coast, which turns out to be a lot less expensive and more exciting in terms of its prospects. We're four years now into those new studies and next year, we hope, I was hoping late this year, it's possible, but early next year, we'll put the first pilot out there for the first commercial project. Oregon is ahead of us on this. Washington is slightly ahead. Oregon's way ahead. California should lead the nation in terms of these energy projects and again this is stuff that is happening, it's not science fiction, in Scotland. It's happening in the UK. It's happened dominantly in Europe and new technologies are coming up, some of you may share them every day. So that's one thing. Second, as Chair of the State, I'm just going to start by putting electric charging stations up and down the spine of the state. You got all those rest stops. You own them. What do we do? Why not just, in every rest stop, you got a couple little charging spaces and you get all those big automobile companies that are rolling out all those electric cars, they pay for them. So I'm gonna do that next week and I've already called the companies. They all said they'll do it. So we'll just have a spine for electric vehicle chargers standardized up and down the state with everybody's version of their next new latest technology. That's number two, just to keep people thinking. We came up with local solar incentive programs that have been a godsend and with the PACE opportunities, once we beat up Fannie and Freddie and we can get the PACE program back, there's the greatest opportunity of financing on people's property taxes and that's really got to be the dominant focus, I think, so that we can really jumpstart the investment. Quick fact and stat. And you guys know this came out in, it's '09 numbers, you know everyone's got their own set of numbers so but it was an interesting study. You put a billion dollars. This is just again of our economic benefits of being in this sector. If you put a billion dollars into coal, people are still buying off this coal, clean coal, melted coal, whatever coal. You create about 890 jobs, big deal. It's nice, big deal. You put a billion dollars in a nuclear plant. I know a lot of environmentalists, even I'm starting to get persuaded a little bit, I have to admit, if we're ever going to get to the 80 percent below 2050 levels. At this pace, I don't know how the hell we're going to do it, but that's about a thousand, I see, on the highest, and 1500 jobs for every billion dollars you put into a nuclear plant. Forget the 7 plus billion dollars it cost and the eight years it takes to permit, but I'm just talking about the raw dollars. Billion dollars into solar, about 1900 jobs. Billion dollars into wind, the whole sort of production side, 3300. But the big game-changer and the thing that I guess my long-winded point, the thing that most excites me to it. The third biggest thing I want to do as Lieutenant Governor is retrofit existing building stock. You got construction trades with unemployment north of 40 percent in some parts of the state. Remember you're in a state with depression or unemployment not on the coast but in the inland. You got 15, or excuse me, 20 counties in California with unemployment north of 15 percent. You got one county with unemployment at 28.8 percent in your state, our state, not underemployment, unemployment. We have got to dramatically address this dearth of unemployment or lack of opportunity in this unemployment rate, particularly in the manufacturing side and the side of building and construction trades and that's in the retrofit. Billion dollars, you create over 7000 jobs. So you're going to put, so I think about if I'm going spend money or invest money, even in my private life, what's the biggest bang for the buck? It's retrofitting existing buildings, getting in that existing building stock. We have more green buildings in San Francisco than New York or LA, not on a per capita, but just raw number terms, but we barely scratched the surface by getting in the existing building stock. And so that's the great opportunity in California, to reduce energy costs and dramatically improve the unemployment numbers by making that kind of investment and that's where I'm hoping to effectuate some policy to get us .

Makower: So tidal power, electric vehicle backbone, and building retrofit.

Newsom: Retrofit.

Makower: I can't wait 'til month two.

Newsom: Well, that's just, yeah it's a short list, but no, I'm a fanatic. I would love adopt recycling, construction debris ordinances in every county in the state. The final point, I know we're out of time, and I have maybe one question. Cities are where it's at. Forget, you know, and that's sort of the strange thing, you kind of invited me three weeks late, big deal, some guy from the state. It's nice what states are doing. States are laboratories of democracy, but cities are laboratories of innovation. You know, for the first time in human history, I think it was 2005, people quibbled about this: more people on the planet are living in urban centers than rural and suburban areas. You have this mass urbanization thing happening; million, million and a half people moving into cities. You're going to have five billion people by 2030 living in cities. As our population grows by 2050 to about 9.2 billion from its 6.7 billion where we are today. You had 111 cities in 1960 with a million people or more. Today, there's over 300 cities with a million people or more, but the advent of mega-cities is really the biggest story in the world and that's the cities with 10 plus million people. There'll be 26 of them, we're almost there, in the next few years. There's not enough water and there's not enough energy capacity to service those cities. Cities are consuming today 75 percent of the earth's natural resources already. So, if you're going to get serious about the issue of innovation and entrepreneurism and the green tech sector, serious about global climate change, which I think is getting reinforced as significant every week when a new study comes out even though again it's not politically popular, you've got to focus on what city managers are doing, what city administrators are doing, city council members are doing, mayors, and boards of supervisors. I'm so, I'm just stunned by the lack of the investment in that focus as it relates to this debate. So, as lieutenant governor, my job is to be a convener for the counties because none of this will happen unless Mayor Reed says in San Jose, 'I agree with you on a standardized plug for electric vehicles,' or the mayor of Oakland or the mayor of Larkspur, California. That's how we're going to change this paradigm and when I talk to mayors, they get this, Republican mayors and Democratic mayors, and therein lies the great opportunity to organize. You know, you can do, and I'll close with this, one of the obvious things you can do. We spend billions of dollars a year to buy things. Why don't we buy good things and look at the lifestyle costs of those good things? We did it with plug---We already have half of our vehicle fleet in San Francisco on alternative fuels. By the way, our public transit fleet is 100 percent alternative fuels. We get fats, oil, and grease, call it a FOG program, from our restaurants. I'm a former restauranteur. We pick it up. We convert it to biodiesel, B20, that's why you see frying pans on the side of a lot of buses 'cos it's a grease cycle program to convert our old diesel fleet into biodiesel. And we now run a hundred percent on alternative fuels. Doesn't cost us much at all to do that. We have the ability, in relationship though to other cities, to begin to bulk purchase, to bring down costs, to use our scale to do open orders. Plug-in Partners started with mayor of Austin. We come and go mayors, the old mayor of Austin. We went out and we got 24, this is a true story, there's 26 big cities, we got 24 cities to do an open order to GM to buy certain alternative fuels for cars and we got close to a thousand vehicles we committed to, I think it was '09 calendar year. Imagine if the states came together and did the same thing. Billions of dollars a year we spend in the state on stuff. Why don't we buy better stuff? That then will drive a market and your business. These are basic things to send real signals that are pragmatic and real and don't require a lot of legislative push or heft, require a pen and a piece of paper because, as governor, as mayor, these are executive orders, you can simply do these things. Through the usual competitive bidding process, you can change that paradigm and so that's what I'll be pushing as Lieutenant Governor and I'm going to be hopeful in my expectation that Governor Brown, gets this as well as anyone, is going to push this even further.

