No llegar a la meta

Juan Villoro
23 May. 08

Aúltimas fechas tengo la impresión de que el secreto de la vida está en la posposición: si te retrasas lo suficiente, impides el drama de llegar.

Esta idea, que parece altamente improductiva, no está encaminada a fomentar la desidia sino a replegar el horizonte para ganar un atractivo tiempo extra.

Empezaré mi argumentación con un ejemplo tomado del reino animal (al que pertenecemos, pero que sólo resulta ilustrativo cuando lo vemos desde la platea). Vivo en compañía de Coco, un perro schnauzer con una clara misión en la vida: correr tras una ardilla. Si hubiera nacido en otra casa sus prioridades serían distintas, pero le tocó crecer en un barrio donde las ardillas usan los cables de luz para ir de un árbol a otro. La misión de las ardillas consiste en buscar ilocalizables cacahuates; la de Coco en parar la oreja cuando una rama tiembla con la prometedora presencia de un intruso.

Cada animal persigue un objetivo inalcanzable y así se mantiene en estado de feliz alerta. El novelista español Miguel Barroso me contó una elocuente parábola al respecto. Su padre era criador de galgos que solían animar las tardes persiguiendo una liebre artificial en el galgódromo. En una ocasión, uno de sus perros tomó la delantera hasta el momento en que hubo una falla de corriente; la liebre eléctrica se descompuso y el perro pudo darle alcance. Atrapar el juguete fue terrible. Durante años, el galgo había corrido en pos de un animal siempre postergado. No hay mayor estímulo que el del anhelo que se alimenta de sí mismo: la esquiva liebre era el horizonte que obligaba a correr. Al final del trayecto, el ganador cruzaba la meta vulgar de los apostadores sin alcanzar nunca la suya.

Cuando el galgo pudo al fin morder su presa sufrió una aguda decepción: su objeto del deseo estaba hecho de metal inapetente. Acto seguido, se deprimió, no quiso volver a correr, dejó de acercarse al plato de las croquetas y tuvo que ser sacrificado.

Este último recurso parece demasiado drástico; sin embargo, quienes saben del tema cuentan que pocas cosas son tan difíciles de sobrellevar como la melancolía de un galgo y que la muerte asistida representa un alivio para una especie que no conoce otra forma del suicidio que matarse de tedio.

¿Sueñan los galgos con liebres eléctricas? Quizá todos lo hacemos, lo único que cambia es el aspecto de lo que perseguimos.

Es obvio que en la vida conviene alcanzar ciertas metas. Sin embargo, la experiencia nos pone en contacto con dos formas de llegar a un fin. Como en los galgódromos, enfrentamos metas alcanzables (el fin de una carrera) y otras que conviene posponer.

Le conté esta anécdota a mi amigo Frank, que analiza muy bien a nuestros conocidos. Como de costumbre, no dijo nada al respecto pero registró el caso. A los pocos días le comenté que me había encontrado a Edwin, un conocido que acaba de recibir un premio importantísimo. Para mi sorpresa, Edwin estaba entre abrumado y sordo. Tuve que gritarle mi felicitación, me vio con ojos borrosos y cambió de tema. Se lo conté a Frank. Su respuesta fue fulminante: "Alcanzó su liebre".

Gracias a esta conversación entendí una historia que Chéjov no llegó a desarrollar, pero dejó anotada en sus cuadernos: "Un hombre, en Montecarlo, va al casino, gana un millón, vuelve a casa, se suicida". De acuerdo con Ricardo Piglia, este apunte condensa la forma clásica del cuento. Que un hombre gane y disfrute es una anécdota, incluso una noticia (si el monto es apropiado). Que se castigue por haber ganado es un cuento. El secreto de esa trama consiste en que el final sea a un tiempo sorpresivo y congruente con la psicología del personaje (una oscura lógica debe impulsarlo a sufrir a fondo su victoria).

Me parece que la clave está en la liebre eléctrica. El jugador no se mata porque detesta el triunfo ni porque se siente culpable de revertir sus muchos días de sufrimiento. Se mata porque ya no puede seguir posponiendo lo que anhela. Su vida carece de segundas oportunidades. Obtuvo lo que deseaba, pero eso apenas lo compensa. Una vez alcanzado, lo que valía como propósito adquiere el sabor del metal inerte.

Esta tragedia ocurre cuando el protagonista tiene una meta de la que todo depende. No es casual que ocurra en los deportes. De pronto, una tenista que lo ha ganado todo dice que su oficio no tiene sentido y ofrece una conferencia de prensa donde justifica su retiro con torpes y escasas palabras. Se ha cansado de coleccionar liebres eléctricas, pero no sabe cómo decirlo.

Tal vez el gran Zidane quiso ponerse a salvo del afán de obtenerlo todo y por ello fracasó adrede en su último partido. Estaba a punto de ganar otro Mundial, hazaña inesperada pero no ilógica. La liebre estaba a su alcance, detenida por la diosa Fortuna, y no quiso atraparla. Salió del campo rumbo a la jubilación en la que ya no hay liebres pero en la que podrá soñar con la que dejó escapar.

Mientras escribo estas líneas, Coco, incesante, persigue una ardilla que no alcanzará. Conviene tener varias presas de ese tipo. La liebre eléctrica es símbolo de lo inalcanzable, y la liebre real, de la sorpresa (salta donde menos lo espera el cazador). Si dispones de varias presas perseguibles evitas la decepción del logro absoluto.

Sobran causas que impiden alcanzar el destino que queremos, pero a veces la vida se vuelve rara y nos permite llegar ahí por casualidad: la liebre se descompone y podemos morderla. Entonces la cambiante materia humana se pone a prueba. Cuando la liebre está a la mano, el político corrupto aprovecha para quedarse con la nómina, el triunfador renuente se pega un tiro y el héroe cultiva su último derecho a la derrota.

Al plazo para entregar un artículo se le llama deadline, la línea de muerte. La expresión recuerda los afanes de los galgos: hay que llegar a tiempo, pero dejar que la liebre corra por su cuenta.

Bear Stearns Neared Collapse

Bear Stearns Neared Collapse
Twice in Frenzied Last Days
Paulson Pushed Low-Ball Bid,
Relented; a Testy Time for Dimon
By KATE KELLY
May 29, 2008; Page A1

It had been a rough day, but when Alan Schwartz headed for home on Friday, March 14, the Bear Stearns Cos. chief executive thought he'd have a month to find a buyer for his teetering firm.


Part One: Missed Opportunities As the firm's fortunes spiraled downward, executives squabbled over raising capital and cutting its inventory of mortgages.
Part Two: Run on the Bank Executives believed they were about to turn a corner, but rumors and fear sent clients, trading partners and lenders fleeing.
Today: Deal or No Deal? The Fed pressured Bear Stearns to sell itself, but a misstep in the hastily drawn agreement nearly scuttled the deal.A quickly concocted loan, guaranteed by the government for up to 28 days, allowed the brokerage to open its doors that morning. But its stock continued to spiral down, its clients continued to flee and its trading partners continued to disappear. It grew obvious to Treasury Secretary Henry Paulson Jr. that Bear Stearns wouldn't last the weekend. It was time for an awkward conversation.

Mr. Schwartz was in the dark back seat of a car whisking him from Manhattan to Greenwich, Conn., when he got a call from Mr. Paulson and New York Federal Reserve Bank President Timothy Geithner.

"You need to have a deal by Sunday night," said Mr. Paulson, a seasoned former Wall Street executive.

Mr. Schwartz was stunned. Now, with the market in shock at Bear Stearns's travails and its stock price cut to ribbons, he'd have to find the best offer he could to fend off bankruptcy.

The confusion over the financing was a testament to the speed with which Bear Stearns had fallen and the urgent need government officials felt to cushion the impact on the financial system.

At their gloomiest, regulators believed a bankruptcy filing could stoke global fears, threatening to topple other financial institutions and to send the Dow Jones Industrial Average into a 2,000-point nose dive.

The phone call to Mr. Schwartz capped a helter-skelter week -- and presaged another 10 days of chaos. Interviews with more than two dozen executives and others directly involved show that Bear Stearns nearly died not once, but twice.


WSJ's Adam Najberg talks with writer Kate Kelly about covering the Bear Stearns' collapse.
That weekend, the firm agreed to sell itself to J.P. Morgan Chase & Co. for a mere $2 a share after Mr. Paulson personally urged the bank to cut a higher bid. But a single clause tucked in the 74-page deal agreement set off a series of increasingly dire events that nearly scuttled the rescue brokered and financed by the Fed.

At one point, J.P. Morgan threatened to pull financing it had promised to provide for Bear Stearns. In turn, Bear Stearns executives considered suing J.P. Morgan, and the firm nearly was forced to liquidate its assets. Finally, Bear Stearns agreed to a price of about $10 a share, which stockholders are poised to approve at a meeting Thursday.

By the time Mr. Schwartz faced investors on a midday conference call on March 14, he had been at the office for more than 24 tense hours.

On the call, Mr. Schwartz said that while Bear Stearns's cash on hand had "deteriorated," the funding from the Fed, routed through J.P. Morgan, would allow the firm to resume doing "business as usual." Bear Stearns had moved its first-quarter earnings announcement up from March 20 to March 17, he added, and he felt "comfortable" with the range of analyst estimates, some of which placed Bear Stearns's expected profit at more than $1 a share. Longer term, Mr. Schwartz added, Lazard Ltd. had been hired to generate a possible deal for Bear Stearns.

In fact, teams from J.P. Morgan and J.C. Flowers & Co., the leveraged-buyout outfit that had briefly been interested in a stake in the company last summer, were in the firm's Madison Avenue offices that afternoon, scouring its books.

It was painfully apparent that neither the Fed's moves nor Mr. Schwartz's reassurances were having their desired effect. The rescue was seen in the market as a sign of weakness rather than one of hope.

Bear Stearns executives had heard rumors that some of the firm's big clients -- including Citadel Investment Group, a powerful Chicago hedge fund -- had made big bets that Bear Stearns's shares would fall. The brokerage's leaders feared that word of a big player taking a so-called short position could lead others to make the same moves, helping to depress the share price further.

Early that afternoon, Citadel CEO Kenneth Griffin called Tom Marano, the head of Bear Stearns's mortgage division, to ask, "Is there anything I can do?"

"There's such concern that you're short that I wouldn't even go there," Mr. Marano said.

"I'm not short," Mr. Griffin insisted. Any doubters could visit Citadel, he said, and review its trading positions themselves.


Tim Bower
Citadel CEO Kenneth Griffin denies to a Bear Stearns executive that he is betting against the firm's stock.
Bear Stearns's shares continued to fall. By day's end, nearly 190 million of the firm's shares had changed hands -- 17 times the daily average -- and the price had fallen 47% to $30 a share.

Bear Stearns Chief Financial Officer Samuel Molinaro Jr. -- tired and in the same suit he'd left home in 36 hours before -- had stopped at a Mobil gas station on the Merritt Parkway for a cup of coffee on his way home to New Canaan, Conn., when Mr. Schwartz phoned him that Friday night with the bad news.

Messrs. Paulson and Geithner wanted a deal to sell Bear Stearns in place by early Sunday evening when Asian markets opened for business.

"You've got to be kidding me," Mr. Molinaro said. "I thought we had 28 days."

"So did I," Mr. Schwartz replied. "Now we have to get a deal done this weekend." By 8 a.m. the next morning, the two men were back at the office meeting with J.P. Morgan executives.

The Bear Stearns and J.P. Morgan buildings, less than a block from each other, were hives of activity. As J.P. Morgan and Flowers furiously conducted due diligence, Bear Stearns's directors met periodically throughout the day in Mr. Molinaro's sixth-floor conference room.

Early that afternoon, Flowers presented a tempting proposal: It would buy 90% of the company for $3 billion in cash, or roughly $28 a share. But the deal was contingent upon Flowers lining up a consortium of lenders to provide $20 billion to finance Bear Stearns's continuing operations.

Hours later, J.P. Morgan said it might be willing to pay between $8 and $12 a share. That would value the company at between $945 million and $1.4 billion.

At J.P. Morgan, more than 200 of the bank's top managers were holding round-the-clock discussions in a suite of offices on the eighth floor of the bank's Park Avenue building. Food was brought in; executives grabbed sleep on couches.

There were misgivings about consummating the lightning-quick deal, but on Sunday morning, J.P. Morgan sent Bear Stearns a rough draft of a merger plan with the share price left blank.

Shortly after 8 a.m., Mr. Schwartz gathered the roughly 50 Bear Stearns employees who were in the building to help the firm's suitors sift through its financial records. Flowers was having difficulty lining up operating funds. He knew the J.P. Morgan bid was likely to win out and wanted to manage expectations about the price.

