Economic growth is too slow, unemployment is too high and the country is too divided by self interests, say experts in business.
On the heels of new report that states the U.S. economy actually shrunk in the fourth quarter of 2012, four titans of business on Wednesday tackled questions related to how we got here and what needs to be done to improve the economy.
Jobs, Education and the Economy, Elmhurst College's sixth annual Governmental Forum, featured panelists John Engler, former Michigan governor and president of The Business Roundtable; Doug Oberhelman, Caterpillar chairman and CEO; Desiree Rogers, Johnson Publishing CEO; and Thomas Kloet, TMX Group CEO. Read more about the panelists here.
'The World is Starved for Leadership'
The discussion started out with a simple question: If you could do one thing to make the economy better, what would it be? Of course, the answer is not simple.
There is no silver bullet, Oberhelman said. Generations will be "riding the tailwind of low interest rates that are driving tremendous amounts of debt," and the rancor and partisanship in Washington is not going away, he said.
Every January since 2011, the country has been optimistic about the year ahead. And every year something sabotages recovery: a downgraded financial rating, increasing debt ceiling, a bruising election and partisan fights about the fiscal cliff, he said.
"The world is starved for leadership. We have not had strong leadership in awhile," Oberhelman said.
But our competitive advantage is smart people, he said, and that goes back to education.
"The one-room schoolhouse put a man on the moon," Oberhelman said, repeating a favorite quote of his father's.
Rogers pointed out that in the early days of this country, we were all striving for the same thing: democracy. But in our mature democracy, citizens and politicians are splintered into a tremendous number of special-interest groups, making it difficult to agree on anything.
Only two things bring all Americans together: terrorism and the Olympics, she said.
"We have to put some of our individual issues aside for a moment and do what is best for this country and for the next generation's children," she said. "We need to pull together and say (to our leaders), 'We're not going to put up with the kind of leadership you are demonstrating for the people you represent.' We're never going to get ahead if we don't somehow come up with a list of items we need to move forward on."
She said President Obama is focused on cultural, social agendas, like gun control, gay rights and immigration.
"Not that those things aren't important, but we have to make sure the government is strong in terms of the economy," she said.
Oberhelman took it a step further, saying those social issues, pushed by the media, "are a great distraction from the really tough stuff that no one wants to face."
'US Tax Rates Are Exceptionally High'
Kloet said there are many opportunities and great ideas, but executives are too uncertain about the future to implement them.
"I've been an adult now for 33 years," he said. "I've never seen the degree of uncertainty that exists in companies and investors' minds that I'm seeing (now).
"In the last election, there was a disproportionate amount of rhetoric about how we are going to divide the pie, rather than how we can make the pie bigger, grow the economy. You don't see that prevalent in other countries."
Kloet said tax rates are "exceptionally high" in the U.S. compared to other countries.
"Add state tax on top of that, and that's a competitive disadvantage compared to every other country that's growing at a faster rate," he said. "That's something we have to address."
It's not popular these days to talk about big corporations making money, Oberhelman said.
"All our competitors—China, Canada, Brazil—have half our (tax) rate," he said. "It makes it more difficult to compete. Nobody wants to talk about giving rich people a break, but we have to be competitive with those outside this country who are getting it done."
He said at one time Caterpillar only had about five competitors. Now it has 150 around the world, all wanting to sell in this market.
"In China, they all want to take our jobs away," he said.
We tend to think about how states compete with one another, like jobs from Illinois moving to Indiana for lower tax rates, Engler said.
"What's not so understood is that nations are competing. It's a mindset we don't have yet," he said.
'It's Going to Take a Real Crisis'
"America may not be the best at everything," Rogers said. "That's hard for us to swallow, but we've got some work to do."
She pointed to 1 million homeless children, $40 trillion tied up in derivatives, $1 trillion in unpaid student loans and 46 percent of Americans unhappy with their job.
