VSOD-05-06- Vital- Speeches-of-the- Day

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					May 2006
VOL. LXXII, No. 14-15                                                                            $8.00


    418        U.S. Energy Policy
               George W. Bush, President of the United States

    422        Friendship Between Our Two Nations
               Address by Hu Jintao, President of the People’s Republic of China

    425        Liberal Democracy
               Condoleezza Rice, United States Secretary of State

    428
    	
               Thoughts on Financial Stability and Central Banking	
               Roger W. Ferguson, Jr., Vice Chairman, Federal Reserve Board

    432
    	
               Sustainability and the Changing Notion of Fairness	
               Gail Fosler, Chief Economist, The Conference Board

    434        The Art of Information
               Robert S. Mueller, III, Director, Federal Bureau of Investigation

    437        Ideas, Policy and Politics
               Strobe Talbott,	President, The Brookings Institution

    441        Energy
               Rex W. Tillerson, Chairman and CEO, ExxonMobil Corporation

    443        From “Sick-Care” to Healthcare
               Hank McKinnell, Chairman and Chief Executive Officer, Pfizer Inc.

    447        Global Transportation
               Mike Eskew, Chairman and CEO, UPS

    451
    	
               Past, Present and Future of Alternative Fuels
               Beth Lowery, Vice President, Environment and Energy, General Motors Corporation

    454
    	
               The Synergy of Libertarianism and Islam
               M. Zuhdi Jasser, Chairman of the American Islamic Forum for Democracy

    458
    	
               Could Non-Citizens Elect The President?
               Ren Renfro, physicist, attorney, author, entrepreneur and chair of ReMarln Co.

    461        U.S. Economics
               John J. Sweeney, President of the AFL-CIO



             The besT ThoughTs of The besT minds on currenT naTional quesTions
                                    ImpartIal • ConstruCtIve • authentIC
418                                                                                                                        VITAL SPEECHES OF THE DAY



                                                U.S. Energy Policy
                                        AMERICAN CONSUMERS MUST BE TREATED FAIRLY
                                Address by GEORGE	W.	BUSH, President of the United States
                        Delivered at the Marriott Wardman Park Hotel, Washington, D.C., April 25, 2006


T     hank	you	all.	Bob,	thanks	for	the	introduction.	It’s	always	
      good	to	be	introduced	by	somebody	who	is	referred	to	as	
the	“Promoter	in	Chief.”	For	25	years,	the	Renewable	Fuels	
                                                                          important	for	the	American	people	to	know	that	these	three	
                                                                          leaders	appreciate	the	sacrifice	that	our	troops	have	made	and	
                                                                          that	our	taxpayers	have	made	to	help	them	realize	a	dream.	
Association	has	been	a	tireless	advocate	for	ethanol	produc-              And	the	dream	is	to	live	in	a	unified,	free	society.	A	free	Iraq	
ers.	Your	advocacy	is	paying	off.	Renewable	energy	is	one	of	             is	in	the	interest	of	the	United	States	of	America.	A	free	Iraq	
the	great	stories	of	recent	years,	and	it’s	going	to	be	a	bigger	         will	be	a	part	of	laying	the	peace	for	generations	to	come.	And	
story	in	the	years	to	come.	                                              a	free	Iraq	will	be	a	major	defeat	for	the	terrorists	who	still	
    I	like	the	idea	of	talking	to	people	who	are	growing	Amer-            want	to	do	us	harm.	
ica’s	energy	security.	I	like	the	idea	of	policy	that	combines	               We’ve	got	good	news	here	at	home	on	the	economic	front,	
agriculture	and	modern	science	with	the	energy	needs	of	the	              too.	This	economy	of	ours	is	growing,	and	the	entrepreneurial	
American	people.	I’m	here	to	talk	to	you	about	the	contribu-              spirit	in	America	is	strong.	We’ve	cut	the	taxes	for	everybody	
tions	you	are	making,	and	I’m	here	to	talk	to	you	about	the	
need	for	this	country	to	get	off	our	dependency	of	oil.	
    And	so	I	want	to	thank	Bob	for	the	invitation.	I	want	to	
thank	 Ron	 Miller,	 the	 Chairman	 of	 the	 Renewable	 Fuels	
Association.	I	want	to	thank	the	board	of	directors	and	the	
members	 of	 the	 Renewable	 Fuels	 Association.	 I	 thank	 the	            POLICY OF VITAL SPEECHES
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    Before	I	talk	about	energy,	I	do	want	to	share	with	you	                unexpurgated speech that the reader can best obtain the view of the speaker.
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VSOTD.COM
GEORGE W. BUSH                                                                                                                     419

who	paid	income	taxes,	and	that	tax	relief	is	getting	results.	       going	up,	but	what	they	don’t	want	and	will	not	accept	is	
Last	year,	our	economy	grew	faster	than	any	major	industrial-         manipulation	of	the	market.	And	neither	will	I.	
ized	nation.	Since	August	of	2003,	this	economy	of	ours	has	              The	Federal	Trade	Commission	is	investigating	whether	
created	5.1	million	new	jobs.	The	unemployment	rate	nation-           price	of	gasoline	has	been	unfairly	manipulated	in	any	way.	
wide	is	4.7	percent.	That’s	lower	than	the	average	rate	of	the	       I’m	also	directing	the	Department	of	Justice	to	work	with	the	
‘60s,	‘70s,	‘80s,	and	‘90s.	The	American	people	are	working.	         FTC	and	the	Energy	Department	to	conduct	inquiries	into	
    Farm	income	is	up.	Agricultural	exports	are	growing.	Real	        illegal	manipulation	or	cheating	related	to	the	current	gasoline	
after-tax	 income	 is	 up	 over	 8	 percent	 for	 Americans	 since	   prices.	The	FTC	and	the	Attorney	General	are	contacting	50	
2001.	Productivity	is	high.	More	people	own	a	home	than	              state	attorney	generals	to	offer	technical	assistance	to	urge	
ever	before	in	our	nation’s	history.	This	economy	is	strong,	         them	to	investigate	possible	illegal	price	manipulation	within	
and	we	intend	to	keep	it	that	way.	And	one	way	to	keep	it	            their	jurisdictions.	In	other	words,	this	administration	is	not	
that	way	is	to	make	the	tax	cuts	permanent.	                          going	to	tolerate	manipulation.	We	expect	our	consumers	to	
    Yet	 amongst	 this	 hopeful—these	 hopeful	 signs,	 there’s	      be	treated	fairly.	
an	area	of	serious	concern,	and	that	is	high	energy	prices.	              To	 reduce	 gas	 prices,	 our	 energy	 companies	 have	 got	 a	
And	 the	 prices	 that	 people	 are	 paying	 at	 the	 gas	 pumps	     role	to	play.	Listen,	at	record	prices,	these	energy	companies	
reflect	our	addiction	to	oil.	Addiction	to	oil	is	a	matter	of	        have	got	large	cash	flows,	and	they	need	to	reinvest	those	
national	security	concerns.	After	all,	today	we	get	about	60	         cash	flows	into	expanding	refining	capacity,	or	researching	
percent	of	our	oil	from	foreign	countries.	That’s	up	from	20	         alternative	energy	sources,	or	developing	new	technologies,	
years	ago	where	we	got	oil	from—about	25	percent	of	our	              or	expanding	production	in	environmentally	friendly	ways.	
oil	came	from	foreign	countries.	Now,	part	of	the	problem	            That’s	what	the	American	people	expect.	We	expect	there	to	
is	that	some	of	the	nations	we	rely	on	for	oil	have	unstable	         be	strong	reinvestment	to	help	us	with	our	economic	security	
governments,	or	agendas	that	are	hostile	to	the	United	States.	       needs	and	our	national	security	needs.	
These	countries	know	we	need	their	oil,	and	that	reduces	                 Record	 oil	 prices	 and	 large	 cash	 flows	 also	 mean	 that	
our	influence,	our	ability	to	keep	the	peace	in	some	areas.	          Congress	has	got	to	understand	that	these	energy	companies	
And	so	energy	supply	is	a	matter	of	national	security.	It’s	also	     don’t	need	unnecessary	tax	breaks	like	the	write-offs	of	certain	
a	matter	of	economic	security.	                                       geological	and	geophysical	expenditures,	or	the	use	of	tax-
    What	people	are	seeing	at	their	gasoline	pumps	reflects	          payers’	money	to	subsidize	energy	companies’	research	into	
the	global	economy	in	which	we	live.	See,	when	demand	for	            deep	water	drilling.	I’m	looking	forward	to	Congress	to	take	
oil	goes	up	in	China	or	India,	two	fast-growing	economies,	           about	$2	billion	of	these	tax	breaks	out	of	the	budget	over	a	
it	affects	the	price	of	oil	nation—worldwide.	And	when	the	           10-year	period	of	time.	Cash	flows	are	up.	Taxpayers	don’t	
price	of	crude	oil	goes	up,	because	it’s	such	an	important	part	      need	to	be	paying	for	certain	of	these	expenses	on	behalf	of	
of	the	price	of	gasoline,	the	average	citizen	sees	the	price	of	      the	energy	companies.	
gasoline	go	up	at	the	pump.	                                              Second	part	of	a	good	plan	is—to	confront	high	gasoline	
    Gasoline	price	increases	are	like	a	hidden	tax	on	the	work-       prices	is	to	promote	greater	fuel	efficiency.	And	the	easiest	
ing	people.	They’re	like	a	tax	on	our	farmers.	They’re	like	a	        way	to	promote	fuel	efficiency	is	to	encourage	drivers	to	pur-
tax	on	small	businesses.	Energy	prices	are—energy	experts	            chase	highly	efficient	hybrid	or	clean	diesel	vehicles,	which,	
predict	gas	prices	are	going	to	remain	high	throughout	the	           by	the	way,	can	run	on	alternative	energy	sources.	Hybrid	
summer,	 and	 that’s	 going	 to	 be	 a	 continued	 strain	 on	 the	   vehicles	run	on	a	combination	of	a	traditional	engine	and	an	
American	people.	                                                     electric	battery.	The	twin	sources	of	power	allow	hybrid	cars	
    And	so	the	fundamental	question	is,	what	are	we	going	to	         and	trucks	to	travel	about	twice	as	far	on	a	gallon	of	fuel	as	
do?	What	can	the	government	do?	One	of	the	past	responses	            gasoline-only	 vehicles.	 When	 people	 are	 driving	 hybrids,	
by	government,	particularly	from	the	party	of	which	I	am	             they’re	conserving	energy.	
not	a	member,	has	been	to	have—to	propose	price	fixing,	or	               Clean	diesel	vehicles	take	advantage	of	advances	in	diesel	
increase	the	taxes.	Those	plans	haven’t	worked	in	the	past.	          technology	to	run	on	30	percent	less	fuel	than	gasoline	ve-
I	think	we	need	to	follow	suit	on	what	we	have	been	em-               hicles	do.	More	than	200,000	hybrid	and	clean	diesel	vehicles	
phasizing,	particularly	through	the	energy	bill,	and	that	is	to	      were	sold	in	the	United	States	last	year.	It’s	the	highest	sales	
encourage	conservation,	to	expand	domestic	production,	and	           in	history.	Congress	wisely	in	the	energy	bill	expanded	a	tax	
to	develop	alternative	sources	of	energy	like	ethanol.	               credit	for	purchase	of	hybrids	and	clean	diesel	vehicles	up	to	
    Signing	the	energy	bill	was	one	thing,	and	I	want	to	thank	       as	much	as	up	to	$3,400	per	purchase.	That	made	sense.	
the	members	of	Congress	for	getting	a	comprehensive	energy	               If	we’re	trying	to	conserve	energy,	if	we	want	to	become	
bill	to	my	desk.	But	there’s	a	lot	more	to	be	done.	First	thing	      less	dependent	on	oil,	let’s	provide	incentives	for	consumers	
is	 to	 make	 sure	 that	 the	 American	 consumers	 are	 treated	     to	use	less	energy.	The	problem	is	that	these	tax	credits	apply	
fairly	at	the	gas	pump.	Americans	understand,	by	and	large,	          to	only	a	limited	number	of	hybrid	and	clean	diesel	vehicles	
that	the	price	of	crude	oil	is	going	up	and	that	the	prices	are	      for	each	manufacturer.	If	the	automakers	sell	more	than	their	


                                                                                                                              MAY 2006
420                                                                                                      VITAL SPEECHES OF THE DAY

limit,	new	purchasers	are	not	eligible	for	the	full	tax	credit.	           decisions.	I	want	to	simplify	the	process	for	the	sake	of	our	
And	so	here’s	an	idea	that	can	get	more	of	these	vehicles	on	              consumers.	And	then	I’m	asking	them	to	get	these	recom-
the	road,	and	that	is	to	have	Congress	make	all	hybrid	and	                mendations	to	my	desk,	and	I	look	forward	to	working	with	
clean	 diesel	 vehicles	 sold	 this	 year	 eligible	 for	 federal	 tax	    the	United	States	Congress	to	simplify	the	process.	
credits.	We	want	to	encourage	people	to	make	wise	choices	                      Listen,	we	need	to	expand	our	refining	capacity.	One	of	
when	it	comes	to	the	automobiles	they	drive.	                              the	problems	we	face	is	we’ve	got	tight	supplies	because	we	
    Third	 part	 of	 the	 plan	 to	 confront	 high	 gas	 prices	 is	 to	   haven’t	expanded	refining	capacity.	There	hasn’t	been	a	new	
boost	our	supplies	of	crude	oil	and	gasoline.	It	makes	sense	              refinery	built	in	30	years.	If	you’re	worried	about	the	price	
in	the	supply-and-demand	world,	if	prices	are	high,	it	means	              of	gasoline	at	the	pump,	it	makes	sense	to	try	to	get	more	
demand	is	greater	than	supply.	One	way	to	ease	price	is	to	                supply	to	the	market.	That	will	be	beneficial	for	American	
increase	supply.	One	immediate	way	we	can	signal	to	people	                consumers	to	get	more	supply	to	the	market.	
we’re	serious	about	increasing	supply	is	to	stop	making	pur-                    Part	of	the	reasons	why	we	haven’t	expanded	or	built	new	
chases	or	deposits	to	the	Strategic	Petroleum	Reserve	for	a	               refineries	to	the	extent	we	need	to	is	because	the	permitting	
short	period	of	time.	                                                     process	in	this	country	is	extremely	complicated.	Companies	
    I’ve	directed	the	Department	of	Energy	to	defer	filling	the	           that	want	to	upgrade	their	equipment	or	expand	their	exist-
reserve	this	summer.	Our	strategic	reserve	is	sufficiently	large	          ing	refineries	or	build	new	ones	often	have	to	wade	through	
enough	to	guard	against	any	major	supply	disruption	over	the	              long,	bureaucratic	delays	and/or	lawsuits.	
next	few	months.	So	by	deferring	deposits	until	the	fall,	we’ll	                To	make	this	gasoline	supply	more	affordable	and	more	
leave	a	little	more	oil	on	the	market.	Every	little	bit	helps.	            secure,	Congress	needs	to	allow	refiners	to	make	modifica-
    We	 also	 need	 to	 ensure	 that	 there	 are	 not	 needless	 re-       tions	on	their	refineries	without	having	to	wait	for	years	to	
strictions	on	our	ability	to	get	gasoline	to	the	pump.	Under	              get	something—to	get	their	idea	approved.	I	mean,	if	we	want	
federal	quality—air	quality	laws,	some	areas	of	the	country	               more	supply,	let’s	reduce	the	paperwork	and	the	regulations.	
are	required	to	use	fuel	blend	called	reformulated	gasoline.	                   Congress	also	needs	to	simplify	and	speed	up	the	permit-
Now,	as	you	well	know,	this	year	we’re	going—undergoing	                   ting	process	for	refinery	construction	and	expansion.	And	so	
a	rapid	transition	in	the	primary	ingredient	in	reformulated	              I’m	going	to	work	with	Congress.	It’s	important	for	Congress	
gas—from	MTBE	to	ethanol.	And	I	appreciate	the	role	the	                   to	cut	through	the	red	tape	and	guarantee	refinery	construc-
ethanol	producers	are	playing	to	meet	this	challenge.	You’re	              tion	permits	will	be	processed	within	a	single	year.	
playing	a	vital	role.	                                                          We	also	need	to	be	mindful	of	the	fact	that	we	can	find	addi-
    Yet	state	and	local	officials	in	some	parts	of	our	country	            tional	crude	oil	in	our	own	country	in	environmentally	friendly	
worry	 about	 supply	 disruption	 for	 the	 short	 term.	 They	            ways.	The	technology	is	such	that	we’re	capable	of	environmen-
worry	about	the	sudden	change	from	MTBE	to	ethanol—the	                    tally-sensitive	exploration.	We	got	tight	crude	oil	supplies,	and	
ethanol	producers	won’t	be	able	to	meet	the	demand.	And	                   it	seems	like	it	makes	sense	for	us	to	use	our	new	technologies	
that’s	causing	the	price	of	gasoline	to	go	up	some	amount	in	              to	find	more	crude,	particularly	crude	here	at	home.	
their	jurisdictions.	                                                           One	of	the	issues,	as	you	know,	that	has	been	confronting	
    And	some	have	contacted	us	to	determine	whether	or	not	                Congress	is	ANWR.	And	I	fully	recognize	that	the	passage	
they	can	ask	the	EPA	to	waive	local	fuel	requirements	on	a	                of	ANWR	will	not	increase	the	oil	supply	immediately.	But	
temporary	basis.	And	I	think	it	makes	sense	that	they	should	              it’s	also	important	to	understand	that	if	ANWR	had	been	law	
be	allowed	to.	So	I’m	directing	EPA	Administrator	Johnson	                 a	decade	ago,	America	would	be	producing	about	a	million	
to	use	all	his	available	authority	to	grant	waivers	that	would	            additional	barrels	of	oil	a	day,	and	that	would	increase	our	
relieve	critical	fuel	supply	shortages.	And	I	do	that	for	the	             current	level	of	domestic	supply	by	20	percent.	We’ve	got	to	
sake	of	our	consumers.	If	Johnson	finds	that	he	needs	more	                be	wise	about	energy	policy	here	in	America.	We’ve	got	to	
authority	to	relieve	the	problem,	we’re	going	to	work	with	                make	sure	that	we	protect	the	environment,	but	we’ve	also	got	
Congress	to	obtain	the	authority	he	needs.	                                to	make	sure	that	we	find	additional	supplies	of	crude	oil	in	
    Secondly,	we	also	need	to	confront	the	larger	problem	of	              order	to	take	the	pressure	off	the	price	of	crude,	which	takes	
too	many	localized	fuel	blends,	which	are	called	boutique	                 the	pressure	off	the	price	of	gasoline	at	the	pump.	
fuels.	The	number	of	boutique	fuels	has	expanded	rapidly	                       And	all	I’ve	outlined	here	today	are	interim	strategies—
over	the	years,	and	America	now	has	an	uncoordinated	and	                  short-term	and	interim	strategy.	The	truth	of	the	matter	is,	
overly	complex	set	of	fuel	rules.	And	when	you	have	a	unco-                the	 long-term	 strategy	 is	 to	 power	 our	 automobiles	 with	
ordinated,	overly	complex	set	of	fuel	rules,	it	tends	to	cause	            something	 other	 than	 oil,	 something	 other	 than	 gasoline,	
the	price	to	go	up.	                                                       which	is	derived	from	oil.	
    And	 so	 I’m	 asking	 Director—directing	 Administrator	                    And	we’re	making	progress.	In	my	State	of	the	Union	Ad-
Johnson	to	bring	the	governors	together	to	form	a	task	force	              dress,	I	talked	about	the	Advanced	Energy	Initiative.	And	this	
on	boutique	fuels.	And	the	mission	of	this	task	force	will	be	             is	an	aggressive	plan,	a	wise	way	of	using	taxpayers’	money	to	
to	 find	 ways	 to	 reduce	 the	 number	 of	 boutique	 fuels	 and	         get	us	off	our	addiction	to	oil.	We	have	a	unique	opportunity	
to	 increase	 cooperation	 between	 states	 on	 gasoline	 supply	          to	continue	forward	with	this	plan.	

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GEORGE W. BUSH                                                                                                                              421

    Technology	is	the	way,	really,	to	help	us—to	help	change	              of	those	are	expanding.	And	35	more	are	under	construction.	
America	for	the	better.	Years	of	investment	in	fuels	like	ethanol	         The	ethanol	industry	is	on	the	move,	and	America	is	better	
have	put	us	on	the	threshold	of	major	breakthroughs.	And	                  off	for	it.	
those	breakthroughs	are	becoming	a	reality	for	our	consum-                     Many	of	these	refineries	are	in	the	Midwest—the	Midwest	
ers.	I	set	a	goal	to	replace	oil	from	around	the	world.	The	               because	that	is	where	the	source	of	ethanol	comes	from.	That	
best	way	and	the	fastest	way	to	do	so	is	to	expand	the	use	                happens	 to	 be	 corn.	 But	 what’s	 really	 interesting	 is	 there	
of	ethanol.	                                                               are	 new	 plants	 springing	 up	 in	 unexpected	 areas,	 like	 the	
    The	Advanced	Energy	Initiative	is	focused	on	three	promis-             Central	Valley	of	California,	or	Arizona,	or,	of	course,	in	the	
ing	ways	to	reduce	gasoline	consumption.	One	is	increasing	                sugar	fields	of	Hawaii.	After	all,	sugar	is	also	important—can	
the	use	of	ethanol,	another	is	improving	hybrid	vehicles,	and	             be	used	for	ethanol.	As	a	matter	of	fact,	it’s	a	very	efficient	
finally,	one	is	developing	hydrogen	technology.	All	three	go	              feedstock	for	ethanol.	
hand-in-hand;	all	three	are	an	important	part	of	a	strategy	to	                Ethanol	 required	 our	 support.	 In	 other	 words,	 to	 get	
help	us	diversify	away	from	hydrocarbons.	                                 this	new	industry	going,	it	required	a	little	nudge	from	the	
    Ethanol	 is—has	 got	 the	 largest	 potential	 for	 immediate	         federal	government.	Since	I	took	office,	we’ve	extended	the	
growth.	 Most	 people	 may	 not	 know	 this,	 but	 today,	 most	           tax	credit	to	51	cents	per	gallon	for	suppliers.	We’ve	created	
of	 ethanol	 produced	 in	 America	 today	 is	 from	 corn.	 Most	          a	new	10-cent	per	gallon	tax	credit	to	provide	extra	help	to	
vehicles	can	use	10	percent	ethanol	in	their	automobiles.	                 small	ethanol	producers	and	farmers;	provided	$85	million	
    What’s	interesting	that	Americans	don’t	realize,	with	a	little	        of	loans	and	grants	for	the	ethanol	business	ventures.	
bit	of	expenditure,	we	can	convert	a—kind	of	the	standard	                     In	other	words,	this	is	a	collaborative	effort.	The	federal	
automobile	to	what’s	called	a	flex-fuel	automobile.	And	that	              government	has	got	a	role	to	play	to	encourage	new	indus-
flex-fuel	vehicle	can	use	ethanol	that	is—or	fuel	that	is	85	              tries	that	will	help	this	nation	diversify	away	from	oil.	And	so	
percent	ethanol.	It’s	amazing,	isn’t	it?	Without	much	cost,	your	          we’re	strongly	committed	to	corn-based	ethanol	produced	in	
automobile	can	be	converted	to	be	able	to	burn	fuel	with	85	               America.	Yet	there—you	just	got	to	recognize	there	are	limits	
percent	ethanol,	or	a	product	made	from	corn	grown	right	                  to	how	much	corn	can	be	used	for	ethanol.	After	all,	we	got	
here	in	America.	                                                          to	eat	some.	And	the	animals	have	got	to	eat.	
    Ethanol	is	a	versatile	fuel	and	the	benefits	are—the	benefits	             And	so	I	am	committed	to	furthering	technology	research	
are	easy	to	recognize	when	you	think	about	it.	One,	the	use	of	            to	find	other	ways,	other	sources	of	ethanol.	We’re	working	
ethanol	in	our	automobiles	is	good	for	the	agricultural	sector.	           on	 research—strong	 research	 to	 figure	 out	 cellulosic	 etha-
I’m	one	of	these	people	who	believes	when	the	agricultural	                nol	that	can	be	made	from	wood	chips,	or	stalks,	or	switch	
sector	is	strong,	America	is	strong.	The	way	I	like	to	put	it,	            grass.	 These	 materials	 are	 sometimes	 waste	 products	 and	
it	would	be	a	good	thing	when	a	President	can	sit	there	and	               are	just	simply	thrown	away.	Doesn’t	it	make	sense	for	us?	I	
say,	 gosh,	 we’ve	 got	 a	 lot	 of	 corn,	 and	 it	 means	 we’re	 less	   think	it	does;	to	use	taxpayers’	money	to	determine	whether	
dependent	on	foreign	sources	of	oil.	                                      or	not	we	can	use	these	new—these	raw	materials	to	make	
    Years	back,	they’d	say,	oh,	gosh,	we’ve	got	a	lot	of	corn,	            something	out	of	nothing,	so	that	we	continue	the	advance	
worried	about	the	price.	Ethanol	is	good	for	our	rural	com-                of	 ethanol,	 so	 the	 market	 for	 ethanol	 expands	 throughout	
munities.	It’s	good	economic	development	for	rural	America.	               the	United	States.	
New	bio-refinery	construction	creates	jobs	and	local	tax	rev-                  We’re	spending—I	proposed,	and	I’m	working	with	these	
enues.	When	the	farmer—when	the	family	farmer	is	doing	                    members	of	the	Renewable	Caucus—$150	million	in	next	
well,	it’s	good	for	the	local	merchants.	                                  year’s	budget	for	research	in	advanced	forms	of	ethanol.	And	
    Ethanol	 is	 good	 for	 the	 environment.	 I	 keep	 emphasiz-          that’s	 a	 significant	 increase	 over	 previous	 levels.	 I	 think	 it	
ing	that	we	can	be	good	stewards	of	our	environment,	and	                  makes	sense.	And	surely	the	prices	at	the	gas	pump	should	
at	 the	 same	 time,	 continue	 with	 our	 economic	 expansion.	           say	 to	 the	 taxpayer	 it	 makes	 sense	 for	 this	 government	 to	
And	ethanol	will	help	meet	that	strategy.	You	don’t	have	to	               spend	money	on	research	and	development	to	find	alterna-
choose	 between	 good	 environment	 and	 good	 economics.	                 tive	sources	of	energy.	
You	can	have	both	by	the	use	of	technology.	And	ethanol	is	                    I	 also	 support	 bio-diesel	 fuel,	 which	 can	 substitute	 for	
an	example	of	what	I’m	talking	about.	And	ethanol	is	good	                 regular	 diesel	 in	 cars,	 trucks,	 buses	 and	 farm	 equipment.	
for	 drivers.	 Ethanol	 is	 home-grown.	 Ethanol	 will	 replace	           Last	year	I	went	out	to	see	a	bio-diesel	refinery	in	Virginia	
gasoline	consumption.	It’s	a	good—ethanol	is	good	for	the	                 that’s	 making	 clean-burning	 fuel	 from	 soybean	 oil.	 And	 it	
whole	country.                                                             was	a	really	interesting	process	to	watch.	I	don’t	know	if	you	
    The	ethanol	industry	is	booming.	It	must	be	exciting	to	               know	this	or	not,	but	they’re	able	to	use	waste	products	like	
have	worked	for	as	long	as	you	have	on	encouraging	alterna-                recycled	cooking	grease	to	manufacture	bio-diesel.	In	other	
tive	sources	of	energy,	and	then	all	of	a	sudden	see	the	work	             words,	research	and	development	has	lead	to	new	alterna-
come	to	fruition.	                                                         tive	 sources	 of	 energy	 like	 bio-diesel.	 So	 that’s	 one	 of	 the	
    Last	year	America	used	a	record	4	billion	gallons	of	ethanol.	         reasons	why	I	signed	into	law	the	first	ever	federal	tax	credit	
There	are	now	97	ethanol	refineries	in	our	country,	and	nine	              for	bio-diesel	producers.	In	other	words,	we’re	interested	in	

