Question 2
Tom Friedman, The New York Times Foreign Affairs columnist
Let's step back and diagnose where we are, and then we'll talk about what to do about it from a business/labor perspective. We're on the cusp of something really big and really new. What is it?

Answers

Jeffrey Garten, Dean of Yale School of Management
If it was 20 years from now, we wouldn't be having this discussion. Our economy, our country is wonderfully equipped to change with all of the different rhythms of the world economy.  And the real question is the interim period.  I think that a lot of the points that are being discussed in the country about offshoring are assuming that we've been through this before. And the reason I don't think we've been through this before is that we've never had the ability for knowledge to be transferred so quickly.  Now, the speed is very important, because it means that the normal adjustment process simply can't take place in a socially acceptable or politically meaningful time. So an entire process can be sent abroad, or sent around the world, almost overnight. 

That's partly the Internet, but it's also digitalization, which allows you to break jobs, especially the high value added ones, into lots of pieces and find the best people around the world to do them. Now, we've just never been there. That's not the same as adjusting to imports, or American firms moving abroad in manufacturing. This is totally different.

I think we are also about to see the emergence of a different global market. This isn't just about tens of millions of low wage workers from China, or India, or Eastern Europe, or Brazil.  It's also partly about the transfer of education and technology to these countries such that we are going to be challenged not only on the low end but also by people who have very significant, innovative capacities. At some point, it ought to be that those countries become great consumers as well. But there is an enormous lag. 

I'm an optimist but the problem I have is that, if you look at a lot of Asian countries, such as Japan, they have been slow to become consumer economies. And so we could be seeing the emergence of a productive capacity, in orders of magnitude that are simply not quantifiable, without the offsetting markets that would give us the opportunities  to capitalize on that. So I think we are not prepared for this discontinuity and there are two things that we ought to keep in mind. One is, simply, not to take the wrong steps. But we also ought to be on the cusp of a whole new way of thinking about how to create adjustment assistance, in the broadest sense, and how to create safety nets for this new world.  Because if we don't, I am quite sure that we're capable of pursuing the wrong policies, such as high protectionist policies.

Diana Farrell, Director of McKinsey Global Institute
One important difference we see is themental construct we have, which is increasingly problematic because we have highly diversified investor, employee, and consumer bases. As you look more carefully at what companies are doing around the world, it becomes difficult to say whether Intel is an American company when it's got 70 percent of its sales outside of the U.S. Does it have a moral responsibility to sustain 70 percent of sales with an American work force?  It's a difficult question. So, in some ways, that's part of how we need to think differently about a world that is really integrated, and where national boundaries are less meaningful in a lot of important ways. 

Another unique aspect of what we're seeing today is that, as these large developing economies with their radically different local conditions, compete meaningfully in a global environment, dislocation and adjustment follows. What this really calls for is a mandate to embrace and accept change, and to prepare ourselves for that change. It's a question of whether we're going to maintain our innovativeness through embracing change, or are we going to destroy it?

Ron Blackwell, Director of Corporate Affairs of the AFL-CIO
We are in a global economy. There is no choice but to embrace change. But this is a different globalization than the early 20th century. Then, too, we had large volumes of capital people and goods moving across international borders. But what we have now that we did not have then is the internationalization of production, which is the distinguishing characteristic of our period. I think the challenge for us as a country, but also for us as citizens, is, how do we get this internationalization structured right so that it works for the developing world, the United States and other advanced economies, for business, and for the population? Because right now, we're headed toward the edge of a cliff. 

Three weeks ago I met a young engineer at Boeing, in Wichita, Kansas. She was a Ph.D., aerospace engineer, third generation Boeing employee. Her father was a machinist and he saw manufacturing just coming up from under him. He didn't want his family to follow him into this business. So he sent his daughter to get an advanced degree in aerospace engineering. Now that company is threatening to move the work of these engineers offshore unless they get the right settlement at the bargaining table. 

This anecdote is undercutting one of the other comforting narratives, which is that somehow, if you work with your hands, of course you could lose your job, but, if you get an education, you'll keep your job. Well, many people did go get an education and they're especially bitter about this trend for that reason. 

When we did a large survey of a number of issues, in the (American electoral) swing states, we asked: "Which of the following two statements do you agree with? One, business should find the cheapest place to do its work to remain competitive and a strong company. Two, American businesses have a moral responsibility to hire Americans." Sixty-six percent of the people said, companies have a moral responsibility to hire Americans. There's a moral and a political dimension to this, which is immediate, and could do harm, as Jeff warned.  The palliatives that are currently before people are not going to work. Leaders can say, ‘Don't worry, we're going to train you.' But what is an aerospace engineer going to be trained to do? To become a doctor? A lawyer? A Wall Street plutocrat? It's not just an adjustment problem for workers that are left behind.  It's a question of, how are we going to make an environment where people can make a living in the advanced countries, even as the developing countries move forward and build world-class companies?