The President’s Distinguished Lecture Series

Video of the lecture - October 24, 2012

Transcript

That was a mighty generous introduction for an unemployed aerospace worker!  It reminds me of my first day serving on the faculty at Princeton.  After having spent my entire career until that time in either industry or government, I had been invited to deliver the welcoming lecture to the incoming freshman engineering students.  As the dean was making his own introductory remarks I was busily flipping through my lecture notes, not paying much attention to what he was saying—until suddenly I heard him pronounce, “And now, we will hear from Professor Augustine.”  For just an instant – and this is true – the thought went through my mind, “Gee, what a coincidence.  They have some guy here with the same name as me!”

To make matters even worse, when I was granted an honorary degree by my alma mater—and needless to say I was very proud—The New York Times story about the occasion carried the following headline:  “Mohammed Ali and Three Others Receive Princeton Degrees!”  (I believe I was the “first” of the “others.”)

But what a privilege it is to be back at Stevens where I am of course a member of the family as the proud holder of an honorary degree from this great institution.  At the ceremony where the degree was presented, the order of proceedings was such that Honorary Degrees were awarded before the regular degrees.  My grandchildren were really impressed when I told them I had graduated first in my class!

When I was working in the aerospace industry two of my most senior colleagues in our company held degrees from Stevens.  And, of course, President Farvardin and I have been friends for many years, even taking a fascinating trip to the Mideast together.  We are very fortunate to have a person of Nariman’s integrity, dedication and ability as our university’s leader.

I will be concentrating my remarks today on science and engineering education.  But I could not do so without also pointing to the importance of such subjects as history, economics and ethics, whether one is focused on engineering or on the liberal arts.

During my time at Lockheed Martin there were some 82,000 engineers working for me.  They ranged from being very good to truly outstanding as engineers.  But I often noticed that the discriminator regarding who rose in management was often the ability to write.  Those of you who are students and have an interest in management might want to think about that.

As I am sure is evident to everyone in this room, when we moved into the 21st century we entered an altogether new world, a world propelled by technology.  This is leading to major disruptions in everyone’s life, some for the better…for example, the average American’s lifespan expanded from 47 to 79 years during the past century…and some not for the better.  As an example of the latter, for the first time in history, individuals or small groups, acting alone, can profoundly impact the lives of very large groups—negatively if they so choose.  The possibility of nuclear terrorism is the ultimate example.

Much of this change that is occurring is attributable to developments in science and engineering.  In fact, I would assert that advancements in just two fields underlie what is the most profound change of all:  namely, “globalization.”  I refer to jet aircraft, that make it possible to move “things,” including people, around the planet at nearly the speed of sound, and to information systems that move ideas and information around the world literally at the speed of light.  The result, in the words of Frances Cairncross writing in The Economist, is that Distance is Dead.

Yes, distance is dead.  In fact, Nobel Laureate Arthur Compton wrote as long ago as 1927 that, “Communication by printed and spoken word and television [will be] much more common … so that the whole earth will be one great neighborhood.”  Dr. Compton was very prescient.

In order to fully appreciate the implications of this notion, let’s turn the clock back in time a little bit...say, about 200 million years!  Geologists tell us that something over 200 million years ago many of what today are the earth’s major continents were joined together in a single “supercontinent” now known as Gondwanaland.  It included, in part, what today is South America, Africa, Australia, Antarctica, Arabia and the Indian Peninsula.  Over the years, these land masses slowly drifted apart…and their influence on each other diminished correspondingly.  

Then, according to the economists, in just the past few decades all these continents suddenly came crashing back together.  As Tom Friedman put it in his remarkable book, The World is Flat, “Globalization has accidentally made Beijing, Bangalore and Bethesda next door neighbors.”  Now this is a truly remarkable happenstance…over 200 million years of drifting apart effectively reversed in just a few decades.   