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422                                                                                                   VITAL SPEECHES OF THE DAY

addressing	our	energy	security	needs	on	a	variety	of	fronts.	          and	cars	and	SUVs	that	are	driving	on	the	highways	out	there	
It	makes	sense	for	the	United	States	to	have	a	comprehensive	          powered	by	hydrogen.	And	the	research	and	development	
strategy	to	help	us	diversify	away	from	oil.	                          money	that	we	have	spent	has	lowered	the	cost	of	hydrogen	
   And	 so	 we	 also	 have	 got	 to	 understand	 that	 we	 got	 to	    fuel	cells,	it’s	helped	make	them	lighter.	In	other	words,	there’s	
research	not	only	to	find—to	invest	in	ethanol	and	bio-die-            an	 industry	 coming.	 And	 it’s	 an	 industry	 that	 will	 enable	
sel,	but	part	of	a	comprehensive	strategy	is	to	spend	money	           consumers	to	drive	to	work,	just	like	we’re	doing	today,	but	
on	 researching	 new	 battery	 technologies.	 And	 one	 of	 the	       not	rely	on	foreign	sources	of	oil.	
really	 interesting	 opportunities	 available	 for	 the	 American	        What	I’m	describing	to	you	today	is	a	strategy	that	rec-
consumer	will	be	the	ability	to	buy	a	plug-in	hybrid	vehicle	          ognizes	 the	 realities	 of	 the	 world	 in	 which	 we	 live.	 Our	
that	will	be	able	to	drive	up	to	40	miles	on	electricity.	Seems	       dependency	on	oil	has	created	economic	security	issues	for	
to	make	sense	to	me.	If	we’re	trying	to	get	us	off	gasoline,	          us,	and	national	security	issues	for	us.	And	therefore,	this	
with	crude	oil	as	the	main—as	its	main	feedstock,	then	why	            country	must	use	our	brain	power	and	entrepreneurial	spirit	
wouldn’t	we	explore	ways	to	be	able	to	have	vehicles	that	             to	diversify	away	from	the	hydrocarbon	economy.	You	all	have	
use	less	gasoline?	And	one	way	to	do	so	is	to	use	electricity	         known	this	a	lot	longer	than	most	Americans.	You’ve	known	
to	power	vehicles.	                                                    that	we’ve	needed	to	have	this	strategy,	and	that’s	why	you’re	
   And	we’re	pretty	close	to	a	breakthrough.	We	believe	we’re	         on	the	forefront	of	incredible	changes	that	are	taking	place	
close	to	a	technology	that	will	make	it	possible	to	drive	up	to	       in	this	country.	
40	miles	on	electricity	alone.	And	then	if	you	have	to	drive	             You	know,	there’s	no	doubt	in	my	mind	that	one	of	these	
more	than	40	miles,	then	your	gasoline	kicks	in.	                      days,	instead	of	people	driving	up	to	a	gas	station,	they’re	
   But	you	can	imagine	what	that	will	mean	for	a	lot	of	drivers	       going	to	be	going	up	to	a	fueling	station.	And	they’ll	be	able	
in	big	cities	who	on	a	daily	basis,	they	don’t	drive	over	40	miles.	   to	have	choices	to	choose	from.	Got	a	hydrogen-powered	car,	
And	so	therefore,	a	lot	of	drivers	that	are	going	back	and	forth	      you’ll	be	able	to	have	that	choice.	If	you	want	85	percent,	
from	work	in	big	cities	won’t	be	using	gasoline.	And	that’s	going	     maybe	someday	100	percent	ethanol,	that	will	be	an	option	
to	help.	We’ve	got	$31	million	in	our	budget	to	speed	up	re-           available,	too.	
search	and	development	into	advanced	battery	technologies.	               We	 owe	 it	 to	 the	 American	 people	 to	 be	 aggressive	 on	
   And	finally,	one	other	opportunity	that	is	more	long	run	           price-gouging	now.	We	owe	it	to	the	American	people	to	be	
than	ethanol	or	bio-diesel	or	plug-in	hybrid	vehicles,	or	en-          promoting	alternative	ways	to	drive	their	car	so	as	to	make	
couraging	people	to	buy	the	hybrids	that	are	on	the	market	            us	less	dependent	on	foreign	sources	of	oil.	We	owe	it	to	the	
today,	is	hydrogen.	We’re	spending	about	$1.2	billion	over	            American	people	to	be	aggressive	in	the	use	of	technology	so	
five	years	to	research	the	use	of	hydrogen	to	power	vehicles.	         we	can	diversify	away	from	the	hydrocarbon	society.	And	that’s	
And	it	makes	a	lot	of	sense	when	you	think	about	it,	because	          precisely	what	we’re	doing,	and	I’m	glad	to	stand	with	you.	
hydrogen	 produces	 zero	 emissions.	 The	 only	 emission	 it	            I	appreciate	your	work	for	the	United	States	of	America.	
produces	is	water.	And	when	I	was	out	there	in	California,	            Thank	you	for	letting	me	come	by	and	talk	to	you,	and	may	
                                                                                          	
I	visited	the	California	Fuel	Cell	Partnership	and	saw	buses	          God	bless	you.



                       Friendship Between Our Two Nations
                                       WORKING TOGETHER TO CREATE A BETTER WORLD
                             Address by HU	JINTAO, President of the People’s Republic of China
                                 Delivered to Yale, New Haven, Connecticut, April 21, 2006


L    et	me	begin	by	thanking	you,	Mr.	Levin,	for	your	kind	invi-
     tation	and	the	opportunity	to	come	to	Yale	to	meet	young	
friends	and	teachers	of	this	world-renowned	university.
                                                                       and	 excellence	 in	 academic	 pursuit.	 If	 time	 could	 go	 back	
                                                                       several	decades,	I	would	really	like	to	be	a	student	of	Yale	just	
                                                                       like	you.
    Coming	to	the	Yale	campus,	with	its	distinctive	academic	             Yale’s	motto	“Light	and	Truth,”	which	is	a	calling	for	hu-
flavor,	and	looking	at	the	eager	young	faces	in	the	audience,	         man	progress,	represents	the	aspiration	of	every	motivated	
I	cannot	but	recall	my	great	experience	studying	at	Qinghua	           young	man	and	woman.	Over	the	past	three	centuries,	Yale	
University	 in	 Beijing	 40	 years	 ago.	 Indeed,	 what	 happens	      has	produced	a	galaxy	of	outstanding	figures,	including	20	
during	one’s	school	year	will	influence	his	whole	life.	I	still	       Nobel	laureates	and	five	American	presidents.	The	words	of	
benefit	greatly	from	the	instruction	and	my	interaction	with	          Nathan	Hale,	an	American	hero	and	Yale	alumnus,	“I	only	
other	students.                                                        regret	that	I	have	but	one	life	to	lose	for	my	country,”	have	
                                                                 	
    Yale	is	renowned	for	its	long	history,	unique	way	of	teaching	     also	inspired	me	and	many	other	Chinese.	I	sincerely	hope	

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HU JINTAO                                                                                                                           423

that	Yale	will	produce	more	talent	and	contribute	further	to	              We	aim	to	raise	China’s	GDP	to	$4	trillion	by	2020,	aver-
the	social	and	economic	development	of	the	United	States	              aging	$3,000	per	person.	By	then,	China’s	economy	will	be	
and	the	cause	of	human	progress.                                       better	developed	and	its	democracy	will	be	further	enhanced.	
    Ladies	and	gentlemen,	dear	friends.                                More	 progress	 will	 be	 made	 in	 science	 and	 education.	 Its	
    The	Chinese	and	Americans	have	always	had	an	intense	              culture	will	be	further	enriched,	the	society	will	become	more	
interest	in	and	cared	deeply	about	each	other.	The	Chinese	            harmonious	and	the	people	will	lead	a	better	life.
admire	the	pioneering	and	enterprising	spirit	of	the	Americans	            To	realize	these	goals,	China	has	adopted	a	new	concept	
and	 their	 proud	 achievement	 in	 national	 development.	 As	        of	 development	 in	 line	 with	 its	 national	 conditions	 and	
China	develops	rapidly	and	steady	headway	is	made	in	China-            the	requirement	of	the	times.	That	is,	to	pursue	a	scientific	
U.S.	cooperation,	more	and	more	Americans	are	following	               outlook	 on	 development	 that	 makes	 economic	 and	 social	
with	great	interest	China’s	progress	and	development.                  development	people-oriented,	comprehensive,	balanced	and	
    Today,	I	would	like	to	speak	to	you	about	China’s	devel-           sustainable.	We	will	work	to	strike	a	proper	balance	between	
opment	strategy	and	its	future	against	the	backdrop	of	the	            urban	and	rural	development,	development	among	regions,	
evolution	 of	 the	 Chinese	 civilization	 and	 China’s	 current	      economic	and	social	development,	development	of	man	and	
development	endeavor.	I	hope	this	will	help	you	gain	a	better	         nature,	and	domestic	development	and	opening	wider	to	the	
understanding	of	China.                                                outside	world.	Greater	emphasis	will	be	put	on	addressing	
    In	a	history	that	spans	more	than	five	millennia,	the	Chi-         issues	affecting	people’s	livelihood,	overcoming	imbalances	in	
nese	nation	has	contributed	significantly	to	the	progress	of	          development	and	resolving	key	problems	that	have	occurred	
human	civilization.	But	its	course	of	national	development	            in	the	course	of	development.	We	will	pursue	a	new	path	to	
has	been	an	arduous	one.	In	particular	in	the	160	years	and	           industrialization	featuring	high	technology,	good	economic	
more	since	the	Opium	War	in	1840,	the	Chinese	people	have	             returns,	 low	 resource-consumption,	 low	 environment	 pol-
fought	courageously	and	unyieldingly	to	rid	themselves	of	             lution	and	full	use	of	human	resources.	We	will	bring	about	
poverty	and	backwardness	and	to	realize	national	rejuvena-             coordinated	economic,	political,	cultural	and	social	develop-
tion,	thus	profoundly	changing	the	destiny	of	the	Chinese	             ment.	And	we	will	endeavor	to	ensure	sustainable	develop-
nation.	Ninety-five	years	ago,	the	Chinese	people	launched	            ment	 by	 boosting	 production,	 improving	 people’s	 life	 and	
the	Revolution	of	1911	that	overthrew	the	feudal	autocracy	            protecting	the	environment.
which	had	ruled	China	for	several	thousand	years	and	opened	               This	concept	of	scientific	development	is	based	on	the	ex-
the	door	to	China’s	progress.                                          perience	China	has	gained	in	its	modernization	drive	and	put	
    Fifty-seven	 years	 ago,	 the	 Chinese	 people	 succeeded	 in	     forth	in	response	to	the	trends	of	the	times.	It	is	also	rooted	
winning	 liberation	 after	 protracted	 and	 hard	 struggle	 and	      in	the	cultural	heritages	of	the	Chinese	nation.
founded	 New	 China	 in	 which	 people	 became	 their	 own	                The	Chinese	civilization	is	one	that	has	continued	uninter-
masters.	 Twenty-eight	 years	 ago,	 the	 Chinese	 people	 em-         rupted	for	more	than	5,000	years.	The	distinct	cultural	tradi-
barked	upon	the	historic	drive	of	reform,	opening-up	and	              tion	of	the	Chinese	nation	that	developed	in	the	long	course	
modernization	and	have	made	phenomenal	progress	through	               of	history	has	exerted	a	strong	influence	on	contemporary	
unremitting	efforts.                                                   China,	just	as	it	did	on	ancient	China.	Putting	people	first,	
    Between	1978	and	2005,	China’s	GDP	grew	from	$147.3	               keeping	pace	with	the	times,	maintaining	social	harmony	and	
billion	 to	 $2.2257	 trillion.	 Its	 import	 and	 export	 volume	     pursuing	peaceful	development:	these	values	that	are	being	
went	up	from	$20.6	billion	to	$1.4221	trillion	and	its	foreign	        pursued	in	China	today	are	derived	from	its	tradition.	But	
exchange	reserve	soared	from	$167	million	to	$818.9	billion.	          they	also	give	expression	to	the	progress	of	the	times.
During	this	period,	the	number	of	its	poor	rural	population	               The	Chinese	civilization	has	always	given	prominence	to	
dropped	from	250	million	to	23	million.	The	above	review	              the	people	and	respect	for	people’s	dignity	and	value.	Cen-
of	the	profound	changes	in	these	160	years	shows	one	thing,	           turies	ago,	the	Chinese	already	pointed	out	that	“people	are	
namely,	 by	 carrying	 out	 persistent	 and	 hard	 struggle,	 the	     the	foundation	of	a	country;	when	the	foundation	is	stable,	
Chinese	 people	 have	 both	 changed	 their	 own	 destiny	 and	        the	country	is	in	peace.”	Nothing	is	more	valuable	in	the	uni-
advanced	the	cause	of	human	progress.                                  verse	than	human	beings.	The	ancient	Chinese	emphasized	
    On	the	other	hand,	I	need	to	point	out	that,	despite	the	          the	value	of	serving	the	people,	enriching	them,	nourishing	
success	in	its	development,	China	remains	the	world’s	largest	         them,	and	benefiting	them.	We	are	pursuing	today	a	people-
developing	country,	with	per	capita	GDP	ranking	behind	the	            oriented	approach	toward	development	because	we	believe	
100th	place.	The	Chinese	people	are	yet	to	live	a	well-off	life	       that	development	must	be	for	the	people	and	by	the	people	
and	China	still	faces	daunting	challenges	in	its	development	          and	its	benefit	should	be	shared	among	the	people.
endeavor.	Therefore	it	requires	sustained	and	unremitting	ef-              We	 care	 about	 people’s	 value,	 rights	 and	 interests	 and	
forts	to	transform	the	country	and	make	life	better	for	its	people.	   freedom,	the	quality	of	their	life,	and	their	development	po-
In	the	next	15	years,	we	will	strive	to	make	new	progress	in	          tential	and	happiness	index	because	our	goal	is	to	realize	the	
building	a	moderately	prosperous	society	in	an	all-round	way	          all-around	development	of	the	people.	Ensuring	the	right	to	
that	will	benefit	China’s	one	billion	and	more	population.             survival	and	development	remains	China’s	top	priority.	We	

                                                                                                                               MAY 2006
424                                                                                                   VITAL SPEECHES OF THE DAY

will	vigorously	promote	social	and	economic	development,	              mutual	benefit	and	win-win	outcomes.	It	genuinely	wishes	
protect	people’s	freedom,	democracy	and	human	rights	ac-               to	enter	into	extensive	cooperation	with	other	countries.	It	is	
cording	to	law,	achieve	social	fairness	and	justice	and	enable	        inclusive	and	is	eager	to	draw	on	the	strength	of	other	civiliza-
the	1.3	billion	Chinese	people	to	live	a	happy	life.                   tions	to	pursue	peace	and	development	through	cooperation	
    The	Chinese	civilization	has	always	given	prominence	to	           and	play	its	part	in	building	a	harmonious	world	of	enduring	
unremitting	 self-improvement,	 reform	 and	 innovation.	 As	          peace	and	common	prosperity.
an	ancient	Chinese	motto	puts	it,	“As	Heaven	keeps	vigor	                  Ladies	and	gentlemen,	dear	friends.
through	movement,	a	gentleman	should	unremittingly	prac-                   China	 and	 the	 United	 States	 are	 both	 countries	 of	 vast	
tice	self-improvement.”	Throughout	its	5,000-year	history,	it	         territory	 where	 many	 ethnic	 groups	 coexist	 and	 different	
is	thanks	to	their	perseverance,	determination,	stamina	and	           cultures	intermingle.	Both	our	two	peoples	are	hard-working	
innovation	that	the	Chinese	nation	has	grown	after	surviving	          and	 talented.	 Due	 to	 different	 historical	 backgrounds	 and	
numerous	setbacks	and	adversity.	The	Chinese	people	have	              national	conditions,	there	are	differences	between	China	and	
shown	enterprising	spirit	and	reform	and	opening-up	creativ-           the	United	States.	But	this	enables	us	to	learn	from	each	other	
ity	in	national	development	and	great	tenacity	in	overcoming	          and	draw	on	each	other’s	strengths.	Closer	China-U.S.	coop-
difficulties	on	the	road	to	progress.	And	all	this	gives	expres-       eration	serves	the	fundamental	interests	of	our	two	countries	
sion	to	the	spirit	of	unremitting	self-improvement	embodied	           and	peoples	and	is	also	of	far-reaching	significance	for	peace	
in	China’s	cultural	tradition.                                         and	development	of	the	whole	world.
    The	Chinese	civilization	has	always	given	prominence	to	               Vast	as	it	is,	the	Pacific	Ocean	has	not	stood	in	the	way	of	
social	harmony,	unity	and	mutual	assistance.	Back	in	the	early	        exchanges	and	cooperation	between	our	two	peoples	over	
days	of	the	Chinese	nation,	the	Chinese	already	advocated	             the	past	two	hundred	years,	and	many	moving	episodes	of	
that	“harmony	is	most	valuable.”	They	strove	for	harmony	              mutual	learning	and	mutual	help	between	our	two	peoples	
between	man	and	nature,	among	people	and	between	man’s	                who	represent	different	civilizations	have	been	recorded.	In	
body	and	soul,	and	yearned	for	an	ideal	society	where	“ev-             the	27	years	since	the	establishment	of	diplomatic	relations	in	
eryone	loves	everyone	else,	everyone	is	equal	and	the	whole	           1979,	China-U.S.	relations	have	maintained	steady	momen-
world	is	one	community.”                                               tum	of	growth	despite	twists	and	turns	on	the	way,	bringing	
    Today,	China	is	endeavoring	to	build	a	harmonious	society.	        tremendous	benefits	to	both	countries	and	peoples.
It	is	a	society	of	democracy	and	rule	of	law,	fairness	and	jus-            Entering	 the	 21st	 century,	 the	 world	 has	 continued	 to	
tice,	integrity,	fraternity,	vitality,	stability,	order	and	harmony	   undergo	profound	changes.	Peace	and	development	remain	
between	man	and	nature.	It	is	a	society	where	there	is	unity	          the	calling	of	our	times.	On	the	other	hand,	factors	causing	
between	the	material	and	the	spirit,	democracy	and	rule	of	            instability	and	uncertainty	are	increasing	and	new	challenges	
law,	fairness	and	efficiency,	and	vitality	and	order.                  and	threats	are	looming.	Against	this	backdrop,	the	common	
    The	Chinese	people	take	the	maintenance	of	ethnic	unity	           interests	between	our	two	countries	are	increasing	and	the	
and	 harmony	 as	 their	 bound	 duty	 and	 the	 defense	 of	 the	      areas	of	our	cooperation	widening.	Global	peace	and	secu-
country’s	 sovereignty	 and	 territorial	 integrity	 their	 sacred	    rity	now	face	new	challenges,	such	as	fighting	international	
mission.                                                               terrorism,	preventing	the	proliferation	of	weapons	of	mass	
    Any	act	that	promoted	ethnic	harmony	and	national	unity	           destruction,	protecting	the	environment	and	human	habitat	
will	receive	the	warm	welcome	and	support	of	the	Chinese	              and	combating	transnational	crimes.	And	it	is	exactly	in	these	
people.	On	the	other	hand,	any	act	that	undermines	China’s	            fields	that	we	share	important	strategic	interests.	China	has	
ethnic	 harmony	 and	 national	 unity	 will	 meet	 their	 strong	      a	 huge	 market	 and	 its	 development	 has	 generated	 strong	
opposition	and	resistance.                                             demand,	while	the	United	States	has	advanced	technology	
    The	Chinese	civilization	has	always	given	prominence	to	           and	high	quality	products.	This	has	created	enormous	op-
good	neighborliness.	The	Chinese	nation	cherishes	peace.	In	           portunities	for	economic	and	technical	cooperation	between	
foreign	relations,	the	Chinese	have	always	believed	that	“the	         our	two	countries.	Indeed,	there	is	a	broad	prospect	for	the	
strong	should	not	oppress	the	weak	and	the	rich	should	not	            growth	of	constructive	and	cooperative	China-U.S.	relations	
bully	the	poor”	and	advocated	that	“all	nations	live	side	by	          in	all	fields.
side	in	perfect	harmony.”                                                  Yesterday	 morning,	 President	 Bush	 and	 I	 had	 an	 in-
    The	Chinese	held	that	“one	should	be	as	inclusive	as	the	          depth	exchange	of	views	on	China-U.S.	relations	and	major	
ocean,	which	is	vast	because	it	admits	hundreds	of	rivers”	and	        international	 and	 regional	 issues	 of	 common	 interest	 and	
called	for	drawing	upon	the	strength	of	others.	Today,	China	          reached	broad	and	important	agreement.	We	are	both	of	the	
holds	high	the	banner	of	peace,	development	and	coopera-               view	that	the	two	sides	should	approach	our	relations	from	
tion.	It	pursues	an	independent	foreign	policy	of	peace	and	           the	strategic	and	long-term	perspective	and	that	we	should	
commits	itself	firmly	to	peaceful	development.                         enhance	dialogue,	expand	common	ground,	increase	mutual	
    It	seeks	to	accelerate	its	development	by	upholding	world	         trust,	deepen	cooperation	and	promote	the	overall	growth	
peace.	The	world	peace	is,	in	turn,	enhanced	by	China’s	de-            of	the	constructive	and	cooperative	China-U.S.	relations	in	
velopment.	China	firmly	pursues	a	strategy	of	opening-up	for	          the	21st	century.

