As prepared for delivery
Thank you for that warm welcome.
And thank you all for the opportunity to be part of such an important conversation.
It may seem strange, here in the heart of Australia’s most famous, most visited, and most global city, to consider whether the forces of globalization are now in retreat. But I cannot imagine a better place for this discussion to unfold.
What a simple walk through Sydney’s CBD makes clear is that globalization does not retreat. Not for an instant – not ever.
In a digitized world, companies large and small will continue to source materials… recruit talent… and harness innovations from every part of the world. And they will continue to be drawn to cities like this one – crossroads of different cultures, hubs of global commerce.
So globalization itself is not in retreat.
What is in retreat is the belief that globalization is inevitably a force for good.
Historically, global trade and commerce have fueled tremendous progress – bringing investment to Australia’s shores, allowing us to take advantage of global export markets, and affording Aussies like me the opportunity to build careers and business around the world. But what we are seeing today, from Sydney to Shanghai to Silicon Valley, is a kind of recalibration – on a massive scale.
A moment of pause – a moment of reckoning – as we contend with the disparate impacts that globalization has had on different countries, different sectors, different constituencies.
A more inclusive capitalism
For some, rapidly changing realities have brightened their outlook.
Digitization, for instance, is not merely reshaping the ways in which we communicate and conduct commerce; it is revolutionizing entire industries. Empowering analysts with real-time data about every aspect of a business. Filling factories with machines that learn and communicate. Putting powerful tools in the palm of your hand.
For others, though – for people left behind by technologies that move at the speed of “live” – this progress casts a shadow of dissatisfaction. It seeds discontent with leaders and governments. It seeds discontent, in some places, with capitalism itself.
We see this in the wave of populism that is sweeping western Europe and the United States. World leaders are being compelled, more than ever before, to listen to the people for whom globalization has brought pain, not prosperity.
We see it in growing opposition to a paradigm where the rich get richer and the poor get poorer – where people find themselves suddenly unable to afford a basic standard of living, and worry that their kids will not have what they had.
And we see it in discussions – like this one – that play out in centers of commerce. Thoughtful leaders are coming to grips with the fact that, if the pieces of the economic pie are not well-distributed, the market-based economies of the world that have adopted capitalism as their centerpiece have not done their job.
It is only at the margins that this discontent becomes a full-throated repudiation of the capitalist system.
But that is all the more reason for those of us who believe strongly in this system – leaders like you and me, who understand that capitalism has been, and will continue to be, a singular force for human progress – to step forward and shape a new paradigm.
This means evolving the capitalist system in much the same way that we in private enterprise evolve our business models. Capitalism, after all, is society’s business model. And that is why we all must work together to forge a more open and inclusive capitalism: a system that thrives on multi-stakeholder involvement… and benefits everyone in the ecosystem.
Four pillars of competitiveness
Different countries are, of course, grappling with this challenge in different ways. But they are taking various paths toward the same destination: toward better balanced and more inclusive economies… toward sustainable growth in the face of volatility.
In China, for example – where capitalism used to be a dirty word – the government began to embrace capitalist solutions in 1978. As we know, economic reforms have allowed China to benefit enormously from globalization.
Today, a new reform agenda shows that China’s leaders are not taking growth for granted.
Rather, they are prioritizing urbanization, energy efficiency, environmental protection, and private consumption. Their recently announced thirteenth Five Year Plan has as it features the One Belt One Road initiative as a pathway towards economic globalization, and the “Blue Skies, Green Mountains, Clear Waters” initiative that embraces sustainability and environmental reform.
They are working strenuously to support the country’s growing middle class. And they know as well as anyone that this means rolling out the red carpet – not red tape – for global businesses. The more access we have to Chinese markets, the more we can contribute to job creation and prosperity in China.
Or consider Saudi Arabia. The government there has begun to invest in re-skilling its workforce – a workforce of educated, driven, and talented young women and men – while investing more of its natural resources in value-added industries that provide a foundation for future growth. Doing this to reduce their society’s dependency on one commodity – oil – and to employ their restless youth in diverse, technology-driven sectors, all under their young prince’s Vision 2030 Initiative.
