No more business as usual for US

July 11, 2010
| By Pete Daly |
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According to Mike Maibach, three things happened during the last 20 years that now force the U.S. to change — or risk losing its standard of living.

“No. 1: 3 billion new capitalists. No. 2: The world is flat. And No. 3: The West is aging,” said Maibach.

Maibach, president/CEO of the European-American Business Council, is making his fourth appearance in Grand Rapids July 22 at the World Affairs Council of Western Michigan luncheon at the Kent Country Club.

The EABC was chartered in 1989 as the European Community Chamber of Commerce but renamed in 1997 to reflect its role as advocate before both the American and European governments.

Last year the EABC contracted with the Information Technology and Innovation Foundation, a non-partisan public policy think tank, for a survey on American competitiveness in the global arena. Results of that study have been referenced by The White House and by New York Times columnist Thomas Friedman.

ITIF used 16 indicators to assess the global innovation-based competitiveness of 36 countries and four regions of the world. It found that the U.S. ranks sixth overall — but last in progress made over the past 10 years toward the new knowledge-based economy.

Maibach, a former Intel executive before he took over at the EABC, will talk about the study and its ramifications for West Michigan companies, including a Q&A. He told the Business Journal he plans to explain five policy proposals “that the U.S. government ought to follow to keep us competitive.”

His speech is called “The Atlantic Century? Benchmarking U.S. Innovation and Competitiveness,” and when he gives it, he said, “I get everyone depressed, because we are in very challenging times.” He’s joking about everybody getting depressed, but he’s not joking about the serious issues facing this country, he said.

Those 3 billion new capitalists that cropped up over the last 20 years and now competing with our own homegrown capitalists are in China and India, he said.

“When communism failed in central Europe (starting in 1989), the Chinese gave up on it, too. So they entered the global market,” said Maibach. At that time, India was still “very hidebound” and closed to world trade in many ways, “but they couldn’t resist joining the world anymore because its big neighbor next door had, and they had to remain competitive with the Chinese.”

The world was suddenly flattened by the Internet, which virtually permits any individual to do business anywhere in the world.

“We have to do things very differently if we are going to compete with people in India and China because they have access to all the stuff we have, via the Internet. You can go to MIT from China and not live here,” he said.

“It used to be that global companies had to have tens of millions of dollars in sales, like Coca-Cola” to be able to market overseas. No more, he said.

“The third largest nation in the world is Facebook, if you wanted to look at it like a nation. There’s more people on Facebook than in the United States,” he said.

The aging of the West is a demographic phenomenon in North America and Europe, with serious ramifications for the future, according to Maibach. It means that the number of workers supporting the social systems compared to the number of people supported by the systems is in reverse.

“For every person who got Social Security (payments) back in the 1930s, there were 30 or 40 working” and supporting that system with their taxes. Now, however, low birthrates in the developed nations, along with improvements in health care, means the oldest segment of the population is growing larger even as the young, working population grows smaller.

“The social welfare model of the West is collapsing. This is what you see in Greece and Spain, and elsewhere,” said Maibach.

The lifespan of the social welfare state “was the lifespan of the machine age or the industrial revolution. But that model is done. What I’ll be telling people (in Grand Rapids) is that the U.S. needs to start doing things now which move us off that model and onto a more sustainable model,” said Maibach.

Maibach has proposed that Americans under age 25 or 30 should not be brought into the Social Security system when they begin working, but rather should be required by law to make their own contributions into a retirement fund.

He said the “challenging times” really started to kick in when the dotcom bubble burst around 2000, followed by 9-11, and now the economic crisis of 2008 and 2009. All those events, Maibach said, were similar to signs of an impending heart attack, and too often an individual who has suffered a small heart attack thinks he can just go back to the bad habits that led up to it.

But too many things have changed, he said.

“Business as usual in America is no longer going to be good enough to maintain our standard of living,” he added.

For more information about the World Affairs Council luncheon July 22, visit www.worldmichigan.org or call 616-776-1721. Reservations are required by July 20.

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