"The division, even within the administration, is so specialized, yet all these things are interrelated," she said. "How do we get a message across that we've got to pull together and work on some of these things on a unified level?"
In business, executives and staff sit down and say, "What are the strategic things we need to get done in this amount of time," then communicate that to the team and execute it, Oberhelman said.
But it doesn't work that way in Washington.
"In Washington, we seem to deal with things in crisis mode, and then it's only on the fringes," Kloet said.
He said if he were president, he would have corporate leaders finding the solutions to these problems, rather than legislators.
"Give them fiscal issues or the tax code and say, 'Come back with some recommendations.' We should give it to people who do this for a living."
Oberhelman said he's "afraid it's going to take a real crisis" before progress can be made. Whenever there is a crisis, the country comes together and solves the problem, he said. Maybe it will be a social crisis, maybe environmental, he said.
"I'm waiting for that catalyst," he said. "Something will happen and we'll get that done; the most unlikely leaders will become leaders, and we'll get this figured out. I'm on the edge of my seat waiting. It's happened so many times in our country. That's our last hope."
K-12: 'We're Losing Generations of Talent'
We're spending $650 billion a year on public education, and only one-third of third-graders are proficient in reading, Engler said.
"If we can't teach young kids to read ... we're already on the slippery slope," Engler said.
Rogers said not everyone can learn in the same way, and not everyone wants to go to Harvard.
"We have to be realistic about what the issues are for those students coming into the system," she said. "Also, there is no shame in being a carpenter or a plumber. How do we get them the right training without judgment? It's not always about the money but understanding what the issues are."
Oberhelman said his perennial problem is finding a certified technician to "lay a wrench on a caterpillar machine."
"We were interviewing thousands of people for manufacturing jobs—they needed basic skills, nothing fancy," he said. "I was appalled to learn ... that we rejected 60 percent of those applicants for manufacturing jobs because they can't read, have no math skills and they failed a drug test. Here's a society that spends $650 billion a year on trying to educate a mass of young people, and we're throwing money out the door because we can't employ these people in a basic-skill job. We are losing generations of talent."
China and other societies value education, and they don't spend a lot of money on it, he said.
"That's who we're competing with. We will have a horrific situation to deal with in this country if we don't get hold of it," Oberhelman said.
'Let Us Go and We'll Add Jobs'
Members of the audience asked what they can do to affect change.
"(Legislators) really want to hear from voters," Oberhelman said.
He pointed to Illinoisans as being apathetic to the corruption in our capitol.
"(In Illinois) you don't see an outpouring of protest about what's going on. We're all just used to this, I guess," he said. "We all feel like we're little things in this big wheel that's turning, but it does make a difference."
Choice in K-12 education also will pave the way for change, Engler said.
"We ought to create a wider array of choices—a charter school that's high performing, one that focuses on health professions. Let different approaches develop so we can get kids in places where they can get excited about learning," he said.
We can learn from other countries, too, Kloet said.
"As Americans, we've been leading the world in thought and culture and economics for a long time," he said. "You may not want to hear it, but once in a while, we should observe what else is going on in the world and bring it home."
Kloet said he's seen corporate business plans of some Chinese companies.
"There are some incredible things happening in China over the next 10 years. We have to position our country and economy to sell goods to that emerging middle class. Same in Latin America," he said.
The most adversarial relationship between government and business among industrialized nations is found here in the United States, Engler said. It takes twice as long to bring a medical device to market or build a pipeline here than it does in other countries, he said.
"We have to be able to move more expeditiously," he said.
But, Kloet said as he's traveled the world, he's learned: "The innovative spirit and inventiveness of the American entrepreneur should never be underestimated."
"This country has a fabulous future in front of us," he said. "We have some roadblocks and we ought to be working on fixing them. If we do, the future ... is going to be fantastic."
The American public corporation is "one of the most competitive vehicles on this planet," Oberhelman said.
"Let us go and we'll add jobs. We can compete in the world. Let us go. All the rest of this stuff gets in the way."