"We have a deal," he told the group, "but you're not going to like it."

Then, at about 10 a.m., J.P. Morgan suddenly withdrew its offer. Buying the brokerage after such a brief review of its books was simply too risky, the bank told Gary Parr, the investment banker representing Bear Stearns.

The bank had gotten cold feet after its senior managers returned to Park Avenue from assessing Bear Stearns's books. Besides losing clients, the firm was facing a rash of lawsuits from the collapse of two hedge funds the previous summer, and its large mortgage portfolio left it widely exposed to further problems in the housing market.

A deal with Flowers wasn't looking any more likely. By midday Sunday, the buyout firm knew it would be impossible to raise $20 billion fast enough to keep Bear Stearns operating. Flowers now toyed with alternatives: It asked Mr. Parr if Bear Stearns's large rivals would consider buying the firm's prime-brokerage business, a prized asset that processed and financed trades with big clients. Perhaps then, Flowers reasoned, it could proceed with a purchase of Bear Stearns's core bond and stock units. Those deals never materialized.


Tim Bower
Bear Stearns CFO Samuel Molinaro finds out that the federal government wants his firm sold in two days.
Soon, though, J.P. Morgan was back, floating the price of $4 a share. Under the plan, the Federal Reserve would take responsibility for $30 billion in hard-to-trade securities on Bear Stearns's books, with potential for both profit or loss.

Bear Stearns directors were getting angry. How could the deal price go from $8 to $4 in a few hours? Chairman James Cayne -- himself a large shareholder and the firm's chief executive for 14 years until forced out in January -- was irate.

"Let's play the bankruptcy card," he said to the group as they discussed the bid in a conference room high in the Madison Avenue tower.

A large team from the law firm Cadwalader, Wickersham & Taft was already in the building, preparing for a potential Chapter 11 filing, which technically would allow Bear Stearns time to work out its problems with creditors. But the option would have been suicidal: Under changes to the bankruptcy code made in 2005, regulators would wrest control of the firm's customer accounts, leaving it with little or no business. Many of Bear Stearns's pending trades in investments known as derivatives, which are tied to underlying assets like stocks and bonds, would be subject to seizure by creditors.

The start of the business day in Asia loomed at 6 p.m. New York time. If the firm filed for bankruptcy, it would have to notify its Asian trading desks before markets there opened.

Throughout the weekend, the Fed's Mr. Geithner had been consulting Mr. Paulson, a former investment banker who had run Goldman Sachs Group Inc. for seven years before becoming Treasury secretary. After they talked on Sunday afternoon, they decided that Mr. Paulson should call J.P. Morgan CEO James Dimon.

He reached Mr. Dimon, who put the call on the speakerphone in his Park Avenue office. The bank was mulling a price of $4 or $5 a share.

"That sounds high to me," Mr. Paulson said. "I think this should be done at a low price."

Given the unprecedented level of government involvement in rescuing the troubled firm, the secretary was leery of appearing to bail out Wall Street investors at a time when homeowners were losing their houses to foreclosure in record numbers. He also was concerned about "moral hazard," the danger that too generous a price would encourage future risky behavior.

By midafternoon, as Bear Stearns directors hashed out these issues, Mr. Parr took a call from Doug Braunstein, head of investment banking at J.P. Morgan. "The number's $2," Mr. Braunstein told him.


Tim Bower
J.P. Morgan CEO James Dimon tries to woo upset Bear Stearns employees.
"You surely don't mean that," Mr. Parr replied. After years of advising companies, he no longer reacted emotionally to bad news on a deal negotiation, but he knew how tough the revised price would be for his clients to swallow when he returned to the boardroom.

"I need to interrupt and give an update from J.P. Morgan," he told the Bear Stearns directors, relaying matter-of-factly what he'd been told.

Directors were shocked. Mr. Cayne said there was no way he would approve the $2 deal.

Mr. Schwartz didn't want to buck the Treasury and the Fed. He also knew that as the CEO of a company incorporated in Delaware, he was obliged by law to consider the interests of creditors over shareholders if his company faced insolvency. Besides, he had employees to think about, and he didn't want the company's workers to face abruptly canceled paychecks and padlocked offices the next morning.

"Two dollars is better than nothing," he told directors. He spent 30 minutes arguing his case. A price of $2 and the right for shareholders to vote, he explained, was better than a price of zero and a bankruptcy filing. He also pointed out the untold consequences a bankruptcy could have on world markets -- a scenario Bear Stearns directors didn't want to be held responsible for.

Mr. Schwartz looked around the room to each board member. "Do I have anyone who's opposed?" he asked. No one spoke. At about 6:30 p.m., the deal was unanimously approved. Bear Stearns's advisers notified J.P. Morgan, which scheduled a conference call for investors to discuss the deal at 8 p.m.

The Bear Stearns CEO, exhausted and deflated, did not participate.

At about 7 p.m., when The Wall Street Journal's Web site broke the news of the $2 price, people at rival firms were stunned. Morgan Stanley CEO John Mack and his financial team -- who were preparing for the firm's upcoming earnings announcement -- wondered aloud whether $2 was a typo and should have read $20.

Late Sunday night, as lawyers raced to finalize the merger agreement, executives of the New York Fed convened a call for Wall Street CEOs. So many people were dialing in that officials were repeatedly interrupted by the announcement of new participants.

Messrs. Geithner and Dimon led off with some brief remarks, noting that J.P. Morgan would be guaranteeing Bear Stearns's debts and that if the pact hadn't come together, the market impact may have been catastrophic. During the question-and-answer session, Citigroup Inc.'s new CEO, Vikram Pandit, spoke up.

Mr. Pandit -- who did not initially identify himself -- asked a shrewd but technical question: How would the deal affect the risk to Bear Stearns's trading partners on certain long-term contracts?

The query irked Mr. Dimon. "Who is this?" he snapped. Mr. Pandit identified himself as "Vikram." Offended that Mr. Pandit was taking up time with what he considered granular inquiries, Mr. Dimon shot back, "Stop being such a jerk." He added that Citigroup "should thank us" for staving off further mayhem on Wall Street.

In the next few hours, Mr. Dimon would have a bigger reason to be annoyed. The hurried deal had a loophole that could give angry Bear Stearns investors powerful leverage to seek a higher price: J.P. Morgan had pledged to finance Bear Stearns's trades for a year -- even if shareholders rejected the deal.


Review biographical details of the major players in the Bear Stearns deal.
It was the beginning of another long week. By Tuesday morning, J.P. Morgan's lawyers were arguing with their counterparts at Bear Stearns over the yearlong guarantee.

"Don't you understand that we have a problem?" Mr. Dimon asked Mr. Schwartz the next time the two talked. "Shareholders may vote this down!"

Mr. Schwartz, who had been taking a beating over the low price, knew an opening when he saw one. "What do you mean, 'we' have a problem?"

It was a rare moment in his three months as CEO when something wasn't Mr. Schwartz's problem. He was inclined to make some concessions, he told his advisers, but not without a higher offer.

On Wednesday evening, Mr. Dimon visited Bear Stearns to talk with hundreds of restive managers in the firm's second-floor auditorium. He knew he needed to placate this important group of stockholders, who along with directors owned about 30% of the firm.

Hostile audiences were unusual these days for Mr. Dimon. J.P. Morgan had largely avoided many of the pitfalls that were sinking other banks, and now the 52-year-old banker had become the go-to executive for frustrated regulators.

The Queens, N.Y.-born son of a Greek immigrant stockbroker, Mr. Dimon began his career under Sanford Weill, as the famed deal maker snapped up troubled companies to stitch together Citigroup. Mr. Dimon, widely seen as Mr. Weill's heir-apparent, was later ousted, though, after repeated clashes with Mr. Weill and his daughter, then an executive at the bank. Mr. Dimon moved on to Chicago's Bank One Corp., where he slashed costs and sacked managers he viewed as ineffective. In 2004, he arranged the sale of Bank One to J.P. Morgan for $58 billion and quickly rose to chairman and CEO of the combined bank.

Standing on the dais with two senior lieutenants, Mr. Dimon tried to strike a conciliatory tone.

Bear Stearns's "shotgun marriage" to J.P. Morgan "is not the sort of thing we set out to do," he told the audience. Noting the pain for Bear Stearns managers facing the prospect of unemployment and big losses on their Bear Stearns stock, he added: "We can't begin to imagine how difficult this is."

In the tense question-and-answer session that followed, Ed Moldaver, a stocky, 40-year-old broker, stood up.

"This isn't a shotgun marriage," he said. "This is more like a rape."

As some in the room shook their heads and muttered uncomfortably, Mr. Dimon stared stonily at the crowd.

Around 9 p.m. the next day, Bear Stearns lawyer H. Rodgin Cohen -- Sullivan & Cromwell chairman -- was running on his treadmill at home in Westchester County, N.Y., when an executive from J.P. Morgan called.

"This has been a disaster for everyone," the executive said. He wanted an assurance that Bear Stearns would agree to allow J.P. Morgan to hold 51% of Bear Stearns's shares as part of the deal. That way, they'd control enough votes to approve the deal without having to persuade any disgruntled investors. Delaware courts, however, had frowned upon an acquirer being given an option to buy such a large stake without shareholder approval. To ensure court approval, J.P. Morgan would have to opt for something lower.

The next day, March 21, was Good Friday. J.P. Morgan turned up the heat, telling Mr. Cohen that if Bear Stearns didn't make the desired concessions, the bank didn't see how it could provide funding for the brokerage to trade the following Monday. In an ugly replay of the weekend before, Bear Stearns was imperiled again.

If J.P. Morgan wouldn't guarantee Bear Stearns's trades on Monday, the firm would most likely have to file for bankruptcy protection.

But this time around, Bear Stearns's business was so weak, it wasn't eligible for a Chapter 11 reorganization filing. Instead it faced a Chapter 7 liquidation, in which a court-appointed trustee would take over the firm, likely throwing out management and launching a sale of its assets to repay debts.

The firm's directors talked briefly about suing J.P. Morgan to continue the financing. But they quickly realized their position was untenable. With Bear Stearns's core business eroding, how would regulators and investors react to a Chapter 7 filing and a new spate of litigation? They decided it was time to talk to the government again.

While Mr. Cohen telephoned his contacts at the New York Fed, Mr. Schwartz called Kevin Warsh, a former investment banker at Morgan Stanley who had been a member of the Federal Reserve Board for two years. "We're under a perceived threat," Mr. Schwartz told Mr. Warsh, explaining that J.P. Morgan appeared to be playing hardball in order to garner a bigger chunk of Bear Stearns's shares. While Bear Stearns was prepared to renegotiate, Mr. Schwartz said, it needed a higher price. Mr. Warsh pressed him for details on the firm's situation but declined to take sides.


On Easter morning, Mr. Schwartz called Mr. Dimon. "There's a psychological limit here," he said. Bear Stearns's directors needed a sale price in the double digits to feel comfortable. "Don't come back to me at $9.99," he cautioned Mr. Dimon.

With tension so high between the two sides, Messrs. Geithner and Paulson were concerned that, far below the markets' radar, Bear Stearns was again becoming a threat to the financial system. In a call to Mr. Dimon, Mr. Paulson reluctantly agreed to bless a higher price.

Before markets opened the next morning, J.P. Morgan countered with a final bid: about $10 a share, valuing the brokerage at $1.2 billion, for 39.5% of the firm's stock. To make it palatable to the Fed, J.P. Morgan assumed responsibility for the first $1 billion of any potential losses, reducing the government's exposure to $29 billion.

The deal was approved, markets opened smoothly and most investors remained happily unaware of the week's turmoil. Yet for Bear Stearns, the federal government and J.P. Morgan, it was an unsatisfying denouement in many ways.

Bear Stearns investors took their lumps, if not as painful as Mr. Paulson had envisioned. The Fed got stability in the markets, but at a risk of tens of billions of dollars and by setting an uncomfortable precedent. And J.P. Morgan picked up prized clients, talented Bear Stearns employees and a sleek new building at a bargain price, but now faces at least $9 billion in liabilities and the chore of integrating two wildly different cultures.

But the Dow did not plunge 2,000 points, other trading houses did not fail and the global financial system, while wheezing, did not collapse.

If there were hazards, moral and otherwise, lurking in the deal, the future would have to sort them out.