Speaking of one not overly complex product, a toothbrush, the CEO of its manufacturer, Bausch and Lomb, pointed out that its electromechanical design was performed in Germany and Japan, its motors are from China, the brush head from Ohio, the batteries from Japan, the molded plastics from Georgia, the charging base is from Hong Kong and the final assembly is performed in Mexico.  Customers are all around the world.

And change comes rapidly in the Global Village.  As the Red Queen advises Alice in Lewis Carroll’s Through the Looking Glass, “Here, you see, it takes all the running you can do, to keep in the same place.  If you want to get somewhere else, you must run at least twice as fast as that!”  

One of the more profound consequences of globalization is that Americans no longer compete for jobs simply with their neighbors down the street…rather, they must now compete with their neighbors all around the globe.  And many of these neighbors are highly motivated and increasingly well educated.  

There are already numerous real-world examples of the Death of Distance to be found in our daily lives.  For example:

  • I recently called a customer service department for help in repairing the television receiver in our cabin located 9,000 feet up in the mountains of Colorado.  To do this, it turned out that I had to speak with experts in Denver, Jamaica, Indonesia and India – but the problem was finally resolved.  
  • In India, to better prepare students for jobs in call-centers, courses are offered on how to speak with a mid-western accent.  The workers in some centers are encouraged to adopt a pseudonym that will make American callers more comfortable.  My neighbor in Maryland once talked to a fellow in India who insisted his name was “Abraham Lincoln.”  Really!  
  • Visitors to a firm’s offices that are located not far from the White House are greeted by a receptionist who does not sit at a desk in the lobby but whose image appears on a flat-screen display mounted on the wall.  She is not in Washington, D.C. — she lives in Pakistan.    
  • The C-T scans of patients in a number of U.S. hospitals are now read in near real-time by radiologists in Australia or India.
  •  “Pilots” at consoles in Nevada fly unmanned aerial vehicles that attack targets in Afghanistan, then drive home in time for dinner.  
  • And a patient in Strasbourg, France, had his gallbladder removed by a surgeon in New York using a remotely controlled robot.  (As an engineer, I hope they had a back-up surgeon somewhere around!)

Ironically, in this new world order, it will be the “established” nations that are most challenged.  Why?  Well, for starters, nine factory workers can be hired in Mexico for the cost of one in the United States.  I visited a plant in Vietnam where twenty assembly workers could be hired for the cost of one in the U.S.   As many as five chemists can be employed in China for the cost of one in the U.S. and as many as eight engineers can be hired in India for the cost of one in the U.S.   Productivity rates of course differ from country to country … but not nearly enough to offset differences of this magnitude.  And over time, wages will rise in the developing countries, but because of the sheer size of their potential workforces it will take decades to approach equilibrium, particularly for the less-skilled portion of the workforce.

Since the year 2000, one-third of all U.S. manufacturing jobs—5.5 million jobs—disappeared.  Forty-two thousand factories closed.  But it  should be emphasized that it is not simply factory workers who are being affected ... this is increasingly becoming a “full-spectrum problem,” impacting accountants, dentists, radiologists, architects, professors, scientists, engineers, and even basketball and baseball players.  In addition to the factories that are moving abroad, the list now includes research laboratories, administrative offices, financial centers, prototype shops, and more.

A job is the foundation of an individual’s standard of living, as well as of the nation’s tax base that enables our government to provide the many services to which we have become accustomed, ranging from national defense to healthcare and from education to social security.  

We may be entering an era of sustained unemployment because of enduring structural flaws in our economy.  The future real unemployment rate may well be closer to today’s than to that of the historical past.  Concerned over this prospect, the U.S. House and Senate seven years ago asked the National Academies of Science, Engineering and Medicine to examine what will be required if America is to be competitive in the new global marketplace.  In search of an answer, the Academies formed a 20-member committee composed of individuals with highly diverse professional backgrounds that included public and private university presidents, Nobel Laureates, CEO’s of Fortune 100 companies, former presidential appointees, and the head of a state public school system.  Upon completion of our work, two of our members took positions in President Obama’s cabinet, one as Secretary of Energy and the other as Secretary of Defense.

