After the Attacks: The Limits of Globalization - Capitol Ideas Turbulent Times - United States Corporate presence in Developing Countries

Chief Executive, The, Nov, 2001 by David E. Sanger

For chief executives, the world changed on September 11--maybe not forever, but for a long time to come.

It will be months or years before we understand not only how much the horrific events worsened the global economic slowdown, but also how profoundly it affected the national psyche.

There is little doubt, though, that the thousands of deaths will be remembered as far more than just a terrorist attack of remarkable proportions. It may also be seen as the violent end of a remarkable marriage of freedom and prosperity--an era in which America's commercial interests had moved to the center of the country's agenda, in which government shrank and Washington's influence seemed to pale.

The spread of American power in the l990s was particularly remarkable because it was driven by private interests. The world seemed to be run by its own set of rules--the rules of globalization, competitiveness, deregulation, and entrepreneurship.

American foreign policy, until September, had gradually adjusted to reflect the changed reality. As the Cold War mentality melted away in Washington, the focus became expanding those seamless boundaries by opening the world to American goods and opening America to the world. From NAFTA to the decision to usher China into the World Trade Organization, the theory was that free trade in goods and ideas would speed the spread of democracy and American-style institutions. As one of President Clinton's closest advisers put it, "Job One was strengthening America by opening the world to American-style democracy and prosperity. Job Two was preventing the world's failed states from violent implosion.

While no one will quite admit it yet, on September 11, those priorities changed.

By presidential command and national consensus, Washington suddenly has a new role--to root out terrorism. In private and in public, President Bush has repeatedly declared that focusing America's energy on the terrorist threat has become the "purpose of my Administration," the legacy he hopes to leave behind.

By necessity, his domestic agenda was relegated to the back burner, save for emergency measures to shore up the economy. Overnight, the question of whether the United States should preserve its fiscal surpluses disappeared; the war would cost whatever it cost.

This won't be the Bush foreign policy that the business community thought it was getting a year ago. The potential effects on how global businesses operate may be profound.

The same openness that freely circulated American ideas and goods turns out to have also freely circulated the poison of terrorism. That was obvious as soon as we learned how effectively the terrorists had woven their plot our midst. The plotters exploited the very openness in American society that they abhorred.

All this suggests a rebalancing is about to take place. The government's role seems bound to expand. The era in which we were lulled by the disappearance of the Cold War, and the illusion that shared prosperity would become the global ethos, seems over. A major environmental shift is beginning for global businesses.

In the age of limitless freedom, CEOs made American companies stateless, and they were proud of it. They operated in a borderless world, and their primary allegiances were to global shareholders.

Chief executives and their companies thought of themselves--perhaps rightly--as citizens of the world first, and citizens of a country second. The composition of their executive suite and staff reinforced that view. Top executives were drawn from around the world, and many American-based multinationals have more employees outside the U.S. than inside.

In Silicon Valley, many companies drew the bulk of their engineering talent from South Asia and Europe. The multicultural company became a symbol of American vitality and evidence of its global appeal. It also explained America's great productivity gains in the '90s. While Japan kept its borders locked and Europe fretted about immigration, American companies attracted and trained the best and the brightest from around the world. Eventually, the largest international companies even developed foreign policies of their own. Boeing carefully spread its subassembly work around the globe as international customers demanded a share of its technology and training.

Along the way, though, we forgot the degree to which this increased our dependence on an ability to cross the globe at will, with no restrictions. It is that sense of openness that was, beyond the tragic human toll, the real casualty of the terrorist attacks. For a few weeks after them, the world got a taste of what things would be like if business travelers were afraid to fly, if borders were closed down, if every shipment of goods was subjected to rigorous inspection, and if foreigners in our midst were suddenly regarded with suspicion.

Hopefully, none of that will last. Americans are already getting back in the air, and the borders have reopened. No one has suggested cutting off immigration. But the psychological change is indisputable.