--Greg Ip, Robin Sidel and David Enrich contributed to this article

Rockefellers Seek Change at Exxon

May 27, 2008
Rockefellers Seek Change at Exxon
By CLIFFORD KRAUSS
HOUSTON — The Rockefeller family built one of the great American fortunes by supplying the nation with oil. Now history has come full circle: some family members say it is time to start moving beyond the oil age.
The family members have thrown their support behind a shareholder rebellion that is ruffling feathers at Exxon Mobil, the giant oil company descended from John D. Rockefeller’s Standard Oil Trust.
Three of the resolutions, to be voted on at the company’s shareholder meeting on Wednesday, are considered unlikely to pass, even with Rockefeller family support.
The resolutions ask Exxon to take the threat of global warming more seriously and look for alternatives to spewing greenhouse gases into the air.
One resolution would urge the company to study the impact of global warming on poor countries, another would encourage Exxon to reduce its emissions and a third would encourage it to do more research on renewable energy sources like solar panels and wind turbines.
A fourth resolution, which the Rockefellers are most united in supporting, is considered more likely to pass. It would strip Rex W. Tillerson of his position as chairman of Exxon’s board, forcing the company to separate that job from the chief executive’s job.
A shareholder vote in favor of that idea would be a rebuke of Mr. Tillerson, who is widely perceived as more resistant than other oil chieftains to investing in alternative energy.
The Rockefellers say they are not trying to embarrass Mr. Tillerson, also Exxon’s chief executive, but think it is time for the company to spend more of its funds helping the nation chart a new energy future.
“Exxon Mobil needs to reconnect with the forward-looking and entrepreneurial vision of my great-grandfather,” Neva Rockefeller Goodwin, a Tufts University economist, said in a statement to reporters.
“The truth is that Exxon Mobil is profiting in the short term from investments and decisions made many years ago, and by focusing on a narrow path that ignores the rapidly shifting energy landscape around the world,” she added.
The resolution on Exxon’s chairmanship was offered for several years before the Rockefellers became publicly involved and last year was supported by 40 percent of shareholders who voted. Royal Dutch Shell and BP already separate the positions of chairman and chief executive, as do many other companies.
“You need a board asking the tough questions,” Peter O’Neill, a private equity investor and great-great-grandson of John D. Rockefeller, said in an interview. “We expect the company to figure out how in this changing world to adjust.”
Kenneth P. Cohen, vice president for public affairs at Exxon, said the shareholders pushing the resolutions were “starting from a false premise.” He added that the company was already concerned about “how to provide the world the energy it needs while at the same time reducing fossil fuel use and greenhouse gas emissions.”
Fifteen members of the family are sponsoring or co-sponsoring the four resolutions, but it appears that some have much more solid support in the sprawling family than others.
Mr. O’Neill said that 73 out of 78 adult descendants of John D. Rockefeller were supporting the family effort to divide the chief executive and chairman positions. The goal of that resolution is to improve the management of the company, which could strengthen its environmental policies and improve more traditional pursuits like exploring more aggressively for new oil reserves.
David Rockefeller, retired chairman of Chase Manhattan Bank and patriarch of the family, issued a statement saying, “I support my family’s efforts to sharpen Exxon Mobil’s focus on the environmental crisis facing all of us.”
The Rockefeller family has always been identified with oil and the legacy of Standard Oil, but for several generations, it has also been active in environmental causes and acquiring land for preservation. John D. Rockefeller’s grandsons devoted themselves to conservation issues, and Rockefeller charitable organizations have long promoted efforts to fight pollution.
Ms. Goodwin, one of the most vocal Rockefellers on the environment today, is co-director of the Global Development and Environment Institute at Tufts.
In recent years, family members have quietly encouraged Exxon executives to take global warming seriously, but their private efforts did not go far. Until now, they have avoided publicity in their efforts, and the youngest Rockefeller generations have generally shunned attention.
Exxon executives said the company spent $2 billion over the last five years on programs to reduce emissions and improve efficiencies and had plans to spend $800 million on similar initiatives over the next three years. They said the company reduced the release of greenhouse gases from its operations last year by 3 percent, and it was working with Stanford to research biofuels and solar and hydrogen energy.
Since taking over the company two years ago, Mr. Tillerson has gradually shifted the company’s positions away from those of his predecessor, Lee R. Raymond, who was considered a skeptic on the science of global warming.
But with gasoline prices soaring and concern growing over global warming, Exxon, the biggest of the investor-owned oil companies, is a target for politicians and environmentalists. Chevron, BP and Shell, Exxon’s largest competitors, have given their investments in renewable fuels a much higher profile.
Similar or identical environmental proposals have not passed at previous Exxon shareholder meetings, but the public support of the Rockefeller family has given old efforts new energy.
The involvement of the Rockefellers, said Robert A. G. Monks, a shareholder who has been urging a separation of the chairman and chief executive jobs for years, shows that “this is not just a matter of the self-appointed good guys against the cavemen, but also a matter of the capitalists wanting to make money.”
Nineteen institutional investors with 91 million shares announced last week that they would support resolutions asking Exxon to separate the top executive positions and tackle global warming. They included the California Public Employees’ Retirement System, the California State Teachers’ Retirement System and the New York City Employees’ Retirement System.
California’s treasurer, Bill Lockyer, who serves on the boards of the two California funds, said the company’s “go-slow approach” on global warming “places long-term shareholder value at risk.”
Under Exxon’s rules, a shareholder proposal that passes is not binding without the support of the board. But Andrew Logan, director of the oil program at Ceres, a coalition of institutional investors and environmentalists, said, “boards tend to strongly consider proposals that get significant support.”
Paul Sankey, an oil analyst at Deutsche Bank, said that he thought a separation of the chief executive and chairman jobs might be a good management move and that “we might see a mild benefit to Exxon’s public image.” But he added, “On balance, we wouldn’t expect any change in strategy.”
The Fraternal Order of Police, which represents public safety officers, whose pensions are invested in Exxon, has publicly opposed the shareholder effort to change company policy.
“The Rockefeller resolution threatens to degrade the value of Exxon Mobil,” the organization wrote in a letter to Mr. Tillerson that criticized the splitting of the top executive jobs.

Young Saudis, Vexed and Entranced by Love’s Rules

May 12, 2008
Generation Faithful
Young Saudis, Vexed and Entranced by Love’s Rules
By MICHAEL SLACKMAN
RIYADH, Saudi Arabia — Nader al-Mutairi stiffened his shoulders, clenched his fists and said, “Let’s do our mission.” Then the young man stepped into the cool, empty lobby of a dental clinic, intent on getting the phone number of one of the young women working as a receptionist.
Asking a woman for her number can cause a young man anxiety anywhere. But in Saudi Arabia, getting caught with an unrelated woman can mean arrest, a possible flogging and dishonor, the worst penalty of all in a society where preserving a family’s reputation depends on faithful adherence to a strict code of separation between the sexes.
Above all, Nader feared that his cousin Enad al-Mutairi would find out that he was breaking the rules. Nader is engaged to Enad’s 17-year-old sister, Sarah. “Please don’t talk to Enad about this,” he said. “He will kill me.”
The sun was already low in the sky as Nader entered the clinic. Almost instantly, his resolve faded. His shoulders drooped, his hands unclenched and his voice began to quiver. “I am not lucky today; let’s leave,” he said.
It was a flash of rebellion, almost instantly quelled. In the West, youth is typically a time to challenge authority. But what stood out in dozens of interviews with young men and women here was how completely they have accepted the religious and cultural demands of the Muslim world’s most conservative society.
They may chafe against the rules, even at times try to evade them, but they can be merciless in their condemnation of those who flout them too brazenly. And they are committed to perpetuating the rules with their own children.
That suggests that Saudi Arabia’s strict interpretation of Islam, largely uncontested at home by the next generation and spread abroad by Saudi money in a time of religious revival, will increasingly shape how Muslims around the world will live their faith. Young men like Nader and Enad are taught that they are the guardians of the family’s reputation, expected to shield their female relatives from shame and avoid dishonoring their families by their own behavior. It is a classic example of how the Saudis have melded their faith with their desert tribal traditions.
“One of the most important Arab traditions is honor,” Enad said. “If my sister goes in the street and someone assaults her, she won’t be able to protect herself. The nature of men is that men are more rational. Women are not rational. With one or two or three words, a man can get what he wants from a woman. If I call someone and a girl answers, I have to apologize. It’s a huge deal. It is a violation of the house.”
Enad is the alpha male, a 20-year-old police officer with an explosive temper and a fondness for teasing. Nader, 22, is soft-spoken, with a gentle smile and an inclination to follow rather than lead.
They are more than cousins; they are lifelong friends and confidants. That is often the case in Saudi Arabia, where families are frequently large and insular.
Enad and Nader are among several dozen Mutairi cousins who since childhood have spent virtually all their free time together: Boys learning to be boys, and now men, together.
They are average young Saudi men, not wealthy, not poor, not from the more liberal south or east, but residents of the nation’s conservative heartland, Riyadh. It is a flat, clean city of five million people that gleams with oil wealth, two glass skyscrapers and roads clogged with oversize S.U.V.’s. It offers young men very little in the way of entertainment, with no movie theaters and few sports facilities. If they are unmarried, they cannot even enter the malls where women shop.