The committee, which became known as the Gathering Storm Committee after the first line in the title of the report it issued, concluded that the only reasonable answer to the global competitiveness challenge facing America is through leadership in innovation.  That is, creating new knowledge through leading-edge research; applying that knowledge to produce new products and services through world-class engineering; and being first to market with the resulting products and services through extraordinary entrepreneurship.  

The Academies’ conclusion was strongly influenced by the substantial number of studies, one of which was the basis of a Nobel Prize, that demonstrate that over the past half-century 50 to 85 percent of the increase in the nation’s GDP has been attributable to advancements in science and engineering.  So too is two-thirds of the nation’s increase in productivity—both strong indicators of the creation of jobs and improvement in the standard of living.  My own analysis indicates that each percentage-point increase in GDP in the U.S. is accompanied by an increase of over 0.6 percentage-points in jobs.  While one might argue the relative magnitudes of the cause and effect, the impact is evident.

The Academies report went on to say that, “…the United States must compete by optimizing its knowledge-based resources, particularly in science and technology…”  

Still another report, this one prepared by the bipartisan Hart-Rudman Commission of which I was also a member, not only warned well before 9/11 of the likelihood of a major terrorist attack on U.S. soil, it further noted that, “…second only to a weapon of mass destruction detonating on an American city, we can think of nothing more dangerous than a failure to manage properly science, technology and education for the common good.”

While the Gathering Storm report did em   phasize the importance of science and engineering, it did not focus, per se, on jobs for scientists and engineers.  Scientists and engineers now comprise less than five percent of the nation’s workforce, but the work performed by that five percent disproportionately creates jobs for the other 95 percent.

For example, the invention of the iPad, the Blackberry and the iPhone, all rooted in much earlier work performed in solid state physics and quantum mechanics, created jobs not only for scientists and engineers but also for factory workers, salespersons, advertisers and even musicians.  A recent study reported in the Journal of International Commerce and Economics states that in 2006 the 700 engineers working on Apple’s iPod were accompanied by 14,000 other workers in the U.S. and nearly 25,000 abroad.  Floyd Kvamme, a highly successful entrepreneur, has said that “Venture capital is the search for good engineers.”  In fact, Steve Jobs told the president of the United States that the reason Apple employs 700,000 workers abroad is because it can’t find 30,000 engineers in the United States.

Other nations have not overlooked this proposition—for example, China, where as many as seven of its eight top leaders have held degrees in engineering.  This is what Wen Jiabao, Premier of the State Council of the People’s Republic of China, had to say on the subject:  “The history of modernization is in essence a history of scientific and technological progress.  Scientific discovery and technological inventions have brought about new civilizations, modern industries, and the rise and fall of nations…I firmly believe that science is the ultimate revolution.”

Probably the greatest economic advantage the U.S. enjoys today, other than our democracy and free enterprise system, is the strength of our great universities.  According to The Times of London, the top five universities in the world and 18 of the top 25 are located in the United States.  Shanghai’s Jiao Tong University that each year ranks the top 500 universities in the world (although it should be noted that the ranking is principally based on research productivity and neglects the educational mission), places 8 U.S. universities in the top 10 in the world and 17 in the top 20.  But it is becoming more and more apparent that we are living off of past investments.

Suddenly, and unexpectedly, as state and local tax revenues declined precipitously due to the economic downturn this past decade, U.S. institutions, particularly the public ones, find themselves facing severe budget shortfalls—some requiring Draconian corrective measures...such as the 83 percent tuition and fee increase imposed by the State of California over the past four years.  Over the most recent decade our state research universities—that educate 70 percent of our scientific and technological degree recipients—have on average suffered a 24 percent budget cut, not including the effect of inflation.  State funding for colleges and universities per student is now at a 25-year.  

