Jeffrey E. Garten, Dean of the Yale University School of Management, has impressive credentials—he has increased the number of student applications to the school by 75 percent and the size of the faculty by 42 percent. He writes a monthly column for Business Week magazine, has written several books, is a director of three major corporations, was the under secretary of commerce for international trade in the first Clinton administration and sat on the White House Council on International Economic Policy in the Nixon administration.
At a recent invitation-only event at TRUMPF Inc., Dean Garten was asked to speak on the state of the U.S. and world economies, a subject he addressed in a style that was sobering, enlightening and challenging. Just what you want a keynoter to do, but rarely happens.
He speaks with authority and the confidence of one who has an opinion, not just parroting the latest Wall Street Journal editorial. One senses a bit of the contrarian, or maybe iconoclast, in his perception of the current world economy.
He opened his remarks, to a standing-room crowd of small business owners and mid-size manufacturing company managers, by defining five problems he thinks challenges an economic turnaround here and abroad. The first is risk aversion brought on by the telecom crash. He applauds the currently popular "vision thing" but says vision without execution spells trouble, and he isn't seeing much successful execution today.
He bemoans the dysfunctional world economy, pointing out that U.S. consumers drive the world economy by running up debt. And he is pessimistic about Europe (read Germany) and Japan correcting their tax and socio-welfare problems. He is concerned about deflation, a word we are just beginning to hear in the U.S. Rather than seeing more growth in developing nations that chase the same product markets, he prefers adjusting worldwide industrial overcapacity and rising unemployment. Simply stated, he says there is too much manufacturing capacity worldwide, period.
Garten cites China as the major threat to other economies, not because of its currently challenging low labor rates, but because it is now shipping quality products as its company managers keep costs and prices down and quality high with technology improvements. He sees this continuing, as China becomes the dominant power in manufacturing.
He thinks the era of corporate globalization is coming to a close because the cost of doing trade is rising to unsustainable levels and harmonization is blurring supplier identification. He says trade balance fears are a political ploy and in the long run have no bearing on a country's economic health. And finally he states, bluntly, that the U.S. is the most powerful nation on earth and will likely remain so for some time. But he cautions that this power must be exercised carefully, with restraint and fairness.
He asked those attending this event to take a role by speaking out on foreign policy issues, by directing their companies to new levels of excellence to better compete and by management assuming more concern for its workers.
As attendees moved around the TRUMPF campus after these opening remarks, it was interesting to hear comments about Garten's talk. Many thought it was a pessimistic, even depressing presentation, albeit knowledgeable and likely on target. Some would have liked to hear that things were going to get better soon, not so. Dean Garten had set the tone of his talk early by saying that he had no easy solutions, except that the excellence of certain companies gave him confidence that attention to doing what you do and doing it well are proven ways to survive in a down economy.
David A. Belforte