Guardians of Propriety
Nader sank deep into a cushioned chair in a hotel cafe, sipping fresh orange juice, fiddling with his cellphone. If there is one accessory that allows a bit of self-expression for Saudi men, it is their cellphones. Nader’s is filled with pictures of pretty women taken from the Internet, tight face shots of singers and actresses. His ring tone is a love song in Arabic (one of the most popular ring tones among his cousins is the theme song to “Titanic”).
“I’m very romantic,” Nader said. “I don’t like action movies. I like romance. ‘Titanic’ is No. 1. I like ‘Head Over Heels.’ Romance is love.”
Three days later, in a nearby restaurant, Nader and Enad were concentrating on eating with utensils, feeling a bit awkward since they normally eat with their right hands.
Suddenly, the young men stopped focusing on their food. A woman had entered the restaurant, alone. She was completely draped in a black abaya, her face covered by a black veil, her hair and ears covered by a black cloth pulled tight.
“Look at the batman,” Nader said derisively, snickering.
Enad pretended to toss his burning cigarette at the woman, who by now had been seated at a table. The glaring young men unnerved her, as though her parents had caught her doing something wrong.
“She is alone, without a man,” Enad said, explaining why they were disgusted, not just with her, but with her male relatives, too, wherever they were.
When a man joined her at the table — someone they assumed was her husband — she removed her face veil, which fueled Enad and Nader’s hostility. They continued to make mocking hand gestures and comments until the couple changed tables. Even then, the woman was so flustered she held the cloth self-consciously over her face throughout her meal.
“Thank God our women are at home,” Enad said.
Nader and Enad pray five times a day, often stopping whatever they are doing to traipse off with their cousins to the nearest mosque.
Prayer is mandatory in the kingdom, and the religious police force all shops to shut during prayer times. But it is also casual, as routine for Nader and Enad as taking a coffee break.
To Nader and Enad, prayer is essential. In Enad’s view, jihad is, too, not the more moderate approach that emphasizes doing good deeds, but the idea of picking up a weapon and fighting in places like Iraq and Afghanistan.
“Jihad is not a crime; it is a duty,” Enad said in casual conversation.
“If someone comes into your house, will you stand there or will you fight them?” Enad said, leaning forward, his short, thick hands resting on his knees. “Arab or Muslim lands are like one house.”
Would he go fight?
“I would need permission from my parents,” he said.
Nader, though, said, “Don’t ask me. I am afraid of the government.”
The concept is such a fundamental principle, so embedded in their psyches, that they do not see any conflict between their belief in armed jihad and their work as security agents of the state. As a police officer, Enad helps conduct raids on suspected terrorist hideouts. Nader works in the military as a communications officer.
Each earns about 4,000 riyals a month, about $1,200, not nearly enough to become independent from their parents. But that is not a huge concern, because fathers are expected to provide for even their grown children, to ensure that they have a place to live and the means to get married.
To many parents, providing money is seen as more central to their duty — their honor — than ensuring that their children get an education.
Each young man has the requisite mustache and goatee, and most of the time dresses in a traditional robe. Nader prefers the white thobe, an ankle-length gown; Enad prefers beige.
But on weekends, they opt for the wild and crazy guy look, often wearing running pants, tight short-sleeved shirts, bright colors, stripes and plaids together, lots of Velcro and elastic on their shoes. In Western-style clothes, they both seem smaller, and a touch on the pudgy side. Nader says softly, “I don’t exercise.”
Family Life
There are eight other children in the house where Enad lives with his father, his mother and his father’s second wife. The apartment has little furniture, with nothing on the walls. The men and boys gather in a living room off the main hall, sitting on soiled beige wall-to-wall carpeting, watching a television propped up on a crooked cabinet. The women have a similar living room, nearly identical, behind closed doors.
The house remains a haven for Enad and his cousins, who often spend their free time sleeping, watching Dr. Phil and Oprah with subtitles on television, drinking cardamom coffee and sweet tea — and smoking.
Enad and Nader were always close, but their relationship changed when Nader and Sarah became engaged. Enad’s father agreed to let Nader marry one of his four daughters. Nader picked Sarah, though she is not the oldest, in part, he said, because he actually saw her face when she was a child and recalled that she was pretty.
They quickly signed a wedding contract, making them legally married, but by tradition they do not consider themselves so until the wedding party, set for this spring. During the intervening months, they are not allowed to see each other or spend any time together.
Nader said he expected to see his new wife for the first time after their wedding ceremony — which would also be segregated by sex — when they are photographed as husband and wife.
“If you want to know what your wife looks like, look at her brother,” Nader said in defending the practice of marrying someone he had seen only once, briefly, as a child. That is the traditional Nader, who at times conflicts with the romantic Nader.
Soon his cellphone beeped, signaling a text message. Nader blushed, stuck his tongue out and turned slightly away to read the message, which came from “My Love.” He sneaks secret phone calls and messages with Sarah. When she calls, or writes a message, his phone flashes “My Love” over two interlocked red hearts. “I have a connection,” he said, quietly, as he read, explaining how Sarah manages to communicate with him.
His connection is Enad, who secretly slipped Sarah a cellphone that Nader had bought for her. These conversations are taboo and could cause a dispute between two families. So their talks were clandestine, like sneaking out for a date after the parents go to bed. Enad keeps the secret, but it adds to an underlying tension between the two, as Nader tries to develop his own identity as a future head of household, as a man.
Enad teases Nader, saying, “In a year you will find my sister with a mustache and him in the kitchen.”
“Not true,” Nader said, mustering as much defiance as he could. “I am a man.”
Another flashpoint: The honeymoon. Nader is planning to take Sarah to Malaysia, and Enad wants to go. He suggests that Nader owes him. “Yes, take me,” Enad says, with a touch of mischief in his voice. Nader cannot seem to tell whether he is kidding. “You know, he can be crazy,” Nader said. “He’s always angry. No, he is not coming. It is not a good idea.”
Back in the Village
Nader grew up in Riyadh, and his parents, like Enad’s, are first cousins. Enad says his way of thinking was forged in the village of Najkh, 350 miles west of Riyadh, where he lived until he was 14 with his grandfather. It is where he still feels most comfortable.
When he can, he has a cousin drive him to his grandfather’s home, a one-story cement box in the desert, four miles from the nearest house. There is a walled-in yard of sand with piles of wood used to heat the house in the cold desert winters.
Inside there is no furniture, just a few cushions on the floor and a prayer rug pointing in the direction of Mecca. Enad and his cousins absentmindedly toss trash out the kitchen window, and around the yard, expecting that the “houseboy,” a man named Nasreddin from India, will clean up after them — and he does.
Enad is quiet and hides his cigarettes when his grandfather comes through. He would never tell his father or grandfather that he smokes. Enad remains stone-faced when a cousin mentions that another of his cousins, a woman named Al Atti, 22, is interested in him. The topic came up because another cousin, Raed, had asked Al Atti to marry him, and she refused.
The conflict and flirtation touched on so many issues — manhood, love, family relations — that it sparked a flurry of whispering, and even Enad was drawn in.
Al Atti had let her sisters know that she liked Enad, but made it clear that she could never admit that publicly. So she asked a sister to spread the word from cousin to cousin, and ultimately to Enad. “It’s forbidden to announce your love. It is impossible,” she said.
Word finally reached Enad, who tried to stay cool but was clearly interested, and flattered. At that point Enad was himself whispering about Al Atti, trying to figure out a way to communicate with her without actually talking to her himself. He asked a female visitor to arrange a call, and then pass along a message of interest.
Enad said it was never his idea to pursue her, but that a man — a real man — could not reject a woman who wanted him. To get his cousin Raed out of the picture, he suggested that Al Atti’s brother take Raed to hear Al Atti’s refusal in person, at her house.
“From behind a wall,” Enad said.
“Love is dangerous,” Al Atti said as she sat with her sisters in the house. “It can ruin your reputation.”
A Question of Romance
It was a short visit, two days in the village, and then Enad was back to Riyadh for work. In Riyadh he seemed to be both excited and tormented by Al Atti’s interest.
That weekend, he and Nader went out to the desert, just outside of Riyadh, where young men go to drive Jeeps in the sand and to relax, free from the oversight of the religious police and neighbors. They sat beside each other on a blanket.
Nader began.
“I am a romantic person,” he said. “There is no romance.”
What Nader meant was that Saudi traditions do not allow for romance between young, unmarried couples. There are many stories of young men and women secretly dating, falling in love, but being unable to tell their parents because they could never explain how they knew each other in the first place. One young couple said that after two years of secret dating they hired a matchmaker to arrange a phony introduction so their parents would think that was how they had met.
Now, in the desert, Nader’s candor set Enad off.
“He thinks that there is no romance. How is there no romance?” Enad said, his eyes bulging as he grew angry. “When you get married, be romantic with your wife. You want to meet a woman on the street so you can be romantic?”
Nader was intimidated, and frightened. “No, no,” he said.
“Convince me then that you’re right,” Enad shot back.
“I am saying there is no romance,” Nader said, trying to push back.
Enad did not relent, berating his cousin.
Under his breath, Nader said, “Enad knows everything.”
Then he folded. “Fine, there is romance,” he said, and got up and walked away, flushed and embarrassed.
Mona el-Naggar contributed reporting.