It has not gone unnoticed by legislators in many states and in Washington, as well as by the public and media, that during the most recent five-year timeframe the average compensation for major college head football coaches has increased by 55 percent.  At least 64 of these coaches now make in excess of $1 million per year.  In a few cases it is stipulated that no state money can be used to pay these salaries; however, a review conducted by USA Today reveals that only 20 percent of Football Bowl-Subdivision schools are able to pay their athletic department bills without the use of state funds or student fees—not to mention the benefit of tax exemptions.  

If a developed nation is to create jobs for its citizens in an era of globalization it is clear that it will need a world-class education system, particularly in science and engineering.  But today, only 16 percent of U.S. Baccalaureate degrees are awarded in science and engineering whereas in China the corresponding share is 47 percent.  In the specific case of engineering degrees, the share in Asia is 21 percent; in Europe, 12 percent; and in the U.S., 4.5 percent.  By these measures the U.S. was first, or near-first, just a few decades ago.  

And that brings us to our elementary and secondary education system, the source of domestic science and engineering candidates.  America, of course, has some outstanding schools, some outstanding teachers and some outstanding students.  But in international tests in math and science, U.S. K-12 students on average are firmly ensconced near the bottom of the global class.  In the (2009) so-called PISA test—involving 15-year-olds from 33 OECD countries—U.S. students ranked 14th in reading, 17th in science and 25th in mathematics.   That same year writing scores were the lowest ever recorded by the U.S. and a report by the Hartland Program on Education Policy and Governance ranked the U.S. high school class of 2011 as 32nd in overall performance among the 34 OECD nations. 

In the most recent U.S. standardized tests, known as the Nation’s Report Card, 67 percent of U.S. fourth graders were scored “not proficient,” the lowest ranking, in science.  By eighth grade the fraction had grown to 70 percent, and by twelfth grade it reached 79 percent.  

During the forty years the National Assessment of Education Progress test has been administered real spending per student increased by 140 per cent and staffing per student increased by 75 percent.  Yet during this period scores in reading and science were unchanged and math scores actually declined slightly.  

It is occasionally argued  that we seek to educate a larger proportion of our youth than many other nations…but when, for example, America’s best performing state, Massachusetts, is compared with, say, Shanghai, we still come out badly.  In the recent PISA test only about ten percent of all American students scored in the highest two of six proficiency levels in math or science.  In Shanghai, one-fourth was in those highest categories in science, as were half in math.  

You may recall how strongly Americans reacted when we discovered a few years ago that our Olympic basketball team was no longer first in the world, yet we seem remarkably indifferent that we now rank:

6th in innovation-based competitiveness

10th in percent of adults with college degrees

16th in college completion rate

20th in high school completion rate

23rd in science proficiency of 15-year-olds

48th in the quality of overall K-12 math and science education

In most of these area the U.S. ranked number one only a decade or two ago.  It is worthy of note how quickly one can lose a leadership position in science or engineering due to the rapid pace of change in those fields.  Craig Barrett, the former CEO of Intel and a member of the Gathering Storm committee, points out that over 90 percent of the revenues Intel realizes on the last day of any given year come from products that did not exist on the first day of that same year.  

According to the College Board, only 43 percent of all college-bound high school seniors met their “college-ready” benchmarks.  ACT, another organization that administers college entrance examinations, says that the figure is 24 percent…and this of course excludes the one-third who have dropped out of high school and the one-third  of those who do graduate but do not seek to enter college.  In the case of pursuing a degree in engineering, the corresponding preparedness figure is closer to 15 percent.  

One thing that is not the problem is a lack of investment in K-12 education.  The U.S. spends more per student, totaling 7.4 percent of the GDP, than any other country with the exception of Switzerland.  The worst performing schools in the nation are in Washington, D.C.—which just happens to be where the most highly funded schools are to be found.  