Or consider the United States – where I have been privileged to work with the government on policy issues that we believe will lead to a manufacturing renaissance. What I see is a growing consensus that we must collaborate at the intersections of business, government, and civil society to ensure that the economic pie is well distributed.
This means developing smarter policies and supply chains that will create a sense of fairness… that will level the playing field … and that will contribute to a growth economy that truly drives prosperity for all.
To this end, I have been working hard with the new administration in Washington to shape pro-growth, pro-business policies that move the U.S. from an economy focused on consumption to an economy focused on investment and job creation for the new age: not yesterday’s era, but today’s. Not to rekindle American manufacturing at the expense of some other country… but to boost U.S. and global manufacturing – ensuring that it is no longer a zero-sum game.
We are doing so by focusing on four pillars of competitiveness:
First, on retraining – reskilling – America’s workforce for the 21stcentury. This means apprenticeship programs. This means national skills certification. In an age where businesses are starved for properly trained employees – and workers are hurting as old economy jobs have disappeared – this is one of our most important workstreams.
It should be a key focus here in Australia, as well. I will have more to say about this in a moment.
Second, we are streamlining regulations in the U.S. – because we can keep people and the environment safe while, at the same time, making it easier for businesses to grow. We must make sure that regulations are simple, science-based, and harmonized as much as possible across borders.
When they are not, the burdens on industry can be overpowering. The U.S. manufacturing sector pays, on average, $19,564 per employee to comply with federal regulations; in all other sectors combined, that number is just short of $10,000. So manufacturers are shouldering a disproportionate weight – nearly double the rest!
Third, the U.S. has pledged to reinvest in infrastructure. At a time when it is easy for businesses to choose the country where they will set up shop, they are not going to invest in places where airports cannot meet capacity and roads are crumbling. To stay competitive, America has recognized that it has to rebuild. And we at Dow are pushing Washington to act, at long last, on that priority.
Finally, American lawmakers are working hard to reform tax policy in order to encourage more investment. To operate in the United States, businesses have long had to pay high taxes – and navigate an unnecessarily complex tax code. This is driving money overseas. And it is past time to change that.
America First is not a retreat from the world. It is a rebuilding of America from within – a new deal that will transform the U.S. from a consumption economy to a consumption AND investment economy. And ultimately, a stronger America is good for the world.
Not merely "the lucky country"
The prescription the U.S. is following is a simple one.
Retrain… streamline… reinvest… reform.
That is all. Just four steps.
But if we deliver on those four steps, we will have done much to provide companies with the workers they need to thrive. We will give hope to millions who feel that the global economy has left them behind. And we will ensure that the talk of “retreating” from globalization will remain just that – talk – and will give way to that old American optimism about the country’s future and its role in the world.
I share this with you, here in Sydney, for one simple reason: the same can be achieved here in Australia.
The gains of globalization are deep enough and broad enough to be widely enjoyed.
And this country – our country – is well-positioned to share in these gains.
But first, we have to pivot away from our dependence on the commodities cycle.
We have all have seen the results of this outdated approach: rolling blackouts… an exodus of international investment… and the predictable implosion of an energy policy under which one of the most energy-rich countries in the world has hemorrhaged its natural resources.
If there is good news to be had in the discouraging headlines, it is that – at long last – Australia’s self-generated emergency has given way to concrete action: a seven-part plan, by the government and the energy industry, to get the situation back under control.
Of course, there is much more that Australia must do:
- To begin with, we must lift the blanket ban on onshore gas exploration and development in Victoria and NSW, allowing us to benefit from resources that could be extracted safely and sustainably.
- We must encourage more exploration and development around the country – ensuring that Australian companies can put our natural resources to productive use, rather than simply banking them. We need to enforce a use it or lose it policy.
- We need a more open and connected gas pipeline system – one that multiple users can access for a fair transparent, contested price.
- And we must include renewable energy – in a smart, strategic way that acknowledges both its advantages and its limitations – as part of our balanced, comprehensive and reliable approach.