Where does Google go next?

Yes, it's making gobs of money. Yes, it's full of smart people. Yes, it's a wonderful place to work. So why are so many people leaving?
By Adam Lashinsky, senior writer
(Fortune) -- Sean Knapp had it made. As a young computer scientist, he couldn't have had a better gig: working at Google, the engineer's paradise. He had all the usual perks - a massage every other week, onsite laundry, free all-you-can-eat haute cuisine. Even better, he got to work on some of Google's highest-profile products, including the search technology that is the heart and soul of the company. And he made full use of his "20% time," that famous one day a week that Google gives its engineers to work on whatever project they want. A little over a year ago he and a couple of colleagues, brothers Bismarck and Belsasar Lepe, ages 28 and 21, respectively, did what many of the young geniuses do at Google: They came up with a cool idea, in this case a new way to handle Web video.
Then Knapp, who's 27, and the Lepes did something truly remarkable. They expelled themselves from paradise to start their own company.
That sort of thing just doesn't happen at Google - or it didn't used to anyway. In April 2007, when the trio informed Google they were leaving, they didn't give any specifics, just that they were going to do their own thing. Without even knowing what their idea was, Google wanted them - and their project - to stay. "They told us, 'Here's a blank check,'" recalls Knapp, a baby-faced former track star at Stanford. "I said, 'You're asking me to be a surrogate parent.'" Knapp and his pals would do the hard work, in other words, but Google would own the product. Instead, off they went, leaving behind the perks, the 20% time, and a combined seven-figure pile of unvested options. (Google declined to comment on Knapp's account.)
A year later the company the three founded, Ooyala, is precisely the kind of budding success Google wants to be creating inside its walls. Ooyala's 28 employees are building a system that runs videos for independent Web sites, and eventually they plan to sell video ads in the same way Google (GOOG, Fortune 500) hawks text ads for other web publishers. The startup has raised $10 million in venture capital, which doesn't even come close to matching Google's resources. But the Ooyala founders say what they lack in institutional backing they make up for in speed and the ability to communicate with one another by turning around in their chairs and talking. Google was like that too, about eight years and 18,000 employees ago.
It would be easy to dismiss the exodus of some of Google's best people if it were an isolated occurrence. It isn't. Paul Buchheit, an early Google engineer who coined the "Don't be evil!" battle cry, is a founder, with three ex-Google colleagues, of a social-networking company called FriendFeed. Yanda Erlich, once a popular Google product manager, started an instant-messaging company called Mogad. Nathan Stoll, who managed Google News, is hard at work on his new company, Mechanical Zoo. (It's in "stealth mode"- no details.) Former business-development guys Salman Ullah and Sean Dempsey have a new venture capital firm, Merus Capital, that aims in part to fund startups founded by ex-Googlers. (That's employees, in Googlespeak.) The departures have grown so numerous that the exiles have formed an informal alumni club of ex-Googlers turned entrepreneurs. David Friedberg, another former biz-dev executive, who started a company called WeatherBill, which sells insurance pegged to climate risks, recently attended the club's first meeting at a conference center in Palo Alto. "I was surprised by the number of things that were being done that could have been done at Google," he says.
There's been an exodus of executive talent too: Its chief information officer, Douglas Merrill, just left. Several top people have gone to Facebook, most notably Sheryl Sandberg, who ran Google's automated ad sales, and Elliot Schrage, who ran PR. George Reyes, Google's CFO, announced his retirement last summer and has yet to be replaced.
Employee turnover is the norm in Silicon Valley, especially at companies where early hires get rich enough to do whatever they want (and post-jackpot hires don't). For his part, Google CEO Eric Schmidt - who left Sun Microsystems for Novell and then Novell for Google - brushes off the effects of all those departures. "We've been hiring on the order of 100 people a week," he says. "So in one week we hire more people than the people you just named."
But fleeing executives and star engineers aren't the only challenges Google faces these days. You may be thinking: Challenges? Google? The company that nets $1 billion - plus a quarter and is so powerful it even scares Microsoft (MSFT, Fortune 500)? Yes, the very same. Fact is, Google's torrid growth is finally slowing, as the company's sheer size dictates it must. And size necessitates changes. Gone are the days when Google could take full advantage of its quirkiness. It's the market leader now, which presents a classic conundrum: Which is more important, process or innovation? For all Google's success, it still has just one meaningful way of making money: its powerful search-advertising system. It's a gusher, but it's the only one. All the other projects it has in the works are just that, projects.
The mere hint that Google may have issues to deal with clearly hits a nerve. As I was researching this article, Marc Benioff, the CEO of Salesforce.com (CRM) and a Google business partner, phoned to discuss an alliance his company had inked with Google. I'm always happy to hear from the voluble Benioff - except I hadn't called him in the first place. Someone "at the top" at Google had asked him to reach out to me. "What they need to do is build a full portfolio of revenue, as Microsoft has," says Benioff. "They have a fantastic cash cow. They need a goat and a chicken."
More than diversification, though, Google has to prove that its quirks - its odd hiring practices (e.g., asking 45-year-olds their GPAs), refusal to play the guidance game with Wall Street, the free food, etc. - will stand the test of time. It has to show that its success is because of its Googleyness (more Googlespeak), not despite it. Even its friends harbor doubts. "I'm not convinced they're in the ranks of GE or P&G or even Microsoft, for that matter," says Peter Chernin, president of News Corp., whose MySpace unit is a key Google partner. "Not yet."
A basic tenet of Google's way of doing business is that it is not like other businesses. Founders Larry Page and Sergey Brin celebrated this quality in their famous letter to prospective shareholders before the company's 2004 IPO, and they promised to keep things that way. For example, Google's operations themselves are unconventional. One of the most fundamental precepts of modern management has to do with how to allocate resources: deciding which projects to pursue, where to spend money, when to take a pass. In fact, MBAs learn in their first classes at business school that resource allocation is a manager's most important task. Yet it's a concept that, while not exactly alien to Google's top dogs, isn't their highest priority. After all, why focus on allocating scarce resources when the resources aren't all that scarce? At the end of the first quarter Google had cash and other liquid assets of $12 billion; it generates almost $2 billion of cash per quarter.
Where does Google go next? (page 2)
By Adam Lashinsky, senior writer
At Google, what you often end up with instead of resource allocation is a laissez-faire mess. Take, for example, the hassles Dave Girouard had to face. Girouard is vice president in charge of Google Apps, the company's fledgling initiative to sell Web-based software applications to businesses. He wanted some alterations to Gmail to make the e-mail product more appealing to his corporate customers. To do that, he needed to lobby Gmail engineers, who don't work for him. He likens his efforts to a Peace Corps mission: all heart but little power to enforce his will. Yet while Girouard is begging for engineers, others, like the Ooyala founders, get blank-check offers. Says one ardent, if critical, Google fan: "They can't do everything, but they still think they can."
The dabbling often results in duplicated efforts - or products stuck in also-ran status. Google Page Creator, an early-stage product that nevertheless was publicly released in 2006, does about the same thing as Google Sites, a newer offering. "Even on Web search, there were multiple teams working on similar projects," says Ooyala's Knapp. Google Checkout is a payment system in which Google has invested heavily, yet it remains far behind eBay's (EBAY, Fortune 500) PayPal unit in market share. It doesn't help matters that eBay is a major Google customer, but that's another story.
Even high-profile business deals don't always reflect a clear logic. When the company outbid Microsoft to supply search ads to News Corp.'s MySpace social network, for instance, Google was aware that the deal wouldn't make it a lot of money right away. Almost two years later Google still isn't making much, if any, money on MySpace - or any other social network, for that matter.
Google also has yet to see the kinds of financial returns it had hoped for from its prodigious acquisitions. In its first significant purchase Google paid $98 million in early 2006 for dMarc, a startup that manages ad spots for radio. It was to be the foundation for Google's move into selling forms of advertising other than plain text ads. But dMarc, now Google Audio Ads, hasn't amounted to much. Indeed, it's one of seven products, as Google dryly notes in its securities filings, that have not produced any material revenue. Another of those products, surprisingly, is YouTube, which Google acquired in 2006 for $1.6 billion and which continues to experience torrid growth. According to comScore Video Matrix, YouTube's share of video on U.S. websites is now 34%, double what it was in February 2007. Yet Google has been relatively ineffective at selling ads on YouTube, collecting about $100 million in revenue in 2007, mostly from ads on YouTube's home page. Google says it's focused on growing share and improving the "user experience." Industry wags suspect that advertisers simply see little value in selling their wares next to dancing cats.
Google does have some big bets that could become meaningful businesses. Google Apps, a Microsoft Office lookalike package, is a modest success, with expected 2008 bookings of "several hundred million dollars," according to Google. That's still tiny compared with Google's main search-ad business, and it's downright microscopic next to Microsoft's $19 billion Office franchise. Another initiative with serious potential is Google's Android project, which offers a standard and open operating system for cellphones, compared with the proprietary systems in use today. Important industry players such as T-Mobile and Samsung have signed up with Google to be partners on Android.
Google's biggest bet so far is its recent $3.1 billion acquisition of DoubleClick, a specialist in online display advertising. Display ads are like what you'd find on TV or in magazines: They're focused on image and message rather than on transactions, which is the allure of text ads. Online display ads have grown more slowly than search ads, but they are a huge untapped territory. In the traditional ad world, brand advertising is far bigger than direct marketing. Same deal online. When people are on the web, most of the time they're not searching- they're reading, watching video, playing poker, whatever. There's big bucks in getting ads in front of people while they're engaged in all their nonsearch activities. Google hasn't excelled at such ads; DoubleClick has. (Disclosure: My wife is a former DoubleClick, and newly minted Google, sales executive.)
Google's move into new kinds of advertising opens up another thorny issue: the economy. In mid-2007, Google's chief economist, former University of California professor Hal Varian, read that Schmidt had referred to Google as "recession-proof." He quickly corrected his boss: "I would say recession-resistant," says Varian. In fact, Varian ran an analysis of Google's business to determine the effect of the overall economy on its performance. His conclusions were contradictory. First, he found that Google has a "GDP beta" of one, meaning that because the company's ad base is diversified, its business should swing according to the overall economy. That would seem to be troubling. Yet Varian also determined that because Google is so successful at targeting its ads- advertisers who buy the phrase "digital camera" on Google are highly confident they'll attract digital camera shoppers - it will be less susceptible to economic trends. Furthermore, because Google caters to advertisers who buy in small increments, Varian thinks the company's offering appeals in price-sensitive times. His overall conclusion: "There is something of a contra-cyclical nature" to Google's business. What's more, the massive shift underway from traditional media to online will trump any effects Google might otherwise feel from a weak economy.
As of this spring, the balance has swung in Google's favor. Fears that a slowdown in the growth of users clicking on Google's ads would lead to worsening performance have so far proved unfounded. When Google reported first-quarter earnings of $1.3 billion, significantly beating Wall Street's estimates, the stock jumped $90 per share in a day. A slowing economy simply hasn't affected Google's performance. "We've looked at this really carefully, and we do not see an impact as of this time," Schmidt told investors on April 17. "Should the economy change, we're well positioned to continue to do well because our model is so targeted. And targeted advertising does well in pretty much most scenarios."
So far the facts bear Schmidt out. But there's that bothersome conclusion of his economist, the one where Google's performance at some point mirrors the economy's. The question is, when?
For all its challenges, Google obviously remains a phenomenon. Its people may be wasting resources chasing disparate dreams, but the engineers dedicated to tweaking and improving the search algorithm and the ad system that cashes in on it are among the best in the world. Google's share of U.S. search queries just keeps rising: It's now around 59%, up from 46% in early 2005, according to Nielsen Online. "We are in one of our most productive phases," boasts Schmidt.
Also remember just how profitable Google is - and what a cushion that provides. Net margins of 25% place Google between Microsoft's monopoly margins of 28% and Cisco's (CSCO, Fortune 500) best-in-class hardware profits of 21%. Should Google ever decide to cut costs, it will have ample opportunities. As an example, the company spends at least $14 per employee per day on all that free food. At 19,000 employees, that works out to $67 million a year, or about 20 cents per share that would drop to the bottom line if Google were to have the temerity to ask its workers - shudder - to pay for their own meals. Twenty cents is a trifle; analysts expect 2008 earnings of nearly $20 per share. But in a pinch? No-brainer.
Then there's the possibility that Google truly is inventing an entirely new way of doing business. "People are labeling them as just about search," says Bruce Jaffe, a former M&A executive at Microsoft who came to admire Google the hard way- by competing against it. "But I'm not sure that's accurate. They've introduced a new model for software. Think of it this way. If they are a household brand on products like Google Maps and Gmail, that may be more than just search." In other words, getting customers to use Google all the time would make it ubiquitous on the web, as Windows is on PCs. "It may be that they're in a whole other world from everyone else," says Jaffe. "They could be such pioneers that no one will know for years."
Even if Google does not redefine business as we know it, the company will change. Companies inevitably do as they grow and age. They lose their coolness, they bureaucratize. But expect Google to keep doing things its way for as long as possible. After all, its founders still control 58% of the company's voting shares and have vowed to invest for the long haul rather than heed criticism about short-term performance. In that regard, it's interesting to get a sense of the way Google sees itself. When Schmidt is asked how he as CEO balances the need for process with the less quantifiable demands of experimentation and innovation, he responds by relating the thoughts of Page and Brin. "Let me give you the argument that Larry and Sergey have made, which is, I think, surprising," Schmidt says. "They are concerned that the company is becoming too conservative. They say to me, 'We took huge risks when we had no cash. Now we have all of this cash and we take few risks.'"
Think about that. Google recently made headlines by bidding almost $5 billion in a government auction of wireless spectrum, even though the company had no plan for using it. Some of its more peculiar products include Google Sky, Google Mars, and Google Ride Finder. It has become a significant investor in alternative-energy projects. Yes, alternative energy. And its founders fret that its risk-taking days are over? Then again, Google's biggest risk may be recreating the magic it enjoyed as a startup- that intangible quality that makes Silicon Valley tick. Paul Buchheit, the former Google engineer who is on to his second startup now, recalls what he loved about Google's early days. "I was always so excited at Google, because I didn't know what would happen next," he says. "Then I knew what would happen next." Predictability is a virtue in the world of big business. It's just not particularly Googley.