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CONDOLEEZZA RICE                                                                                                                    425

    When	we	focus	on	the	overall	interest	of	China-U.S.	rela-           people	serve	as	a	bridge	for	increasing	mutual	understanding	
tions,	respect	and	show	understanding	to	each	other,	I	am	              between	our	two	peoples.	They	are	also	a	major	driving	force	
confident	that	our	relations	will	move	ahead	in	a	healthy	and	          for	the	healthy	and	stable	growth	of	China-U.S.	relations.	Yale	
steady	manner,	and	contribute	to	the	well-being	of	our	two	             is	a	forerunner	in	conducting	China-U.S.	educational	exchang-
peoples	and	bring	greater	hope	to	people	around	the	world.              es	and	provides	an	important	platform	for	cultural	exchanges	
    Ladies	and	gentlemen,	dear	friends.                                 between	our	two	countries.	One	hundred	and	fifty-six	years	
    A	 composer	 cannot	 write	 enchanting	 melody	 with	 one	          ago,	a	Chinese	young	man	named	Rong	Hong	entered	Yale	
note,	 and	 a	 painter	 cannot	 paint	 landscape	 with	 only	 one	      Campus.	Four	years	later,	he	graduated	with	distinction	and	
color.	The	world	is	a	treasure	house	where	the	unique	cultural	         received	a	bachelor	of	arts	degree,	making	him	the	first	ever	
achievements	created	by	people	of	all	countries	are	displayed.	         Chinese	graduate	of	an	American	university.	Later,	group	after	
The	culture	of	a	nation	tells	a	lot	about	the	evolution	of	the	         group	of	young	Chinese	followed	his	footsteps	and	studied	
nation’s	understanding	of	the	world	and	life,	both	past	and	            in	Yale.	Over	the	past	20	years,	Yale	has	accepted	over	4,000	
present.	Culture	thus	embodies	a	nation’s	fundamental	pursuit	          Chinese	students	and	undertaken	more	than	80	cooperation	
of	 mind	 and	 dictates	 its	 norms	 of	 behavior.	 The	 historical	    projects	in	culture,	science	and	technology,	and	education	with	
process	 of	 human	 development	 is	 one	 in	 which	 different	         China.	Last	summer,	Yale	sent	the	first	group	of	students	to	
civilizations	 interact	 with	 and	 enrich	 each	 other	 and	 all	      China	for	internships	and	some	among	them	became	the	first	
civilizations	 in	 human	 history	 have	 contributed	 to	 human	        foreign	interns	to	work	with	China’s	Palace	Museum.	I	wish	
progress	in	their	own	unique	way.                                       to	take	this	opportunity	to	express	my	appreciation	to	you,	
    Cultural	diversity	is	a	basic	feature	of	both	human	society	        Mr.	Levin,	and	Yale	for	the	efforts	you	have	made	to	promote	
and	today’s	world	and	an	important	driving	force	for	human	             exchanges	between	our	two	peoples.
progress.	As	history	has	shown,	in	the	course	of	interactions	              To	enhance	mutual	understanding	between	young	people	
between	civilizations,	we	not	only	need	to	remove	natural	bar-          and	educators	of	the	two	countries,	I	announce	with	pleasure	
riers	and	overcome	physical	isolation,	we	also	need	to	remove	          here	that	we	have	decided	to	invite	100	Yale	faculty	members	
obstacles	and	obstructions	of	the	mind	and	overcome	various	            and	students	to	visit	China	this	summer.	I’m	sure	you	can	
prejudices	and	misunderstandings.	Differences	in	ideology,	             look	forward	to	an	enjoyable	experience	in	China.
social	system	and	development	model	should	not	stand	in	                    Ladies	and	gentlemen,	dear	friends.
the	way	of	exchanges	among	civilizations,	less	should	they	                 As	an	old	Chinese	saying	goes:	“As	in	the	Yangtze	River	
become	excuses	for	mutual	confrontation.	We	should	uphold	              where	the	waves	behind	drive	on	those	before,	so	a	new	gen-
the	diversity	of	the	world,	enhance	dialogue	and	interaction	           eration	always	excels	the	last	one.”	Young	people	represent	
between	 civilizations,	 and	 draw	 on	 each	 other’s	 strength	        the	hope	and	future	of	the	world.	They	are	full	of	vitality,	new	
instead	of	practicing	mutual	exclusion.	When	this	is	done,	             ideas	and	creativity.	I	sincerely	hope	that	the	young	people	
mankind	will	enjoy	greater	harmony	and	happiness	and	the	               in	China	and	the	United	States	will	join	hands	and	work	to	
world	will	become	a	more	colorful	place	to	live	in.                     enhance	friendship	between	our	two	peoples,	and,	together	
    Ladies	and	gentlemen,	dear	friends.                                 with	people	of	other	countries,	create	a	better	world	for	all.
                                                                                        	
    Exchanges	 in	 culture	 and	 education	 and	 among	 young	              Thank	you!



                                              Liberal Democracy
                                                         IT IS NOT INEVITABLE
                            Address by CONDOLEEZZA	RICE, United States Secretary of State
                           Delivered to Ewood Park, Blackburn, United Kingdom, March 31, 2006


T   hank	you	very	much.	Well,	listening	to	Jack,	I’m	sure	you	
    understand	why	I	value	his	counsel	and	his	friendship	and	
why	the	people	of	the	United	States	are	so	pleased	that	we	have	
                                                                        the	United	States,	of	course,	have	that	historic	bond.	
                                                                            Today,	on	behalf	of	President	Bush,	I	would	like	to	thank	the	
                                                                        citizens	and	the	government	of	Great	Britain	for	the	willingness	
such	a	good	friend	in	the	Foreign	Secretary	here	in	the	United	         to	share	in	the	sacrifices	for	freedom,	no	more	so	than	in	the	
Kingdom.	The	partnership	that	we	forged	over	this	past	year,	I	         last	several	years	since	the	attacks	on	the	Twin	Towers	in	New	
think	is	a	reflection	of	our	nations’	historic	alliances,	but	more	     York	and	on	the	Pentagon	really	revealed	again	to	America	in	
than	that	is	a	reflection	of	the	values	that	we	share	as	peoples,	be-   ways	that	we	had	not	seen	for	a	very,	very	long	time	in	our	his-
cause	ultimately	the	work	of	governments	cannot	be	sustained,	          tory,	our	own	vulnerability	to	outside	attack	and	to	the	forces	
particularly	democratic	governments	if	there	is	not	a	deep	bond	        of	hostility	to	democratic	values.	And,	of	course,	on	July	7th	
between	their	peoples.	And	the	peoples	of	Great	Britain	and	of	         when	Britain	also	experienced	that	hostility,	I	hope	that	Britain	

                                                                                                                               MAY 2006
426                                                                                                       VITAL SPEECHES OF THE DAY

felt	the	support	of	the	United	States	in	our	joint	desire	to	defeat	     own	property	and	to	worship	as	they	pleased.	These	universal	
those	forces	that	are	so	hostile	to	our	democratic	principles.	          rights,	established	and	embodied	in	institutions	and	enshrined	
    I	also	want	to	thank	Jack	for	inviting	me	here	to	Blackburn	         in	 law,	 would	 then	 establish	 the	 principled	 limits	 on	 state	
and	for	allowing	me	to	share	the	stage	with	Jim	Naughtie.	               power.	But	that	was	not	all.	They	had	another	equally	bold	
Thank	you	very	much	for	the	work	of	the	BBC	in	this	and	I	am	            idea:	For	government	to	be	truly	legitimate,	they	argued,	it	
really	honored	that	Lord	Hurd	would	be	here,	a	great	public	             had	to	be	blessed	by	the	consent	of	the	governed.	
servant	whom	we’ve	all	admired	for	many	years.	Thank	you	                    Now,	those	were	truly	revolutionary	ideas,	and	not	surpris-
very	much	for	being	here.	Jack	invited	me	to	see	a	different	            ingly,	they	inspired	revolutions.	You	made	yours	here	in	Britain	
side	of	British	society,	one	that’s	not	normally	seen	by	Sec-            in	1688.	We	made	ours,	after	a	few	false	starts,	in	1776	and	
retaries	of	State	and	already	I	have	seen	how	this	old	cotton	           1789.	And	I	do	not,	therefore,	mean	to	imply	that	there	is	only	
city	is	finding	new	prosperity	and	building	airplanes	and	a	             one	model	of	liberal	democracy.	There	is	not.	Even	two	coun-
knowledge-based	economy.	And	of	course,	I’ve	just	had	the	               tries	as	similar	as	Britain	and	the	United	States	embraced	liberal	
opportunity	to	walk	around	the	“pitch”—is	that	right?—of	                democracy	on	our	own	terms,	according	to	our	own	traditions	
the	Blackburn	Rovers	football	club.	And,	Jack,	if	Blackburn	             and	our	cultures	and	our	experiences.	That	has	been	the	case	
is	“the	center	of	the	world,”	then	I	suspect	that	this	stadium	          for	every	country	and	every	people	that	has	begun	the	modest	
is	the	center	of	the	center	of	the	center	of	the	world.	                 quest	for	justice	and	freedom—whether	it	was	France	in	1789;	
    When	Jack	was	in	Birmingham	last	October,	I	took	him	to,	            or	Germany	and	Japan	after	World	War	II;	or	nations	across	Asia,	
as	he	said,	a	University	of	Alabama	football	game.	Now,	unless	          and	Africa,	and	Latin	America	during	these	past	decades;	or	in	
you’ve	experienced	American	college	football	in	the	South-               countries	like	Ukraine,	and	Afghanistan,	and	Iraq	today.	
eastern	Conference,	you	just	don’t	know	what	that	means.	I	                  The	appeal	of	liberal	democracy	is	desirable,	but	its	progress	
think	it’s	safe	to	say,	though,	that	even	though	Jack	loved	the	         has	not	been	even	inevitable	and	there’s	a	reason	for	that.	The	
experience,	I’m	not	absolutely	certain	that	he	knew	what	was	            challenge	of	liberal	democracy	is	always	two-fold:	to	ensure	
going	on.	Had	I	had	the	opportunity	to	watch	Blackburn	play	             majority	rule	and	to	respect	minority	rights,	to	strengthen	com-
Wigan	here	next	week,	I’m	certain	that	I	would	have	been	                munities	and	to	liberate	individuals,	to	empower	government	
just	as	clueless.	And	it	is	true	that	the	European	stereotype	of	        and	to	limit	that	power	at	the	same	time.	And	for	societies	
America—Americans	that	we	do	not	have	the	attention	span	                accustomed	 to	 thinking	 in	 zero-sum	 terms,	 or	 for	 diverse	
for	a	90-minute	game	that	doesn’t	have	that	much	scoring	                communities	that	have	never	shared	power	among	themselves,	
and	where	there	isn’t	full	contact.	Yeah,	it’s	true.	But	I	would	        liberal	democracy	can	seem	difficult	and	frustrating	and	even	
remind	you	that	the	man	who	keeps	the	ball	out	of	the	Rov-               threatening,	and	that	feeling	is	entirely	understandable.	
ers’	goal	is	an	American,	Brad	Friedel.	                                     Too	often,	we	forget	how	long	and	hard	liberal	democracy	
    I’m	delighted	to	be	here	to	deliver	this	lecture.	As	a	pro-          has	been	for	us.	At	times	in	our	history	and	cities	like	Blackburn	
fessor	myself,	I	like	to	take	every	opportunity	to	put	on	my	            and	Birmingham	for	that	matter,	the	challenge	of	liberal	democ-
academic	hat,	to	reflect	broadly	on	the	issues	of	the	day.	So	           racy	seemed	so	severe	that	it	would	split	societies	in	two.	
this	afternoon,	I	want	to	talk	about	an	idea—an	idea	that	has	               Once	the	cotton	business	moved	out	of	this	city,	inequality	
defined	the	modern	era	since	the	dawn	of	the	Enlightenment,	             and	alienation	were	so	rampant	that	many	thought	a	revolu-
an	idea	that	has	now	captured	the	imagination	of	a	majority	             tion	was	not	just	likely,	but	inevitable.	In	my	hometown	of	
of	humanity,	and	made	our	world	more	secure	as	a	result,	so	             Birmingham,	Alabama,	the	legacy	and	the	birthmark	of	slavery	
that	idea	is	liberal	democracy.	                                         persisted	for	a	century	in	the	brutal	and	dehumanizing	form	
    What	do	I	mean	by	“liberal”	democracy?	Well,	first	of	all,	          of	segregation.	I	spent	the	first	13	years	of	my	life	without	a	
I	 mean	 capital	 “L”	 in	 Liberal,	 as	 in	 Liberalism,	 the	 theory	   white	classmate.	It	was	when	we	moved	to	Denver,	Colorado,	
of	politics	that	took	shape	in	the	minds	of	Englishmen	like	             that	I	had	my	first	white	classmate.	And	one	Sunday	morning	
Thomas	Hobbes,	and	John	Locke,	and	even	a	Scot	or	two,	like	             in	1963,	four	little	girls,	including	my	good	friend	Denise	
Adam	Smith.	The	ideas	of	Liberalism	were,	of	course,	later	              McNair,	were	murdered	in	church	by	a	terrorist	bomb.	
refined	and	applied	and	written	into	the	American	Constitu-                  So	even	today,	we	know	that	we	are	still	wrestling	with	
tion	by	men	like	Hamilton,	and	Jefferson	and	Madison.	And	               the	two-fold	challenges	of	liberal	democracy.	Consider,	for	
all	of	these	individuals	were	trying,	in	their	own	way,	to	solve	        example,	our	efforts	to	strengthen	national	security	and	to	
one	of	history’s	oldest	quandaries:	How	can	individuals	with	            protect	civil	liberties	at	the	same	time.	In	the	attacks	of	9/11	
different	interests,	and	different	backgrounds,	and	different	           or	7/7	here	in	Britain,	the	United	States	and	Britain	saw	the	
religious	beliefs,	live	together	peacefully	and	avoid	the	evil	          true	threat	of	global	terrorism.	No	matter	of	just	police	work	
extremes	of	politics:	civil	war	and	tyranny,	or	as	they	would	           of	 course,	 because	 if	 we	 wait	 for	 terrorists	 to	 attack,	 then	
have	said,	the	state	of	nature	or	the	oppression	of	the	state?	          3,000	people	die	on	one	September	morning	or	dozens	are	
    In	their	answer	to	this	question,	the	theorists	of	Liberalism	       murdered	on	their	commute	to	work.	This	forces	us	to	think	
transformed	 politics	 forever.	 They	 declared	 that	 all	 human	       anew	about	how	we	will	keep	our	societies	both	open	and	safe	
beings	possessed	equal	dignity	and	certain	natural	rights—               at	the	same	time	and	that	is	no	easy	task,	and	we’re	all	finding	
among	these,	the	right	to	live	in	liberty,	to	enjoy	security,	to	        our	own	solutions	within	our	own	democratic	systems.	

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CONDOLEEZZA RICE                                                                                                                              427

    I	know	that	there	is	a	lot	concern	in	Britain	as	well	as	in	         and	 hopelessness	 so	 desperate	 that	 it	 feeds	 an	 ideology	 of	
Europe	and	in	other	parts	of	the	world,	that	the	United	States	is	       hatred	that	leads	people	to	strap	bombs	to	their	bodies	and	
not	adequately	guaranteeing	both	our	need	for	security	and	our	          fly	airplanes	into	building?	The	old	status	quo	was	unstable.	
respect	for	the	law.	We	in	America	welcome	the	free	exchange	            Any	sense	of	stability	was	a	false	sense	of	stability.	It	was	not	
of	opinions	with	our	allies	about	this	issue,	especially	here	in	        serving	any	interest	and	democratic	reform	had	to	begin.	
place	like	Britain.	But	I	also	want	to	say	that	no	one	should	               It’s	hard	to	imagine,	as	some	do,	how	this	process	of	re-
ever	doubt	America’s	commitment	to	justice	and	the	rule	of	              form—it’s	hard	to	imagine	for	some	critics	how	this	process	
law.	President	Bush	has	stated	unequivocally,	as	have	I	that	            of	reform	might	go	forward	in	the	Broader	Middle	East.	But	
the	United	States	is	a	nation	of	laws	and	we	do	not	tolerate	            I	can	tell	you	this;	it	cannot	go	forward	in	the	Middle	East	
any	American,	at	home	or	abroad,	engaging	in	acts	of	torture.	           without	freeing	its	citizens	to	voice	their	choices.	For	decades,	
We	also	have	no	desire	to	be	the	world’s	jailer.	We	want	the	            authoritarian	regimes	in	this	region	have	completely	closed	
terrorists	that	we	captured	to	stand	trial	for	their	crimes.	But	        off	the	political	space	of	their	countries.	If	things	remain	as	
we	also	recognize	that	we	are	fighting	a	new	kind	of	war,	and	           they	 are,	 it	 is	 not	 very	 likely	 that	 a	 vibrant	 civil	 society	 is	
that	our	citizens	will	judge	us	harshly	if	we	release	a	captured	        somehow	going	to	emerge	under	the	heel	of	authoritarianism.	
terrorist	before	we	are	absolutely	certain	that	he	does	not	pos-         Real	change	will	begin	and	is	beginning	in	the	Middle	East	
sess	information	that	could	prevent	a	future	attack,	or	even	            when	citizens—men	and	women—are	free	to	make	demands	
worst,	if	we	meet	that	terrorist	again	on	the	battlefield.	              of	their	government.	It	would	be	illiberal	in	the	extreme	to	
    Now,	these	difficult	issues,	still	for	us	affirm	the	value	of	lib-   think	that	disagreeing	with	a	people’s	free	choice	means	that	
eral	democracy.	But	from	our	present	and	past	experience,	we	            we	should	deny	them	the	freedom	to	choose	altogether.	
know	that	liberal	democracy	is	no	panacea.	It	is	a	living	regime,	           Elections	 are	 the	 beginning	 of	 every	 democracy,	 but	 of	
a	never-ending	conversation,	a	perpetual	struggle	to	balance	            course	they	are	not	the	end.	Effective	institutions	are	essen-
democratic	demands	within	the	limitations	of	Liberalism.	This	           tial	to	the	success	of	all	liberal	democracies.	And	by	institu-
is	genuine	liberal	democracy	and	this	is	its	genius,	its	flexibility	    tions	I	mean	pluralistic	parties,	transparent	and	accountable	
and	its	dynamism,	how	it	helps	diverse	societies	and	diverse	            legislatures,	independent	judiciaries,	free	press,	active	civil	
peoples	reconcile	their	differences	peacefully.	Even	for	mature	         society,	market	economies	and,	of	course,	a	monopoly	for	the	
liberal	democracies	like	ours,	with	centuries	of	experience,	            state	on	the	means	of	violence.	One	cannot	have	one	foot	in	
these	balancing	acts	are	often	painstaking	and	time-consuming	           terrorism	and	one	foot	in	politics.	It	is	these	institutions	that	
and	frustrating.	So	when	we	talk	about	young	democracies,	               transform	a	government	of	imperfect	citizens	into	a	govern-
like	those	emerging	in	the	Broader	Middle	East	today,	we	must	           ment	of	enduring	laws.	
do	so	with	great	humility	and	with	great	patience	and	with	                  I	think	that	we	in	the	West	need	to	reflect	long	and	hard	
great	sympathy	for	their	historic	undertaking.	                          before	 we	 write	 off	 entire	 societies	 as	 inherently	 despotic	
    Too	often,	I	think,	we	forget	this	perspective.	Recent	elec-         because	of	some	notion	of	their	cultures.	Remember,	cultural	
tions	in	places	like	Egypt	and	the	Palestinian	territories—the	          determinists	were	once	so	certain	that	democracy	would	never	
freest	by	far	in	both	of	those	places—have	led	some	to	argue	            work	in	Asia	because	of	“Asian	values,”	or	in	Africa	because	of	
that	our	policy	of	supporting	democratic	change	in	this	region	          tribalism,	or	in	Latin	America	because	of	its	military	juntas.	
is	 creating	 not	 liberal	 democracy,	 but	 illiberal	 democracy:	      It	was	even	said,	in	my	own	lifetime,	that	blacks	in	America	
elected	governments	that	view	no	inherent	limitations	to	state	          were	“unfit”	for	democracy—too	“childlike,”	too	“unready,”	
power.	 Some	 American	 and	 European	 commentators	 even	               too	“incapable,”	too	“unwanting”	of	self-government.	
argue	that	democracy	is	impossible	in	the	Middle	East,	and	                  The	criticism	assumes	that	human	beings	are	slaves	to	their	
that	perhaps	it	should	not	be	tried	for	fear	of	its	consequences	        culture,	not	the	authors	of	it.	Liberal	democracy	is	unique	
in	destabilizing	the	Middle	East.	Now,	this	criticism	seems	to	          because	it	is	both	principle	and	process,	an	end	toward	which	
assume	that	our	support	for	democratic	reform	in	the	Middle	             people	strive,	and	the	means	by	which	they	do	so.	The	daily	
East	is	disrupting	somehow	a	stable	status	quo	there.	But	do	            work	of	negotiation,	and	cooperation,	and	compromise,	the	
we	really	think	that	this	was	the	case?	                                 constant	 struggle	 to	 balance	 majority	 rule	 with	 individual	
    Does	anyone	think	that	the	Lebanese	people	were	better	              rights—this	democratic	process	is	how	people	create	a	demo-
off	under	the	boot	of	Syria?	Does	anyone	think	that	Yasser	              cratic	culture.	
Arafat	pretending	to	make	peace	while	supporting	terrorism	                  All	too	often,	cultural	determinists	misunderstand	culture	in	
was	 better	 for	 the	 Palestinian	 people?	 Does	 anyone	 think	        many	places	in	the	world.	But	we’ve	seen	it	most	especially	lately	
that	the	Middle	East	was	more	secure	when	Saddam	Hussein	                in	Iraq.	It	is	certainly	true	that	Iraq	rests	on	the	major	fault	lines	
was	 massacring	 the	 Iraqi	 people,	 invading	 his	 neighbors,	         of	ethnicity	and	religion	in	the	Middle	East.	It	is	also	true	that,	
using	 weapons	 of	 mass	 destruction	 against	 his	 neighbors	          for	many	centuries,	Iraqis	have	settled	their	differences	through	
and	 his	 people,	 funding	 terrorism,	 pursuing	 weapons	 of	           coercion	and	violence,	rather	than	compromise	and	politics.	
mass	destruction	and	exploiting	a	failed	sanctions	regime	for	               But	in	the	past	two	generations,	it	was	Saddam	Hussein	
billions	of	dollars?	And	who	today	would	honestly	defend	                who	took	a	society	that	was	already	rife	with	sectarian	and	
Arab	authoritarianism,	which	has	created	a	sense	of	despair	             religious	divisions	and	drove	it	to	the	brink	of	the	state	of	

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nature.	He	committed	genocide	and	filled	mass	graves	with	               The	majority	of	Iraqis	are	formulating	their	own	democratic	
300,000	 souls.	 He	 slaughtered	 entire	 villages	 of	 Shia	 and	    answer	to	the	question	that	first	inspired	the	Enlightenment	
Kurds.	 And	 he	 carried	 out	 a	 nationwide	 policy	 of	 ethnic	     four	centuries	ago:	How	can	different	individuals	and	com-
cleansing	to	make	Iraq’s	Sunni	minority	dominant	through-             munities	live	 together	in	 peace,	avoiding	both	 the	state	 of	
out	the	country.	To	be	certain,	he	repressed	a	good	number	           nature	and	the	tyranny	of	the	state?	With	time,	with	painstak-
of	Sunnis,	too.	So	when	we	look	at	Iraq	today,	we	must	take	          ing	effort,	and	with	our	steadfast	support,	Iraqis	will	build	up	
care	to	separate	the	culture	of	its	people	from	the	near-term	        their	fragile	democratic	culture,	and	eventually,	many	decades	
legacy	of	a	tyrant.	And	we	must	support	the	millions	of	Iraqi	        from	now,	people	will	take	it	for	granted;	that	that	democratic	
patriots	who	are	striving	nobly	to	redeem	their	country.	             culture	was	always	to	be,	just	as	we	in	America	and	Britain	
   This	is	an	incredibly	difficult	endeavor,	but	the	Iraqis	are	      now	take	for	granted	our	democratic	culture.	
moving	forward.	In	just	three	years,	the	people	of	Iraq	have	            In	a	tale	of	two	cities,	that	the	Secretary	and	I	have	now	vis-
regained	sovereignty	and	voted	in	free	elections.	They’ve	written	    ited,	Birmingham	and	Blackburn,	Britain	and	the	United	States	
and	ratified	a	constitution,	then	voted	again,	and	their	elected	     have	seen	how	the	impossible	dreams	of	yesterday	can	become	
leaders	are	now	working	to	form	a	national	government.	This	          the	inevitable	facts	of	today.	Who	would	have	imagined,	fifty	
steady	progress	has	occurred	in	the	face	of	truly	horrific	vio-       years	ago,	that	Birmingham	would	have	been	a	thriving	and	
lence.	Terrorist	attacks,	like	the	one	that	destroyed	the	Golden	     desegregated	capital	of	the	New	South?	Or	that	Blackburn	today	
Mosque	in	Samarra,	seek	to	inflame	Iraq’s	divisions	and	tear	         would	be	revitalizing	and	modernizing	and	growing	into	a	hub	
the	country	apart.	But	in	response	to	that,	some	Iraqis	have	         of	enterprise	for	Northwest	England	and	beyond?	
given	into	the	temptation	to	take	justice	into	their	own	hands,	         Someday,	people	in	Baghdad	and	Beirut	and	Cairo	and,	yes,	
to	engage	in	reprisal	killings.	                                      in	Tehran	will	say	the	same	thing	about	their	great	cities.	They	
   Yet,	at	the	same	time,	we	are	witnessing	something	else,	          will	wonder	how	anyone	could	ever	have	doubted	the	future	
something	very	hopeful.	After	the	Samarra	mosque	bombing,	            of	liberal	democracy	in	their	countries.	But	most	of	all,	they	
Iraq’s	new	democratic	institutions	helped	to	contain	popular	         will	remember	fondly	those	fellow	democracies,	like	Britain	
passions.	Iraq’s	leaders	joined	together	to	stay	the	hand	of	         and	the	United	States,	and	dozens	of	others,	who	stood	with	
vengeance	and	violence	in	their	communities.	In	these	actions	        them	 in	 their	 time	 of	 need—believing	 that	 advancing	 the	
and	events,	we	see	the	early	contours	of	a	democratic	culture,	       cause	of	freedom	is	the	greatest	hope	for	peace	in	our	time.	
                                                                                                    	
forged	in	cooperation	and	strengthened	by	compromise.	                   Thank	you	very	much.



