The view from on high: America can't compete because Americans are dumb

Manufacturing & Technology News, July 15, 2008 by Richard McCormack

"At the dawn of the 21st Century, the United States is the most competitive economy in the world."

So stated the narrator on the opening Department of Commerce video that kicked off the federal government's "2008 National Summit on American Competitiveness" in Chicago. Among the CEOs in attendance, the theme continued: the United States is the world's most competitive nation. On second thought, maybe not.

"By and large, America is, in my view, very competitive," said Jim McNerney, chairman, president and CEO of Boeing Co. But it's "very obvious" that there is a "huge threat" to its position "in many industries," including the aerospace industry. The dominance of American industry is threatened by its lousy educational system, said the Boeing boss, "and we better respond."

Exactly, replied Louis Gerstner, chairman of the board of IBM Corp. from 1993 until 2002. "We should be very worried," he said. The old model of achieving economic dominance through an abundance of land, capital and labor no longer works. The key in today's global economy is skills. "What it's all about is who is building a country with skilled workers that will deliver economic growth and competitiveness and the fundamental answer to that question is we are not."

Craig Barrett, chairman of Intel Corp., was next. "We're in good shape," he said and then added: "Every leading indicator shows we're going in the negative direction." Those indicators: education, tax rates that discourage investment in the United States and lack of investment in research and development. "All have to change," said Barrett.

Michael Porter of the Harvard Business School followed with a similar line of reasoning. The United States has been the "engine of the world's economic growth." Its citizens received 80,000 patents last year. "You know how many were issued in China?" Porter asked the audience. "700. That's smaller than the country of Finland." India had 500 patents, Russia had 200. The United States has a great entrepreneurial culture and universities. The fundamental challenge facing the country is a dysfunctional K-12 educational system. And for that problem "we don't have any answers, we don't have any credible solutions," Porter said.

The country has hit an economic slow patch, but 130 million stimulus checks worth $100 billion are being sent to Americans, noted Commerce Department Secretary Carlos Gutierrez. "That, combined with Federal Reserve actions as well as some of the housing actions, should have us in a lot better shape in the second half of the year," he told the opening session of the event. "Most economists agree--there is consensus--that the first half of the year will be more difficult than the second half of the year and we're right in the middle of it now. We're going to get through this housing correction. The question is how do we stay competitive for the long haul?"

The speakers at the summit--the country's "leading thinkers on competitiveness" as Sandy Baruah, head of the Small Business Administration, described them--agreed that the country is in trouble mostly because Americans, along with their politicians, are dumb, a word used throughout the CEO session.

"We are really becoming a nation of ignorant people," said Gerstner of IBM. "One adult American in five thinks that the sun revolves around the earth. Fewer than one-third--fewer than a third of American adults--can identify DNA as key to heredity."

Given the poor state of the U.S. educational system, there will soon be "two generations of illiterate people in the United States," Gerstner added. And when that happens "we will have huge, huge issues of class conflict. The major problems, the spread between the rich and the poor, will [be] exacerbate[d]. We will have internal tensions in this country that we haven't seen in 100 years."

Barrett of Intel said current immigration policy is "insane." The country has 12 million to 13 million illegal aliens. "So what do you do? You can't control the 13 million, so you clamp down on the 100,000 legal immigrants that we allow into the U.S. So let's let all of the poorly educated, manual-labor-type folks into the country and let's keep the Ph.D.s out. This is a policy that we can all be proud of, don't you think?" he said to laughter.

IBM hires smart people, many from foreign countries. They have been educated at the best universities in the United States, many at taxpayers' expense. "And then what do we do?" Gerstner asked. "We tell them to go home to compete with us. And it's even worse than that because what we do--because we're international companies and we hire the best and smartest in the world--we not only send them home but we send the job with them because we're going to hire them wherever they are.

There's something wrong with this someplace." At least 200,000 of the smartest, best educated, foreign-born Americans have gone back to their home countries.

Gerstner told a story: "I was with a person who was a very high-level individual in his country and he came to see me. I had known him a number of years. I said, 'What are you doing now?' He says, 'While I'm here, I've got a list of 15 high-talent young people who came to the United States to study biological sciences. They're at Cal Tech, Princeton, Harvard. We're building a huge biocenter in our country and I'm here to get all these people to come back.'