The Future of American Power How America Can Survive the Rise of the Rest

The Future of American Power How America Can Survive the Rise of the Rest By Fareed Zakaria
From Foreign Affairs , May/June 2008
Summary: Despite some eerie parallels between the position of the United States today and that of the British Empire a century ago, there are key differences. Britain's decline was driven by bad economics. The United States, in contrast, has the strength and dynamism to continue shaping the world -- but only if it can overcome its political dysfunction and reorient U.S. policy for a world defined by the rise of other powers.
FAREED ZAKARIA is Editor of Newsweek International. This essay is adapted from his book The Post-American World (W. W. Norton and Company, Inc., © 2008 by Fareed Zakaria).
On June 22, 1897, about 400 million people around the world -- one-fourth of humanity -- got the day off. It was the 60th anniversary of Queen Victoria's ascension to the British throne. The Diamond Jubilee stretched over five days on land and sea, but its high point was the parade and thanksgiving service on June 22. The 11 premiers of Britain's self-governing colonies were in attendance, along with princes, dukes, ambassadors, and envoys from the rest of the world. A military procession of 50,000 soldiers included hussars from Canada, cavalrymen from New South Wales, carabineers from Naples, camel troops from Bikaner, and Gurkhas from Nepal. It was, as one historian wrote, "a Roman moment."
In London, eight-year-old Arnold Toynbee was perched on his uncle's shoulders, eagerly watching the parade. Toynbee, who grew up to become the most famous historian of his age, recalled that, watching the grandeur of the day, it felt as if the sun were "standing still in the midst of Heaven." "I remember the atmosphere," he wrote. "It was: 'Well, here we are on top of the world, and we have arrived at this peak to stay there forever. There is, of course, a thing called history, but history is something unpleasant that happens to other people. We are comfortably outside all of that I am sure.'"
But of course, history did happen to Britain. The question for the superpower of the current age is, Will history happen to the United States as well? Is it already happening? No analogy is exact, but the British Empire in its heyday is the closest any nation in the modern age has come to the United States' position today. In considering whether and how the forces of change will affect the United States, it is worth paying close attention to the experience of Britain.
There are many contemporary echoes. The United States' recent military interventions in Somalia, Afghanistan, and Iraq all have parallels in British military interventions decades ago. The basic strategic dilemma of being the only truly global player on the world stage is strikingly similar. But there are also fundamental differences between Britain then and the United States now. For Britain, as it tried to maintain its superpower status, the largest challenge was economic rather than political. For the United States, it is the other way around.
Through shrewd strategic choices and some sophisticated diplomacy, Britain was able to maintain and even extend its influence for decades. In the end, however, it could not alter the fact that its power position -- its economic and technological dynamism -- was fast eroding. Britain declined gracefully -- but inexorably. The United States today faces a problem that is quite different. The U.S. economy (despite its current crisis) remains fundamentally vigorous when compared with others. American society is vibrant. It is the United States' political system that is dysfunctional, unable to make the relatively simple reforms that would place the country on extremely solid footing for the future. Washington seems largely unaware of the new world rising around it -- and shows few signs of being able to reorient U.S. policy for this new age.
BRITANNIA'S DEMISE
Today, it is difficult even to imagine the magnitude of the British Empire. At its height, it covered about a quarter of the earth's land surface and included a quarter of its population. London's network of colonies, territories, bases, and ports spanned the globe. The empire was protected by the Royal Navy, the greatest seafaring force in history, and linked by 170,000 nautical miles of ocean cables and 662,000 miles of aerial and buried cables. British ships had facilitated the development of the first global communications network, via the telegraph. Railways and canals (the Suez Canal most importantly) deepened the connectivity of the system. Through all of this, the British Empire created the first truly global market.
Americans often talk about the appeal of their culture and ideas, but "soft power" really began with Britain. The historian Claudio Véliz points out that in the seventeenth century, the two imperial powers of the day, Britain and Spain, both tried to export their ideas and practices to their western colonies. Spain wanted the Counter-Reformation to take hold in the New World; Britain wanted religious pluralism and capitalism to flourish. As it turned out, British ideas proved more universal. In fact, Britain has arguably been the most successful exporter of its culture in human history. Before the American dream, there was an "English way of life" -- one that was watched, admired, and copied throughout the world. And also thanks to the British Empire, English spread as a global language, spoken from the Caribbean to Cape Town to Calcutta.
Not all of this was recognized in June 1897, but much of it was. The British were hardly alone in making comparisons between their empire and Rome. Paris' Le Figaro declared that Rome itself had been "equaled, if not surpassed, by the Power which in Canada, Australia, India, in the China Seas, in Egypt, Central and Southern Africa, in the Atlantic and in the Mediterranean rules the peoples and governs their interests." The Kreuz-Zeitung in Berlin described the empire as "practically unassailable." Across the Atlantic, The New York Times gushed, "We are a part, and a great part, of the Greater Britain which seems so plainly destined to dominate this planet."
Britain's exalted position, however, was more fragile than it appeared. Just two years after the Diamond Jubilee, Britain entered the Boer War, a conflict that, for many scholars, marks the moment when British power began to decline. London was sure that it would win the fight with little trouble. After all, the British army had just won a similar battle against the dervishes in Sudan, despite being outnumbered by more than two to one. In the Battle of Omdurman, it inflicted 48,000 dervish casualties in just five hours while losing only 48 soldiers of its own. Many in Britain imagined an even easier victory against the Boers. After all, as one member of Parliament put it, it was "the British Empire against 30,000 farmers."
The war was ostensibly fought for a virtuous reason: to defend the rights of the English-speaking people of the Boer republics, who were treated as second-class citizens by the ruling Boers. But it did not escape the attention of London that after the discovery of gold in the region in 1886, these republics had been producing a quarter of the world's gold supply. In any event, the Boers launched a preemptive strike, and war began in 1899.
Things went badly for Britain from the beginning. It had more men and better weapons and was fielding its best generals (including Lord Kitchener, the hero of Omdurman). But the Boers were passionate in defending themselves, knew the land, and adopted successful guerrilla tactics that relied on stealth and speed. The British army's enormous military superiority meant little on the ground, and its commanders resorted to brutal tactics -- burning down villages, herding civilians into concentration camps (the world's first), sending in more and more troops. Eventually, Britain had 450,000 troops fighting a militia of 45,000.
The Boers could not hold back the British army forever, and in 1902 they surrendered. But in a larger sense, Britain lost the war. It had suffered 45,000 casualties, spent half a billion pounds, stretched its army to the breaking point, and discovered enormous incompetence and corruption in its war effort. Its brutal wartime tactics, moreover, gave it a black eye in the view of the rest of the world. At home, all of this created, or exposed, deep divisions over Britain's global role. Abroad, every other great power -- France, Germany, the United States -- opposed London's actions. "They were friendless," the historian Lawrence James has written of the British in 1902.
Fast-forward to today. Another superpower, militarily unbeatable, wins an easy victory in Afghanistan and then takes on what it is sure will be another simple battle, this one against Saddam Hussein's isolated regime in Iraq. The result: a quick initial military victory followed by a long, arduous struggle, filled with political and military blunders and met with intense international opposition. The analogy is obvious; the United States is Britain, the Iraq war is the Boer War -- and, by extension, the United States' future looks bleak. And indeed, regardless of the outcome in Iraq, the costs have been massive. The United States has been overextended and distracted, its army stressed, its image sullied. Rogue states such as Iran and Venezuela and great powers such as China and Russia are taking advantage of Washington's inattention and bad fortunes. The familiar theme of imperial decline is playing itself out one more time. History is happening again.
THE LONG GOODBYE
But whatever the apparent similarities, the circumstances are not really the same. Britain was a strange superpower. Historians have written hundreds of books explaining how London could have adopted certain foreign policies to change its fortunes. If only it had avoided the Boer War, say some. If only it had stayed out of Africa, say others. The historian Niall Ferguson provocatively suggests that had Britain stayed out of World War I (and there might not have been a world war without British participation), it might have managed to preserve its great-power position. There is some truth to this line of reasoning (World War I did bankrupt Britain), but to put things properly in historical context, it is worth looking at this history from another angle. Britain's immense empire was the product of unique circumstances. The wonder is not that it declined but that its dominance lasted as long as it did. Understanding how Britain played its hand -- one that got weaker over time -- can help illuminate the United States' path forward.
Britain has been a rich country for centuries (and was a great power for most of that time), but it was an economic superpower for little more than a generation. Observers often make the mistake of dating its apogee by great imperial events such as the Diamond Jubilee. In fact, by 1897, Britain's best years were already behind it. Its true apogee was a generation earlier, from 1845 to 1870. At the time, it was producing more than 30 percent of global GDP. Its energy consumption was five times that of the United States and 155 times that of Russia. It accounted for one-fifth of the world's trade and two-fifths of its manufacturing trade. And all this was accomplished with just two percent of the world's population.
By the late 1870s, the United States had equaled Britain on most industrial measures, and by the early 1880s it had actually surpassed it, as Germany would about 15 years later. By World War I, the United States' economy was twice the size of Britain's, and together France's and Russia's were larger as well. In 1860, Britain had produced 53 percent of the world's iron (then a sign of supreme industrial strength); by 1914, it was making less than 10 percent.
Of course, politically, London was still the capital of the world at the time of World War I, and its writ was unequaled and largely unchallenged across much of the globe. Britain had acquired an empire in a period before the onset of nationalism, and so there were few obstacles to creating and maintaining control in far-flung places. Its sea power was unrivaled, and it remained dominant in banking, shipping, insurance, and investment. London was still the center of global finance, and the pound still the reserve currency of the world. Even in 1914, Britain invested twice as much capital abroad as its closest competitor, France, and five times as much as the United States. The economic returns of these investments and other "invisible trades" in some ways masked Britain's decline.
In fact, the British economy was sliding. British growth rates had dropped below two percent in the decades leading up to World War I. The United States and Germany, meanwhile, were growing at around five percent. Having spearheaded the first Industrial Revolution, Britain was less adept at moving into the second. The goods it was producing represented the past rather than the future. In 1907, for example, it manufactured four times as many bicycles as the United States did, but the United States manufactured 12 times as many cars.
Scholars have debated the causes of Britain's decline since shortly after that decline began. Some have focused on geopolitics; others, on economic factors, such as low investment in new plants and equipment and bad labor relations. British capitalism had remained old-fashioned and rigid, its industries set up as small cottage-scale enterprises with skilled craftsmen rather than the mass factories that sprang up in Germany and the United States. There were signs of broader cultural problems as well. A wealthier Britain was losing its focus on practical education, and British society retained a feudal cast, given to it by its landowning aristocracy.
But it may be that none of these failings was actually crucial. The historian Paul Kennedy has explained the highly unusual circumstances that produced Britain's dominance in the nineteenth century. Given its portfolio of power -- geography, population, resources -- Britain could reasonably have expected to account for three to four percent of global GDP, but its share rose to around ten times that figure. As those unusual circumstances abated -- as other Western countries caught up with industrialization, as Germany united, as the United States resolved its North-South divide -- Britain was bound to decline. The British statesman Leo Amery saw this clearly in 1905. "How can these little islands hold their own in the long run against such great and rich empires as the United States and Germany are rapidly becoming?" he asked. "How can we with forty millions of people compete with states nearly double our size?" It is a question that many Americans are now asking in the face of China's rise.
Britain managed to maintain its position as the leading world power for decades after it lost its economic dominance thanks to a combination of shrewd strategy and good diplomacy. Early on, as it saw the balance of power shifting, London made one critical decision that extended its influence by decades: it chose to accommodate itself to the rise of the United States rather than to contest it. In the decades after 1880, on issue after issue London gave in to a growing and assertive Washington.
It was not easy for Britain to cede control to its former colony, a country with which it had fought two wars and in whose recent civil war it had sympathized with the secessionists. But it was a strategic masterstroke. Had Britain tried to resist the rise of the United States, on top of all its other commitments, it would have been bled dry. For all of London's mistakes over the next half century, its strategy toward Washington -- one followed by every British government since the 1890s -- meant that Britain could focus its attention on other critical fronts. It remained, for example, the master of the seas, controlling its lanes and pathways with "five keys" that were said to lock up the world -- Singapore, the Cape of Good Hope, Alexandria, Gibraltar, and Dover.
Britain maintained control of its empire and retained worldwide influence with relatively little opposition for many decades. (In the settlement after World War I, it took over 1.8 million square miles of territory and 13 million new subjects, mostly in the Middle East.) Still, the gap between its political role and its economic capacity was growing. By the twentieth century, the empire was an enormous drain on the British treasury. And this was no time for expensive habits. The British economy was reeling. World War I cost over $40 billion, and Britain, once the world's leading creditor, had debts amounting to 136 percent of domestic output afterward. By the mid-1920s, interest payments alone sucked up half the government's budget. Meanwhile, by 1936, Germany's defense spending was three times as high as Britain's. The same year that Italy invaded Ethiopia, Mussolini also placed 50,000 troops in Libya -- ten times the number of British troops guarding the Suez Canal. It was these circumstances -- coupled with the memory of a recent world war that had killed more than 700,000 young Britons -- that led the British governments of the 1930s, facing the forces of fascism, to prefer wishful thinking and appeasement to confrontation.
World War II was the final nail in the coffin of British economic power: in 1945, the United States' GDP was ten times that of Britain. Even then, Britain remained remarkably influential, at least partly because of the almost superhuman energy and ambition of Winston Churchill. Given that the United States was paying most of the Allies' economic costs, and Russia was bearing most of the casualties, it took extraordinary will for Britain to remain one of the three major powers deciding the fate of the postwar world. (The photographs of Franklin Roosevelt, Joseph Stalin, and Churchill at the Yalta Conference in February 1945 are somewhat misleading: there was no "big three" at Yalta; there was a "big two" plus one brilliant political entrepreneur who was able to keep himself and his country in the game.)
But even this came at a cost. In return for its loans to London, the United States took over dozens of British bases in Canada, the Caribbean, the Indian Ocean, and the Pacific. "The British Empire is handed over to the American pawnbroker -- our only hope," said one member of Parliament. The economist John Maynard Keynes described the Lend-Lease Act as an attempt to "pick out the eyes of the British Empire." Less emotional observers saw that the transition was inevitable. Toynbee, by then a distinguished historian, consoled Britons by noting that the United States' "hand will be a great deal lighter than Russia's, Germany's, or Japan's, and I suppose these are the alternatives."
THE ENTREPRENEURIAL EMPIRE
Britain was undone as a global power not because of bad politics but because of bad economics. Indeed, the impressive skill with which London played its weakening hand despite a 70-year economic decline offers important lessons for the United States. First, however, it is essential to note that the central feature of Britain's decline -- irreversible economic deterioration -- does not really apply to the United States today. Britain's unrivaled economic status lasted for a few decades; the United States' has lasted more than 120 years. The U.S. economy has been the world's largest since the middle of the 1880s, and it remains so today. In fact, the United States has held a surprisingly constant share of global GDP ever since. With the brief exception of the late 1940s and 1950s, when the rest of the industrialized world had been destroyed and its share rose to 50 percent, the United States has accounted for roughly a quarter of world output for over a century (32 percent in 1913, 26 percent in 1960, 22 percent in 1980, 27 percent in 2000, and 26 percent in 2007). It is likely to slip, but not significantly, in the next two decades. Most estimates suggest that in 2025 the United States' economy will still be twice the size of China's in terms of nominal GDP.