Based on my own travels in 111 countries, it appears not to be without justification that Bill Gates has remarked, “When I compare our high schools to what I see when I’m traveling abroad, I’m terrified for our workforce of tomorrow.”  

Perhaps not surprisingly, the Hamilton Institute reports that the median real income of men in the United States between 25 and 64 years old fell 28 percent over the forty-year period prior to 2009.  In the case of high school graduates who did not attend college, the drop was 47 percent.

McKinsey & Co., the management consultant, sought to link GDP...a not unreasonable surrogate for the standard of living in a country with a relatively stable population...with K-12 educational achievement.  It concluded that if U.S. youth could match the academic performance of students in Finland, our economy would be between 9 and 16 percent larger.  That is about two trillion dollars—the equivalent of nearly three of the recent stimulus packages, each and every year.  

America’s system simply does not work without quality education for all youth.  Education is the very foundation for the American Dream.  But in the 25-year period between 1979 and 2004, the real after-tax income of the poorest one-fifth of Americans rose by only 9 percent while that of the richest one-fifth rose by 69 percent—and that of the wealthiest one percent by 176 percent.  

One must ask what kind of a nation it is if 34 percent of males between the ages of 16 and 24 having only a high school diploma are unemployed, with little hope of employment.  Or when the over one-quarter of students who drop out of high school have a 63 times greater chance of being incarcerated than those who graduate from four-year colleges.  

And, the requirement for higher education in the workforce is gaining momentum. A Georgetown University Workforce report states, “…the demand for postsecondary education will increase from 59 to 63 percent of all jobs by 2018.” It adds, “Jobs for workers with a high school diploma or less still exist but are quickly declining. . .”  In 1973, 72 percent of jobs were available to workers who had either a high school diploma or an incomplete high school education but some on-the-job training, whereas by 1992 this number was down to 44 percent, and by 2007 it reached 41 percent…and declining.  

Given the situation that exists in grades K-12, it is not surprising that the nation’s supply of engineers and physical scientists has become a significant concern to most U.S. corporate executives.  During the past two decades, part of an era that has been described as technology’s greatest period of accomplishment, the number of engineers, mathematicians and physical  scientists graduating in the U.S. with bachelor’s degrees actually fell by over 20 percent until a very recent up-tick—the latter largely propelled by an increase in foreign students.  Correspondingly, two-thirds of the engineering graduates receiving PhD’s from U.S. universities are non-U.S. citizens.  Fifty-six percent of the PhD recipients in physics are non-citizens.

A recent NSF study of the fraction of all first-degrees in 93 nations that are awarded in engineering placed the U.S. in 79th place.  The country most closely matching the U.S. in this regard in both science and engineering was Mozambique.  The only countries behind the U.S. were Bangladesh, Brunei, Burundi, Cambodia, Cameroon, Cuba, Zambia, Guyana, Lesotho, Luxembourg, Madagascar, Namibia, Saudi Arabia and Switzerland.

Reflective of this is a full-page article that appeared in The Washington Post that bore the headline “How to Get Good Grades in College.”  A sub-headline advised:  “Don’t Study Engineering.” 

One popular misconception is that the STEM professions do not pay well…a conclusion often fueled by comparisons with the extraordinary compensation received by a comparatively few individuals working on Wall Street.  Overall, STEM workers earn 26 percent more than their non-STEM counterparts, and earn more than the latter group even when employed in non-STEM occupations.  The most common undergraduate degree among Fortune 500 CEO’s is an engineering degree.  Further, following the 2008 financial crisis, when overall unemployment exceeded 10 percent, it peaked at 5.5 percent in the STEM fields.  

Exacerbating the dilemma we face in producing scientists and engineers is the enormous leakage in the talent pipeline.  Consider the following scenario based upon a little arithmetic of my own.  If you need one additional engineering researcher possessing a PhD in the year 2029; you will need to begin with a pool of about 3,000 students in 8th grade in the U.S. public schools today. 

