“The End of Manifest Destiny”
May 23, 2005
Thank you, Peter, for that nice introduction. I want to say a special thanks to Beth Chappell for the invitation to be here today.
In preparation for this — the final speech of the 2004-2005 season — I know there was some debate about whether the focus of today’s remarks should be on the subject of competitiveness or unemployment. Being the creative group that you are, the Economic Club decided to kill two birds with one stone, and invite me.
But don’t get your hopes up. I’m not here to tell you what really happened in the HP Boardroom, although I am here to talk about something that created major headlines. What I want to talk about today happened a little over a year ago, and it really made me think about the state of our nation.
I was doing a reporter’s roundtable in Washington last January on the subject of competitiveness when I was quoted as saying, “No American has a God-given right to a job.” In this case, it was an accurate quote. I said it and I believe it. The controversy arose, in part, because people interpreted me as being callous and unfeeling. That was not my intent. I got a letter from one angry reader that excoriated me for my lack of compassion, and ended by saying, “You don’t have a God-given right to your job as CEO, either.”
Well, clearly, he got that right!
I meant no disrespect to any American, and I believe there is dignity in all work. I started my career answering telephones and typing and I know from first-hand experience that all work makes a contribution if done with quality. I also know from experience how painful it is for an individual, a family, and a community when a job is lost – when work is unavailable.
And like some of you, I have done my share of cost-cutting – billions and billions of dollars worth. I have done my share of layoffs. I have done my share of outsourcing. I know the human cost, and as a CEO, I have had to live with the human consequences. It was always the most painful part of the job. No one should ever trivialize the impact those decisions have on families and communities, and I believe companies have a responsibility to help those who get hurt.
Beyond the hardships and the emotions however, many commentators and citizens were clearly offended by the idea itself — the idea that Americans don’t have a God-given right to a job. And that surprised me; that made me think. Because I believe it signals a profound and disturbing shift in our national psyche that says much about how we see our place in the world.
This nation was founded on the principle that everyone deserves an opportunity — not a guarantee. After all, our Declaration of Independence speaks not of a right to happiness, but of a right to the pursuit of happiness. Whether it’s been pilgrims, or pioneers, or slaves who became free men and women, or immigrants, all were Americans who treasured opportunity but who journeyed and sacrificed and worked to turn that opportunity into a better life for themselves and their families.
Our nation isn’t perfect and not everyone has access to the opportunities or tools they need. But the basic bargain has always been that if you work hard and develop the skills and education you need to do a good job, and make the necessary sacrifices to build a future, then you should have the opportunity to make a better life for yourself and your family. That opportunity, of course, has been created in the form of good jobs by millions of entrepreneurs from farmers to small business owners to technology innovators who were willing to sacrifice and take risks; and government at all levels willing to make the investments and create the environment to nurture and sustain those opportunities. Over the past 220 years, hundreds of millions of Americans have benefited from that basic bargain.
But what happens when other nations and other people become willing to follow that same bargain? What happens when millions, if not billions, of other people are also willing to work hard and develop the skills or education they need to do a good job? What happens when they are also supported by entrepreneurs willing to take risks, and government at all levels willing to make the investments necessary to create opportunity? If our democratic principles are universal, shouldn’t it then follow that people all over the world should have the opportunity to make a better life for their families, too? All those commentators and letter writers would say no. They would argue that opportunity is fine for the rest of the world, as long as it never comes at the expense of America or Americans. They would argue we’re more entitled than anyone else.
What does it say about us when so many Americans believe we have a “right” to the job we want? Does it mean we have become a nation that takes economic opportunity for granted? That takes our leadership of the world for granted? Perhaps we are self-satisfied because we believe that the 21st Century is like the 20th, and so we believe that if we just keep doing what we’ve always done, success is inevitable.
Of course, that’s not an idea that comes from the 20th Century. That’s an idea that comes from the 19th Century. In the 1840s, it was called Manifest Destiny — the idea that the inevitable arc of American history would always make us the strongest, smartest, most powerful economic and political force in the world. Looking back on the vantage point of the past 220 years, it’s hard to take issue with the argument of manifest destiny.
Except that it’s completely wrong. The worst idea in American history is the belief that we were destined to become what we have become. Our success as a nation has never been about inevitability or simple destiny. At every step along our glorious history, opportunity and achievement were always the result of decision, choice, innovation and investment, made by people who imagined a better future, and then made it happen. It was always because we had a fierce commitment to doing more, being more, and achieving more as a nation — in short, proving ourselves over and over again because we never became self-satisfied.
