2020 Vision : How America can compete in the global economy of the future : RETHINKING AMERICA: A New Game Plan From the American Innovators: Schools, Business, People, Work, <i> By Hedrick Smith (Random House: $25; 420 pp.)</i>
In his 1835 classic, “Democracy in America,” Alexis de Tocqueville coined the term individualism to describe the essential American character. “Individualism is a word . . . to describe a new idea,” he wrote. “Our fathers only knew about egoism.” Individualism was not an end in itself, it had a social component, which Tocqueville hoped, through enlightened self-interest, compassion, cooperation, volunteerism, teamwork and delayed gratification would reconcile the well-being of individuals and their short-term interests with the long-term interests of a community and the nation.
Hedrick Smith, one of our nations’ foremost journalists, and the author of such remarkable works as “The Russians” and “The Power Game,” has written a provocative study, “Rethinking America” in which he deals with the role of American individualism in this post Cold War Age of global economic and technological competition. His study is about “the need for America to develop new ways of thinking about ourselves,” a new “mindset” about systemic change buffeting our educational, economic and industrial systems.
Smith’s major premise is that the greatest and most valuable asset of the United States is its people. Hence, the path for constant renewal of America lies not in worker layoffs or “downsizing” but rather in the investment in and cultivation of a skilled labor force and in the engagement of as many people as possible in our national economic goals. To help preserve a healthy democracy, a viable, robust economy, our standard of living and to compete effectively in a global economy dominated by rapid technological changes, Americans need long-term, fundamental educational and economic reforms. And to accomplish that, Smith argues we need a variety of local and national compacts between educators, parents and businesses, between labor and management, between businesses and government. Such partnerships are necessary in order to enable us to work together and to compete more effectively in the global marketplace.
To underline the scope of these challenges, Smith contrasts our educational and economic systems with two of our main global rivals, Japan and Germany. He catalogues some well-known past-failed practices and strategies of American corporations such as RCA, General Motors and IBM. The author contends that the American culture of creativity and individualism is handicapped by impatient corporate “immediate return on investment” practices, which often do not allow American business to match “dazzling innovations” with “manufacturing muscle,” facilitated by patient capital. The result is that despite major scientific inventions, vital technological developments in the United States have often been squandered to our economic rivals. For example, RCA, which developed LCD (Liquid Crystal Display) technology, sold its operations to Timex of Japan for $3 million. Rockwell sold to Sharp its semi-conductor patent for $2 million. Ampex sold its magnetic videotape technology to Sony, which has generated a market worth tens of billions of dollars. Such actions have disadvantaged the U.S. vis-a-vis Japan and Germany, countries that have long-term industrial and economic policies, coupled with government-business and business-labor compacts.
Smith asserts that U.S. companies, on the whole, have no long-range strategies to cope with massive changes dictated by the realities of the global marketplace. Many of them have chosen stability over change and coast on “past successes.” In contrast German and Japanese industries are ready and plan to cope with short-term losses, if necessary even for a decade, in order to gain leadership in particular technologies through “patient capital.”
Smith is deeply concerned that at this crucial junction, the U.S. is facing an R&D; crisis, the full impact of which may not be apparent until the next five to 15 years. By then it will be too late. The United States may lose its scientific, technological and economic supremacy. He cites studies showing that in 1994 the U.S. was investing only 1.9% of its gross national product on civilian R&D;, compared with 3% in Japan and 2.7% in Germany, despite the fact that those countries were in recession.
Our nation responds to emergencies very well. The time has come to plan for the future challenges facing us, rather than provide sporadic, haphazard, costly temporary “solutions.” To maintain our preeminence, American science, technology and manufacturing have to dispel the myth that our economy has resolved the problems of mass production but not those of quality. In the global marketplace, the two go hand-in-hand. Smith sees signs that a new corporate leadership is emerging that values and invests in its work force and fights for quality. These are the “innovators” who plan for the future. He cites Don Petersen and Red Poling of Ford Motor Co., Jack Smith of General Motors, Bob Galvin and George Fisher of Motorola, Lou Gerstener of IBM and a few others.
The key to America’s success or failure is its educational system, particularly K-12, and the ability of corporate America to forge imaginative labor retraining and educational programs that minimize the endemic layoffs, which not only demoralize and destabilize our communities but constitute actual economic waste. Smith makes a forceful case for educational reform as the necessary ingredient for a resurgent America. While hailing the pioneering education reforms of such leaders as Deborah Meier, a public school leader in East Harlem, Bert Grover, the former Wisconsin school superintendent, and the national efforts of Ted Sizer of Brown University and James Comer of Yale, he makes not only a compelling case that both public and private school systems need structural reform, but that a high school education should be a valuable education in itself rather than as a means to a college education alone.
Hence he cites successful European examples where secondary education leads to careers of craft and other professions, as an honorable tradition. He believes, and I concur with him, that a high school should provide a smooth transition from school to work. A solid high school education and a diploma should receive the dignity that they deserve. Our school-to-work education programs are by and large antiquated or obsolete and they should be revamped with the help of American industries, labor and government.
Many studies have dealt with the central themes that “Rethinking America” deals with. Smith’s contribution has been to synthesize those studies and present them with greater force and clarity to the general public. In writing this book, he has read widely, studied carefully, compared judiciously and consulted broadly. This is not a pessimistic assessment of America, but rather provides a manifesto of hope for teamwork, cooperation and a general guideline for reform.
Unfortunately, Smith’s study does not deal with some of the natural structural obstacles that serve as impediments to his vision of a new collaboration. The multiplicity and diversity of U.S. educational institutions, the dynamism of small businesses, our unique political culture, the multi-religious, multiracial and multiethnic character of our nation, the place of immigration, geopolitical realities, regionalism, the current neo-isolationist mood of the country--all impede the development of consistent long-range economic, industrial, educational policies or blue prints for a “managed capitalist” economy similar to those of Japan and Germany.
But Smith’s admonition and warnings are timely. We cannot compete effectively without a highly skilled labor force, a healthy school system, a robust higher education and necessary investments in science. We need a resilient political system that brings together education, business, and government in the development and defense of America’s creative talent, inventiveness and economy. His book is must reading for our leaders as we face the challenges of the global marketplace.