Rising Above The Gathering Storm:
Energizing and Employing America for a
Brighter Economic Future
Statement of
Norman R. Augustine
Retired Chairman and Chief Executive Officer
Lockheed Martin Corporation
And
Chair, Committee on Prospering in the Global Economy of the 21st Century
Committee on Science, Engineering, and Public Policy
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ion on Policy and Global Affairs
The National Academies
the before
Science Committee
on
U.S. Hou of Reprentatives
October 20, 2005
Mr. Chairman and members of the Committee.
Thank you for this opportunity to appear before you on behalf of the National Academies’ Committee on Prospering in the Global Economy of the 21st Century. As you know, our effort was sponsored by the National Academy of Sciences, National Academy of Engineering and Institute of Medicine (collectively known as the National Academies). The National Academies were chartered by Congress in 1863 to advi the government on matters of science and technology.
The Academies were requested by Senator Alexander and Senator Jeff Bingaman, members of the Senate Committee on Energy and Natural Resources to conduct an asssment of America’s ability to compete and prosper in the 21st century—and to propo appropriate actions to enhance the likelihood of success in that endeavor. This request was endord by Reprentatives Sherwood Boehlert and Bart Gordon of the Hou Committee on Science.
To respond to that request the Academies asmbled twenty individuals with diver backgrounds, including university presidents, CEOs, Nobel Laureates and former presidential appointees. The result of our committee’s work was examined by over forty highly qualified reviewers who were also designated by the Academies. In undertaking our assignment we considered the results of a number of prior studies which were conducted on various aspects of America’s future prosperity. We also gathered sixty subject-matter experts with whom we consulted for a weekend here in Washington and who provided recommendations related to their fields of specialty.
It is the unanimous view of our committee that America today faces a rious and intensifying challenge with regard to its future competitiveness and standard of living. Further, we appear to be on a losing path. We are here today hoping both to elevate the nation’s awareness of this developing situation and to propo constructive solutions.
The thrust of our findings is straightforward. The standard of living of Americans in the years ahead will depend to a very large degree on the quality of the jobs that they are able to hold. Without quality jobs our citizens will not have the purchasing power to suppo描写春天的好词
rt the standard of living which they ek, and to which many have become accustomed; tax revenues
will not be generated to provide for strong national curity and healthcare; and the lack of a vibrant domestic consumer market will provide a disincentive for either U.S. or foreign companies to invest in jobs in America.
What has brought about the current situation? The answer is that the prosperity equation has a new ingredient, an ingredient that some have referred to as “The Death of Distance”. In the last century, breakthroughs in aviation created the opportunity to move people and goods rapidly and efficiently over very great distances. Bill Gates has referred to aviation as the “World Wide Web of the twentieth century”. In the early part of the prent century, we are approaching the point where the communication, storage and processing of information are nearly free. That is, we can now move not only physical items efficiently over great distances, we can also transport information in large volumes and at little cost.
The conquences of the developments are profound. Soon, only tho jobs that require near-physical contact among the pa国际跳棋
rties to a transaction will not be opened for competition from job ekers around the world. Further, with the end of the Cold War and the evaporation of many of the political barriers that previously existed throughout the world, nearly three billion new, highly motivated, often well educated, new capitalists entered the job market.
Suddenly, Americans find themlves in competition for their jobs not just with their neighbors but with individuals around the world. The impact of this was initially felt in manufacturing, but soon extended to the development of software and the conduct of design activities. Next to be affected were administrative and support rvices. Today, “high end” jobs, such as professional rvices, rearch and management, are impacted. In short, few jobs em “safe”:
•U.S. companies each morning receive software that was written in India overnight in time to be tested in the U.S. and returned to India
for further production that same evening—making the 24-hour
workday a practicality.
•Back-offices of U.S. firms operate in such places as Costa Rica, Ireland and Switzerland.
•Drawings for American architectural firms are produced in Brazil.
•U.S. firm’s call centers are bad in India—where employees are now being taught to speak with a mid-western accent.
•U.S. hospitals have x-rays and CAT scans read by radiologists in Australia and India.
•At some McDonald’s drive-in windows orders are transmitted to a processing center a thousand miles away (currently in the U.S.),
where they are procesd and returned to the worker who actually
prepares the order.
•Accounting firms in the U.S. have clients tax returns prepared by experts in India.
•Visitors to an office not far from the White Hou are greeted by a receptionist on a flat screen display who controls access to the
building and arranges contacts—she is in Pakistan.
•Surgeons sit on the opposite side of the operating room and control robots which perform the procedures. It is not a huge leap of
imagination to have highly-specialized, world-class surgeons located not just across the operating room but across the ocean.
As Tom Friedman concluded in The World is Flat, globalization has “accidentally made Beijing, Bangalore and Bethesda next door neighbors”. And the neighborhood is one wherein candidates for many jobs which currently reside in the U.S. are now just a “mou-click” away.
How will America compete in this rough and tumble global environment that is approaching fasteraslongas
than many had expected? The answer appears to be, “no豹子胆
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well”—unless we do a number of things differently from the way we have been doing them in the past.
Why do we reach this conclusion? One need only examine the principal ingredients of competitiveness to discern that not only is the world flat, but in fact it may be tipping against us.
One major element of competitiveness is, of cour, the cost of labor.
I recently traveled to Vietnam, where the wrap rate for low-skilled workers is about twenty-five cents
per hour, about one-twentieth of the U.S. minimum wage. And the problem is not confined to the so-called “lower-end” of the employment spectrum. For example, five qualified chemists can be hired in India for the cost of just one in America. Given such enormous disadvantages in labor cost, we cannot be satisfied merely to match other economies in tho other areas where we do enjoy strength; rather we must excel . . . markedly.
The existence of a vibrant domestic market for products and rvices is another important factor in determining our nation’s competitiveness, since such a market helps attract business to our shores. But here, too, there are warning signs: Goldman Sachs analysts project that within about a decade, fully 80% of the world’s middle-income consumers will live in nations outside the currently industrialized world.
The availability of financial capital has in the past reprented a significant competitive advantage for America. But the mobility of financial capital is legion, as evidenced by the willingness of U.S. firms to move factories to Mexico, Vietnam and China if a competitive advantage can be derived by doing so. Capital, as we have obrved, cross geopolitical borders at the speed of light.
Human capital—the quality of our work force—is a particularly important factor in our competitivenes
s. Our 走出来真好
public school system compris the foundation of this ast. But as it exists today, that system compares, in the aggregate, abysmally with tho of other developed—and even developing—nations . . . particularly in the fields which underpin most innovation: science, mathematics and technology.
Of the utmost importance to competitiveness is the availability of knowledge capital—“ideas”. And once again, scientific rearch and engineering applications are crucial. But knowledge capital, like financial capital, is highly mobile. There is one major difference: being first-to-market, by virtue of access to new knowledge, can be immenly valuable, even if by only a few months. Craig Barrett, a member of our committee and Chairman of Intel, points out that ninety percent of the products his company delivers on December 31st did not even exist on January 1st of that