In other words, Australia needs an all-of-the above energy policy – one that enables us to leverage current supplies while investing in the cutting-edge technologies of tomorrow.
But a new energy policy is only the start.
We need nothing less than a reorientation – a revolution – in Australian thinking: not just to reduce our exposure to the commodities cycle, but to fully modernize our entire economy. More of our natural resources should be put to work here at home: creating the innovative, high-tech, high-value products that the Asia-Pacific, and the world, increasingly demands. When the digital economy meets the industrial economy, opportunities abound. Australia needs to embrace this opportunity in sectors where it is a world leader, like mining, food and vaccines.
And like the ongoing work in the U.S., we must look across all pillars of competitiveness, from tax reform, to harmonization of regulations and infrastructure investment.
The Growth Centres the government launched in 2015 – to engage business leaders in crafting strategic plans for Australian industries – are a promising step in the right direction. I am honored to serve as an Independent Member of the Advisory Committee. And I am pleased to note that these plans are focused on the right areas: investing in education and training… improving our business climate through regulatory reform… easing Australia’s access to a free and fair system of international trade…and enabling business and academia to collaborate on solutions that meet pressing needs, and then commercialize them quickly.
In other areas, however, we are not yet doing enough.
We still need an actual mechanism to encourage researchers to commercialize Australian innovation within our borders. We can do more to encourage corporate R&D – for instance, by providing upfront funding instead of tax credits after the fact. And we must accelerate regulatory reform to match the pace of change – the instantaneous flow of information and capital – that shapes and reshapes the global economy on an almost daily basis.
A digital future
This brings me to my final point – and one that is especially crucial to our discussion this afternoon.
We have all seen how easy it is to be overwhelmed by operating in a “speed-of-live” world – by the new technologies and new tools that are revolutionizing the ways we live and work.
But if we are to seize the opportunity before us – if we are to transform this moment of pause into a moment of action – we will need to be both intelligent and intentional about navigating this landscape.
Recently, as some of you know, the government launched an Industry 4.0 Task Force that will help Australia tackle this very issue – and keep our businesses at the forefront of technological development – by building cooperation on global standards for the Industrial Internet of Things. This will encourage more innovative businesses to invest and grow right here in Australia.
But if we are honest, not everybody is ready to benefit from this growth.
Our workforce needs skills training to prepare for these new, technology-focused jobs.
I can tell you that this is some of the policy work we are most excited about in the U.S. Because as my friend Ginni Rometty, the CEO of IBM, likes to say, when it comes to jobs, it is no longer about white collar or blue collar. It is about new collar. Jobs across the world are getting more technical.
Reskilling Australia’s workforce will help ensure that nobody is left behind as the economy gains steam. And that must be our highest priority – because Australia’s greatest natural resource is not what lies beneath our feet. It is the talent and drive and creativity of our people.
It is time to put that resource to use once again. It is time to prioritize vocational training… invest in other forms of education…and ensure that we are developing talent with the right tools – and the right skills – to fuel Australia’s prosperity long into the future.
This, in the end, is what inclusive capitalism is really about: solving problems. Expanding opportunity and prosperity. Improving people’s lives.
For proof, look around this beautiful city. And the notion that the lucky country is still lucky. That its citizens, whether they be in Sydney or Darwin or Tasmania, enjoy a lifestyle that many envy.
So much about Australia can rightly be seen as symbolic of the benefits that globalization can bring… and the promise of a proud country, an exceptional country. A G20 country that has had 27 years of best in OECD growth. A country that truly punches above its weight internationally.
This is a sophisticated country with great intellect that needs to show the rest of the world what inclusive capitalism can produce. When government, civil society and business work hand in hand to create a sustainable lifestyle with new collar jobs for the next generation. That leads the way in value added technology-driven innovation. That has the muscle of commodities and the brains of value add. That is a leader in innovation and entrepreneurial activity. That lives the digital age as an early adopter. And brings all of its citizens along in the new business model of inclusive capitalism.
That is a new vision of globalization. And Australia can lead it. I truly believe that.
Thank you all.