This week I am representing Intel at the Annual Meeting of the World Economic Forum in Davos, Switzerland. Many just refer to this annual event as "Davos". Intel has been involved in Davos over the last two decades and for a number of reasons it has become recognized as the one of the most influential annual meeting of global leaders from the private sector, public leadership and civil society. And on Intel's behalf, I plan to represent and convey technology's role in solving major global problems and improving human lives.The theme of this year's Annual Meeting is "Shaping the Post-Crisis World", and no surprise this dominates much of the discussion - in formal meetings, panel sessions, hallway conversations and media interviews. One question posed to me concerns the new economic model that I see emerging once the dust settles from this crisis. And then whether I believe the resulting model will lean toward a European approach - with more redistribution, more environmental and social concerns and higher taxes? And is America ready for such a model?
I believe the current economic crisis is a perturbation on a larger global trend. The decline in housing prices, the subprime mortgage mess, and the overt speculation in the financial sector are all serious but they are merely short term symptoms of a bigger systemic change. Although it is difficult to predict when the current crisis will moderate, it seems clear that the longer term trends are bound to be more important in determining the winner and losers in the 21st century. With the inclusion of 3B new participants in the world's free economic system over the last decade or so we are bound to see major shifts in economic power and global competitiveness. Some of the first obvious signs of this shift have been the rise of a manufacturing industry in China and a software/services industry in India. Fundamental to these changes are the ease of movement of capital, ideas, and information, the presence of well trained and knowledgeable workers, and government policy aimed at attracting investments. None of these environmental parameters are going to change in the foreseeable future and as a result, governments and economies will have to decide if they want to compete or they want to pursue isolationism and the economic decline associated with stagnant markets. The means of competition are very straightforward in principle but rather more complicated to put into practice. Economic competitiveness will be driven by smart people (a good education system), smart ideas (investment in research and development) and the right environment to promote investment in innovation (government policy on taxes, IP protection, availability of venture capital, etc). Any economy which ignores these three fundamentals will be left behind.
Thus a debate over whether the US system is better or worse than the European system misses the point. The point is that worldwide competition is here to stay - capital will move to the points of highest return - intellectual capital will follow opportunity - competitiveness and success will be determined by who does the best job on the fundamentals. As such, the 'right model' for the future is one which recognizes the necessity of making the decision to compete and then puts in place the right policies and systems to grow smart people and smart ideas and then create an environment to bring them together to do something wonderful.
For much of the last half of the 20th century competition and success were dictated by geographic location - if you were born in the US or Western Europe or Japan you were almost guaranteed a high standard of living and economic prosperity. Now the rules have changed. Country of birth is no longer destiny. We all have to compete if we want a bright future and it seems that much of the developed world would rather talk about how unfair and distasteful competition is rather than make the decision to compete and then get down to the difficult task of actually competing.
So, let's move the debate from the US vs Europe to competing in a new world. Right now it seems those 3B new capitalists from the developing economies are more interested in competing than their counterparts in the developed world. As Wayne Gretsky said, skate to where the puck is going, not where it is now. I hope that the Davos leaders will follow Gretsky's advice.