    Thoughts on Financial Stability and Central Banking
                                           TO ONLY LOOK BACKWARD IS NOT USEFUL
                    Address by ROGER	W.	FERGUSON,	JR., Vice Chairman, Federal Reserve Board
          Delivered at the Conference on Modern Financial Institutions, Financial Markets, and Systemic Risk,
                            Federal Reserve Bank of Atlanta, Atlanta, Georgia, April 17, 2006


I	 am	 very	 pleased	 to	 open	 this	 conference	 on	 Modern	
   Financial	 Institutions,	 Financial	 Markets	 and	 Systemic	
Risk.	Let	me	begin	by	thanking	the	Federal	Reserve	Bank	of	
                                                                      Others	argue	that	financial	stability	is	potentially	absent,	or	
                                                                      that	financial	instability	is	on	the	horizon,	when	they	perceive	
                                                                      that	some	important	set	of	financial	asset	prices	seem	to	have	
Atlanta	for	hosting	this	conference	and	for	organizing,	along	        diverged	sharply	from	fundamentals.	Finally,	many	observers	
with	the	International	Association	of	Financial	Engineers,	an	        have	 used	 the	 term	 “financial	 instability”	 to	 describe	 their	
impressive	program	that	is	filled	with	high-quality	papers	on	        perception	that	market	functioning	seems	to	have	been	sig-
topics	of	keen	interest	to	central	bankers.	Before	proceed-           nificantly	distorted	or	impaired.	Regardless	of	the	definitions	
ing,	I	must	indicate	that	the	views	I	am	about	to	express	are	        used	for	financial	instability,	they	lead	us	to	a	strong	interest	
my	 own	 and	 do	 not	 necessarily	 reflect	 the	 views	 of	 other	   in	ensuring	that	our	financial	infrastructure	is	robust	and	that	
members	of	the	Board	of	Governors	or	the	Federal	Reserve	             our	supervisory	operations	are	sound	and	up-to-date.	
more	generally.                                                          Ironically,	our	interest	in	financial	stability	seem	to	have	in-
    Few	subjects	are	more	important	for	central	bankers	than	         creased	in	recent	years	even	as	real	(that	is,	inflation-adjusted)	
the	efficiency	and	stability	of	our	financial	system.	The	term	       variability	in	economic	aggregates	seems	to	have	decreased.	
“financial	instability”	is	often	poorly	defined.	Some	argue	that	     Since	1985,	the	volatility	of	real	growth	in	gross	domestic	
financial	instability	occurs	when	imperfections	or	externali-         product	(GDP)	has	been	only	about	half	of	what	it	was	dur-
ties	in	the	financial	system	are	substantial	enough	to	create	        ing	the	preceding	twenty-five	years.	In	addition,	as	shown	
significant	 risks	 for	 real	 aggregate	 economic	 performance.	     in	a	number	of	papers,	the	volatility	of	many	components	of	

VSOTD.COM
ROGER W. FERGUSON, JR.                                                                                                              429

GDP	and	of	other	measures	of	aggregate	economic	activity	               The	greater	transparency	of	central	banks	also	seems	to	
also	declined	sharply	between	these	periods.                         have	led	to	improved	economic	performance.	Market	expecta-
   The	 source	 of	 the	 moderation	 in	 the	 real	 economy	 is	     tions	are	more	likely	to	remain	anchored	in	the	face	of	vari-
unclear.	 Changes	 in	 data	 construction	 do	 not	 seem	 to	 be	    ous	shocks	when	investors	can	see	more	clearly	that	central	
responsible.	Fiscal	policy	has	not	become	appreciably	more	          bankers	are	committed	to	long-run	objectives	such	as	price	
countercyclical,	and	the	shift	of	the	economy	toward	produc-         stability	and	sustainable	economic	growth.	This	commitment	
ing	more	services	appears	to	have	played	only	a	small	role.	         feeds	into	the	planning	and	execution	of	investments	by	firms	
The	leading	explanations	of	the	moderation	are	that	(1)	eco-         and	 households,	 which	 are	 more	 likely	 to	 undertake	 such	
nomic	shocks	have	been	milder;	(2)	inventory	management	             investments	given	greater	certainty	about	the	commitment	of	
has	 improved;	 (3)	 financial	 innovations	 such	 as	 improved	     the	central	bank.	Moreover,	with	this	greater	certainty,	prices	
risk	assessment	and	risk-based	pricing	have	made	credit	more	        and	pricing	decisions	more	clearly	communicate	the	desires	
widely	available,	even	during	economic	downturns;	and	(4)	           of	households	and	firms.	
monetary	policy	has	been	better.	                                       Some	 evidence	 for	 this	 view	 is	 found	 in	 the	 decline	 of	
   The	 first	 explanation—milder	 economic	 shocks—has	             inflation	volatility	relative	to	real	interest	rate	volatility.	Both	
seemed	less	persuasive	following	the	events	of	the	late	1990s	       inflation	volatility	and	bond	term	premiums	have	declined	
and	early	2000s.	From	the	Asian	financial	crisis	to	the	Sep-         significantly	in	recent	years.	Research	at	the	Federal	Reserve	
tember	11	attacks	to	the	corporate	governance	scandals	to	the	       Board	by	Don	Kim	and	Jonathan	Wright,	as	well	as	work	by	
surge	in	oil	prices,	powerful	economic	shocks	have	marked	           others	outside	the	Federal	Reserve,	have	suggested	that	infla-
the	past	few	years.	Yet,	the	economy	has	performed	rather	           tion	expectations	that	are	more	firmly	anchored,	combined	
well,	on	balance,	over	this	period.	                                 with	the	reduction	in	the	volatility	of	real	activity,	seem	to	be	a	
   As	for	the	second	explanation—better	inventory	manage-            significant	part	of	the	explanation	for	the	decline	in	term	pre-
ment—changes	in	inventory	dynamics	have	indeed	contrib-              miums.	I	would	argue	that	the	greater	transparency	of	central	
uted	significantly	to	the	reduced	volatility	of	GDP	growth.	         banks	has	played	a	role	in	communicating	and	emphasizing	
Those	changes	are	consistent	with	anecdotal	evidence	and	            to	the	markets	our	commitment	to	price	stability.
case	 studies	 about	 the	 use	 of	 information	 technology	 and	       Thus,	 the	 moderation	 in	 aggregate	 economic	 volatility	
better	 inventory	 management	 practices	 to	 catch	 incipient	      seems	somewhat	understandable.	But	why,	then,	the	seem-
inventory	overhangs	before	they	become	a	problem.                    ingly	greater	concern	these	days	about	financial	market	in-
   Regarding	 the	 third	 explanation—better	 availability	 of	      stability?	This	anxiety	appears	to	be	driven	by	three	factors:	
credit—Karen	Dynan,	Doug	Elmendorf	and	Dan	Sichel,	of	the	           First,	some	asset	prices,	such	as	housing	prices,	seem	to	be	
Board’s	staff,	present	evidence	in	a	recent	paper	that	financial	    high	by	historical	standards.	Given	the	substantial	decline	of	
innovation	has	been	partly	responsible	for	the	reduced	vari-         stock	prices	beginning	in	2000,	many	observers	worry	that	
ability	of	real	activity	of	the	past	two	decades	or	so.	According	   greater	boom	or	bust	cycles	in	some	asset	prices	could	be	
to	their	work,	the	greater	availability	and	use	of	credit	over	      the	“flip-side”	of	the	moderation	of	real	economic	volatility	
time	may	have	reduced	economic	volatility	by	reducing	the	           during	recent	decades.
sensitivity	of	household	spending	to	downturns	in	income	               Asset	prices	are	the	key	channel	through	which	monetary	
and	cash	flows	and	to	fluctuations	in	interest	rates,	with	the	      policy	is	transmitted	to	the	real	economy.	Moreover,	because	
result	 that	 consumer	 spending	 and	 home	 purchases	 have	        asset	 prices	 embody	 the	 expectations	 of	 forward-looking	
become	less	sensitive	to	contemporaneous	income.	                    investors,	 they	 might	 contain	 information	 of	 value	 for	 the	
   Let	me	focus	for	a	moment	on	the	fourth	explanation,	that	        policy-setting	 process.	 But	 from	 the	 Federal	 Reserve’s	 per-
monetary	policy	has	been	better.	I	think	it	has	indeed	been	         spective,	 asset	 prices	 must	 ultimately	 be	 seen	 through	 the	
better.	 We	 are	 better	 at	 understanding	 how	 the	 economy	      lens	of	long-term	growth	and	price	stability.	If	inflation	seems	
operates	(and	therefore,	at	evaluating	the	appropriate	stance	       contained	and	the	prospects	for	economic	growth	are	good,	
of	monetary	policy)	and	we	are	more	determined	to	pursue	            then	it’s	unclear	why	the	policymaker	should	set	aside	these	
the	goal	of	price	stability.	But	secondarily,	I	think	the	greater	   direct	signals	in	preference	for	signals	from	asset	prices	that	
dominance	of	market-based	finance,	combined	with	a	greater	          may	or	may	not	be	out	of	line	with	their	historical	relation-
transparency	 by	 the	 Federal	 Reserve,	 has	 made	 both	 the	      ships	to	fundamentals—the	very	fundamentals,	I	should	add,	
mechanism	 of	 monetary	 policy	 and	 the	 intentions	 of	 the	      that	we	look	at	directly	in	judging	the	health	of	the	economy.	
central	bank	more	understandable	to	market	participants.	            Indeed,	even	in	retrospect,	our	knowledge	of	what	drove	the	
   The	mechanism	of	monetary	policy	is	clearer	with	greater	         price-earnings	ratios	for	U.S.	equities	so	high	in	the	late	1990s	
market-based	finance	relative	to	bank-dominated	finance	be-          and	our	ability	to	estimate	what	a	more	“appropriate”	level	for	
cause	the	direct	effects	of	policy	on	corporate	and	household	       the	price-earnings	ratio	might	have	been	are	very	incomplete	
balance	sheets	are	more	easily	observed	by	both	policymakers	        and,	frankly,	probably	will	not	improve	substantially.
and	market	participants.	In	contrast,	bank-dominated	finance	           Additionally,	in	the	current	conjuncture,	some	have	ex-
involves	 more	 complicated	 interactions	 between	 depositor	       pressed	a	concern	that	an	unwinding	of	global	imbalances,	
behavior,	loan	underwriting	standards,	and	interest	rates.	          should	 it	 occur,	 might	 be	 disorderly	 and	 associated	 with	

                                                                                                                               MAY 2006
430                                                                                                      VITAL SPEECHES OF THE DAY

financial	instability.	Others	question	whether	the	simultane-            smoother	 operation	 of	 foreign	 exchange	 transactions	 and	
ous	removal	of	monetary	accommodation	by	central	banks	                  established	swap	lines	that	channeled	funds	to	institutions	
in	several	major	economies	could	possibly	trigger	a	period	of	           that	needed	dollars.	In	addition,	the	Federal	Reserve	took	a	
financial	instability	emanating	from	the	inevitable	rebalanc-            variety	of	other	actions,	including	waiving	daylight	overdraft	
ing	of	portfolios.	Should	events	such	as	these	occur,	central	           fees,	extending	the	operating	hours	for	Fedwire,	and	easing	
bank	communication	and	understanding	market	participants’	               the	 limits	 on	 securities	 lending	 to	 reduce	 the	 pressure	 on	
reactions	will	certainly	be	important	considerations	for	main-           firms	requiring	securities	that	were	made	scarce	because	of	
taining	financial	stability.                                             settlement	difficulties.	All	these	measures	were	taken	quickly,	
    A	third	source	of	anxiety	concerning	financial	market	in-            maintained	temporarily,	and	wound	down	in	an	orderly	man-
stability	arises	because	some	of	the	more	recent	crises	have	            ner	as	the	need	for	them	receded.
been	financial	in	nature.	Although	their	effects	on	the	real	                After	the	initial	rush	of	activity,	we	focused	on	the	non-
economy	in	the	United	States	have	been	relatively	limited,	the	          financial	economy.	Evidence	of	a	weakening	economy	had	
economies	of	other	nations	have	been	significantly	affected,	            already	emerged	before	the	terrorist	attacks;	the	decline	in	
and	 there	 is	 concern	 that	 a	 financial	 crisis	 might,	 at	 some	   stock	prices,	the	widening	of	risk	spreads,	and	the	impairment	
point,	have	more	severe	consequences	for	the	real	economy	               of	market	functioning	created	by	the	attacks	caused	many	
in	the	United	States.	When	we	review	these	recent	cases	of	fi-           policymakers	to	worry	that	this	weakening	would	accelerate.	
nancial	market	turmoil,	it	appears	that	each	is	a	unique	event.	         Again	reflecting	the	risk-management	perspective	I	described	
But	some	common	lessons	can	be	learned,	and	I	will	outline	              earlier,	 the	 FOMC	 lowered	 its	 target	 for	 the	 federal	 funds	
them	after	I	briefly	review	two	of	these	crises	that	have	been	          rate	50	basis	points	before	the	reopening	of	the	markets	on	
important	in	the	United	States	during	the	past	decade.                   Monday,	September	17,	2001.	In	explaining	its	action,	the	
    The	market	turmoil	in	the	fall	of	1998	was	touched	off	by	           FOMC	pointed	to	a	less	sanguine	economic	outlook	and	to	
the	Russian	debt	default	in	August	and	then	exacerbated	by	the	          significant	downside	risks	associated	with	that	outlook.
well-publicized	travails	of	Long-Term	Capital	Management.	                   Besides	the	crisis	of	1998	and	the	September	11	terrorist	
During	this	time,	nearly	all	financial	indicators	portrayed	a	           attacks,	other	episodes	of	financial	turmoil	were	important,	
dour	picture	of	economic	prospects—risk	spreads	widened	                 but	these	episodes	did	not	raise	the	same	level	of	concern	that	
sharply,	stock	prices	fell,	and	banks	reported	tightening	the	           the	negative	shock	might	be	transmitted	to	the	nonfinancial	
terms	and	lending	standards	on	business	loans.	In	addition,	             economy	in	a	rapid	and	disorderly	fashion.	For	example,	the	
market	reports	indicated	that	the	capital	markets	were	seizing	          significant	decline	of	stock	prices	starting	in	2000	was	not	
up	as	dealers	and	other	market-makers	recoiled	from	risk	tak-            accompanied	 by	 a	 major	 market	 malfunctioning,	 and	 the	
ing.	In	response,	the	Federal	Open	Market	Committee	(FOMC)	              resulting	loss	of	equity	wealth	did	not	seem	likely	to	have	
lowered	its	target	for	the	federal	funds	rate	75	basis	points	in	        negative	 ramifications	 for	 the	 real	 economy	 that	 were	 so	
three	equal	steps	and	maintained	the	lower	rate	through	June	            immediate	and	severe	as	to	be	considered	a	crisis.	Similarly,	
of	the	subsequent	year.	This	response	mainly	reflected	FOMC	             the	major	accounting	and	corporate	scandals	of	2002	led	to	
concerns	that	these	financial	instabilities	had	either	signaled	         a	significant	widening	of	risk	premiums	and	much	anxiety	
or	created	significant	downside	risks	to	the	economic	outlook,	          about	 the	 veracity	 of	 many	 corporations’	 financial	 state-
particularly	for	business	investment.	The	FOMC’s	significant	            ments.	But	for	the	most	part,	the	markets	again	functioned	
aversion	to	the	possible	negative	outcomes	associated	with	              smoothly	and	risks	seemed	to	be	priced	normally.	Finally,	the	
these	risks	was	part	of	a	risk-management	perspective—that	              more	pronounced	interest	rate	volatility	during	the	summer	
is,	that	the	economic	recovery	from	a	financial	shock	could	be	          of	2003,	which	appears	to	have	been	significantly	amplified	
more	difficult	to	manage	than	the	financial	shock	itself.                by	mortgage	hedging,	created	some	short-lived	market	dif-
    As	for	events	after	1998,	it	is	more	difficult	to	identify	a	        ficulties.	 But	 again,	 this	 volatility	 seemed	 unlikely	 to	 have	
“pure”	financial	crisis.	The	devastating	terrorist	attacks	in	2001	      significant	effects	on	the	real	economy.
caused	tragic	loss	of	life	and	major	damage	to	the	physical	                 Despite	the	rarity	of	internally	generated	financial	crisis,	
infrastructure	of	a	number	of	key	firms	central	to	trading	and	          some	argue	that	ongoing	trends	in	the	United	States	should	
market-making	activities.	Although	there	were	many	impor-                be	examined	closely	for	their	potential	effects	on	financial	
tant	differences,	this	crisis	mimicked	a	financial	meltdown	in	          stability.	Four	trends	are	often	mentioned.	
the	sense	that	important	financial	markets	could	not	operate	                The	first	is	increased	concentration	in	the	financial	services	
because	of	the	cessation	of	activities	by	some	firms.	                   industry.	In	particular,	consolidation	has	resulted	in	a	smaller	
    The	Federal	Reserve	responded	in	a	manner	that	was	ap-               number	 of	 firms	 doing	 a	 larger	 share	 of	 the	 bank	 lending	
propriate	to	the	nature	of	the	crisis.	We	issued	a	statement	            throughout	the	world.	For	example,	the	origination	and	ser-
that	we	were	up	and	running	and	ready,	if	needed,	to	extend	             vicing	of	consumer	loans	have	become	more	concentrated.	
loans	from	the	discount	window.	Depository	institutions	took	            For	the	most	part,	these	rising	levels	of	concentration	appear	
up	the	offer;	their	borrowing	surged	to	more	than	$45	billion	           to	be	motivated	by	cost	savings	that	are	often	attributed	to	
but	dropped	quickly	after	a	few	days.	We	also	worked	jointly	            economies	of	scale,	or	by	expectations	of	greater	revenue	sta-
with	foreign	central	banks	to	provide	funds	to	promote	the	              bility	derived	from	either	greater	diversification	of	products	or	

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greater	geographic	diversification.	While	the	risks	to	financial	          The	final	trend	is	the	ongoing	and	increasing	globalization	
stability	that	arise	from	the	creation	of	a	small	number	of	large	     of	markets.	Make	no	mistake;	I	think	such	a	trend	is	to	be	
and	complex	firms	are	obvious,	there	may	be	benefits	as	well.	         welcomed	because	it	brings	about	the	usual	gains	from	trade.	
Greater	concentration	in	financial	services	has	the	potential	         But	we	must	be	mindful	that	borrowers	are	raising	funds	in	
to	have	some	positive	impact	on	financial	stability	because	           multiple	financial	centers	in	multiple	currencies	across	diverse	
lower	costs	can	allow	firms	to	build	the	capital	reserves	that	        legal	and	political	systems;	that	investors	are	taking	on	greater	
help	insulate	them	from	shocks,	and	greater	diversification	           international	exposure;	and	that	arbitrageurs	are	establishing	
can	 reduce	 firm	 risk.	 Moreover,	 the	 market	 and	 financial	      leveraged	positions	across	currencies	and	international	markets.	
supervisors	are	requiring	the	adoption	of	more	sophisticated	          These	actions	increase	cross-border	interdependence	and	thus	
and	comprehensive	techniques	for	the	management	of	risks	              in	 some	 circumstances	 might	 propagate	 financial	 problems	
associated	 with	 larger	 and	 more	 complex	 firms.	 However,	        more	quickly	and	widely.
the	benefits	of	lower	costs,	greater	diversification,	and	better	          Given	these	trends,	what	roles	should	a	central	bank	play	
risk	management	at	large,	complex	firms	depend	on	many	                with	regard	to	financial	stability?	I	would	suggest	three.	First	
particulars,	including	robust	infrastructure	and	a	reduction	in	       and	foremost,	the	central	bank’s	role	is	to	maintain	a	focus	
the	opaqueness	that	results	from	increased	firm	complexity.	           on	the	possible	effects	of	financial	instability	for	its	two	core	
In	this	regard,	infrastructure	is	one	area	in	which	the	increase	      objectives,	namely	price	stability	and	long-run	real	growth.	
in	concentration	has	received	attention.	The	creation	of	New-          Any	 actions	 to	 promote	 financial	 stability	 need	 to	 be	 seen	
Bank,	which	I	describe	later,	is	a	recent	private-sector	response	     through	this	lens.	We	must	always	ask:	Do	our	potential	ac-
to	the	concentration	of	clearing	and	settlement	activities	in	the	     tions	credibly	mitigate	a	risk	of	inflation	or	a	threat	to	the	real	
market	for	government	securities.                                      economy?	Such	a	standard	helps	reduce	the	danger	that	we	
    The	 second	 trend	 is	 that	 the	 pricing	 and	 management	       might	pursue	financial	stability	to	the	point	of	changing	the	
of	credit	continues	to	become	more	market	oriented.	This	              behavior	of	market	participants	in	counterproductive	ways,	
development	 should	 increase	 financial	 stability,	 because	         such	as	increasing	moral	hazard,	which	would,	in	turn,	create	
market	pricing	and	the	management	of	credit	risk	via	market-           problems	for	the	real	economy.	This	objective	also	suggests	
able	securities	would	be	expected	to	promote	a	more	robust	            that	the	central	bank	needs	to	continually	monitor	financial	
system	for	risk	management.	In	this	scenario,	a	broad-based	           developments,	including	those	regarding	financial	accounting	
and	diversified	group	of	rational	market	participants	would	           and	reporting	standards,	to	be	able	to	appropriately	assess	the	
determine	the	success	or	failure	of	financial	products	through	        effect	of	these	developments	on	the	real	economy.	
an	evolutionary	process,	allowing	the	available	set	of	financial	          Secondly,	I	would	argue	that	the	examples	of	the	recent	
assets	to	gradually	become	more	useful	and	comprehensive.	             past,	 combined	 with	 our	 understanding	 of	 how	 markets	
However,	 some	 hold	 to	 a	 more	 pessimistic	 scenario	 that	        function,	suggest	that	much	of	the	central	bank’s	work	lies	in	
envisions	smaller	groups	of	market	participants,	with	short	           bank	supervision,	including	promoting	better	risk	manage-
time	horizons	and	an	excessive	interest	in	mark-to-market	             ment	and	the	avoidance	of	operational	risks	on	the	part	of	
profitability,	 which	 create	 more	 volatility	 because	 of	 their	   other	financial	institutions,	and	emphasizing	the	importance	
high	sensitivity	to	the	latest	rumors	and	news.	I	tend	to	adopt	       of	backup	and	contingency	arrangements.	That	is,	the	central	
the	more	optimistic	view,	but	in	any	case	the	central	bank	            bank	can	assist	in	getting	market	participants	to	consider	and	
will	need	to	maintain	its	focus	on	markets	as	more	credit	is	          focus	on	the	management	of	risk	in	general	and	of	the	risk	of	
intermediated	through	them.                                            low	probability,	but	high	cost,	outcomes	in	particular.
    The	third	trend	is	similar	to	the	second.	The	ongoing	in-              Along	 these	 lines,	 we	 have	 encouraged	 banks	 to	 adopt	
crease	in	the	scope	and	availability	of	financial	instruments	         the	most	modern	risk-management	techniques,	and	we	have	
is	probably	providing	many	firms	and	households	with	im-               encouraged	all	financial	institutions	to	ensure	the	robustness	
proved	methods	of	risk	diversification	and	hedging	and	with	           of	their	systems.	We	have	also	strived	to	bring	our	capital	
greater	access	to	credit.	As	I	noted	earlier,	such	financial	in-       regulations	 up-to-date	 and	 make	 them	 more	 risk	 sensitive	
novations	have	likely	been	partly	responsible	for	the	lowered	         through	 the	 Basel	 II	 process	 and	 the	 effort	 to	 revise	 Basel	
variability	in	many	real	economic	aggregates	over	the	past	two	        I;	 both	 of	 these	 efforts	 are	 intended	 to	 modernize	 capital	
decades.	That	said,	the	increasing	complexity	of	these	instru-         regimes	as	part	of	our	ongoing	effort	to	improve	safety	and	
ments	raises	a	host	of	policy	questions	regarding,	to	name	            soundness	and,	ultimately,	financial	stability.	And	following	
just	a	few	items,	financial	education	for	households,	and,	for	        our	own	advice,	the	Federal	Reserve	has	implemented	ad-
financial	institutions,	operational	procedures,	valuation	prac-        ditional	layers	of	backup	and	contingency	arrangements	for	
tices,	accounting	treatments,	disclosure	policies,	and	capital	        our	key	payment	system	operations.
provisions.	Moreover,	these	financial	innovations	often	rely	on	           Most	 recently,	 the	 Federal	 Reserve	 Board	 endorsed	 the	
the	ready	availability	of	market	liquidity,	an	assumption	that	        creation	of	a	dormant	bank,	referred	to	as	NewBank,	which	
likely	will	not	hold	during	a	financial	crisis.	Therefore,	one	        would	be	available	for	activation	to	clear	and	settle	U.S.	gov-
hopes	that	all	market	participants	who	are	involved	in	these	          ernment	securities.	Such	activation	would	occur	if	a	credit	
complex	instruments	have	liquidity	plans	in	place.                     or	legal	problem	caused	the	market	to	lose	confidence	in	an	

                                                                                                                                  MAY 2006
432                                                                                                    VITAL SPEECHES OF THE DAY

existing	clearing	bank	and	no	well-qualified	bank	stepped	             example	of	being	proactive,	I	would	suggest	that	the	efforts	
forward	to	purchase	that	bank’s	clearing	business.	Similarly,	         to	 increase	 the	 transparency	 of	 central	 bank	 actions	 that	 I	
the	Federal	Reserve	System,	operating	through	the	Federal	             discussed	at	the	beginning	of	my	talk	have,	in	some	part,	been	
Reserve	Bank	of	New	York,	has	met	with	major	dealers	to	               motivated	by	a	desire	to	enhance	financial	stability.	
improve	 the	 practices	 of	 the	 credit	 derivatives	 industry	 in	       One	 lesson	 that	 stands	 out	 from	 our	 experience	 gained	
various	ways,	including	implementing	procedures	to	improve	            during	the	past	decade	is	that	only	looking	backward	is	not	
the	settlement	process	for	credit	default	swaps,	establishing	         useful.	 Prudent	 central	 bankers	 must	 be	 forward-looking,	
targets	for	the	reduction	of	confirmation	backlogs,	and	insist-        searching	 for	 developments	 that	 might	 become	 significant	
ing	that	dealers	obtain	the	consent	of	the	original	counterparty	      problems	under	some	circumstances.	What	would	be	useful	
before	accepting	an	assignment	of	a	contract.	                         from	a	risk-management	perspective	is	more	information	along	
    The	final	role	I	would	suggest	for	a	central	bank	is	to	re-        the	lines	of	what	we	have	for	inflation—market	instruments	
search	the	implications	of	longer-term	financial	trends	for	the	       that	allow	us	to	measure,	to	some	extent,	market	participants’	
economy	more	generally.	As	I	mentioned	above,	the	consoli-             expectations.	The	absence	of	such	direct	measures	of	financial	
dation	of	financial	services,	increasing	market	intermediation	        stability,	however,	suggests	that	we	should	continue	to	pres-
of	credit,	the	greater	complexity	of	financial	instruments,	and	       ent	our	views	of	potential	financial	risks	and	their	associated	
increasing	globalization	of	financial	institutions	and	markets	        propagation	 mechanisms,	 both	 to	 other	 public-sector	 col-
all	might	raise	concerns	about	our	financial	system.	Although	         leagues	and	to	private-sector	analysts	and	observers.	Participa-
my	 assessment,	 and	 that	 of	 many	 other	 observers,	 is	 that	     tion	in	official	organizations	such	as	the	President’s	Working	
these	 forces	 and	 developments	 support	 financial	 stability,	      Group,	the	Financial	Stability	Forum,	and	the	Committee	on	
they	merit	ongoing	study.                                              the	Global	Financial	System,	which	are	little	known	to	the	
    In	a	more	proactive	vein,	once	the	central	bank	identifies	a	      general	public	but	are	well	regarded	by	the	official	commu-
longer-run	concern,	it	can	try	to	raise	the	awareness	of	other	        nity,	offers	the	Federal	Reserve	such	engagement.	Moreover,	
policymakers	regarding	the	potential	problems.	Recently,	for	          we	should	develop	theoretical	and	empirical	models	to	help	
example,	the	government-sponsored	enterprises,	which	lack	             us	understand	potential	risks.	That	is	why	conferences	such	
the	normal	market	discipline	to	check	the	growth	of	their	             as	this	one,	which	bring	together	researchers,	policymakers,	
portfolios,	 have	 been	 a	 concern	 that	 the	 Federal	 Reserve	      and	practitioners	to	discuss	issues	related	to	financial	stability,	
                                                                                           	
Board	has	been	highlighting	before	the	Congress.	As	another	           are	so	important.