This difference between the United States and Britain is reflected in the burden of their military budgets. Britannia ruled the seas but never the land. The British army was sufficiently small that Otto von Bismarck once quipped that were the British ever to invade Germany, he would simply have the local police force arrest them. Meanwhile, London's advantage over the seas -- it had more tonnage than the next two navies put together -- came at ruinous cost. The U.S. military, in contrast, dominates at every level -- land, sea, air, space -- and spends more than the next 14 countries combined, accounting for almost 50 percent of global defense spending. The United States also spends more on defense research and development than the rest of the world put together. And crucially, it does all this without breaking the bank. U.S. defense expenditure as a percent of GDP is now 4.1 percent, lower than it was for most of the Cold War (under Dwight Eisenhower, it rose to ten percent). As U.S. GDP has grown larger and larger, expenditures that would have been backbreaking have become affordable. The Iraq war may be a tragedy or a noble endeavor, but either way, it will not bankrupt the United States. The price tag for Iraq and Afghanistan together -- $125 billion a year -- represents less than one percent of GDP. The war in Vietnam, by comparison, cost the equivalent of 1.6 percent of U.S. GDP in 1970, a large difference. (Neither of these percentages includes second- or third-order costs of war, which allows for a fair comparison even if one disputes the exact figures.)
U.S. military power is not the cause of its strength but the consequence. The fuel is the United States' economic and technological base, which remains extremely strong. The United States does face larger, deeper, and broader challenges than it has ever faced in its history, and it will undoubtedly lose some share of global GDP. But the process will look nothing like Britain's slide in the twentieth century, when the country lost the lead in innovation, energy, and entrepreneurship. The United States will remain a vital, vibrant economy, at the forefront of the next revolutions in science, technology, and industry.
In trying to understand how the United States will fare in the new world, the first thing to do is simply look around: the future is already here. Over the last 20 years, globalization has been gaining breadth and depth. More countries are making goods, communications technology has been leveling the playing field, capital has been free to move across the world -- and the United States has benefited massively from these trends. Its economy has received hundreds of billions of dollars in investment, and its companies have entered new countries and industries with great success. Despite two decades of a very expensive dollar, U.S. exports have held ground, and the World Economic Forum currently ranks the United States as the world's most competitive economy. GDP growth, the bottom line, has averaged just over three percent in the United States for 25 years, significantly higher than in Europe or Japan. Productivity growth, the elixir of modern economics, has been over 2.5 percent for a decade now, a full percentage point higher than the European average. This superior growth trajectory might be petering out, and perhaps U.S. growth will be more typical for an advanced industrialized country for the next few years. But the general point -- that the United States is a highly dynamic economy at the cutting edge, despite its enormous size -- holds.
Consider the industries of the future. Nanotechnology (applied science dealing with the control of matter at the atomic or molecular scale) is likely to lead to fundamental breakthroughs over the next 50 years, and the United States dominates the field. It has more dedicated "nanocenters" than the next three nations (Germany, Britain, and China) combined and has issued more patents for nanotechnology than the rest of the world combined, highlighting its unusual strength in turning abstract theory into practical products. Biotechnology (a broad category that describes the use of biological systems to create medical, agricultural, and industrial products) is also dominated by the United States. Biotech revenues in the United States approached $50 billion in 2005, five times as large as the amount in Europe and representing 76 percent of global biotech revenues.
Manufacturing has, of course, been leaving the country, shifting to the developing world and turning the United States into a service economy. This scares many Americans, who wonder what their country will make if everything is "made in China." But Asian manufacturing must be viewed in the context of a global economy. The Atlantic Monthly's James Fallows spent a year in China watching its manufacturing juggernaut up close, and he provides a persuasive explanation of how outsourcing has strengthened U.S. competitiveness. What it comes down to is that the real money is in designing and distributing products -- which the United States dominates -- rather than manufacturing them. A vivid example of this is the iPod: it is manufactured mostly outside the United States, but most of the added value is captured by Apple, in California.
Many experts and scholars, and even a few politicians, worry about certain statistics that bode ill for the United States. The U.S. savings rate is zero; the current account deficit, the trade deficit, and the budget deficit are high; the median income is flat; and commitments for entitlements are unsustainable. These are all valid concerns that will have to be addressed. But it is important to keep in mind that many frequently cited statistics offer only an approximate or an antiquated measure of an economy. Many of them were developed in the late nineteenth century to describe industrial economies with limited cross-border activity, not modern economies in today's interconnected global market.
For the last two decades, for example, the United States has had unemployment rates well below levels economists thought possible without driving up inflation. Or consider that the United States' current account deficit -- which in 2007 reached $800 billion, or seven percent of GDP -- was supposed to be unsustainable at four percent of GDP. The current account deficit is at a dangerous level, but its magnitude can be explained in part by the fact that there is a worldwide surplus of savings and that the United States remains an unusually stable and attractive place to invest. The decrease in personal savings, as the Harvard economist Richard Cooper has noted, has been largely offset by an increase in corporate savings. The U.S. investment picture also looks much rosier if education and research-and-development spending are considered along with spending on physical capital and housing.
The United States has serious problems. By all calculations, Medicare threatens to blow up the federal budget. The swing from surpluses to deficits between 2000 and 2008 has serious implications. Growing inequality (the result of the knowledge economy, technology, and globalization) has become a signature feature of the new era. Perhaps most worrying, Americans are borrowing 80 percent of the world's surplus savings and using it for consumption: they are selling off their assets to foreigners to buy a couple more lattes a day. But such problems must be considered in the context of an overall economy that remains powerful and dynamic.
EDUCATION NATION
"Ah, yes," say those who are more worried, "but you are looking at a snapshot of today. The United States' advantages are rapidly eroding as the country loses its scientific and technological base and suffers from inexorable cultural decay." A country that once adhered to a Puritan ethic of delayed gratification, the argument goes, has become one that revels in instant pleasures; Americans are losing interest in the basics -- math, manufacturing, hard work, savings -- and becoming a society that specializes in consumption and leisure.
No statistic seems to capture this anxiety better than those showing the decline of engineering in the United States. In 2005, the National Academy of Sciences released a report warning that the United States could soon lose its privileged position as the world's science leader. The report said that in 2004 China graduated 600,000 engineers, India 350,000, and the United States 70,000 -- numbers that were repeated in countless articles, books, and speeches. And indeed, these figures do seem to be cause for despair. What hope does the United States have if for every one qualified American engineer there are more than a dozen Chinese and Indian ones? For the cost of one chemist or engineer in the United States, the report pointed out, a company could hire five Chinese chemists or 11 Indian engineers.
The numbers, however, are wrong. Several academics and journalists investigated the matter and quickly realized that the Asian totals included graduates of two- or three-year programs training students in simple technical tasks. The National Science Foundation, which tracks these statistics in the United States and other nations, puts the Chinese number at about 200,000 engineering degrees per year, and the Rochester Institute of Technology's Ron Hira puts the number of Indian engineering graduates at about 125,000 a year. This means that the United States actually trains more engineers per capita than either China or India does.
And the numbers do not address the issue of quality. The best and brightest in China and India -- those who, for example, excel at India's famous engineering academies, the Indian Institutes of Technology (5,000 out of 300,000 applicants make it past the entrance exams) -- would do well in any educational system. But once you get beyond such elite institutions -- which graduate under 10,000 students a year -- the quality of higher education in China and India remains extremely poor, which is why so many students leave those countries to get trained abroad. In 2005, the McKinsey Global Institute did a study of "the emerging global labor market" and found that 28 low-wage countries had approximately 33 million young professionals at their disposal. But, the study noted, "only a fraction of potential job candidates could successfully work at a foreign company," largely because of inadequate education.
Indeed, higher education is the United States' best industry. In no other field is the United States' advantage so overwhelming. A 2006 report from the London-based Center for European Reform points out that the United States invests 2.6 percent of its GDP in higher education, compared with 1.2 percent in Europe and 1.1 percent in Japan. Depending on which study you look at, the United States, with five percent of the world's population, has either seven or eight of the world's top ten universities and either 48 percent or 68 percent of the top 50. The situation in the sciences is particularly striking. In India, universities graduate between 35 and 50 Ph.D.'s in computer science each year; in the United States, the figure is 1,000. A list of where the world's 1,000 best computer scientists were educated shows that the top ten schools are all American. The United States also remains by far the most attractive destination for students, taking in 30 percent of the total number of foreign students globally, and its collaborations between business and educational institutions are unmatched anywhere in the world. All these advantages will not be erased easily, because the structure of European and Japanese universities -- mostly state-run bureaucracies -- is unlikely to change. And although China and India are opening new institutions, it is not that easy to create a world-class university out of whole cloth in a few decades.
Few people believe that U.S. primary and secondary schools deserve similar praise. The school system, the line goes, is in crisis, with its students performing particularly badly in science and math, year after year, in international rankings. But the statistics here, although not wrong, reveal something slightly different. The real problem is one not of excellence but of access. The Trends in International Mathematics and Science Study (TIMSS), the standard for comparing educational programs across nations, puts the United States squarely in the middle of the pack. The media reported the news with a predictable penchant for direness: "Economic Time Bomb: U.S. Teens Are Among Worst at Math," declared The Wall Street Journal.
But the aggregate scores hide deep regional, racial, and socioeconomic variation. Poor and minority students score well below the U.S. average, while, as one study noted, "students in affluent suburban U.S. school districts score nearly as well as students in Singapore, the runaway leader on TIMSS math scores." The difference between the average science scores in poor and wealthy school districts within the United States, for instance, is four to five times as high as the difference between the U.S. and the Singaporean national average. In other words, the problem with U.S. education is a problem of inequality. This will, over time, translate into a competitiveness problem, because if the United States cannot educate and train a third of the working population to compete in a knowledge economy, this will drag down the country. But it does know what works.
The U.S. system may be too lax when it comes to rigor and memorization, but it is very good at developing the critical faculties of the mind. It is surely this quality that goes some way in explaining why the United States produces so many entrepreneurs, inventors, and risk takers. Tharman Shanmugaratnam, until recently Singapore's minister of education, explains the difference between his country's system and that of the United States: "We both have meritocracies," Shanmugaratnam says. "Yours is a talent meritocracy, ours is an exam meritocracy. We know how to train people to take exams. You know how to use people's talents to the fullest. Both are important, but there are some parts of the intellect that we are not able to test well -- like creativity, curiosity, a sense of adventure, ambition. Most of all, America has a culture of learning that challenges conventional wisdom, even if it means challenging authority." This is one reason that Singaporean officials recently visited U.S. schools to learn how to create a system that nurtures and rewards ingenuity, quick thinking, and problem solving. "Just by watching, you can see students are more engaged, instead of being spoon-fed all day," one Singaporean visitor told The Washington Post. While the United States marvels at Asia's test-taking skills, Asian governments come to the United States to figure out how to get their children to think.
THE GRAY ZONE
The United States' advantages might seem obvious when compared with conditions in Asia, which is still a continent of mostly developing countries. Against Europe, the margin is slimmer than many Americans believe. The eurozone has been growing at an impressive clip, about the same pace per capita as the United States since 2000. It takes in half the world's foreign investment, boasts strong labor productivity, and posted a $30 billion trade surplus in the first ten months of 2007. In the World Economic Forum's Global Competitiveness Index, European countries occupy seven of the top ten slots. Europe has its problems -- high unemployment, rigid labor markets -- but it also has advantages, including more efficient and fiscally sustainable health-care and pension systems. All in all, Europe presents the most significant short-term challenge to the United States in the economic realm.
But Europe has one crucial disadvantage. Or, to put it more accurately, the United States has one crucial advantage over Europe and most of the developed world. The United States is demographically vibrant. Nicholas Eberstadt, a scholar at the American Enterprise Institute, estimates that the U.S. population will increase by 65 million by 2030, whereas Europe's population will remain "virtually stagnant." Europe, Eberstadt notes, "will by that time have more than twice as many seniors older than 65 than children under 15, with drastic implications for future aging. (Fewer children now means fewer workers later.) In the United States, by contrast, children will continue to outnumber the elderly. The United Nations Population Division estimates that the ratio of working-age people to senior citizens in western Europe will drop from 3.8:1 today to just 2.4:1 in 2030. In the U.S., the figure will fall from 5.4:1 to 3.1:1."
The only real way to avert this demographic decline is for Europe to take in more immigrants. Native Europeans actually stopped replacing themselves as early as 2007, and so even maintaining the current population will require modest immigration. Growth will require much more. But European societies do not seem able to take in and assimilate people from strange and unfamiliar cultures, especially from rural and backward regions in the world of Islam. The question of who is at fault here -- the immigrant or the society -- is irrelevant. The reality is that Europe is moving toward taking in fewer immigrants at a time when its economic future rides on its ability to take in many more. The United States, on the other hand, is creating the first universal nation, made up of all colors, races, and creeds, living and working together in considerable harmony. Consider the current presidential election, in which the contestants have included a black man, a woman, a Mormon, a Hispanic, and an Italian American.
Surprisingly, many Asian countries (with India an exception) are in demographic situations similar to or even worse than Europe's. The fertility rates in China, Japan, South Korea, and Taiwan are well below the replacement level of 2.1 births per woman, and estimates indicate that the major East Asian nations will face a sizable reduction in their working-age populations over the next half century. The working-age population in Japan has already peaked; by 2010, Japan will have three million fewer workers than it did in 2005. The worker populations in China and South Korea are also likely to peak within the next decade. Goldman Sachs predicts that China's median age will rise from 33 in 2005 to 45 in 2050, a remarkable graying of the population. And Asian countries have as much trouble with immigrants as European countries do. Japan faces a large prospective worker shortage because it can neither take in enough immigrants nor allow its women to fully participate in the labor force.
