Here's how the piece starts:
In his recent Newsweek article "Sputnik Was Nothing," Louis V. Gerstner Jr. asks, "How much longer will the United States be a superpower? Not much, if we do not wake up to the fact that our economic strength, which has underpinned our political and military might for two centuries, is decaying. In the 21st century, economic power will be derived from skills and innovation. Nations that don't invest in skills will weaken: it is that straightforward."
Gerstner once again raises the alarm on the deterioration of the U.S. educational system and the negative implications this has for the future of America. He states that "calls for a crash program to defend our superpower status are even more urgent now."
Gerstner's message is not new—not for him, nor for other "enlightened" (read: already got theirs) capitalists such as financiers Robert Rubin, Paul Volcker, and Peter Peterson, and respected technology executives like Intel's Andy Grove and Craig Barrett—all of whom have been calling for various reforms for years.
In the 1990s, Gerstner led the big turnaround of IBM from an aging computer maker into the largest global IT services corporation in the world. Now he's chairman of the Carlyle Group, the well-connected private equity firm that included President Bush I, whose friends Brent Scowcroft and James Baker have voiced serious concerns about the foreign policy direction of the current Bush II administration.
Thomas Friedman, a cheerleader for "globalization" in his New York Times columns, his recent book The World is Flat, and his appearances on "The Charlie Rose Show," has wondered aloud why CEOs and political leaders don't speak out even more emphatically about the obvious economic threats facing America.
To us, the reason why these leaders don't take meaningful action—such as mobilizing a serious political movement to set things right—is straightforward.
All these leaders understand, but never admit, that the motivation and incentive for Americans to resolve these critical problems—to improve our education, healthcare, and energy systems; to control our debts, live within our means, and so on—have been gradually reduced by the U.S.-dominated global speculative financial system that they themselves have helped create.
Welch of GE, in his book Winning, describes how pleasantly surprised he was to learn (in the late 1970s and early 1980s) how easy it was to make money in financial services as he sold or shut down GE's industrial businesses. He not only became very wealthy by doing so, but also came to symbolize an entire era.
The reality is: why should Gerstner really care to do anything about education, when his private equity firm can buy a public company, "fix" it via financial leverage and layoffs, and then sell it for a quick profit to individuals and pension funds made both desperate for yield (by years of accommodative Fed rate policy) and oblivious to risk (from decades of Fed bailouts every time a poorly conceived, high-risk investment failure threatens the so-called "real economy")?
For that matter, why should ambitious American students study physics, engineering, and math (except perhaps to become Wall Street "quants"), when it is so much easier to make money speculating in real estate, stocks, and everything else, including untenable IPOs for companies that are unlikely to ever be profitable?
Why should corporate CEOs worry about American education, science, and technology, when they can simply "downsize" and "outsource" to Asia, greatly enhancing the value of their stock options and, at least in the short term, shareholder value?
Why should any corporate leader be surprised that, 25 years after the magic of making masses of money from government-protected leverage and guaranteed liquidity, the process has come full circle?
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