A strong case can be made that America’s science and engineering enterprise would barely function were it not for the contribution of foreign-born individuals who have come to this country to study and elected to remain and contribute here…in spite of our immigration practices that make it difficult for them to gain entry to the U.S. and then drive them out of the country when they obtain their degrees, presumably so they can compete against us.  

Immigrants make up 12 percent of the U.S. workforce, yet 52 percent of the PhD-holders under the age of 45 working in the “hard sciences” are foreign-born.  Immigrants started one-fourth of all successful high tech companies in recent years, and 18 percent of the Fortune 500 were founded by immigrants.  This latter figure grows to 40 percent if the children of immigrants are included.

In most developing countries careers in science and engineering are highly regarded by young people.  George Heilmeier, the former Director of the Defense Advanced Research Projects Agency and former CEO of Lucent Technologies, once e-mailed me from Moscow that he always likes to go to the movies when he is in Russia.  He explained that, “In Russia, the engineer always gets the girl.”  (Actually, I met my wife of 49 years when I was in engineering school—she tells me the odds were good…but the goods were odd!)  

But that brings us to yet another problem.  In America all too seldom is the engineer a woman.  Women, comprising about half the nation’s population and 58 percent of its undergraduate degree recipients, receive only 20 percent of the engineering bachelor’s degrees and 19 percent of the engineering doctorates awarded by U.S. universities.   In contrast, they now receive a majority of the degrees in law and medicine.

Members of minority groups receive even more disproportionate shares of science and engineering degrees.  For example, African Americans and Hispanics, separately making up about 12 percent of the total U.S. population, each receive fewer than five percent of the bachelor’s and doctorates awarded in each of these fields.  Recently there have been some encouraging signs of improvement—however; it is far too early to declare victory.  

What is critical is for the U.S. to produce and retain a cadre of engineers who are innovators, who are risk-takers and entrepreneurs and can, as GE’s Jack Welch says, “see around corners,”—because these are the people who produce most of the new jobs.  This, incidentally, points to the importance of continuing education:  engineering is a career where you can, without any effort, become professionally middle-aged by the time you are thirty years old.  

Addressing the U.S. workforce as a whole, McKinsey partner James Manyika cites the mismatch of individual skills with employer needs.  Case in point:  there are three million job openings in the U.S. today (6/11)…along with an effective unemployment rate of nearly 15 percent—what the economists refer to as U-6.

Turning to the subject of research—the fount of knowledge—the total federal annual investment in research in the fields of mathematics, engineering and the physical sciences is about equal to the amount by which U.S. healthcare costs increase every ten weeks.  In the case of granting U.S. patents, the number of domestic grantees has already been surpassed by foreign grantees – that occurred in 2008.  After decades of ranking first in research publication impact, the U.S. fell to third place.  And if sequestration takes place just nine weeks from now one can prepare for another eight percent cut in federal research support.

One might reasonably argue that investing in research should be the province of the nation’s industrial sector, since industry is a major beneficiary of its results.  But a survey conducted by the U.S. National Bureau of Economic Research reveals that 80 percent of the senior financial executives questioned said they would be willing to forgo funding research and development in order to meet their public projections of near-term profitability.  Constructive or not, the reality of the financial markets is to emphasize short-term results at the expense of long-term, high-risk endeavors—such as research.  

All of which is to say that our nation’s future resides to an ever increasing extent upon our federal government providing the funds needed to support research that will largely be conducted in the nation’s universities.  The great industrial research institutions such as Bell Labs, home of the laser, the transistor and numerous Nobel Laureates, have seen their best days.

