Op-Ed, New York Times
January 9, 2012
Author: Roger Cohen
Belfer Center Programs or Projects: The Future of Diplomacy Project
LONDON — Perhaps the most successful U.S. chief executive of the past decade is stepping down this month. Samuel Palmisano of I.B.M. has presided over a remarkable transformation of the technology giant, extracting it from the personal computer business and shifting it toward services and software to power a “Smarter Planet.”
In a fascinating interview with my colleague Steve Lohr, Palmisano said the first of the four questions in his guiding business framework was, “Why would someone spend their money with you — so what is unique about you?” At root, business is still about getting money out of your pocket into mine. By being unsentimental in making I.B.M. unique, Palmisano ensured a lot of money flowed the company’s way.
Profits followed. The stock price surged. Warren Buffett, who knows which way the wind blows, recently acquired a stake of more than 5 percent. I.B.M. has been re-imagined, not least in the way it has shifted from being a U.S. multinational to a global corporation powered by rapid expansion in growth markets like India and China.
The question arises: If an American colossus like I.B.M. can be turned around, can America itself? Are the “declinists” on the United States, focused on hard power and America’s falling share of global output, missing something? Before I get to that, let’s take a closer look at I.B.M.’s shifting focus and its implications.
As Lohr has reported, I.B.M. no longer breaks out its global payroll by region. But last time it did, in 2008, it reported that its worldwide employment grew by 21 percent to 386,558, while the U.S. head count fell 11 percent to 120,589. It seems unlikely this trend has halted. By some estimates, huge growth in India has brought the number of I.B.M. employees there to over 100,000, perhaps equivalent to the current number in the United States.
I.B.M. is not alone. U.S.-based global corporations added 683,000 workers in China during the 1999-2009 decade, a 172 percent increase, and 392,000 workers in India, a 542 percent increase. In all they added 1.5 million workers to payrolls in the Asia and Pacific region, while cutting 864,600 workers at home, according to figures from the Commerce Department.
American isolationism has become an oxymoron. As these figures show, it’s a non-option.
On one level this shift poses problems for the United States: Cash-rich companies are creating jobs elsewhere rather than at home. On another, however, the global American corporation expands U.S. power in ways that are hard to quantify but significant. They tend to propagate cultures of openness, connectedness and transparency.
“A General Electric or a Goldman or a Twitter tries to work in each country in culturally appropriate ways, but at their base these companies hold an American set of values. And that is what influence is,” Xenia Dormandy, a senior fellow at Chatham House, told me. “Power viewed in state terms alone, or even primarily, is a false premise these days.”
The conspicuous failure of American hard power — in Iraq and Afghanistan — has tended to obscure the way American soft power has flourished over the past decade. For a while soft power was undercut because the U.S. reputation was tarnished, but the Arab awakening has demonstrated how powerful American-driven social media are in opening up closed societies. Facebook and Twitter have been conspicuous. But when I.B.M. invests massively in Africa — which it has identified as the next major emerging growth market — it is also investing in an openness that advances U.S. interests.
When I was at Harvard recently, Joseph Nye, the professor and former dean of the Kennedy School of Government, made an interesting point. He noted that a rising China has 1.3 billion citizens. But America at its best has 7 billion in that it draws on the world’s talents, as its corporations and colleges demonstrate. Nye in general is skeptical of the “declinists.”
I agree. That’s not because another American century is dawning — it’s not; nor because the power shift to Asia is illusory; nor because U.S. problems of paralyzed government, high deficits and inadequate schools are negligible. No, it’s because the defeat of American hard power has been overdrawn and the magnetism of American soft power underestimated. And we are going into a world where, as Nye has written, “War remains possible, but it is much less acceptable now than it was a century or even a half-century ago.”
The United States is adaptable. The mistakes of the past decade are being corrected through more effective counterterrorism, withdrawal from the major wars, and a slimmed down military budget. Some event, or political lurch, could blow these moves off course, but I don’t think it’s a coincidence that consumer confidence is improving as America overcomes its great post-9/11 disorientation.
Palmisano’s third guiding question was, “Why would society allow you to operate in their defined geography — their country?” That looks like a way of saying no nation is going to welcome a big-footing America. And he urged America to educate itself into the 21st-century, a course hard to follow when trillions are going to far-flung wars.
Smarter U.S. power could still confound the “declinists.”
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