America is a beacon of light in the world. Our democratic ideals, our belief in the individual’s ability to make a difference and to make a better life, are about economics as much as they are about politics. And our ideals inspire people all over the world. People across the globe are learning the lessons we have taught, and they are working overtime to catch up. Absolutely nothing about our future is inevitable or guaranteed: not our jobs, or our leadership, or our standard of living. It’s all being tested today. I don’t say that as a fatalist, I say that as a realist. I do not believe we are bound to lose or about to lose. I believe we are the greatest nation on earth. We can win the 21st Century just like we won the 20th Century. But winning isn’t going to be a matter of destiny, it’s going to be a matter of decision. We are going to have to work hard to do it, and we can’t take anything for granted.
Let’s begin by understanding how the world has changed. I would argue that our world has changed in three fundamental ways.
The first big change is that three billion people have joined the world’s trading system in the past five years. I’m talking about China, India, Russia, and the other Eastern European countries. Three billion people is about half of the world’s combined population, all now part of the global economy. The one thing all of these nations have in common is that they have rich histories of achievement in science and education, meaning that they are much more likely to have well-trained people who can work just about any job in the world. Even if you dismiss 9 in 10 workers in Russia, India, and China alone as farmers with little formal education, that still leaves more than 300 million people — 300 million competitors — which is larger than the entire population of the United States, and nearly twice as large as our workforce.
The second big change is that technology has leveled the playing field. As recently as five years ago, if a Chinese or Indian student wanted a computer and a high-speed connection to the Web, they’d have to come to America. Now, they can stay at home.
For all the changes we have seen in technology in recent years, it is nothing compared to the era we are moving into today. Simply put, we are entering an era where every process and all content is moving from physical and analog to digital, mobile, virtual, and personal. It’s going to be the main event of our lives for decades to come.
Just think about the changes taking place with photography today. Photography used to be a physical, chemical, analog process. You took a picture, and something happened in your camera; you took your film to a photo mat, and something physical and chemical happened; you picked up your film, sorted your pictures, and when you got around to it, you maybe put some in a photo album or mailed them.
Today, photography is a digital, mobile, virtual, personal experience. Digital, because you create digital content – a digital camera or a cameraphone is a computer with a lens. And then you take that content and you network it, your send it wirelessly, you edit it, you share it. It is mobile in the sense that you can do it from anywhere at anytime. It’s virtual in that others can enjoy it without being there with you. And it’s personal in that you can do what you want in any way that you want, with your own signature.
Every process, in every industry — from banking to academia to medicine to international security — is beginning to follow that same pattern. We’ve already seen glimpses of the kinds of changes this transformation will bring.
What will it mean when people all over the world can get access to any information on any device at any time? What the digital age is bringing about is the complete democratization of information, the breakdown of traditional barriers of time, distance and wealth, and the onset of complete transparency. The digital, mobile, virtual, personal age puts the individual – and not the institution — more and more in charge, wherever or whoever they happen to be.
The third big change is that value in today’s world is being created horizontally, not vertically. We no longer live in the command and control world of the 1960s, where work was organized in clear, vertical chains of command, and where our prosperity as a nation depended mostly on what we could do within our borders or our companies. The best example of this is the automobile companies right here in Detroit, which have evolved from vertically integrated entities into vast, horizontal supply chains that spread across industries and around the globe. The horizontal world is all about connection between entities and collaboration across boundaries. It’s true in companies, and it’s true for countries. The horizontal world requires a different set of skills than the vertical world. Cooperation, not just competition, is required.
Increasingly, problems must be solved horizontally as well. Just think about our health care system. We now realize that fixing health care requires thinking about it as a horizontal process of connecting information, expertise, and patients in a high-quality, lower-cost way. No one part of the system can improve itself enough to fix the whole process. It has to happen across the board. The fundamental shift from vertical silos and hierarchical command and control, to horizontal connection and collaboration is also what’s driving the transformation of our military, our intelligence agencies, and our homeland security.
Each one of these changes would be enough to change our world. All three taken together is enough to change our future. Put it all together, and what you potentially have is billions of new people with countless new tools to cooperate and collaborate, all accessing the same information across the same networks. It means that all the good ideas of the future — together with all the good jobs, companies, and innovations — will not come from the United States alone. Indeed, we’re only four percent of the world’s population. Instead, it will come from the citizens and countries and companies that are the hungriest to win in the 21st Century.
As a former CEO who has traveled the world extensively the past two decades, I’ve seen much of this future up close. Allow me to tell a few stories quickly to show you what I’ve seen.