Makower: Question right over there. (pans briefly to the person asking the question) I'm Keith Schwartz, an investor and an entrepreneur in the green tech/clean tech space. You know that this is the development of these businesses in this industry is a worldwide playing field and you talk about some of the things we can do to try to accelerate this in California, in the U.S. A lot of these industries that were started and innovated here, we're being passed in the fast lane by China, Germany, countries in other places and what can realistically be done now to help level that playing field and help us accelerate these businesses here before where we come second place?

Newsom: Well, you're specifically right. Germany and China, what, i think it was last year?, China put 11.7 billion dollars in loan guarantees into solar and they're just now clobbering everybody in solar manufacturing, but it is interesting. You know, all the ingenuity, you guys, all these startups, all these little ideas that are being created here in California. You know, it's 26 percent, the last numbers I saw, and I'm gonna follow up with you (refers to Joel Makower) after all of this, after you're done with this, to see if this is true, but 26 percent of these green jobs we're creating in California are in the manufacturing space. We have about 11, California has about 11 percent, of our job base in manufacturing. It's going like this (signals by pointing down) just in the last 30 years in the United States, but in the green tech sector, it's growing, not just in solar. There's certain things you have to accept, those cold realities about being competitive 'cos you don't want to race to the bottom. We want to race to the top. That's ingenuity, entrepreneurialism, it's leading, in terms of our investment in people and creativity. And that's where we need to focus, but at the same time, as you brought up Van, as he says all the time, 'You can't install solar by shipping someone's home over to China and having it shipped back. You need someone locally to do that installation.' So, you focus on those areas where you have a competitive strength, a self-evident one, in terms of the installation and maybe just picking parts together as opposed to manufacturing those parts and installing them and so those are the areas that I'm looking at in my role, as economic development director, to put together regional plans for California. There's no economic plan for California. There shouldn't be. There should be regional plans, sum total that makes up California's economic plan and really focus on those regions, in terms of their existing strengths. Right here, it would be biotech, life science, nanotechnology, green tech, digital media, digital arts. I would say that would be our, the Bay Area's, economy, not excluding others, but Fresno's economy is very different, etc., and how we can organize a workforce development strategy around these things and strengthen those attributes and build those attributes. Obviously, our corporate tax rates are too high. Obviously, we have big problems as it relates to our tax structure generally in this state, which is going to have to be addressed and I say that as a loving Democrat. And we're going to have be more competitive against Rick Perry, who seems everyday to be calling a company in California, and Hailey Barber.

Makower: It's the governor of Texas?

Newsom: The governor of Texas. I mean, these guys are aggressive and we're going to have build an aggressive framework to . But, final point, I want to open a couple offices in China. California should have offices in China. If they're going to be in this, if we're going to bring the intellectual capital, then we've got to bring those things back and so Beijing and Shanghai are targeted for specific aggressive efforts. What better place? By the way, you have a Chinese mayor in San Francisco, Chinese mayor in the East Bay, largest Chinese population per capita in any city in the United States of America. Korean population in Southern California is very large. Filipino population very broad. China, Asia broadly, that's our godsend and we have a great opportunity to build partnerships. If we can't compete in the broad context, we can build partnerships and we can build capacities. That would be my focus.

Makower: Well, I think it strikes me that the competitive advantage that California has is having you in the leadership now.

Newsom: I don't know about that, but that's sweet.

Makower: And I think that we're really excited in a state that lacks positive news, lacks something to look forward to and look ahead at, it's a tremendous opportunity to have you there and so I want to thank you for being here and thank you for all that you're doing. And please join me in thanking Lieutenant Governor. (Applause)

Newsom: Thank you. Send me ideas.