      Sustainability and the Changing Notion of Fairness
                                                     MEASURING TRADE-OFFS
                           Address by GAIL	FOSLER, Chief Economist, The Conference Board
                Delivered at the 2nd European Sustainability Forum, Brussels, Belgium, January, 11, 2006


I	am	delighted	to	have	the	opportunity	to	discuss	sustain-
  ability	from	an	economist’s	perspective.	It	is	certainly	not	
intuitively	 obvious	 what	 economists	 might	 have	 to	 say	 on	
                                                                           Secondly,	I	would	argue	that	one	of	the	great	tensions	in	
                                                                       the	value	structure	surrounding	market	activities	is	the	ten-
                                                                       sion	between	efficiency	and	equity.	This	is	an	old	tension.	As	
the	subject.	I	hope	that	you	find	my	observations	this	eve-            but,	as	you	chart	the	evolution	of	the	market	decisions	over	
ning	to	be	of	some	value	in	framing	the	discussions	you	will	          time	and	among	countries,	it	is	profoundly	evident	in	terms	
have	tomorrow.	I	will	begin	by	making	four	points	and	then	            of	how	the	public	and	the	public’s	representatives	make	deci-
develop	each	in	turn.                                                  sions	about	the	market.	
                                                                           My	third,	and	possibly	most	important	point	this	evening,	
3	First	is	the	market.                                                 is	that	the	value	structure	surrounding	markets	is	changing	
   We	think	of	the	market	as	a	mechanism	that	operates	on	             because	the	global	neighbourhood	in	which	market	activities	
objective	signals	like	price	and,	rates	of	return.	These	are	the	      take	place	is	changing.	At	The	Conference	Board,	we	have	
metrics	that	I	study	as	an	economist,	and	that	you	in	business	        recently	hired	a	director	of	global	demographics	because	we	
also	use	to	make	key	decisions.	But	it	is	easy	to	forget	that	the	     believe	demographics	are	such	an	important	force	shaping	
market	is	conditioned	by	values.	These	values	that	shape	the	          of	the	environment	in	which	business	operates.	
market	also	shape	the	regulatory	structure	that	surrounds	the	             Demographic	 change	 in	 the	 change	 in	 demographics	
market.	For	example,	the	different	regulatory	structures	in	           of	the	global	neighbourhood	will	change	the	value	structures	
Europe,	versus	the	US	come	from	different	value	structures	            that	govern	how	the	global	neighbourhood	operates.	Those	
compared	to	those	found	in	the	United	States.	                         changes	and	the	resulting	value	structure	will	profoundly	

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GAIL FOSLER                                                                                                                           433

affect	 the	 working	 of	 the	 markets	 in	 which	 businesses	  	        rather	than	just	the	raw	metrics	of	efficiency	that	exist	in	the	
operate.	                                                                United	States.	
   The	fourth	point	I	would	like	to	make	concerns	the	rapid	
pace	at	which	this	is	all	happening.	The	essential	questions	you	        3	Emerging	Markets
need	to	ask	in	your	organisations	are:	Are	we	being	reactive	or	            Although	I	have	drawn	a	distinction	between	Europe	and	
proactive	to	this	change?	Do	we	have	our	finger	on	the	pulse	            the	United	States,	we	are	all	part	of	the	same	western	Europe-
of	the	pace	at	which	this	change	is	taking	place?                        an	philosophical	tradition.	And,	as	such,	we	have	dominated	
                                                                         the	world	in	terms	of	this	philosophical	tradition	for	the	past	
3	Efficiency	or	Equity                                                   200-300	years.	However,	today,	there	are	new	players	on	the	
    The	debates	over	the	relative	importance	of	efficiency	ver-          horizon	in	the	form	of	the	emerging	markets.	In	the	past,	we	
sus,	equity	go	back	literally	millennia.	To	develop	these	points	        were	rich	and	they	were	poor,	and	while	there	were	more	of	
further.	In	this	evolution	of	the	market,	a	new	book	called	             them	than	of	us,	the	demographic	gap	was	not	very	large.	
The Mind and the Market: Capitalism in Western Thought,	charts	          Our	frame	of	economic	reference	dominated.	
the	evolution	of	the	market	and	points	out	that	these	debates,	             In	1965,	for	example,	there	were	twice	as	many	people	in	
which	often	focus	on	the	morality	of	surplus	and	profitability,	         the	developing	world	as	in	the	advanced	economies.	Today,	
are	as	old	as	civilization.	In	the	Greek	and	Roman	periods,	             there	 are	 four	 times	 more	 people	 in	 the	 developing	 world	
the	notion	of	surplus	and	profit	was	immoral	because,	quite	             than	in	the	advanced	economies,	and	by	2025	the	emerging	
simply,	there	was	no	surplus.	If	you	had	a	surplus,	you	must	            market	populations	will	dominate	us	by	a	factor	five	to	one.	
have	taken	it	away	from	someone	else.	The	book	goes	on	to	               The	global	neighbourhood	is	changing	rapidly.
develop	the	concept	of	the	role	of	government	and	individual	               Half	 the	 world’s	 population	 is	 in	 China	 and	 India,	 and	
freedom	in	monitoring	this	allocation	process.	                          these	countries	have	very	different	cultures	in	terms	of	the	
    But,	 in	 reading	 this	 history	 of	 capitalism,	 it	 struck	 me	   marketplace	 that	 go	 back	 thousands	 of	 years.	 In	 China,	 a	
that	the	market	as	we	know	it	today	(Adam	Smith	and	his	                 book	 titled,	 Discourses on Salt and Iron: A Debate on State
book	Wealth of Nations)	is	really	an	18th	century	concept	that	          Control of Commerce and Industry in Ancient China,	written	in	
captured	the	imagination	of	philosophers	like	Adam	Smith	                112	BC,	on	iron	and	salt	production	in	the	country,	debates	
(i.e.Wealth,	 i.e.	 Wealth of Nations)	 and	 Voltaire	 (i.e.	 Philo-     the	views	of	Confucians	and	the	political	structure	about	the	
sophical Letters)	as	a	constructive	alternative	to	war	and—as	           role	of	the	market.	While	the	Confucians	preferred	to	let	the	
a	basis	for	social	interaction.	It	is	striking	that	much	of	the	         market	set	prices,	the	statists	were	opposed	to	this	secular,	
modern	advocacy	for	what	we	think	of	as	the	free	market	                 remote,	arbitrary	force	regulating	the	availability	of	the	two	
occurred	 after	 the	 Thirty	 Years	 War	 (1618-1648)—which	             most	important	commodities	to	the	economy	and	to	their	
pitted	 the	 Catholics	 against	 the	 Protestant	 in	 one	 of	 the	      survival.	Can	these	important	resources	be	distributed	outside	
bloodiest	conflicts	in	European	history.	Would	it	be	possible	           of	the	benign	control	of	the	state?
for	the	question	of	whether	you	find	a	neutral	social	territory	            Knowledge	is	a	particularly	unique	fulcrum	for	the	cultural	
in	 which	 people	 could	 engage	 with	 one	 another,	 operate	          divide	between	advanced	and	emerging	market	mentalities.	
and	 make	 secular	 decisions	 based	 on	 secular	 metrics	 and	         In	India	and	China,	knowledge	is	not	seen	as	a	product.	The	
obtaining	 efficient	 solutions—without	 constant	 reference	            cultural	notion	that	knowledge	(intellectual	property)	could	
to	their	religious	preferences.	That	is,	could	you	trust	this	           be	a	private	good,	is	simply	incomprehensible.	Surely	there	
mechanism	called	the	market	to	allocate	goods	and	services	              are	elements	of	predation	in	the	intellectual	property	disputes	
in	ways	that	enhanced	(from	an	economist’s	point	of	view)	               between	the	east	and	the	west;	but,	we	would	be	incredibly	
people’s	welfare?	                                                       myopic	 not	 to	 recognize	 the	 strong	 cultural	 dimension	 of	
    It	 is	 not	 insignificant	 that	 the	 Wealth	 of	 Nations	 was	     the	dispute.	
published	in	1776—the	year	of	the	Declaration	of	Indepen-
dence.	One	of	the	big	historical	differences	between	Europe	             3	Rules	Changing
and	the	United	States,	in	my	mind,	is	that	in	Europe	these	                 Looking	 ahead,	 these	 societies	 are	 gaining	 in	 economic	
debates	about	the	market	and	the	role	of	equity	and	fairness,	           power	at	an	unprecedented	rate.	Their	notions	of	what	is	fair	
and	whether	the	market	can	be	trusted	to	make	allocative	                will	colour	the	notion	of	fairness	in	the	global	environment	
decisions,	had	been	going	on	for	hundreds	of	years.	It	was	a	            and	how	the	traditional	market	operates.	The	very	notion	of	
very	intense	topic	of	debate,	because	the	market	was	a	new	              fairness	is	becoming	more	variable	and	more	democratized.	
innovation.	In	contrast,	the	United	States	was	a	new	country,	           Companies	make	investments	based	on	their	own	assump-
without	a	legacy,	and	the	market	fit	well	into	this	bow	wave	            tions	and	what	the	terms	of	that	investment	are.	These	terms	
of	freedom.	                                                             can	 then	 be	 subject	 to	 radical	 changes	 when	 the	 public,	
    I	think	this	also	helps	to	explain	why	sometimes	there	are	          whether	the	government	or	private	partners,	rewrite	those	
different	debates	in	Europe	and	the	United	States	on	issues	             terms	of	those	deals	because	they	no	longer	appear	“‘fair.”’.	
such	as	regulation	can	be	so	very	different.	In	Europe,	these	              We	are	talking	not	only	about	AIDS	drugs	and,	the	distri-
debates	take	into	account	the	diversity	of	stakeholders	that	            bution	of	vaccines	in	a	world	where	public	health	is	a	global	

                                                                                                                                 MAY 2006
434                                                                                                    VITAL SPEECHES OF THE DAY

neighbourhood	issue.	We	are	talking	about,	the	independent	            3	Short-Term	Versus	Long-Term
power	industry	in	China,	where	companies	were	given	pref-              As	you	engage	in	your	discussions	on	the	various	business	
erential	investment	benefits,	including	large	tax	exclusions,	         practice	responses	to	this	change	tomorrow,	you	should	ask	
and	promises	by	the	state	grid	promised	to	support	at	least	           yourselves:	“Are	you	simply	reacting	to	a	rapidly	changing	situ-
until	 economic	 circumstances	 changed.	 What	 had	 been	             ation”	These	issues	are	not	tactical—they	go	to	the	fundamen-
“fair”	earlier	was	no	longer	seen	as	fair.	Or,	more	recently,	         tals	of	how	companies	engage	with	the	cultural	and	attitudinal	
changes	 in	 corporate	 tax	 law	 by	 the	 Venezuelan	 Govern-         changes	in	this	rapidly	evolving	global	neighbourhood.	
ment	 changed	 multinational	 oil	 companies	 that	 had	 been	             For	 me	 as	 an	 economist,	 true	 “sustainability”	 is	 being	
operating	in	the	country	that	had,	until	then,	been	receiving	         able	to	make	selective	and	strategic	decisions	about	when	
under	preferential	tax	treatment	is	another	example	of	how	            are	you	are	going	to	forego	the	short-	term	benefits	in	order	
a	changing	value	structure	can	change	the	rate	of	return	on	           to	be	able	to	enjoy	the	opportunities	provided	by	the	long-	
an	investment.                                                         term	success.
   We	can	look	almost	empirically	at	the	pace	at	which	these	              This	 framework	 involves	 much	 deeper	 strategic	 com-
redefinitions	of	what	is	“fair”	take	place	and	how	they	affect	        mitment	than	the	tactical	practices	that	are	often	defined	as	
what	 were	 formerly	 “market”	 decisions.	 The	 incidence	 of	        sustainability	policy.	The	companies	that	create	in	their	core,	
these	changes	in	market	terms	are	rising	almost	exponentially.	        strategic	decision	making	a	process	that	identifies	these	short-	
They	are	the	result	of	rapidly	shifting	economic	and	political	        vs.	longer-term	trade-offs	across	the	full	spectrum	of	market	
power—a	situation	where	it	may	well	be	that	many	of	the	               activities	as	opposed	to	those	that	consider	these	choices	to	
principles	of	market	access	and	function	that	you	and	I	regard	        be	peripheral	and	defensive	are	going	to	be	the	companies	
                                                                                                                         	
as	the	norm,	are	up	for	grabs.                                         that	will	be	truly	sustainable	in	the	long	term.



                                         The Art of Information
                                            ENSURING THE SAFETY OF OUR FAMILIES
                     Address by ROBERT	S.	MUELLER,	III, Director, Federal Bureau of Investigation
                              Delivered to the Denver Forum, Denver, Colorado, April 13, 2006


I t	is	good	to	be	back	here	in	Denver.	The	Denver	Field	Division	
  of	the	FBI	covers	the	states	of	Colorado	and	Wyoming.	It	has	11	
satellite	offices,	and,	recently,	a	new	office	building	in	Colorado	
                                                                       for	me	to	conclude	whether	that’s	because	you	understand	
                                                                       my	point,	or	because	you	know	that,	“I	See	What	You	Mean,”	
                                                                       is	the	title	of	that	sculpture	of	the	blue	bear.	
Springs.	Its	central	location	is	helping	us	to	work	more	closely	          I	use	this	example	to	give	you	an	idea	of	the	complexity	of	
with	our	partners,	some	of	whom	have	joined	us	here	today.             interpreting	information	and	the	challenges	inherent	in	reach-
    In	particular,	I	would	like	to	recognize	Denver	Chief	of	          ing	conclusions	from	limited	bits	of	information.	Yet,	that	is	
Police	Jerry	Whitman,	and	Aurora	Chief	of	Police	Dan	Oates.	           what	we,	and	other	members	of	the	intelligence	community,	are	
Thank	you	so	much	for	attending	here	today.                            asked	to	do	every	day	of	the	year,	and	with	terrorism,	countless	
    In	 today’s	 world	 of	 new	 and	 dangerous	 threats	 to	 our	     lives	may	depend	on	making	the	correct	assessment.	
national	security,	the	value	of	information	has	grown	expo-                One	of	the	key	lessons	of	September	11th	is	that	threats	to	
nentially.	Given	the	challenges	we	face,	it	is	only	by	looking	        our	nation	can	come	from	anywhere	at	anytime.	Our	adversar-
at	information	in	new	ways	and	improving	our	capabilities,	            ies	do	not	respect	organizational	boundaries	or	international	
that	we	can	better	protect	communities	such	as	yours.                  borders.	Instead,	they	are	networked	by	modern	information	
    Leonardo	DaVinci	said,	“All	knowledge	has	its	origins	in	          technology	which	has	made	the	world	even	smaller.	
our	perceptions.”                                                          For	example,	in	Toledo,	Ohio,	three	men	were	recently	indicted	
    I	would	argue	that	what	we	already	know	also	profoundly	           for	actively	trying	to	wage	jihad	against	American	soldiers	and	co-
influences	what	we	perceive.	If	I	had	stood	before	you	two	years	      alition	allies	serving	in	Iraq.	According	to	the	indictment,	the	men	
ago	and	told	you	that	I	had	just	seen	a	giant	blue	bear	staring	       were	attempting	to	acquire	and	deliver	explosives	and	computers	
into	the	second	story	of	the	Denver	Convention	Center,	you	            to	their	co-conspirators	in	the	Middle	East.	One	of	the	men	alleg-
would	have	reasonably	concluded	that	I	had	lost	my	mind.	              edly	downloaded	a	video	from	a	terrorist	Web	site,	which	depicted	
    Today,	because	you	know	that	Lawrence	Argent’s	sculpture	          the	step-by-step	construction	and	use	of	a	bomb	vest.	
of	a	large	blue	bear	does,	indeed,	sit	next	to	your	Convention	            In	the	war	against	terrorism,	one	cannot	help	but	be	struck	
Center,	you	are	likely,	I	hope,	to	make	a	different	judgment.	         by	the	dichotomy	of	the	old	and	the	new—airplanes	used	as	
    Some	of	you	may	be	thinking	to	yourselves,	“Yes,	I	see	            weapons,	plastic	explosives	hidden	in	donkey	carts,	tragic	
what	you	mean,”	but	without	asking	you,	it	would	be	hard	              videotaped	beheadings	posted	on	the	Internet.	Terrorists	who	

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ROBERT S. MUELLER, III                                                                                                                   435

shun	our	way	of	life	are	more	than	willing	to	use	our	technol-              While	it	is	necessary	to	gather	information,	it	is	also	vital	that	
ogy	to	carry	out	and	to	publicize	their	attacks.	                       we	effectively	analyze	that	which	we	do	collect.	It	is	through	anal-
    Increasingly,	the	global	community	of	the	Internet	is	used	         ysis	that	we	transform	raw	data	into	actionable	intelligence.
not	only	to	break	down	barriers	and	aid	commerce,	but	to	                   To	that	end,	we	have	doubled	the	number	of	intelligence	
sustain	and	nurture	centuries-old	hatreds	and	to	commit	new	            analysts,	and	in	every	field	office	we	have	established	Field	
types	of	crimes.                                                        Intelligence	Groups—agents	and	analysts	working	together.	
    The	 threat	 of	 today,	 and	 of	 the	 future,	 is	 a	 dangerous	   For	instance,	here	in	Denver,	six	agents,	24	analysts	and	nine	
convergence	 of	 terrorists,	 hostile	 foreign	 governments	 and	       language	specialists	share	one	mission—to	protect.	
criminal	 groups	 operating	 over	 the	 Internet	 and	 through	             When	it	comes	to	analyzing	information,	technology	is	cru-
interconnected,	 sophisticated	 networks.	 We	 see	 organized	          cial.	It	helps	us	pull	together	disparate	information	to	identify	
crime	laundering	money	for	drug	groups.	Drug	groups	sell-               patterns	and	connections.	We	have	dramatically	upgraded	our	
ing	weapons	to	terrorists.	Terrorists	committing	white-collar	          technology	since	September	11th,	particularly	when	it	comes	
fraud	to	raise	money	for	their	operations.                              to	replacing	computers,	updating	our	networks	and	developing	
    This	convergence	of	crime	and	terrorism	means	information	          databases.	We	continue	to	build	a	modern	information	technol-
is	absolutely	vital.	The	challenge	we	face	today	is	transforming	       ogy	infrastructure.	Last	month,	we	selected	Lockheed	Martin	to	
many	bits	and	pieces	of	information	into	actionable	intelli-            upgrade	our	information	management	systems.	Improved	search,	
gence,	then	disseminating	that	intelligence	to	the	people	who	          analysis,	and	information	sharing	capabilities,	all	help	us	to	know	
need	it—all	within	a	compressed	time	frame.                             what	we	know—and	to	share	that	which	we	do	know.
    To	meet	this	challenge,	we	are	looking	at	information	in	               Along	with	better	analysis,	we	are	also	disseminating	infor-
new	ways.	We	have	improved	our	intelligence	capabilities	and	           mation	more	effectively.	The	legal	and	operational	barriers	that	
adopted	a	more	systematic,	focused	approach.	One	that	is	more	          once	prevented	information-sharing	no	longer	exist.	Thanks	to	
closely	coordinated	with	the	larger	intelligence	community.	            the	Patriot	Act,	today,	there	is	free	exchange	of	information	be-
    The	FBI’s	National	Security	Branch	was	established	to	bet-          tween	the	law	enforcement	and	intelligence	communities.	Since	
ter	integrate	intelligence	throughout	the	investigative	activities	     September	11th	,	we	have	disseminated	more	than	20,000	intel-
of	our	counterterrorism	and	counterintelligence	programs.	Its	          ligence	reports,	assessments,	and	bulletins	to	our	partners.
mission	is	to	protect	the	United	States	against	current	and	                We	 are	 seeing	 information	 in	 new	 ways,	 and	 we	 are	
emerging	national	security	threats—threats	such	as	weapons	             working	in	new	ways.	Today,	our	cases	frequently	have	an	
of	mass	destruction,	terrorist	attacks,	and	espionage.	                 international	nexus.
    Our	 foremost	 goal	 is	 to	 identify	 and	 to	 disrupt	 threats	       For	that	reason,	our	54	international	offices,	or	Legal	Atta-
before	they	cause	harm,	and	this	requires	that	we	effectively	          chés,	have	become	absolutely	critical	to	our	overall	operations.	
gather,	analyze,	and	disseminate	intelligence	information.              We	plan	to	have	58	open	by	the	end	of	2006.	What	began	pri-
    The	FBI	has	always	been	good	at	gathering	information.	It	is	       marily	as	a	liaison,	now	assists	our	counterparts	overseas	on	joint	
how	we	fought	the	Soviet	Union	during	the	Cold	War	and	La	              investigations;	intelligence-sharing;	and	the	development	of	new	
Cosa	Nostra	in	the	seventies	and	eighties,	but	until	recently,	the	     methods	to	detect,	disrupt,	and	prevent	terrorist	attacks.
FBI	primarily	conducted	investigations	by	tracking	down	leads	              Global	connections	have	aided	our	ability	to	track	down	
which	led	to	evidence	to	be	used	in	prosecutions.	Since	Septem-         fugitives	from	justice.	Since	the	first	of	the	year,	43	interna-
ber	11th	,	we	look	at	information	as	pieces	of	a	larger	puzzle—a	       tional	fugitives	in	10	countries	have	been	located—countries	
puzzle	we	must	rapidly	put	together	to	prevent	future	attacks.	         such	as	Armenia,	Ghana,	the	Philippines,	and	Tonga.	
    Likewise,	FBI	investigations	were	case-driven	from	the	bot-             We	are	also	working	more	effectively	with	our	partners	
tom	up.	As	the	head	of	a	field	office,	if	there	were	gangs	or	drug	     here	at	home.	State	and	local	law	enforcement	are	the	eyes	
activity	in	your	area,	that	was	where	you	would	direct	resources,	      and	ears	of	our	communities	nationwide.
but	now	we	say,	“know	your	domain.”	Today,	the	head	of	our	                 Three	of	the	four	hijackers	who	piloted	planes	in	the	Sep-
Denver	office,	Rick	Powers,	directs	his	agents	and	analysts	to	         tember	11	attacks	had	contact	with	state	and	local	police,	even	
look	at	it	this	way:	If	you	were	a	terrorist	operating	in	Colorado,	    though	they	were	in	the	United	States	for	only	a	short	time.
where	would	you	attack?	What	potential	targets	are	in	your	                 Today,	officers	making	traffic	stops	can	contact	the	FBI’s	
backyard?	A	stadium,	a	shopping	mall,	a	convention	center?	             Terrorist	 Screening	 Center,	 where	 multiple	 agencies	 bring	
    And	while	we	know	more,	still,	my	chief	concern	is	always	          together	disparate	“watchlist”	information	for	the	purpose	of	
that	which	we	do	not	know.	But	by	better	understanding	that	            identifying	known	potential	terrorists.	The	Center	stands	at	
which	our	enemies	target,	we	can	better	understand	how	to	              the	crossroads	of	intelligence	and	law	enforcement.	It	allows	
target	our	enemies.                                                     officers	on	the	street	to	receive	guidance	based	on	the	most	
    As	we	recognize	the	necessity	of	intelligence	gathering,	we	        up-to-date	terrorist	information	available.	
must	also	recognize	the	need	to	protect	our	civil	rights.	It	has	           Since	 the	 start	 of	 the	 year,	 the	 Center	 has	 fielded	 more	
always	been	my	belief,	that	in	the	end,	we	will	be	judged	not	          than	500	calls	in	Colorado	alone.	And	in	half	of	those	calls,	
only	on	whether	we	win	the	war	against	terrorism,	but	also	             the	person	who	has	been	stopped	is	a	match	with	a	person	
on	how	we	protect	the	civil	rights	we	cherish.	                         whose	name	is	on	the	watchlist.	