The effects of an aging population are considerable. First, there is the pension burden -- fewer workers supporting more gray-haired elders. Second, as the economist Benjamin Jones has shown, most innovative inventors -- and the overwhelming majority of Nobel laureates -- do their most important work between the ages of 30 and 44. A smaller working-age population, in other words, means fewer technological, scientific, and managerial advances. Third, as workers age, they go from being net savers to being net spenders, with dire ramifications for national savings and investment rates. For advanced industrialized countries, bad demographics are a killer disease.
The United States' potential advantages today are in large part a product of immigration. Without immigration, the United States' GDP growth over the last quarter century would have been the same as Europe's. Native-born white Americans have the same low fertility rates as Europeans. Foreign students and immigrants account for 50 percent of the science researchers in the country and in 2006 received 40 percent of the doctorates in science and engineering and 65 percent of the doctorates in computer science. By 2010, foreign students will get more than 50 percent of all the Ph.D.'s awarded in every subject in the United States. In the sciences, that figure will be closer to 75 percent. Half of all Silicon Valley start-ups have one founder who is an immigrant or a first-generation American. In short, the United States' potential new burst of productivity, its edge in nanotechnology and biotechnology, its ability to invent the future -- all rest on its immigration policies. If the United States can keep the people it educates in the country, the innovation will happen there. If they go back home, the innovation will travel with them.
Immigration also gives the United States a quality rare for a rich country -- dynamism. The country has found a way to keep itself constantly revitalized by streams of people who are eager to make a new life in a new world. Some Americans have always worried about such immigrants -- whether from Ireland or Italy, China or Mexico. But these immigrants have gone on to become the backbone of the American working class, and their children or grandchildren have entered the American mainstream. The United States has been able to tap this energy, manage diversity, assimilate newcomers, and move ahead economically. Ultimately, this is what sets the country apart from the experience of Britain and all other past great economic powers that have grown fat and lazy and slipped behind as they faced the rise of leaner, hungrier nations.
LEARNING FROM THE WORLD
In 2005, New York City got a wake-up call. Twenty-four of the world's 25 largest initial public offerings that year were held in countries other than the United States. This was stunning. The United States' capital markets have long been the biggest in the world. They financed the turnaround in manufacturing in the 1980s and the technology revolution of the 1990s, and they are today financing the ongoing advances in bioscience. It is the fluidity of these markets that has kept American business nimble. If the United States is losing this distinctive advantage, it is very bad news.
Much of the discussion around the problem has focused on the United States' regulation, particularly post-Enron laws such as Sarbanes-Oxley, and the constant threat of litigation that hovers over businesses in the United States. These obstacles are there, but they do not really get at what has shifted business abroad. The United States is conducting business as usual. But others are joining in the game. What is really happening here, as in other areas, is simple: the rise of the rest. The United States' sum total of stocks, bonds, deposits, loans, and other financial instruments -- its financial stock, in other words -- still exceeds that of any other region, but other regions are seeing their financial stock grow much more quickly. This is especially true of the rising countries of Asia, but even the eurozone is outpacing the United States. Europe's total banking and trading revenues, $98 billion in 2005, have nearly pulled equal to the United States' revenues. And when it comes to new derivatives based on underlying financial instruments such as stocks or interest-rate payments, which are increasingly important for hedge funds, banks, and insurers, London is the dominant player already. This is all part of a broader trend. Countries and companies now have options that they never had before.
In this and other regards, the United States is not doing worse than usual. It functions as it always has -- perhaps subconsciously assuming that it is still leagues ahead of the pack. U.S. legislators rarely think about the rest of the world when writing laws, regulations, and policies. U.S. officials rarely refer to global standards. After all, for so long the United States was the global standard, and when it chose to do something different, it was important enough that the rest of the world would cater to its exceptionality. The United States is the only country in the world other than Liberia and Myanmar that is not on the metric system. Other than Somalia, it is alone in not ratifying the Convention on the Rights of the Child. In business, the United States did not need to benchmark. It was the one teaching the world how to be capitalist. But now everyone is playing the United States' game, and playing to win.
For most of the last 30 years, the United States had the lowest corporate tax rates of the major industrialized countries. Today, it has the second highest. U.S. rates have not gone up; others have come down. Germany, for example, long a staunch believer in its high-taxation system, has cut its rates in response to moves by countries to its east, such as Austria and Slovakia. This kind of competition among industrialized countries is now widespread. It is not a race to the bottom -- Scandinavian countries have high taxes, good services, and strong growth -- but a quest for growth. U.S. regulations used to be more flexible and market-friendly than all others. That is no longer true. London's financial system was overhauled in 2001, with a single entity replacing a confusing mishmash of regulators, which is one reason that London's financial sector now beats out New York's on some measures. The entire British government works aggressively to make London a global hub. Regulators from Warsaw to Shanghai to Mumbai are moving every day to make their systems more attractive to investors and manufacturers. Washington, by contrast, spends its time and energy thinking of ways to tax New York, so that it can send its revenues to the rest of the country.
Being on top for so long has its downsides. The U.S. market has been so large that Americans have assumed that the rest of the world would take the trouble to understand it and them. They have not had to reciprocate by learning foreign languages, cultures, or markets. Now, that could leave the United States at a competitive disadvantage. Take the spread of English worldwide as a metaphor. Americans have delighted in this process because it makes it so much easier for them to travel and do business abroad. But it also gives the locals an understanding of and access to two markets and cultures. They can speak English but also Mandarin or Hindi or Portuguese. They can penetrate the U.S. market but also the internal Chinese, Indian, or Brazilian one. Americans, by contrast, have never developed the ability to move into other people's worlds.
The United States is used to being the leading economy and society. It has not noticed that most of the rest of the industrialized world -- and a good part of the nonindustrialized world as well -- has better cell-phone service than the United States. Computer connectivity is faster and cheaper across the rest of the industrialized world, from Canada to France to Japan, and the United States now stands 16th in the world in broadband penetration per capita. Americans are constantly told by their politicians that the only thing they have to learn from other countries' health-care systems is to be thankful for their own. Americans rarely look around and notice other options and alternatives, let alone adopt them.
Learning from the rest is no longer a matter of morality or politics. Increasingly, it is about competitiveness. Consider the automobile industry. For more than a century after 1894, most of the cars manufactured in North America were made in Michigan. Since 2004, Michigan has been replaced by Ontario, Canada. The reason is simple: health care. In the United States, car manufacturers have to pay $6,500 in medical and insurance costs for every worker. If they move a plant to Canada, which has a government-run health-care system, the cost to them is around $800 per worker. This is not necessarily an advertisement for the Canadian health-care system, but it does make clear that the costs of the U.S. health-care system have risen to a point where there is a significant competitive disadvantage to hiring American workers. Jobs are going not to low-wage countries but to places where well-trained and educated workers can be found: it is smart benefits, not low wages, that employers are looking for.
For decades, American workers, whether in car companies, steel plants, or banks, had one enormous advantage over all other workers: privileged access to American capital. They could use that access to buy technology and training that no one else had -- and thus produce products that no one else could, and at competitive prices. That special access is also gone. The world is swimming in capital, and suddenly American workers have to ask themselves, What can we do better than others? It is a dilemma not just for workers but for companies as well. When American companies went abroad, they used to bring with them capital and know-how. But when they go abroad now, they discover that the natives already have money and already know how.
There really is not a Third World anymore. So what do American companies bring to Brazil or India? What is the United States' competitive advantage? This is a question few American businesspeople thought they would ever have to answer. The answer lies in something the economist Martin Wolf noted. Economists used to discuss two basic concepts, capital and labor. But these are now commodities, widely available to everyone. What distinguishes economies today are ideas and energy. A country can prosper if it is a source of ideas or energy for the world.
DO-NOTHING POLITICS
The United States has been and can continue to be the world's most important source of new ideas, big and small, technical and creative, economic and political. (If it were truly innovative, it could generate new ideas to produce new kinds of energy.) But to do that, it has to make some significant changes. The United States has a history of worrying that it is losing its edge. Today's is at least the fourth wave of such concern since World War II. The first was in the late 1950s, a result of the Soviet Union's launching of the Sputnik satellite. The second was in the early 1970s, when high oil prices and slow growth convinced Americans that Western Europe and Saudi Arabia were the powers of the future. The third one arrived in the mid-1980s, when most experts believed that Japan would be the technologically and economically dominant superpower of the future. The concern in each of these cases was well founded, the projections intelligent. But none of the feared scenarios came to pass. The reason is that the U.S. system proved to be flexible, resourceful, and resilient, able to correct its mistakes and shift its attention. A focus on U.S. economic decline ended up preventing it.
The problem today is that the U.S. political system seems to have lost its ability to fix its ailments. The economic problems in the United States today are real, but by and large they are not the product of deep inefficiencies within the U.S. economy, nor are they reflections of cultural decay. They are the consequences of specific government policies. Different policies could quickly and relatively easily move the United States onto a far more stable footing. A set of sensible reforms could be enacted tomorrow to trim wasteful spending and subsidies, increase savings, expand training in science and technology, secure pensions, create a workable immigration process, and achieve significant efficiencies in the use of energy. Policy experts do not have wide disagreements on most of these issues, and none of the proposed measures would require sacrifices reminiscent of wartime hardship, only modest adjustments of existing arrangements. And yet, because of politics, they appear impossible. The U.S. political system has lost the ability to accept some pain now for great gain later on.
As it enters the twenty-first century, the United States is not fundamentally a weak economy or a decadent society. But it has developed a highly dysfunctional politics. What was an antiquated and overly rigid political system to begin with (now about 225 years old) has been captured by money, special interests, a sensationalist media, and ideological attack groups. The result is ceaseless, virulent debate about trivia -- politics as theater -- and very little substance, compromise, or action. A can-do country is now saddled with a do-nothing political process, designed for partisan battle rather than problem solving.
It is clever contrarianism to be in favor of sharp party politics and against worthy calls for bipartisanship. Some political scientists have long wished that U.S. political parties were more like European ones -- ideologically pure and tightly disciplined. But Europe's parliamentary systems work well with partisan parties. In them, the executive branch always controls the legislative branch, and so the party in power can implement its agenda easily. The U.S. system, by contrast, is one of shared power, overlapping functions, and checks and balances. Progress requires broad coalitions between the two major parties and politicians who will cross the aisle. That is why James Madison distrusted political parties, lumping them together with all kinds of "factions" and considering them a grave danger to the young American republic.
Progress on any major problem -- health care, Social Security, tax reform -- will require compromise from both sides. It requires a longer-term perspective. And that has become politically deadly. Those who advocate sensible solutions and compromise legislation find themselves being marginalized by their party's leadership, losing funds from special-interest groups, and being constantly attacked by their "side" on television and radio. The system provides greater incentives to stand firm and go back and tell your team that you refused to bow to the enemy. It is great for fundraising, but it is terrible for governing.
THE RISE OF THE REST
The real test for the United States is the opposite of that faced by Britain in 1900. Britain's economic power waned even as it managed to maintain immense political influence around the world. The U.S. economy and American society, in contrast, are capable of responding to the economic pressures and competition they face. They can adjust, adapt, and persevere. The test for the United States is political -- and it rests not just with the United States at large but with Washington in particular. Can Washington adjust and adapt to a world in which others have moved up? Can it respond to shifts in economic requirements and political power?
The world has been one in which the United States was utterly unrivaled for two decades. It has been, in a broader sense, a U.S.-designed world since the end of World War II. But it is now in the midst of one of history's greatest periods of change.
There have been three tectonic power shifts over the last 500 years, fundamental changes in the distribution of power that have reshaped international life -- its politics, economics, and culture. The first was the rise of the Western world, a process that began in the fifteenth century and accelerated dramatically in the late eighteenth century. It produced modernity as we know it: science and technology, commerce and capitalism, the agricultural and industrial revolutions. It also produced the prolonged political dominance of the nations of the West.
The second shift, which took place in the closing years of the nineteenth century, was the rise of the United States. Soon after it industrialized, the United States became the most powerful nation since imperial Rome, and the only one that was stronger than any likely combination of other nations. For most of the last century, the United States has dominated global economics, politics, science, culture, and ideas. For the last 20 years, that dominance has been unrivaled, a phenomenon unprecedented in history.
We are now living through the third great power shift of the modern era -- the rise of the rest. Over the past few decades, countries all over the world have been experiencing rates of economic growth that were once unthinkable. Although they have had booms and busts, the overall trend has been vigorously forward. (This growth has been most visible in Asia but is no longer confined to it, which is why to call this change "the rise of Asia" does not describe it accurately.)
The emerging international system is likely to be quite different from those that have preceded it. A hundred years ago, there was a multipolar order run by a collection of European governments, with constantly shifting alliances, rivalries, miscalculations, and wars. Then came the duopoly of the Cold War, more stable in some ways, but with the superpowers reacting and overreacting to each other's every move. Since 1991, we have lived under a U.S. imperium, a unique, unipolar world in which the open global economy has expanded and accelerated. This expansion is driving the next change in the nature of the international order. At the politico-military level, we remain in a single-superpower world. But polarity is not a binary phenomenon. The world will not stay unipolar for decades and then suddenly, one afternoon, become multipolar. On every dimension other than military power -- industrial, financial, social, cultural -- the distribution of power is shifting, moving away from U.S. dominance. That does not mean we are entering an anti-American world. But we are moving into a post-American world, one defined and directed from many places and by many people.
There are many specific policies and programs one could advocate to make the United States' economy and society more competitive. But beyond all these what is also needed is a broader change in strategy and attitude. The United States must come to recognize that it faces a choice -- it can stabilize the emerging world order by bringing in the new rising nations, ceding some of its own power and perquisites, and accepting a world with a diversity of voices and viewpoints. Or it can watch as the rise of the rest produces greater nationalism, diffusion, and disintegration, which will slowly tear apart the world order that the United States has built over the last 60 years. The case for the former is obvious. The world is changing, but it is going the United States' way. The rest that are rising are embracing markets, democratic government (of some form or another), and greater openness and transparency. It might be a world in which the United States takes up less space, but it is one in which American ideas and ideals are overwhelmingly dominant. The United States has a window of opportunity to shape and master the changing global landscape, but only if it first recognizes that the post-American world is a reality -- and embraces and celebrates that fact.
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