Margaret Thatcher perhaps best summarized the significance, as well as complexities, of basic research in the following terms: 

“…although basic science can have colossal economic rewards, they are totally unpredictable.  And therefore the rewards cannot be judged by immediate results.  Nevertheless, the value of Faraday’s work today must be higher than the capitalization of all shares on the stock exchange … The greatest economic benefits of scientific research have always resulted from advances in fundamental knowledge rather than the search for specific applications … transistors were not discovered by the entertainment industry … but by people working on wave mechanics and solid state physics.  [Nuclear energy] was not discovered by oil companies with large budgets seeking alternative forms of energy, but by scientists like Einstein and Rutherford …”

Let me briefly turn to the Innovation Ecosystem.  The story here is no more pleasant than the previous two issues I have addressed, research and education.  American firms now spend over twice as much on litigation as on research.  General Motors spends more on health care than on steel.  Starbucks spends more on healthcare than on coffee.  The U.S. has the highest overall corporate tax rate of any industrialized nation, backed by a 3.7 million word, 17,000-page tax code that only a well-paid accountant can understand.  And the U.S. patent system suffers flaws of such magnitude that many companies now deem seeking a U.S. patent to be a liability.  The availability of venture capital, an important U.S. advantage in the past—a little over a decade ago California had more venture capital available than any of the world’s nations (excluding the U.S.)—is no longer a discriminator since that money is now being invested in promising new opportunities on a global basis.  

Then there is the matter of regulation.  Your speaker experienced the long arm of regulation not long ago when he was presented with a citation bearing a $500 fine and a “mandatory” court appearance.  His transgression?  Being at the scene of the crime when his grandchildren and other neighborhood children ages three to eight were operating a lemonade stand bearing a sign indicating the proceeds would go to “Children with Cancer”—are you ready for this?—without a license!  (The fine and court appearance were ultimately waived—as was the threat to confiscate the lemonade—when the episode went viral on the worldwide web to the embarrassment of enforcement officials apparently lacking a modicum of judgment.  In an editorial the next day The Washington Post, tongue in cheek, said the kids should be water-boarded!

Of course, one of the first responsibilities of government in a free enterprise system is to conduct its own affairs in a responsible manner such that it creates an environment in which the private sector has the opportunity to contribute and prosper.  In this regard, Comeback America, an organization led by the former Controller General of the United States, recently established a Sovereign Fiscal Responsibility Index—a measure of a nation’s fiscal responsibility  and sustainability.  In its first ranking the U.S. finished in 28th place out of the 34 countries analyzed.  And let me emphasize that this is not a partisan issue—it has taken us several decades to get where we find ourselves.

It is tempting, especially to those of us who are disciples of Adam Smith, to say “Let market forces solve the competitiveness and standard of living problems.”   But that, from a U.S. perspective, is the problem.  Market forces are solving the competitiveness problem.  Individual companies are doing so by creating jobs outside the United States.  U.S. multi-nations created 2.9 million offshore jobs during the first decade of this century—the problem is that the number of workers they employed in the U.S. was reduced by 2.4 million.  

The bottom line is that the path the U.S. is currently pursuing is likely to lead to prosperous U.S. companies with their research laboratories, engineering facilities, factories, customers—and jobs—largely located abroad.  

During the ongoing election campaign it has been popular among some politicians to blame China for our predicament.  But is it China that runs our public schools?  Does China decide how many of us will study science and engineering?  Does China decide how much we should invest in research?

Some months ago while I was testifying before a committee of the Congress asking for funds for education and research, a member said, “Mr. Augustine, do you not understand that we have a budget crisis in this country?”  I responded by saying that I was aware of that but I am an aeronautical engineer and during my career I have worked on a number of airplanes that during their development programs were too heavy to fly.  Never once did we solve the problem by removing an engine.  In the case of creating jobs for Americans, it is research, education and entrepreneurialism that are the engines of innovation and the creation of jobs.  Incidentally, I was flattered when President Obama used this analogy during his State of the Union Address.

I am often asked if I am an optimist or a pessimist.  I usually answer by quoting the old sage that says, “A pessimist is a person who wants to be an optimist but has a grasp of the facts!”

On the other hand, Winston Churchill once said that you can always count on the Americans to do the right thing, after they have tried everything else.  

In this case, we had better get it right…soon.

Thank you.