Through sources that cannot be revealed, I have obtained a draft of President Obama’s opening address to the one-day summit of corporate chief executives planned for this Wednesday December 15, 2010. This is what the draft says:
Thank you for coming here today. This is a moment of grave national peril. Our peril does not lie in the attacks from any enemy abroad. The peril lies in the fact that we are a nation in economic decline. The decline does not relate to the deep recession we are currently experiencing, although that is also a symptom. The decline is much deeper and longer lasting. The decline has been occurring through the administrations of both parties. Fundamentally, the decline resides in the now well-documented fact that our economy, particularly the private sector, is no longer providing a good living for all its citizens. That is the crux of the matter. You and I know that the public sector does not have the resources to subsidize or fill that gap.
And there are even bigger problems on the horizon. Our education system no longer provides an education that fits our children for the future. Our health system, quite apart from the health reform that we recently passed, is heading the country towards bankruptcy. Equally, the social security system is heading towards insolvency.
That in a nutshell, is what this meeting is about. It is about the very future of our nation.
I am sure that you have come here to tell me what I, as the head of the public sector in this country, should do. And I am ready to listen to that. I know that you will tell me that we need less regulation. I know that you will tell me that we need more promotion of international trade, like the deal with South Korea that we just completed. I know that you will tell me that you need more clarity and predictability as to what the tax regime will be and how the health reform will be implemented. I accept those needs and I am working with my colleagues to resolve them with a sense of dire urgency and importance, within the constraints that I face.
Let me be blunt. The public sector cannot grow the economy. What the public sector can do is provide the framework for growth. But ultimately the growth depends on the private sector. The private sector is the engine of the economy. And that engine is broken.
So I want to spend at least half the time of this meeting listening to what you have to say, and what you are going to do, about certain facts for which, you the private sector are responsible.
- The fact that the rate of return on assets of US firms is one quarter of what it was in 1965.
- The fact that the life expectancy of a firm in the Fortune 500 has fallen to 15 years and continues to decline.
- The fact that only one of five workers is fully engaged in his or her work. The larger the firm, the less the engagement. This is not just a matter of job satisfaction: in a world of knowledge work, engagement is the key determinant of productivity.
- The "topple" rate of leading organizations is accelerating.
- The fact that established organizations between 1980 and 2005 produced no new net jobs for the US economy.
These are not funny numbers. They are not government numbers. These are numbers that come from you, the private sector. Our economists have checked them. We believe that they are robust. I am giving you the headlines. We are going to have more briefings about the details, sector by sector, throughout the morning.
The facts that I mention are not short-term blips that have occurred as a result of the financial meltdown. They are long-term trends that have continued for over fifty years through both Democratic and Republican administrations. They are deep and they are real.
I am sure that some of you will tell me that these numbers don’t apply to your organization. I accept that. Each of you has been chosen to come today because your own firm is doing well. So to simplify the discussion, there is no need to tell me that your own firm is in fine shape financially and growing rapidly. I also accept that your own firms are not achieving their apparent financial prosperity by shipping jobs to China or by clever financial manipulation.
I suggest that we base this part of the discussion on the entire set of Fortune 500 companies, particularly those who are not represented here today. We will examine the health of the private sector as a whole. Let us discuss why we are looking at these sustained fifty year old declines, in terms of rate of return on assets, in terms of the life expectancy of firms, in terms of the engagement of the workforce, and in terms of the ability to create jobs.
Just as you want to hear what I am doing the problems for which I am responsible, so I want to hear your ideas about the root causes of the problems for which the private sector is responsible. There are voices within the private sector who say that these problems have not arisen because the private sector has forgotten how to manage. They say that these problems have arisen because the economy has changed in fundamental ways while the way we are managing our organizations hasn’t.
As possible causes, these voices point to the massive shift in the balance of power from seller to buyer, which imply that our organizations must be more responsive to the needs of the marketplace. And they point to the shift in the nature of work from semi-skilled work to knowledge work. These two massive shifts mean that the hierarchical bureaucracies that were so successful fifty years ago can no longer prosper for long in today’s world. In short, they believe that we have to run our institutions differently if we are to be successful in the 21st Century.
I don’t expect you at this meeting to come up with an action plan to deal with problems of the scale and complexity that are represented by these numbers. I want to spend half the time of this meeting getting your suggestions about what I can do about my side of the problems. But I also want us to spend half of the time here at this meeting, getting a deeper understanding of the private sector side of the problem in all its ramifications and what you can do about that.
I want us to meet again in a month. At that meeting, I will present to you what I am doing about the problems that I, as the head of the public sector, am responsible. And I want you to present to me then what you, as the leaders of the private sector, are doing about the problems for which the private sector is responsible.
All of us sitting around this table receive very generous compensation for what we do. Some say that, given the problems we are facing, the compensation is excessively generous, but let us all agree that it is generous. One reason that the compensation is generous is that people look to us as leaders. We are expected to show the way forward, not just for the few people who report to us, but for the entire nation. I accept this responsibility for the public sector. I am asking you to accept this responsibility on behalf of the private sector as a whole. Our nation is looking to us. I believe we need to respond.
Will President Obama deliver this speech on Wednesday? I don’t yet know. I do know that there are people in his immediate circle advising him to be less confrontational and more conciliatory, while others are urging him to press ahead and confront the real issues that the economy is facing. Only time will tell which side will win. Stay tuned.