                                                                                                                                   MAY 2006
436                                                                                                      VITAL SPEECHES OF THE DAY

    Partnerships	among	the	law	enforcement	and	intelligence	             from	 Frankfurt,	 Germany,	 as	 scheduled	 at	 Miami	 Interna-
communities	act	as	a	force	multiplier.	The	FBI	is	a	relatively	          tional	Airport.	Along	with	its	passengers,	the	plane	carried	a	
small	 organization	 with	 only	 about	 12,000	 agents	 com-             container	holding	80	million	dollars.
pared	with	around	800,000	law	enforcement	officers	spread	                  As	 the	 cash	 was	 prepared	 for	 transport,	 a	 dark	 colored	
throughout	the	United	States.	That	is	why,	since	September	              pickup	truck	pulled	up	to	the	warehouse.	Two	masked	men	
11,	our	Joint	Terrorism	Task	Forces	have	increased	from	35	              jumped	from	the	truck	and,	at	gunpoint,	snatched	up	six	bags	
to	over	100	across	the	country.	                                         of	currency.	They	dropped	one	of	the	bags,	but	managed	to	
    Here,	law	enforcement,	intelligence,	and	first	responders	           spirit	away	7.4	million	dollars	in	cash.	
work	in	the	same	room,	literally	shoulder-to-shoulder,	track-               Miami-Dade	police	responded	to	the	scene	and	started	an	
ing	down	terrorism	leads.	The	Denver	Division	has	a	total	               investigation.	Immigration	and	Customs	Enforcement	arrived	
of	67	participating	agencies	and	has	addressed	over	5,000	               and	began	conducting	interviews.	FBI	agents	from	the	Miami	
investigative	leads	in	the	last	two	years	alone.	In	communities	         Division	joined	our	law	enforcement	partners	at	the	scene.	
like	yours	it	is	partnerships	that	determine	our	success.                   Through	 their	 combined	 efforts,	 a	 number	 of	 suspects	
    Let	me	give	you	a	couple	of	examples:                                were	identified.	After	several	weeks	of	intensive	physical	and	
    In	1992,	the	Denver	law	enforcement	community	recog-                 electronic	surveillance,	a	150,000	dollar	reward	was	offered.	
nized	the	threat	from	violent	gangs	trying	to	dominate	the	              Immediately,	an	individual	came	forward	with	a	list	of	names	
local	crack	cocaine	market.	In	response,	the	FBI,	the	Aurora	            and	was	outfitted	with	a	listening	device.
and	Denver	Police	departments	formed	the	Metro	Gang	Task	                   As	a	conversation	was	monitored,	investigators	learned	that	
Force.	Today,	it	is	a	partnership	of	nine	federal,	state,	and	local	     a	rival	group	kidnapped	one	of	the	robbers	and	would	only	
agencies	all	working	to	dismantle	criminal	enterprises.                  release	him	for	a	cut	of	the	money.	Based	on	the	escalating	
    This	task	force	recently	cracked	down	on	one	of	the	most	            situation,	FBI	agents	and	Metro-Dade	police	officers	arrested	
powerful	 gangs	 in	 Colorado—the	 Gallant	 Knights	 Insane	             three	of	the	robbery	suspects.
Gang.	 Its	 members	 were	 committing	 homicides,	 armed	                   By	tracing	a	cell	phone	call,	Miami-Dade	technical	support	
robberies,	 carjackings,	 and	 assaults	 on	 local	 streets	 on	 a	      located	the	kidnappers	at	a	hotel	near	the	airport.	FBI	agents	
regular	basis.	Task	Force	members	utilized	several	sophis-               and	Miami-Dade	detectives	arrested	the	three	kidnappers.	FBI	
ticated	techniques,	including	court	authorized	wiretaps,	to	             SWAT	team	members	cleared	the	hotel	and	located	a	pick-up	
investigate	the	gang’s	criminal	activities.	The	investigation	           truck	in	the	garage.	
culminated	with	over	400	law	enforcement	officers	making	                   The	 kidnap	 victim—who	 was	 a	 suspect	 in	 the	 original	
arrests,	executing	search	warrants,	and	seizing	assets	belong-           robbery—was	found	in	the	backseat	bound	with	tape.	The	
ing	to	over	60	gang	members.	                                            suspect	was	freed	for	one	brief	moment,	then	put	in	handcuffs	
    Even	as	we	confront	threats	from	international	terrorism,	           and	arrested	on	the	spot.	
we	cannot	forget	terrorists	who	operate	in	our	own	country,	                His	three	captors	were	charged	with	taking	a	hostage	to	
using	violence	to	intimidate	and	coerce	Americans.	Next	week	            extort	 stolen	 money.	 Three	 of	 his	 cohorts,	 along	 with	 the	
marks	the	11th	anniversary	of	the	Oklahoma	City	bombing	                 victim,	were	charged	with	armed	robbery.	
which,	 prior	 to	 September	 11th,	 was	 the	 worst	 bombing	              This	investigation	used	both	investigative	techniques	and	
disaster	in	the	continental	United	States.                               intelligence	activities.	It	demonstrates	the	tremendous	value	
    In	 a	 more	 recent	 investigation,	 members	 of	 the	 Denver	       of	intelligence,	of	informants,	of	technology,	and,	most	par-
Joint	Terrorism	Task	Force	gathered	evidence	on	a	series	of	             ticularly,	the	value	of	partnerships.	Spontaneous	and	seamless	
arsons	in	five	western	states.	According	to	the	indictment,	             cooperation	among	multiple	state	and	local	law	enforcement	
environmental	 extremists	 waged	 a	 campaign	 of	 domestic	             agencies	was	key	to	solving	this	case.
terror	using	incendiary	devices.                                            In	the	FBI,	our	greatest	strength	is	our	ability	to	bring	to	bear	
    The	suspects	allegedly	attacked	U.S.	Forest	Service	ranger	          the	full	array	of	our	law	enforcement	investigative	tools	and	our	
stations,	lumber	companies,	a	high-tension	power	line,	the	Vail	         intelligence	 capabilities	 in	 pursuing	 criminals	 and	 terrorists	
Ski	Resort,	and	other	public	and	private	targets,	causing	millions	      alike.	By	looking	at	information	in	new	ways,	improving	our	
of	dollars	in	damage.	This	January,	11	defendants	were	indicted	         capabilities,	and	working	more	effectively	with	our	partners,	we	
on	charges	of	arson	and	destruction	of	an	energy	facility.	              will	succeed	in	making	America	a	safer	place	in	which	to	live.
    These	are	two	successful	investigations	in	Colorado,	but	suc-           Going	back	to	the	blue	bear	for	a	moment,	information—
cesses	like	these	are	taking	place	from	coast-to-coast.	And	while	our	   like	art—can	change	your	perspective.	Perhaps,	today,	you	
mission	of	preventing	terrorist	attacks	is	our	top	priority,	criminal	   have	gained	a	new	perspective	on	why	the	FBI	is	uniquely	
investigations	remain	vital	to	our	operations.	Often	overlooked	         situated	to	fight	and	win	the	War	on	Terror.
is	the	importance	of	our	history—our	foundation—in	criminal	                We	live	in	a	world	of	changing	threats.	And	we	face	a	ruth-
investigations.	But	many	of	the	skills	and	techniques	we	develop	        less	and	determined	enemy.	It	is	by	using	information	to	our	
chasing	down	criminals	are	the	same	we	use	to	pursue	terrorists.         advantage	that	we	can	ensure	the	safety	of	our	families,	our	
    A	recent	example	from	Miami	reads	like	a	movie	script.	On	           businesses,	and	our	nation.	Together,	we	will	prevail.	Thank	
                                                                                               	
November	6,	2005,	international	flight	number	462	arrived	               you	for	having	me.

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STROBE TALBOTT                                                                                                                        437



                                     Ideas, Policy, and Politics
                                 THE ROLE OF INDEPENDENT RESEARCH IN PARTISAN TIMES
                        Address by STROBE	TALBOTT, President, The Brookings Institution
     Delivered to the Miller Center of Public Affairs, University of Virginia, Alexandria, Virginia, March 28, 2006


T    he	fact	that	one	of	our	nation’s	Founding	Fathers	should	
     also	be	the	founder	of	this	university	is	a	good	starting	
point	for	my	remarks.	Thomas	Jefferson	personified—perhaps	
                                                                       the	public	about	the	major	issues	of	the	day	and	playing	our	
                                                                       own	part	in	generating	ideas	about	how	our	nation	might	
                                                                       better	 govern	 itself	 and	 lead	 the	 world.	 In	 the	 1920s,	 we	
even	epitomized—the	proposition	that	good	governance	is	               helped	 the	 government	 learn	 how	 to	 establish	 a	 modern	
based	on	good	ideas,	and	that	good	ideas	are	based	on	respect	         accounting	and	management	system;	in	the	‘30s,	we	helped	
for	facts,	rigor	in	thinking,	rationality	in	debate,	and	civility	     create	Social	Security;	in	the	‘40s,	we	had	a	significant	hand	
in	discourse.	                                                         in	designing	the	UN	and	the	Marshall	Plan;	in	the	‘50s,	we	
    Moreover,	 Jefferson’s	 name	 is	 associated	 with	 the	 word	     worked	to	improve	the	presidential	transition	process	and	
Independence,	with	a	capital	“I.”	Two	of	the	three	accom-              modernize	the	military;	in	the	‘60s,	we	contributed	to	the	case	
plishments	for	which	he	wanted	to	be	remembered	were	the	              for	deregulation;	in	the	‘70s,	the	design	of	the	Congressional	
Virginia	statute	on	religious	freedom	and	the	Declaration	of	          Budget	Office;	in	the	‘80s,	it	was	tax	reform.	
Independence.	And	the	third	accomplishment	of	which	he	                    In	 the	 last	 twenty	 years,	 we’ve	 turned	 our	 attention	 to	
was	 so	 proud—this	 university—was	 created	 with	 another	           developing	new	approaches	to	healthcare,	tax	policy,	educa-
I-word	in	mind:	the	impact	it	would	have	on	public	affairs,	           tion,	welfare,	public	service,	campaign	finance,	and	the	new	
especially	through	the	education	of	good	citizens	and	leaders	         international	security	environment	that	has	come	with	the	
in	both	political	parties—to	wit,	UVA	graduates	such	as	Ted	           end	of	the	Cold	War	and	global	integration.	In	the	wake	of	
Kennedy	and	George	Allen.	                                             9/11,	we’ve	ratcheted	up	our	search	for	more	effective	ways	
    “Independence”	and	“impact”	are	two	thirds	of	a	trinity	of	        of	organizing	the	U.S.	government	to	defend	our	homeland	
virtues	that	are	critical	to	public	policy	research.	The	third,	       and	advance	our	national	interests	abroad.	
overriding	virtue,	I’m	sure	you’d	all	agree,	is	quality—as	in	             Now,	issues	of	governance	and	leadership	are,	by	defini-
intellectual	quality:	the	kind	of	quality	that	can	only	be	at-         tion,	political.	“Political”	means	that	they	are,	quite	properly,	
tained	in	an	atmosphere	that	fosters	the	right	combination	            subject	to	the	push	and	pull	of	partisan	interests—and,	I’d	
of	discipline	and	imagination,	an	openness	to	the	construc-            add,	 partisan	 passions.	 That	 raises	 an	 issue	 that	 avowedly	
tive	 criticism	 of	 peers,	 and	 the	 active	 encouragement	 of	 a	   nonpartisan	organizations	like	ours,	yours	and	mine,	must	
diversity	of	views.	                                                   face:	what	does	that	adjective,	nonpartisan,	really	mean?	
    Those	basic	values—quality,	independence,	and	impact—                  First,	I	should	explain	why	we	at	Brookings	use	that	word	
are	important	not	just	to	Mister	Jefferson’s	university	and	to	        rather	than	“bipartisan.”	Bipartisanship	implies	cooperation	
the	center	that	Burkett	Miller	established	here,	but	also	to	the	      between	Republicans	and	Democrats	(which—don’t	get	me	
institution	that	Robert	S.	Brookings	founded	in	Washington.	           wrong!—we’re	all	for).	But	in	addition	to	the	lonely	but	rel-
We	have	a	common	stake	not	just	in	upholding	those	values,	            evant	case	of	Senator	Jim	Jeffords,	there	are	lots	of	Americans	
but	in	defending	them	when	they’re	in	jeopardy,	as	I	think	            who	 don’t	 associate	 themselves	 with	 either	 party.	 A	 truly	
is	the	case	today.	                                                    nonpartisan	 institution	 respectfully	 rejects	 the	 notion	 that	
    Before	I	elaborate	on	that	point,	let	me	give	you	a	bit	of	        truth	and	wisdom	are	necessarily	to	be	found	in	one	major	
background	about	Brookings.	We’re	celebrating	our	90th	an-             party	or	the	other.	
niversary	this	year—which	makes	us	only	half	as	old	as	UVA.	               Nonpartisanship,	 in	 other	 words,	 is	 a	 corollary	 of	 the	
But	that	still	makes	us	among	America’s	oldest	think	tanks.	           principle	of	independence.	It	means	that	the	public-policy	
Robert	Brookings	was	a	mid-western	businessman	and	philan-             scholars	most	worth	listening	to—however	they	might	regis-
thropist	who	came	to	Washington	at	the	invitation	of	another	          ter	and	whomever	they	might	vote	for—develop	their	ideas	
one	of	those	UVA-educated	leaders,	who	happened	also	to	be	            independently	of	any	platform,	agenda	or	party	line.	They	
a	professor	and	a	self-described	Jeffersonian.	I’m	referring,	of	      find	solutions	to	today’s	most	pressing	and—by	definition,	
course,	to	Woodrow	Wilson.	We	think	of	ourselves	as	engaged	           complex—problems,	 as	 opposed	 to	 finding	 a	 rationale	 for	
in	a	form	of	education	ourselves.	We’re	constantly	learning	           their	own	established	views.	Or	to	put	it	differently:	nonpar-
things,	and	we	try	to	help	educate	the	public	as	well.	That’s	         tisanship	is	a	frame	of	mind,	one	that	was	captured	nicely	
why	we	take	pleasure	in	being	one	of	the	few	think	tanks	with	         by	Daniel	Patrick	Moynihan—a	Democrat	with	a	Ph.D.	who	
a	“dot.edu”	rather	than	a	“dot.org”	address	in	cyberspace.	            worked	 for	 Richard	 Nixon.	 “We’re	 all	 entitled	 to	 our	 own	
    Over	the	past	nine	decades,	Brookings	and	like-minded	             opinions,”	 said	 Professor/Ambassador/Senator	 Moynihan,	
institutions	have	simultaneously	concentrated	on	informing	            “but	we’re	not	entitled	to	our	own	facts.”	

                                                                                                                                 MAY 2006
438                                                                                                            VITAL SPEECHES OF THE DAY

    That	frame	of	mind	prospers	on	this	campus.	It	also	prospers	             battles.	All	this	encourages	the	noisier,	more	militant	wings	
inside	the	walls	of	Brookings.	But	it’s	not	doing	so	well	in	the	city	        of	the	parties	to	square	off	against	each	other.	
where	I	work	and	where	you	visit	from	time	to	time.	Brookings,	                   Enter	the	fourth	estate	as	an	accomplice	to	the	problem.	
as	you	may	know,	is	located	just	off	DuPont	Circle.	That	puts	                Many	 in	 the	 media	 have	 an	 interest	 in	 covering	 politics	 as	
it	a	mile	from	the	White	House,	two	and	a	half	miles	from	the	                combat	rather	than	as	a	deliberative	process.	This	is	partly	a	
Capitol,	three	miles	from	the	Democrats’	and	the	Republicans’	                function	of	the	commercial	environment	in	which	newspapers,	
national	committee	headquarters—and	eight	miles	inside	the	                   magazines,	and	networks	compete	for	readers,	viewers,	and	
Beltway.	That	means	we’re	at	what	might	be	called	the	Ground	                 listeners.	Major	news	organizations	have	watched	their	market	
Zero	of	intense,	often	destructive	partisanship.	Those	of	you	                share	fall.	They	are	losing	their	audiences	to	specialized	pub-
who	tune	into	what	happens	in	Washington	could	be	forgiven	                   lications,	cable	television,	talk	radio,	internet	Web	sites	and	
for	thinking	the	whole	city	is	a	civility-free-zone.	                         blogs—all	of	which	are	more	focused	on	“narrowcasting”	to	
    Note	that	I	said	“intense,	destructive”	partisanship.	Par-                the	tastes	and	opinions	of	consumers	rather	than	broadcasting	
tisanship	is	not	only,	in	and	of	itself,	a	natural	and	healthy	               to	the	American	public	at	large.	These	new	competitors	often	
part	of	our	political	system—it’s	institutionalized	in	the	two-               slant	their	coverage	in	one	direction	or	the	other	in	order	to	
party	system.	The	same	could	be	said	of	polarization.	Barry	                  go	after	constituencies	with	explicit	political	orientations	and	
Goldwater	had	a	valid	point	when	he	said	that	our	elections	                  agendas.	Even	if	these	newcomers	don’t	succeed,	as	some	fear	
should	offer	the	American	people	“a	choice,	not	an	echo.”	                    they	will,	in	driving	the	established	networks	and	newspapers	
    A	second	point	that	offers	some	consolation	is	that	par-                  to	extinction,	there’s	no	question	they	have	added	to	the	pres-
tisanship	 in	 the	 negative,	 divisive	 sense	 isn’t	 always	 and	           sure	on	the	media	at	large	to	be	more	“edgy,”	more	opinion-
everywhere	as	bad	outside	the	Beltway	as	it	is	inside	(which	                 ated—and,	hence,	more	polarized—and	polarizing.	
is	one	reason	I’m	always	looking	for	an	excuse	to	get	out	of	                     If	I	seem	a	bit	worked	up	on	this	subject,	it’s	because	I	was	
town).	Our	scholars	have	learned	from	their	extensive	work	                   a	journalist	for	21	years.	One	reason	I	loved	that	profession	
in	cities	and	states	that	mayors	and	governors	tend	to	follow	                was	that	it	paid	me	a	decent	wage	to	continue	my	education,	
the	doctrine	associated	with	the	name	of	Fiorello	LaGuardia:	                 see	the	world,	and,	through	columns	and	analytical	pieces,	
when	it	comes	to	picking	up	garbage	or	fixing	potholes,	there	                participate	in	the	national	debate.	But	another	reason	I	loved	
is	no	Democratic	or	Republican	way	to	do	it	right.	                           it	was	that	much	of	the	proprietorship	of	the	media,	when	I	
    A	third	point	I	try	to	bear	in	mind—especially	when	I’m	                  was	getting	my	start,	saw	itself	as	being	not	just	a	business	
in	 the	 presence	 of	 professors	 of	 American	 history—is	 that	            but	a	public	trust.	That’s	far	less	true	today,	to	the	detriment	
polarization	 is	 not	 new,	 nor	 is	 it	 as	 bad	 as	 it’s	 been	 in	 the	   of	the	public	good.	
past,	say,	in	the	1860s,	or,	for	that	matter,	the	1960s,	when	                    Now,	 you	 sometimes	 hear	 conventional	 wisdom	 to	 the	
I	was	an	undergraduate	at	one	of	the	many	campuses	in	this	                   effect	 that	 it’s	 all	 the	 public’s	 fault:	 Americans	 want	 to	 be	
country	that	was	in	turmoil.	                                                 entertained	by	shouting	matches	between	pundits	or	poli-
    But	just	because	partisanship	and	polarization	have	gotten	out	           ticians.	 Therefore,	 they—the	 audience—are	 to	 blame	 for	
of	hand	in	years	gone	by	is	not	an	excuse	for	being	complacent	               hyper-partisanship	in	the	media.	
when	it	happens	in	the	present—especially	when	it’s	toxic	in	new	                 Polling	data	suggests	otherwise.	Self-described	moderates	
and	ominous	ways.	That,	I	fear,	may	be	where	we	are	now.	                     are	still	a	plurality	among	voters,	as	they	have	been	for	the	
    By	 any	 measure,	 the	 United	 States	 Congress	 is	 not	 just	          last	forty	years.	
more	polarized	than	it	was	a	generation	ago—the	polariza-                         There’s	no	denying	that	today’s	polarization	does	reflect	
tion	has	become	structural.	Let	me	explain.	One	of	several	                   some	changes	in	society.	While	the	number	of	self-described	
reasons	that	there	are	fewer	moderates	in	Congress	is	that	                   moderates	has	remained	a	steady	plurality	of	40	percent	over	
electoral	redistricting	has	made	many	seats	safe	for	one	party	               the	last	forty	years,	self-described	liberals	and	conservatives	
or	the	other.	All	too	often,	that	means	either	there’s	virtually	             have	sorted	themselves	more	consistently	along	party	lines.	
no	competition	at	all,	or	the	only	meaningful	competition	                    Like-minded	people	at	either	end	of	the	political	spectrum	
takes	 place	 in	 primaries,	 not	 in	 the	 general	 election.	 As	 a	        tend	to	seek	out	ideas,	neighbors	and,	not	surprisingly,	lead-
result,	candidates	spend	more	energy	winning	the	support	                     ers	that	conform	to	their	own	views.	
of	activists	in	their	own	party	than	in	appealing	to	potential	                   Nevertheless,	 on	 most	 issues—including	 some	 of	 the	
cross-over	voters	in	the	other	party.	                                        most	 politically	 explosive—majorities	 or	 large	 pluralities	
    Once	candidates	are	elected	and	report	for	duty	in	Wash-                  favor	moderate	positions.	For	instance,	polls	suggest	that	the	
ington,	they	find	that	they	are	subject	to	leaderships	on	both	               country	is	nearly	evenly	divided	between	those	who	describe	
sides	of	the	aisle	that	have	become	much	more	dogmatic	about	                 themselves	as	pro-choice	and	pro-life.	More	significant	than	
enforcing	the	party	line.	                                                    that	 roughly	 even	 split	 is	 another	 set	 of	 polling	 data:	 55	  	
    On	 top	 of	 that,	 as	 recent	 headlines	 have	 reminded	 us,	           percent	of	Americans	believe	that	abortion	should	be	legal	
legislators	have	more	sense	of	obligation	to	the	growing	army	                under	certain	circumstances,	while	only	26	percent	believe	
of	 lobbyists	 who	 fund	 campaigns	 and	 who	 use	 legislators	              that	it	should	always	be	legal	and	only	17	percent	say	it	should	
as	surrogates	in	waging	their	own	ideological	or	parochial	                   never	be	legal.	In	short,	the	country	is	more	moderate	than	