Let me begin with a group of young students that I was speaking to at Tsinghua University. For those of you who know China, you know that Tsinghua University is in Beijing, and it is where most of the government leaders have been educated over many decades.
I had given a talk on the qualities that I thought defined leadership and success, and opened it up to these young people for questions. I’m not quite sure what I was prepared for, but I was not prepared for what I got.
The first student asked how I balanced work and family. The second student asked if I had ever thought about starting my own business and, if so, how she, by extension, should think about starting her own business. A third student got up and said that he really didn’t like his major, that he had heard that I didn’t like mine either — I was a law school dropout — but his parents wouldn’t let him change, but perhaps I thought it was a good idea to change. And so I said, in other words, you would like to tell your parents that Carly Fiorina told you to change your major — at which point the audience did what you did, they laughed.
My first thought was that this was precisely the same conversation that I would have had with students in the United States. My second thought was, this is where two decades of engagement with China has brought us; this is where two decades of free trade, and exposure to free market capitalism has brought us. And these Chinese students are hungry to take advantage of the opportunity they have today.
Do you realize that between 1986 and 1999, the number of science and engineering doctorates granted in China increased 5,400 percent — in part, because their government was investing in creating the jobs of the future at a rate 15 percent higher than the United States.
My second story takes place in India. In looking at our cost structure, we realized that there were some areas where we could trim between 25 and 40 percent of the cost. We knew that some of the work being done at HP headquarters — primarily HR, Finance and some R&D — didn’t have to be done in California. With the changes in technology, a lot of this work theoretically could be done anywhere.
Now, there are some fundamental questions you ask when considering whether to move work overseas. Can the work be organized in such a way that people can perform it remotely? Can it be automated or described as a process so that someone without deep subject-matter expertise can learn it? Can you find qualified, motivated people to do the work?
We decided to put some of this corporate work in India. Some time later I took a trip to check on the work, and I remember being completely blown away by what I saw. The motivation and enthusiasm and quality of the people we had hired went beyond my wildest dreams. They had skills we see at some of the most sophisticated universities here, and they were all asking for more work. The management team was very innovative, and their whole mission was to convince me that they could do more.
As I traveled around Bangalore over the next few days, I heard the same speech I’d heard from our local HP management team repeated over and over — by the governor, the ministers, by the school officials. It was like they were all reading from the same page — which of course, they were. And all of them were asking for more work, more opportunity to succeed.
What I realized is that the entire community had come together to improve their skills, improve their capabilities, incent companies, and figure out a strategy to attract jobs. And many of the bright young people I met, who only a few years before would have to come to America for any opportunity at all, now had a chance to build their own country from the ground up.
The third encounter took place in Brazil. It was very much like the experience I had in India, only this time, instead of being coordinated from the ground up, it’s being driven from the top down.
I’ve been traveling to Brazil since 1989. Brazil has always been an economy of great promise, but somehow it never quite delivered on that promise. I had been hopeful, and disappointed many times, and finally was skeptical. In 2004 we were evaluating three Latin American locations for a services center, and I wanted to go down and see Brazil before we made the final choice. I had met with Brazilian government officials in January of that year and they had told me they wanted to become the Bangalore of Latin America. Mind you, they didn’t say, they wanted to become the Silicon Valley of Latin America, but the Bangalore. Our team in Brazil had been working with them since that meeting and so, last July, for the first time in several years, I went back to Sao Paulo. This time I was truly impressed.
This time, you had a set of policymakers who were committed to making it happen. They understood what it meant in terms of difficult changes and painful choices. They understood what it meant in terms of tax policy, in terms of investment credits. They knew what they had to do to change the education and training available to these new workers. These policy makers were working with local ministers and governors to attract jobs and retain them. And then, I met with local management teams who were just like the teams in India — energetic, with the technology they needed, with trained workers who spoke English, and a long-term commitment to succeed.
Whether it’s students in China, or local governors in India, or policymakers in Brazil, what all of these people have in common is an understanding that economics is politics. Economic power translates into political power. And in the 21st Century — a global, horizontal, digital, mobile, virtual, personal age — anyone can win. And anyone can lose.
Here’s one final story. A couple of years ago, I helped chair an extraordinary session of the World Economic Forum in Amman, Jordan. Baghdad had fallen. I sat on a panel with Arabs and Israelis and inevitably, we talked about politics in the region. As the discussion got more and more heated, I noticed a security guard standing off to the side of the stage who was listening very intently to this conversation.
So after the discussion, I walked up to him and asked him what he thought. He was Egyptian, and he said, “You know, we talk a lot about politics here, and rightly so — but if we are going to bring about the kind of change we must, it is not about politics, it is about economics.”