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the	political	background	noise	would	suggest.	Citizens	want	             national	 debt	 pose	 a	 challenge	 that	 can	 only	 be	 met	 with	
their	leaders—and	those	who	advise	them	or	comment	on	                   the	restoration	of	bipartisanship	of	a	kind	that	we	arguably	
their	performance—to	be	arguing	about	what’s	best	for	the	               haven’t	seen	since	Harry	Truman	made	common	cause	with	
country,	not	calling	each	other	names.	                                  Arthur	Vandenberg	on	how	to	rebuild	Europe	and	wage	the	
    Higher	 levels	 of	 polarization	 impair	 the	 nation’s	 ability	    Cold	War.	
to	 come	 together	 in	 meeting	 our	 greatest	 challenges.	 As	 a	         And	speaking	of	national	security	and	foreign	policy,	we’re	
general	 proposition,	 that	 means	 balancing	 diversity	 with	          going	to	need	the	same	kind	of	bipartisanship	if	we’re	going	
unity—a	goal	that’s	captured	by	our	nation’s	motto:	“E	pluri-            to	deal	with	Iraq	in	a	way	that	salvages	our	interests.	On	the	
bus	unum.”	Translated	from	Latin	into	practice,	that	means:	             surface,	the	stances	of	the	political	parties	toward	Iraq	ap-
politics	should	be	more	about	finding	common	ground	than	                peared	to	converge	considerably	in	the	course	of	the	2004	
staking	out	a	battle	ground.	                                            campaign.	 To	 some	 extent,	 that	 illusion	 persists.	 Neither	
    As	 for	 our	 present	 situation,	 I’ll	 grant	 that	 there	 have	   political	party,	after	all,	is	proposing	a	drastic	or	immediate	
been	a	 few	 examples	in	recent	years	of	a	bitterly	fractious	           reduction	of	military	force	levels	or	military	spending.	
Congress	mustering	bipartisan	support	for	some	important	                   Below	the	surface,	however,	a	real	chasm	exists	between	
measures—welfare	and	education	reform,	improvements	in	                  Democratic	 and	 Republican	 bases.	 Less	 than	 half	 of	 those	
homeland	security	and	the	reorganization	of	the	intelligence	            who	identify	themselves	as	Democrats	believe	that	the	best	
community,	and	tightening	up	the	rules	for	corporate	gover-              way	to	ensure	peace	is	through	military	strength,	while	a	lot	
nance,	to	name	a	few.	                                                   more	than	half—nearly	70	percent—of	Republicans	are	on	
    But	 polarization	 has	 still	 gotten	 in	 the	 way	 of	 common	     the	other	side	of	that	issue.	That	gap	between	the	parties	has	
sense	 and	 sound	 policy	 where	 it	 matters	 most.	 Take	 the	         grown	considerably	over	the	last	decade.	This	gap	has	many	
function	of	Congress	providing	advice	and	consent	on	judi-               implications,	but	certainly	the	most	basic	is	that	our	politi-
cial	appointments.	The	fact	that	Congress	last	year	narrowly	            cal	leaders	will	have	a	much	harder	time	putting	together	a	
avoided	“going	nuclear”	on	that	subject	was	a	wake-up	call	              comprehensive	national	security	strategy	capable	of	gaining	
about	the	extent	to	which	both	the	courts	and	Congress	have	             broad-based	 public	 support,	 let	 alone	 addressing	 specific	
been	affected,	and	I’d	say	infected,	by	polarization	and	the	            challenges	such	as	the	war	in	Iraq.	
wrong	kind	of	partisanship.	                                                I	can	tell	you	from	my	own	recent	travels	to	Europe,	the	
    Another	example	is	advocacy	of	an	open	international	trading	        Middle	East,	and	the	Far	East,	that	our	friends	abroad	are	not	just	
system.	That’s	become	a	third	rail	in	American	politics:	speak	          concerned	by	this	structural	divisiveness	in	our	politics—they’re	
out	for	it	and	you	risk	being	fried.	It	hasn’t	always	been	this	way.	    truly	alarmed,	especially	with	regard	to	Iraq.	Whatever	their	
During	the	Cold	War,	presidents	and	congresses	were	able	to	             skepticism	about	the	way	the	war	started,	they	don’t	want	it	
build	broad	national	coalitions	in	favor	of	free	trade	regardless	of	    to	end	in	an	American	debacle.	They’re	also	worried	that	the	
which	party	controlled	either	or	both	branches	of	government.	           troubles	we’re	having	in	Iraq	are	creating	a	backlash	against	
Such	coalitions	are	much	more	difficult	to	forge	today.	                 international	engagement	more	generally—maybe	not	isolation-
    A	number	of	candidates	in	the	2004	Democratic	primaries	             ism	in	the	1920s	and	‘30s	sense,	but	in	a	latter-day	version	that	
treated	the	“outsourcing”	of	service-sector	jobs	as	though	it	was	       combines	xenophobia	and	protectionism.	So	what	does	all	this	
the	greatest	menace	of	our	day.	Republicans,	long	the	party	of	          mean	for	institutions	committed	to	nonpartisan	public	policy?	
free	trade,	still	imposed	steel	tariffs	and	pilloried	the	President’s	   For	starters,	one	way	is	to	lead	by	example—that	is,	to	create	and	
top	economic	advisor,	the	highly	regarded	Harvard	economist	             sustain	an	atmosphere	that	actively—indeed,	proactively—en-
Gregory	Mankiw,	for	merely	suggesting	that	outsourcing	might	            courages	collaboration	on	projects	without	regard	to	party	lines,	
have	some	benefits	for	the	American	economy.	                            that	brings	people	of	different	backgrounds	and	perspectives	
    So	what	should	be	a	bipartisan	effort	to	increase	our	com-           together.	This	is	a	difficult	balancing	act.	It	requires	that	institu-
petitiveness	in	the	global	economy	and	to	address	the	needs	of	          tions	like	ours	cultivate	a	diversity	of	perspectives	within	our	
Americans	displaced	by	international	trade	now	risks	becom-              ranks.	But	it	also	requires	that	scholars	with	different	viewpoints	
ing	a	contest	to	see	who’s	in	favor	of	the	highest	walls—either	         actively	work	together	to	address	policy	challenges.	
against	imports,	or	immigrants,	or	both.	That’s	bad	for	every-              When	Brookings	does	a	joint	event	or	joint	project	with	
one—it’s	bad	for	all	Americans,	and	for	the	whole	world.	                an	institution	that	is	avowedly	conservative	or	liberal—and	
    More	 generally,	 the	 tendency	 to	 frame	 political	 choices	      we	reach	out	in	both	directions—our	purpose	(and	we	hope	
in	win/lose,	winner-take-all	terms	has	inhibited	progress	on	            theirs)	is	to	bridge	the	partisan	divide—not	to	debate,	how-
transnational	issues	like	global	poverty,	climate	change,	and	           ever	politely,	back	and	forth	across	that	divide.	In	other	words,	
non-proliferation.	On	the	home	front,	it	has	had	a	comparable	           we	try	to	avoid	what	we	call	the	“Crossfire”	trap:	that	is,	let-
effect	of	generating	more	heat	than	light	on	issues	like	Social	         ting	the	two	outfits	in	question	get	type-cast	as	representing	
Security,	healthcare	and	worker	training.	                               opposite	and	predictable	sides	in	the	national	debate.	
    The	most	glaring	example	of	this	whole	problem	is	our	                  If	that’s	Scylla,	then	Charybdis	is	the	“two-handed	trap,”	
failure	to	restore	our	nation	to	a	condition	of	fiscal	sanity.	          as	in:	“on	the	one	hand,	on	the	other	hand”—that	is,	feeling	
The	$300	billion	annual	budget	deficit	and	our	$5	trillion	              that	we’ve	always	got	to	reflect	both	sides	of	a	contested	issue.	

                                                                                                                                    MAY 2006
440                                                                                                        VITAL SPEECHES OF THE DAY

That,	too,	is	something	to	avoid.	Our	job	should	not	be	to	               purpose	of	advancing	the	political	fortunes	of	a	political	party	
forge	compromises	or	to	aim	for	the	middle	(which,	by	the	                or	its	candidates.	
way,	is	a	moving	target	in	the	American	political	spectrum).	                 Obviously,	nonpartisan	institutions	like	ours	need	to	steer	
Being	 nonpartisan	 doesn’t	 mean	 being	 “policy-neutral”—a	             clear	 of	 any	 arrangement	 that	 smacks	 of	 compromising	 the	
phrase,	and	a	concept,	that	is	anathema	to	our	goal	of	being	             quality	and	independence	of	their	work.	That	said,	we’ve	got	to	
policy-relevant.	                                                         be	more	focused	on	identifying	our	intended	consumers,	and	
    Once	scholars	have	used	the	best	tools	of	social	science	to	          trying	harder	to	reach	them	through	the	various	media	that	they	
come	up	with	innovative	solutions	to	tough	policy	problems,	              use—from	the	web	and	e-mail,	to	talk	radio	and	cable	televi-
they	 should	 be	 expected	 to	 put	 forward	 their	 policy	 find-        sion,	to	handheld	devices	and,	yes,	cell	phones.	Otherwise,	we	
ings	and	prescriptions	forcefully.	That	doesn’t	mean	there’s	a	           won’t	be	fulfilling	the	third	element	of	our	trinity:	impact.	
“Brookings	line”	on	any	subject,	any	more	than	there’s	a	“UVA	                Therefore	we	have	to	convince	our	own	funders	that	the	
line”	(except	maybe	with	regard	to	certain	sporting	events).	             ability	 to	 disseminate	 our	 work	 is	 crucial—and	 therefore	
Our	attitude	with	regard	to	product—that	is,	in	our	case,	the	            worthy	of	their	support—along	with	the	research	itself.	
analysis	 and	 recommendations	 that	 our	 scholars	 come	 up	                A	final	word	about	how	we	can	strengthen	the	trinity	as	a	
with—is	to	let	the	chips	fall	where	they	may,	as	long	as	our	             whole.	We’ll	enhance	the	quality,	independence	and	impact	
people	adhere	to	the	highest	standards	of	intellectual	rigor	             of	our	work	if	we’re	more	aggressive	and	imaginative	about	
and	collegial	conduct.	                                                   partnerships.	 The	 basic	 premise	 here	 is	 that—while	 there	
    What	does	this	mean	in	practice?	Well,	letting	the	chips	fall	        will	always	be	incompatibilities	between	and	among	institu-
where	they	may	means—to	mix	a	metaphor—not	loading	the	                   tions,	and	while	there	will	always	be	an	inescapable	element	
dice.	The	main	combatants	in	today’s	political	battleground—              of	competition	in	those	relationships—we	absolutely	must	
politicians,	 party	 leaders	 and	 advocacy	 organizations—are	           shift	 the	 ratio	 of	 competition	 to	 collaboration	 more	 in	 the	
always	in	search	of	ideas	that	serve	their	strategic	objectives.	         direction	of	collaboration.	
Some	research	organizations	are	happy	to	supply	these	ideas:	                 At	 Brookings,	 we	 have	 increased	 our	 partnerships	 with	
they	 take	 as	 their	 starting	 point	 a	 set	 of	 policy	 objectives	   scholars	at	other	institutions	across	the	political	spectrum:	
defined	by	political	operatives,	and	then	tailor	their	research	          the	Urban	Institute,	the	Cato	Institute,	the	American	Enter-
to	buttress	those	pre-set	positions.	This	approach	has	been	              prise	Institute,	the	Center	for	American	Progress,	the	Center	
called	“Jeopardy	research,”	a	reference	to	the	TV	game	show	              for	Strategic	and	International	Studies,	the	Hoover	Institu-
where	the	host	provides	the	answer	and	the	contestants	do	                tion—and,	yes,	the	Heritage	Foundation.	
battle	to	come	up	with	the	right	question.	                                   I	 think	 the	 next	 couple	 of	 years—i.e.,	 as	 we	 head	 into	
    In	our	business,	the	competition	also	often	revolves	around	          the	2008	presidential	campaign—give	us	an	opportunity	for	
large	cash	prizes.	As	on	other	fronts	of	the	political	wars,	mon-         more	broad-based	collaboration	than	has	been	the	case	in	the	
ey	is	a	hugely	powerful	weapon.	There	are	plenty	of	funders	              past.	That’s	because	the	2008	race	is	shaping	up	to	be	the	
out	there	who	think	they’ve	got	the	right	answers	already	and	            first	one	in	56	years—since	1952—when	neither	ticket	will	
are	looking	to	sponsor	research	that	will	support	them.	                  feature	an	incumbent	president	or	vice	president.	That	could	
    Quite	simply,	that	is	something	a	truly	independent,	high-            mean—let’s	hope	it	does	mean—that	the	two	parties	will	be	
quality	research	outfit	must	avoid—literally,	at	all	costs,	and	          more	open	than	usual	to	fresh	ideas	without	quite	as	much	
there	will	be	costs	sometimes.	                                           of	a	partisan	stamp	to	them.	We’re	going	to	be	doing	some	
    While	we’re	on	the	subject	of	money:	a	lot	of	it	these	days	          sustained,	focused,	ambitious	work	of	our	own	based	on	that	
is	going	not	into	research	per	se	but	into	the	presentation	              premise,	including	through	collaboration	with	outfits	up	and	
and	marketing	of	that	research.	A	recent	study	by	Andrew	                 down	Think	Tank	Row	and	around	the	country.	
Rich,	a	professor	at	City	College	in	New	York,	caught	my	                     In	 that	 venture,	 as	 in	 others,	 universities	 are	 vital	 part-
eye	because	it	punctured	the	myth	among	liberals	that	con-                ners	for	us.	They’re	the	keepers	of	the	gold	standard	for	the	
servative	research	organizations	have	out-spent	liberal	and	              intellectual	values	we	strive	to	uphold;	they’re	the	source	of	
mainstream	 organizations.	 Quite	 the	 contrary,	 avowedly	              the	latest	methods	for	research	in	the	disciplines	we	apply	
conservative	organizations,	at	least	in	the	time	frame	Rich	              to	the	policy	world;	they’re	often	the	source	of	our	scholars	
looked	 at,	 were	 outspent—by	 a	 considerable	 margin.	 Yet	            themselves.	 And	 many	 of	 them	 see	 value	 in	 joint	 projects	
these	 conservative	 foundations—and	 the	 policy	 institutes	            with	think	tanks	like	ours.	
that	 they	 support—had,	 according	 to	 Rich’s	 data,	 greater	              So	on	that	note,	I	think	I’ve	come	full	circle—to	the	com-
impact.	That	was,	at	least	in	part,	because	they	put	a	signifi-           mon	ground—and	common	mission—between	universities	
cantly	higher	percentage	of	their	budget	into	outreach	than	              like	this	one,	founded	by	Thomas	Jefferson,	and	think	tanks	
nonpartisan	institutions.	                                                in	the	capital	of	the	nation	he	led.	
    Avowedly	liberal	organizations	have	taken	notice.	Several	                With	that,	I	thank	you	for	your	attention	and	look	forward	
of	 these	 have	 copied	 the	 “war-room”	 model,	 focusing	 on	           to	our	discussion—including	on	how	we	can	work	together	
the	drafting	of	talking	points	for	like-minded	politicians,	or	           in	a	way	that	would	have	made	Thomas	Jefferson,	Robert	S.	
                                                                                                                      	
developing	so-called	“wedge-issue	legislation,”	with	the	sole	            Brookings	and	Burkett	Miller	proud. 	

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REX W. TILLERSON                                                                                                                         441



                                                              Energy
                                                         THE GLOBAL OUTLOOK
                      Address by REX	W.	TILLERSON, Chairman and CEO, ExxonMobil Corporation
                     Delivered to the EFR Business Week 2006, Rotterdam, The Netherlands, April 20, 2006


M       y	company	is	proud	to	provide	the	Dutch	and	Europe-
        ans	with	energy	and	jobs	through	our	many	operations	
here	in	the	Netherlands,	including	our	natural	gas	production	
                                                                         The	oil	and	natural	gas	industry	is	literally	grounded	in	the	
                                                                         environment.	
                                                                            Ask	any	geoscientist	or	production	manager	in	our	industry	
                                  	
facilities	in	the	Groningen	field	…	our	refinery,	chemical	plants	       and	they	will	tell	you	that	poor	environmental	performance	
                                         	
and	blending	plant	here	in	Rotterdam	…	our	chemicals	plants	             leads	to	poor	operational	performance,	which	in	turn	leads	
                                 	
in	 Amsterdam	 and	 Kerkrade	…	and	 our	 350	 Esso-branded	              to	poor	business	performance.	A	commitment	to	the	environ-
service	stations	nationwide.	                                            ment	is,	quite	simply,	a	business	imperative.	
    I	have	been	asked	today	to	provide	an	industry	perspective	
on	the	impact	of	shifts	in	the	global	energy	sector.	                    3	The	Realities	We	Face
    In	doing	so,	let	me	begin	by	recalling	the	words	of	this	                Achieving	 these	 goals,	 however,	 demands	 that	 we	 face	
university’s	namesake.	Erasmus	once	wrote:	                              certain	realities.	
    “There	are	some	people	who	live	in	a	dream	world,	and	                   The	first	of	these	realities	is	the	inevitable	rise	in	demand	for	
there	are	some	who	face	reality.	And	then	there	are	those	who	           energy	worldwide.	This	will	have	a	profound	impact	on	us	all.	
turn	one	into	the	other.”	                                                   By	 2030—less	 than	 twenty	 five	 years	 from	 now—the	
    Today	I	would	like	to	speak	to	the	dreams,	or	goals,	we	all	         world’s	energy	needs	will	be	almost	50	percent	greater	than	
       	                             	
share	…	to	the	realities	we	all	face	…	and	to	the	means	of	turn-         they	were	last	year.	That	is	a	startling	statistic,	especially	when	
ing	our	goals	into	realities	through	market-based	advances	              you	consider	that	80	percent	of	that	growth	will	come	from	
in	the	energy	industry.	                                                 one	subset—developing	countries.	
                                                                             Developing	countries	in	Asia	alone	will	see	energy	demand	
3	The	Goals	We	Share                                                     increase	by	over	150	percent	in	the	period	from	2000	to	2030.	
    It	begins	with	a	vision.	What	are	the	goals	we,	as	current	          This	growing	demand	for	energy	reflects	a	growing	demand	
and	future	leaders	of	the	global	economy,	seek	to	achieve?	              worldwide	a	higher	standard	of	living.	
    First,	we	share	the	goal	of	achieving	human	and	economic	                Meeting	it	will	require	massive	investment,	access	to	re-
progress.	In	major	industrialized	countries,	this	means	a	higher	        sources,	and	a	continued	focus	on	technology.	
quality	of	life,	more	secure	lifestyles,	better	jobs,	greater	wealth,	       A	second	reality	with	a	global	impact	is	the	expected	sub-
and	a	wider	choice	of	goods	and	services	at	competitive	prices.	         stantial	increase	in	greenhouse	gas	emissions.	
    In	many	developing	nations,	human	and	economic	prog-                     We	 know	 that	 since	 the	 19th	 century,	 carbon	 dioxide	
ress	means	something	more	basic.	It	means	not	just	bettering	            concentrations	in	the	atmosphere	have	increased	roughly	30	
lives,	but	preserving	them.	                                             percent.	As	fossil	fuel	use	increases	to	meet	growing	energy	
    According	to	the	International	Energy	Agency,	about	1.6	             demand,	particularly	in	the	developing	world,	carbon	dioxide	
billion	people	around	the	world	lack	electricity,	and	about	2.4	         emissions	will	increase,	too.	
billion	still	rely	on	basic	fuels	such	as	wood	and	waste.	                   We	also	know	that,	since	the	mid-1800’s,	average	global	
    Limited	access	to	clean,	safe	and	reliable	energy	limits	ac-         surface	 temperatures	 have	 risen	 by	 about	 6	 tenths	 of	 one	
cess	to	critical	social	services,	including	food	and	water	sup-          degree	 Celsius.	 Other	 changes,	 too,	 have	 been	 observed,	
plies,	sanitation,	healthcare,	and	education.	In	the	hierarchy	          and	have	fueled	concern	about	the	potential	consequences	
of	modern	needs,	energy	ranks	high.	                                     of	climate	change.	
    Indeed,	 energy	 use	 correlates	 directly	 with	 human	 and	            Scientific	research	continues	on	the	reasons	for	these	recent	
economic	development.	Expanding	the	availability	of	clean,	              changes	 and	 the	 role	 played	 by	 greenhouse	 gas	 emissions	
reliable,	affordable	energy	is	critical	to	alleviating	poverty,	lift-    and	other	factors—as	well	as	the	interplay	of	the	climate’s	
ing	living	standards,	and	promoting	prosperity	worldwide.	               natural	 variability.	 However,	 at	 ExxonMobil	 we	 recognize	
    A	 second	 goal	 we	 share	 is	 protecting	 the	 environment.	       that	the	risk	to	society	posed	by	greenhouse	gas	emissions	
Limiting	the	impact	of	necessary	human	activity	on	the	world’s	          may	prove	significant.	
ecosystems	is	a	priority.	                                                   And	therefore,	action	is	justified	now.	
    As	fellow	inhabitants	of	this	Earth,	we	all	share	a	self	inter-          Much	of	the	current	debate	concerning	the	choice	of	action	
est	in	protecting	it.	                                                   is	about	the	economic,	social	and	environmental	consequences	
    We	in	the	energy	industry	have	an	added	interest	because	            of	 these	 potential	 action	 steps	 given	 the	 uncertainties	 that	
the	 commodity	 we	 produce	 is	 itself	 a	 product	 of	 nature.	        remain	and	the	long-term	nature	of	climate	change.	

                                                                                                                                    MAY 2006
442                                                                                                  VITAL SPEECHES OF THE DAY

   At	ExxonMobil	we	are	taking	action—by	extending	effi-                 To	achieve	long-term	sustainable	progress	on	a	global	scale,	
ciencies,	helping	develop	advanced	fuel	and	engine	systems,	          we	 must	 achieve	 balance—balance	 between	 the	 resources	
and	investing	in	breakthrough,	emissions-reducing	technolo-           available,	the	aspirations	of	society,	and	the	prices	that	con-
gies.	I	will	speak	in	more	detail	on	these	areas	later.	              sumers	are	prepared	to	pay.	
   A	third	reality	we	face	is	the	fact	that	making	meaningful,	          Markets	are	the	best	means	of	achieving	this	balance	because	
broad-based,	sustainable	change	in	energy	supply	is	difficult.	       they	provide	the	most	reliable	and	realistic	information	about	
   The	 global	 energy	 system	 is	 enormous,	 and	 as	 such,	 it	    energy	costs	and	benefits,	and	they	bring	practical	solutions	
obeys	what	I	call	the	law	of	large	numbers.	                          forward.	Markets,	allowed	to	function	with	minimal	interfer-
   For	 example,	 the	 average	 European	 consumes	 energy	           ence,	are	the	great	motivators	of	creativity	and	innovation.	
equivalent	to	about	11	liters	of	oil	every	day.	But	in	the	ag-           As	we	work	to	strike	the	best	balance	between	meeting	
gregate,	Europeans	will	have	consumed	over	26	million	liters	         societal	needs	for	energy	and	the	consequential	effects,	both	
of	oil	in	the	short	time	it	takes	me	to	deliver	these	remarks.	       economic	and	environmental,	we	must	also	work	towards	
   At	the	same	time,	individual	market	participants	generally	        changing	the	underlying	realities.	This	is	where	technology	
have	very	limited	influence	on	price	in	the	global	context.	          has	such	an	important	role	to	play.	
Consider	 this:	 ExxonMobil	 is	 the	 world’s	 largest	 publicly-        The	 oil	 and	 gas	 industry	 has	 a	 history	 of	 extraordinary	
traded	 energy	 company,	 with	 operations	 in	 200	 countries	       technological	achievements.	In	the	past,	technological	break-
and	territories	worldwide.	Nevertheless,	we	account	for	less	         throughs—such	as	ever-cleaner	fuels	and	products,	seismic	
than	2	percent	of	total	energy	production.	                           mapping	 techniques	 and	 extended	 reach	 drilling—have	
   These	facts	have	important	implications	for	policymakers.	         dramatically	decreased	environmental	impacts	and	increased	
In	the	vast	marketplace	for	energy,	national	or	regional	energy	      energy	availability.	
policies	often	have	a	limited	positive	impact	in	a	global	con-           I	 am	 confident	 future	 breakthroughs	 will	 enable	 us	 to	
text.	In	fact,	often	such	policies	have	negative	consequences	        continue	to	meet	the	growing	demand	for	energy	while	miti-
for	those	local	consumers	who	must	secure	their	energy	needs.	        gating	the	impact	on	the	environment	of	both	producing	and	
Past	efforts	to	counteract	forces	of	a	well-functioning	market	       consuming	energy.	New	energy	technologies,	when	they	prove	
have	proven	not	just	ineffective,	but	counterproductive.	             competitive,	have	the	potential	to	fundamentally	change	the	
   The	scale	of	the	global	energy	system	also	has	important	          global	energy	system—for	the	better.	
implications	for	alternative	energy	sources	and	technologies.	
To	penetrate	global	markets	in	a	meaningful	way,	alternatives	        3	Energy	and	Environmental	Solutions
must	be	competitive,	economic	and	ultimately	affordable	for	              It	is	within	a	market	framework	that	our	industry	is	find-
most	consumers.	                                                      ing	 technologically—and	 commercially-viable	 solutions	 to	
   While	much	attention	is	given	today	to	wind,	solar	and	            our	energy	challenges.
of	late,	bio-fuels,	because	of	the	enormity	of	global	energy	             	Let	me	highlight	four.	
demand,	none	of	these	offer	meaningful	solutions	to	the	big-              The	first	is	greater	energy	efficiency.	I	make	the	distinc-
ger	issues	surrounding	energy	supply	and	consumption.	A	              tion	between	efficiency	and	conservation.	Efficiency	means	
more	fundamental	breakthrough	is	required.	                           continuing	to	carry	out	your	necessary	activities	with	lower	
   So	the	difficult	question	facing	all	of	us	and	policymakers	       energy	 consumption.	 Conservation	 means	 not	 continuing	
today	is:	What	do	we	want	to	do	between	now	and	the	time	             your	activities	to	lower	your	energy	consumption.	
technology	can	deliver	those	meaningful	solutions?	                       By	using	oil	and	natural	gas	more	efficiently,	we	can	extend	
                                                                      the	life	of	these	resources	while	also	reducing	costs.	Using	
3	Turning	Goals	into	Realities                                        electricity	in	our	homes	and	offices	more	efficiently	has	the	
    First,	we	should	recognize	the	importance	of	the	discipline	      effect	of	saving	the	energy	resources	required	to	produce	that	
to	 which	 many	 of	 the	 students	 and	 faculty	 here	 today	 are	   electricity,	often	coal	or	natural	gas.	
devoted—economics.	                                                       Energy	efficiency	also	has	tangible	environmental	benefits.	
    Energy	solutions	that	are	broadly-applicable,	technically-        Saving	energy	reduces	emissions.	
feasible,	consistently-available,	and	commercially-viable—in	a	           A	clear	example	of	energy	efficiency	at	work	are	the	85	
word,	economic—offer	the	best	hope	of	balancing	economic	             cogeneration	plants	around	the	world	in	which	ExxonMobil	
progress	and	environmental	preservation,	given	the	current	           has	interests,	including	one	at	our	Rotterdam	refinery.	
realities	we	face.	                                                       Through	the	simultaneous	production	of	steam	and	electricity	
    Energy	use,	economic	activity	and	environmental	impacts	          at	these	facilities,	we	provide	3,700	megawatts	of	power	globally,	
are	intertwined	globally.	Affecting	one	affects	the	other	two,	       enough	for	about	seven	million	average	European	households.	
often	in	conflicting	ways.	                                               To	 produce	 that	 same	 amount	 of	 wattage,	 traditional	
    Restricting	fossil	fuel	production	and	use,	for	example,	will	    power	 plants	 can	 emit	 up	 to	 twice	 the	 greenhouse	 gases.	
reduce	emissions,	but	it	will	also	retard	economic	growth	in	         Cogeneration	is	a	net	loss	of	emissions—and	a	net	gain	for	
developed	and	aspiring	economies,	and	could	prevent	many	             the	environment.	And	we	have	taken	9	million	tons	of	carbon	
of	the	world’s	least	advantaged	from	escaping	poverty.	               dioxide	out	of	the	atmosphere.	