And if you look at the Arab world today, you see 200 million people — half of whom are under the age of 18, without nearly enough jobs and opportunity to go around. Without jobs in that region, there can be no lasting progress or peace.
We should not fear this new world, although many do. Instead, we should welcome it. I deeply believe the more we engage with the rest of the world, the more we help empower people all over the world, the more we build a world in which we have fewer enemies and more friends. And in the process, we not only create a more prosperous world that can buy our products, we create a more secure world for us all.
As long as we do the things we must do as a nation to lead in the 21st Century we have no reason to fear progress from others. We’ve led in the industries of the 20th century, now we must do what is necessary to lead in industries like information technology, nanotechnology, biotechnology, alternative energy sources, and even space technology. If we do this, we have no reason to fear. If we help our own people and invest our own energies to help our children master the skills of the 21st Century — math, science and engineering – we have no reason to fear.
And if we make those choices necessary to sustain our own competitiveness as a nation; then we should not have to protect ourselves against the employment of Indians, Chinese, or Iraqis — we should welcome it. We should welcome it because when these nations have a stake in our success, as we have a stake in their success, we all win.
But it won’t happen if we think our continued leadership is a matter of destiny or inevitability. It won’t happen if we all come to believe that we have a God-given right to jobs and opportunity, and that we no longer have to work to do those things that set us apart from the rest of the world. Denial will not win us the future. Neither will partisan politics. This will take all of us.
I began today by talking about cost-cutting and layoffs. I said they were painful – most of all for those affected by the decisions. But the whole truth is the decision to cut costs is a relatively easy one to make – cutting costs, as important as it sometimes is, doesn’t take much imagination.
Whether it’s for a company or a country, the truth is, investing in the future, growth, creating businesses and jobs, building something different and new — these are the truly difficult decisions. Difficult because they require real risk-taking. Difficult because they force you to make tough trade-offs that aren’t obvious based on inadequate information. They take imagination because betting on the future is never an exact science. They take a willingness to postpone pay-off today for an uncertain payoff tomorrow. They take long-term perspective and the courage to stay the course.
Our high school students cannot continue to rank behind 18 other nations in scientific achievement. We know that the scores of our fourth graders are among the highest in the world, and our eighth graders hold steady. It’s only in high school where we start to fall behind.
We must make a concerted effort to entice more of our young people into careers in science and technology. Do you realize that half of our scientists and engineers are at least 40 years old today, and the average age is rising? Science and engineering degrees now represent 60 percent of all bachelor’s degrees earned in China, 33 percent in South Korea, and 41 percent in Taiwan. But here in America, they’re only at 31 percent; and if you just count engineering degrees, they are five percent. That’s no way to win a future defined by science and technology.
Our investment in research and development today is falling in relation to the rest of the world. From 1970 to 2004, federal funding for research in physical and mathematical sciences and engineering, as a share of GDP, actually declined by 37 percent. Meanwhile, spending rose more than 300 percent in South Korea and about 500 percent in China.
Again, this is a question of priorities and choices. America will spend between $20 billion and $40 billion this year on agriculture subsidies. We’ll spend about $5 billion on research and development. As a matter of priority, should we spend more energy protecting the jobs of the 20th century, or building the jobs of the 21st century?
America’s leadership in the world has never been about manifest destiny. It’s never been inevitable. It has always been about people’s hard work and commitment, the result of decision, investment, and choice. Success has never been guaranteed — even when it’s been around so long, we take it for granted. As in all great undertakings, failure is a real possibility. But we have so much of what we need to succeed. What we need now is the heart, the determination and the will to invest what is necessary and sacrifice what is required. We need the courage to take risks, make choices, and stand behind them together. We need the imagination and creativity to picture our future in a world that’s changing fundamentally. And we need to trust in the genius and the ability of the American people.
We have been here before. After World War II, we were challenged to create a new world from the old — and we built an international system that raised living standards around the globe. After the launch of Sputnik, we were challenged to lead the world again in science and technology – and not only put a man on the moon within a decade, we inspired a generation of engineers and scientists who created a new information economy. When Japan and Germany seemed dominant and America seemed to be falling behind, we were challenged to lead the new global economy — and responded by becoming the greatest economic, military, and political force in the history of the world.
I believe our future requires us to be realistic. Realistic about the challenges as well as the changes this 21st century brings. I believe our history entitles us to be optimistic. Optimistic because our leadership, our opportunities and our jobs have never been guaranteed to us by destiny or delivered to us by right. They have always been earned by the power of the American spirit.