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HANK MCKINNELL                                                                                                                      443

    A	second	solution	is	development	of	scientifically	sound	          capacity	and	threatened	to	choke	off	fuel	supplies	to	millions	
standards	to	ensure	environmental	regulations	are	effective.	          of	American	consumers.	
Clear	 and	 workable	 guidelines	 that	 provide	 the	 flexibility	         We	averted	this	threat	thanks	to	a	free,	open	and	competi-
to	 secure	 the	 greatest	 environmental	 benefit	 at	 the	 lowest	    tive	marketplace,	which	enables	mutually-beneficial	trade	and	
economic	cost	offer	the	best	chance	of	success.	                       interdependence	of	the	United	States	and	European	markets	
    Here	I	am	proud	to	point	to	a	local	ExxonMobil	success	            for	refined	products.	Responding	to	market	signals,	refiners	
story.	 As	 Europe’s	 Emissions	 Trading	 Scheme	 was	 taking	         here	quickly	routed	additional	gasoline	supplies	to	the	United	
shape,	a	team	from	our	Rotterdam	refinery,	working	closely	            States.	As	a	result,	few	Americans	were	short	of	fuel.	
with	Dutch	government	officials,	developed	a	detailed	proto-               Unfortunately,	 many	 policymakers	 in	 the	 United	 States	
col	for	monitoring	emissions	that	facilitated	compliance.	It	is	       overlook	this	lesson	and	are	advocating	energy	independence.	
currently	promoted	as	the	best	practice	by	the	EU.	                    Such	a	protectionist	policy	offers	false	hope	for	energy	secu-
    A	 third	 solution	 is	 the	 pursuit	 of	 breakthrough	 clean,	    rity.	Only	by	fortifying	and	multiplying	international	energy	
commercially-viable	 energy	 technologies.	 Emissions-free	            partnerships	can	we	protect	against	shocks.	
energy	technologies	exist,	but	they	are	not	cost-free.	Finding	            The	important	and	growing	role	of	liquefied	natural	gas	in	
ways	of	making	energy	technologies	cost-effective	is	the	chal-         meeting	the	challenge	of	greater	distance	between	producers	
lenge—and	meeting	it	takes	significant	investment	in	research	         and	 consumers	 is	 an	 excellent	 example	 of	 how	 important	
and	development.	                                                      these	international	relationships	will	be.	
    That	 is	 the	 philosophy	 behind	 the	 Global	 Climate	 and	          I	 am	 pleased	 to	 see	 the	 European	 Union	 is	 steering	 a	
Energy	Project,	an	initiative	based	at	Stanford	University	in	         different	course.	In	its	recently	released	“Green	Paper,”	the	
California	and	substantially	sponsored	by	ExxonMobil.	                 Commission	focuses	on	integrating	markets	internally	and	
    Through	 GCEP,	 we	 are	 researching	 new	 ways	 in	 which	        opening	markets	externally.	This	is	an	important	step	in	the	
hydrogen	 and	 solar	 energy	 can	 be	 made	 economic	…	how		          right	direction—the	direction	of	energy	interdependence.	
carbon	dioxide	can	be	captured	and	stored	in	a	cost-effective	             An	economist	from	across	the	Channel	once	dubbed	his	
     	
way	…	and	how	bio-fuels	can	be	made	more	abundant.	                    discipline,	and	many	of	yours,	the	“dismal	science.”	
    And	GCEP	draws	upon	scientific,	engineering	and	envi-                  He	was	wrong.	
ronmental	expertise	from	around	the	world,	including	at	ECN	               Economics,	I	believe,	is	a	profoundly	hopeful	science	that	
and	TU	Delft	here	in	the	Netherlands.	                                 can	help	lift	standards	of	living,	sustain	the	environment	and	
    A	fourth	and	truly	global	solution	is	strengthening	energy	        strengthen	international	cooperation.	
interdependence.	Global	commodity	markets	are	famous	for	                  As	an	essential	element	of	economic	activity,	energy	holds	
their	volatility	and	sensitivity	to	world	events.	The	market	for	      this	promise,	too.	
oil	is	no	exception.	To	mitigate	these	effects	and	to	achieve	             Through	 technologically	 and	 commercially	 viable	          	
the	energy	security	critical	to	economic	progress,	we	must	            energy	 solutions,	 we	 can	 achieve	 the	 proper	 balance	       	
diversify	our	sources	of	supply.	                                      needed	for	progress.	
    There	is	no	better	example	of	this	positive	potential	than	            And	in	the	spirit	of	Erasmus,	one	of	Europe’s	great	human-
the	 recent	 experience	 in	 the	 United	 States	 in	 the	 wake	 of	   ists,	we	can	turn	the	greatest	of	dreams—the	enhancement	
Hurricanes	 Katrina	 and	 Rita	 in	 the	 Gulf	 of	 Mexico.	 These	     and	elevation	of	the	human	condition—into	reality.	
                                                                                        	
storms	temporarily	disabled	fully	25	percent	of	U.S.	refining	             Thank	you.



                             From “Sick-Care” to Healthcare
                                  A NEW AMERICAN AGENDA FOR HEALTH AND HEALTHCARE
                   Address by HANK	MCKINNELL, Chairman and Chief Executive Officer, Pfizer Inc.
                     Delivered to The Detroit Economic Club, Livonia, Michigan, February 13, 2006


T    hank	you,	Arnold	(Milan)	and	welcome,	everyone.	
        We	are	here	in	what	I	understand	is	one	of	the	world’s	
most	important	forums	for	CEOs	to	speak	about	one	of	the	
                                                                       century,	and	her	travels	may	take	her	everywhere	from	Metro	
                                                                       Detroit	to	Mars.	
                                                                          But	in	healthcare,	things	aren’t	going	as	they	should.	
nation’s	most	important	issues—the	future	of	healthcare.	                 In	 my	 view,	 if	 current	 trends	 continue,	 the	 healthcare	
   My	 book	 on	 this	 subject—A Call to Action: Taking Back           systems	 that	 serve	 my	 grand-daughter	 and	 her	 generation	
Healthcare for Future Generations—is	 dedicated	 to	 my	 first	        may	end	up	in	worse	shape	than	the	healthcare	systems	we	
grandchild,	Sarah,	age	two.	                                           already	described	as	“failing.”	
   If	all	goes	as	it	should,	Sarah’s	life	may	reach	into	the	next	        That	goes	against	a	tradition	and	value	we	all	share,	that	

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444                                                                                                     VITAL SPEECHES OF THE DAY

every	generation	should	work	for	the	welfare	of	the	next.	                  Many,	including,	I	am	sure,	a	number	of	you	here	today,	
    None	of	us	wants	our	generation	to	be	the	one	who	enjoyed	          believe	that	this	agenda	should	start	with	the	question,	“How	
the	high-water	mark	of	American	healthcare,	but	in	my	view,	            do	we	control	the	costs	of	healthcare?”	
that’s	what	may	happen	if	we	don’t	transform	the	system.	                   Here’s	my	view:	if	we	frame	the	healthcare	crisis	only	in	
    And	what	better	place	to	discuss	that	transformation	than	          terms	of	“costs,”	the	solutions	always	lead	to	“price	controls”	
right	here	in	Michigan?	                                                and	“rationing.”	
    Michigan	continues	to	be	important	in	advancing	biomedi-                Rationing	access	to	care,	or	ending	the	incentives	for	in-
cal	innovation,	just	as	it	has	been	for	nearly	140	years.	              novation,	may	restrain	healthcare	costs—for	a	while.	
    Few	people	know	this,	but	the	first	modern	pharmaceutical	              But	we	all	end	up	paying	much	more	down	the	road.	
R&D	laboratory	was	built	in	downtown	Detroit,	just	ten	years	               How	smart	is	it	to	pay	the	massive	costs	of	treating	heart	
after	the	Civil	War,	by	a	then-new	company,	Parke-Davis.	               attacks	and	strokes,	if	we	don’t	do	all	we	can	to	prevent	heart	
    Across	the	state,	in	Kalamazoo,	Dr.	William	Upjohn	formed	          attacks	and	strokes	in	the	first	place?	
his	pharmaceutical	company	in	1886—22	years	before	the	                     To	me,	our	fixation	on	the	cost	of	care	looks	at	the	issue	
first	Model	T.	                                                         of	health	through	the	wrong	end	of	the	telescope.	
    I	know	all	this	because	the	companies	started	by	Parke,	                Yes,	the	cost	of	care	is	important,	but	to	get	a	handle	on	the	
Davis	and	Upjohn	are	now	part	of	Pfizer.	                               cost	of	care,	we	must	fully	recognize	the	cost	of	disease.	
    Today,	modern	medical	pioneers	from	academia,	private	                  The	agenda	for	reform	shouldn’t	start	with:	“How	do	we	
industry,	healthcare	systems	and	government	are	all	proud	              control	healthcare	costs?”	
to	call	Michigan	“home.”	                                                   It	 should	 start	 with:	 “How	 do	 we	 keep	 a	 person	
    These	pioneers	are	supported	by	a	state	government	whose	           healthy?”	
leader,	Governor	Granholm,	understands	that	even	though	                    Keeping	 someone	 healthy	 may	 require	 counseling	 on	         	
medicine	has	been	around	forever,	it	is	still	an	industry	of	           diet	 and	 exercise,	 and	 access	 to	 routine	 check-ups	 and	      	
the	future.	                                                            diagnostic	tests.	
    The	 list	 of	 biomedical	 breakthroughs	 emanating	 from	              All	of	this	is	hugely	less	expensive,	in	both	human	and	
Michigan	 is	 too	 long	 to	 list	 today,	 but	 one	 of	 them	 bears	   financial	terms,	than	treating	a	disastrous,	preventable	event	
special	mention.	                                                       like	a	heart	attack	or	stroke.	
    Lipitor—the	 cholesterol	 fighter	 that	 is	 now	 the	 world’s	         Keep	the	whole	person	healthy,	and	in	turn,	you	will	keep	
most	 successful	 medicine—was	 discovered	 and	 developed	             the	whole	healthcare	system	healthy.	
at	our	laboratories	in	Ann	Arbor.	                                          Invest	in	health,	and	you	also	invest	in	wealth,	because	
    Amazing	as	Lipitor	may	be—we	have	medicines	on	the	                 healthy	 societies	 create	 wealth	 far	 more	 quickly	 than	 un-
drawing	board	that	may	go	many	steps	further	in	controlling	            healthy	ones.	
cholesterol—and	even	to	melting	away	arterial	plaque.	                      The	average	American	seems	to	understand	these	concepts	
    I	am	convinced	that	within	our	lifetimes,	new	medicines	will	       almost	instinctively.	
reduce	the	major	risk	factors	for	a	heart	attack,	to	nearly	zero.	          You	hear	it	all	the	time:	“An	ounce	of	prevention	is	worth	
    I	am	also	confident	that	many	of	these	innovations	will	be	         a	pound	of	cure.”	
stamped,	“Discovered	in	Michigan.”	                                         Yet	our	healthcare	system	largely	ignores	what	we	all	take	
    Optimism	about	biomedical	innovation	in	Michigan,	must	             for	granted	about	the	value	of	good	health.	
be	balanced	by	realism	about	the	health	challenges	here.	                   Our	healthcare	system	is	at	its	best	when	the	worst	damage	
    Obesity.	Two-thirds	of	Michiganders	are	clinically	obese.	          is	already	done,	when	the	person	is	felled	by	a	heart	attack,	
    One-third	of	Michigan’s	children	are	overweight.	                   or	crippled	by	a	stroke.	
    Smoking.	Michigan	is	among	the	nation’s	leaders	in	the	                 Then,	amazingly,	the	system—which	I	call	our	“sick-care”	
percentage	of	adults	who	smoke.	                                        system—kicks-in	on	all	cylinders.	
    Asthma?	A	huge	and	largely	hidden	problem	in	Michigan’s	                Ambulances	 roar,	 helicopters	 fly,	 and	 for	 most	 people,	
major	cities,	and	a	problem	falling	very	hard	on	the	children	          there	are	little	or	no	out-of-pocket	costs.	
of	the	poor.	                                                               Our	 “sick-care”	 system	 is	 now	 focused,	 in	 all	 its	 mind-
    Diabetes?	Michigan’s	rate	is	25	percent	higher	than	that	of	        numbing	complexity,	on	expensive	interventions,	offered	late	
the	rest	of	America.	                                                   in	the	disease	cycle.	
    A	fourth	of	all	Michigan	adults	are	already	diagnosed	with	             Have	a	heart	attack	and	you	get	attention	from	the	best	
hypertension.	                                                          professionals	in	the	world,	backed	by	millions	of	dollars	of	
    A	third	of	all	Michigan	adults	are	already	diagnosed	with	          capital	equipment.	
high	cholesterol.	                                                          Ask	for	help	in	preventing	a	heart	attack—and	in	treating	
    Given	these	largely	preventable	health	conditions,	and	their	       the	conditions	that	might	trigger	one—and	you	usually	get	
eventual	cost	in	human	and	financial	terms,	it’s	time	to	get	           the	cold	shoulder.	
serious	about	a	new	agenda	for	American	healthcare.	                        That’s	 the	 reality	 for	 most	 people	 covered	 through	 em-
    How	should	that	agenda	read?	                                       ployers.	

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   We	haven’t	even	begun	to	discuss	what	pundits	somberly	              in	 people’s	 health	 than	 to	 simply	 pay	 later	 for	 devastating	
intone	as	“the	problem	of	the	uninsured.”	                              sickness.	
   Here	 again,	 the	 language	 we	 use	 leads	 us	 in	 the	 wrong	         This	clause	authorizes	a	group	of	demonstration	projects	
direction.	                                                             to	explore	“the	Medicare	of	the	Future.”	
   The	 uninsured	 do	 face	 a	 big	 problem,	 one	 that	 we	 all	          One	of	the	eight	projects	so-authorized	involves	a	partner-
must	 solve,	 first,	 out	 of	 human	 compassion	 and	 decency,	        ship	between	Pfizer	and	healthcare	provider	Humana.	
but	second,	because	“the	problem	of	the	uninsured”	is	also	a	               Called	“Green	Ribbon	Health,”	this	partnership	has	en-
problem	of	the	insured.	                                                rolled	 more	 than	 40,000	 volunteer	 Medicare	 patients	 into	
   While	Americans	are	compassionate	in	our	desire	to	care	             a	 program	 stressing	 prevention,	 wellness,	 and	 aggressive	
for	those	without	the	resources	to	pay,	our	healthcare	systems	         treatment	of	chronic	conditions.	
are	almost	unbelievably	inefficient	in	how	we	actually	deliver	             We	 are	 working	 to	 prove	 that	 an	 integrated	 healthcare	
that	care.	                                                             system—one	centered	on	keeping	people	active	and	healthy	
   We	practically	force	people	without	health	insurance	to	             and	offering	them	easy-to-navigate,	individualized	care—will	
go	to	hospital	emergency	rooms	to	see	doctors	making	one	               offer	better	outcomes	at	lower	cost.	
of	the	most	expensive	components	of	the	healthcare	system	                  Our	confidence	here	is	based	on	an	even-earlier	demon-
the	“default	setting”	for	care.	                                        stration	project,	called	Florida:	A	Healthy	State.	
   This	 care	 isn’t	 provided	 out	 of	 the	 largesse	 of	 hospital	       This	was	a	partnership	between	Pfizer	and	the	administra-
chains.	                                                                tors	of	Florida’s	Medicaid	system.	
   The	bills	for	all	the	people	who	cannot	pay	are	sent	to	those	           Together,	we	established	a	network	of	caregivers	to	divert	
who	can	pay	through	higher	priced	services.	                            175,000	of	the	state’s	poorest,	most	chronically	sick	people	
   There	has	to	be	a	better	solution	than	just	keeping	unin-            from	 reliance	 on	 emergency	 rooms	 and	 into	 personalized	
sured	 Americans	 away	 from	 the	 most	 cost-effective	 means	         care	and	counseling.	
of	delivering	healthcare,	and	then	waiting	for	them	to	show	                These	 caregivers	 offered	 Medicaid	 recipients	 something	
up—time	and	again—in	the	most	expensive	place	they	can	                 that	is	all	too	rare	when	it	comes	to	people	who	cannot	pay:	
go	for	basic	care:	the	hospital	emergency	room.	                        compassionate,	thorough,	individualized	care.	
   Let’s	face	it.	                                                          The	results?	
   The	“sick-care”	system	we	have	allowed	to	flourish	isn’t,	               For	the	sickest	20,000	people	enrolled	in	this	program,	
by	nature,	going	to	be	efficient,	not	when	what	we	pay	for	             trips	to	the	ER	fell	by	nearly	six	percent,	and	hospital	stays	
are	procedures.	                                                        fell	nearly	10	percent.	
   If	we	reward	procedures	over	prevention,	operations	over	                Nearly	40	percent	of	people	enrolled	in	the	program	im-
outcomes,	 and	 transactions	 over	 transformations,	 then	 we	         proved	their	compliance	with	treatment	regimens.	
shouldn’t	be	surprised	that	we	get	a	lot	of	procedures,	opera-              And,	 even	 though	 the	 program	 reached	 participants	
tions	and	transactions.	                                                by	 offering	 more	 care,	 rather	 than	 less,	 Florida	 taxpayers	
   We	need	a	healthcare	system	that	starts	with	the	question,	          saved	 more	 than	 two	 dollars	 for	 every	 dollar	 invested	 in	
“How	do	we	keep	this	person	healthy?”	and	ends	with	this	an-            the	project.	
swer,	“because	we	all	have	a	stake	in	this	person’s	health.”	               We	have	brought	these	demonstration	projects	to	Europe,	
   Put	the	issue	that	way,	over	the	“who	pays?”	question,	and	          providing	a	new	alternative	to	the	highly	rationed	healthcare	
new	solutions	begin	to	emerge	from	the	fog.	                            systems	that	are	falling	further	and	further	behind	in	serving	
   Our	 systems	 begin	 to	 mirror	 how	 we	 take	 care	 of	 our	       their	citizens.	
personal	health	and	the	health	of	our	children.	                            By	focusing	on	prevention	and	wellness,	individualized	
   We	try	to	prevent	sickness	and	minimize	the	damage	of	               and	caring	treatment,	and	early	and	constant	intervention	in	
diseases	we	cannot	prevent.	                                            disease,	demonstration	projects	like	these	are	proving	that	
   We	try	to	stay	as	healthy	and	vital	for	as	long	as	possible.	        you	can	provide	more	care	at	less	cost—if	you	provide	the	
   The	good	news	is	that	this	concept	of	“health	and	vitality,	         right	care	to	begin	with.	
as	long	as	possible”	is	starting	to	take	hold.	                             These	projects	represent	a	real	alternative	to	the	“one	size	
   The	passage	of	the	Medicare	Modernization	Act	was	a	big	             fits	 all”	 healthcare	 systems	 often	 proposed	 in	 response	 to	
step	in	the	right	direction,	not	only	because	of	its	prescrip-          America’s	healthcare	challenges.	
tion	drug	benefit,	but	also	because	it	now	welcomes	all	new	                I	believe	that	if	we	can	re-focus	our	current	system	on	the	
enrollees	with	a	full	medical	examination.	                             cost	of	disease	and	the	value	of	good	health—over	the	cost	
   This	“Welcome	to	Medicare”	exam	may	turn	out	to	be	truly	            of	care—we	can	do	what	many	say	is	impossible:	improving	
revolutionary	in	providing	a	way	for	those	entitled	to	Medicare	to	     health	while	lowering	cost.	
do	a	far-better	job	of	staying	active	and	managing	their	health.	           Greater	resources	devoted	to	the	“front	end”	of	healthcare—
   One	small	step	for	government—one	giant	leap	for	patients.	          the	“prevention	and	wellness”	end—will	free	sufficient	resources	
   Another	clause	in	the	Medicare	Modernization	Act	pro-                to	extend	good	health	coverage	to	all	who	are	truly	in	need.	
vides	hope	for	all	of	us	who	believe	that	it’s	better	to	invest	            We	need	not	throw	out	the	“baby”	of	the	most	world’s	

                                                                                                                                  MAY 2006
446                                                                                                 VITAL SPEECHES OF THE DAY

innovative	healthcare	system	with	the	“bathwater”	of	prob-            employees	become	more	active,	engaged	partners	in	health,	
lems	in	access.	                                                      prevention	and	wellness.	
   Our	society	is	strong	and	rich	enough	to	afford	both	access	          General	Motors	is	a	member	of	Partnership	for	Prevention,	
now	and	innovation	for	the	future.	                                   as	are	Dow	Chemical,	Pitney-Bowes,	Motorola,	Xerox,	Federal	
   While	many	advocate	throwing	out	the	current	system	and	           Express,	and	many	more	firms,	including	Pfizer.	
starting	fresh,	we	must	be	realists.	                                    These	companies	understand	that	affordable	people-cen-
   Healthcare	represents	a	sixth	of	the	GDP,	and	reform	needs	        tered	health	plans	can	be	an	important	tool	in	driving	the	
solid	bipartisan	support.	                                            value	of	their	organizations,	through	greater	productivity,	and	
   In	fact,	no	real	progress	has	ever	been	made	in	healthcare	        more	affordable	healthcare	costs.	
reform	without	solid	bipartisan	support.	                                These	 companies	 have	 begun	 the	 process	 of	 transform-
   It’s	time	to	deal	with	the	art	of	the	possible	and	show	that	      ing	 their	 health	 plans…refocusing	 them	 on	 disciplined	
the	future	does	lie	in	prevention	over	procedures.	                   efforts	to	prevent	illness	and	diagnose	the	diseases	that	do	
   Here	are	three	prescriptions	for	changing	healthcare	for	the	      emerge…early	on.	
better,	starting	with	each	of	us,	then	moving	on	to	employers,	          At	Pfizer,	we	are	putting	our	money	behind	this	belief.	
and	finally,	our	nation.	                                                Last	June,	we	launched	a	new,	comprehensive	employee	
   The	 prescription	 for	 better	 healthcare	 begins,	 naturally,	   health	program	called	Healthy	Directions.	
with	all	of	us.	                                                         It’s	designed	to	provide	employees	and	their	families	with	
   Knowing	our	numbers,	blood	pressure,	fasting	blood	sugar,	         far	more	help	in	managing	healthcare	needs.	
cholesterol,	and,	if	you	are	male,	your	PSA	score,	is	an	amaz-           Through	 Healthy	 Directions,	 our	 colleagues	 and	 their	
ingly	simple	and	cheap	prescription	for	better	healthcare.	           family	members	identify	health	problem	areas.	
   However,	some	60	percent	of	Americans	don’t	know	them,	               Trained	 counselors	 and	 nurses	 then	 help	 people	 in	 the	
and	open	the	door	for	chronic	or	even	fatal	diseases.	                plan	to	work	on	the	problems.	
   Walking	10,000	steps	a	day	would	add	years	to	the	lives	              We	 provided	 a	 modest	 incentive	 for	 people	 to	 sign-up,	
of	Americans,	and	cut	our	health	bills	by	billions.	                  and	we	made	it	optional.	
   I	find	it	interesting	that	people	keep	asking	for	the	power	          More	than	three	out	of	four	Pfizer	colleagues	signed	up	
to	control	their	health.	                                             for	Healthy	Directions.	
   Most	of	us	have	that	power—let’s	start	using	it!	                     These	results	speak	for	the	appreciation	people	have	for	
   Let’s	turn	to	the	prescription	for	employers,	and	the	current	     employers	who	treat	their	health	as	an	asset	to	be	maximized,	
employer-based	system.	                                               not	as	a	cost	to	be	minimized.	
   For	 all	 the	 discussion	 about	 the	 end	 of	 employer-paid	        As	for	this	program’s	benefit,	I	think	of	it	as	more	than	a	
healthcare,	this	will	be	the	system	that	serves	the	vast	majority	    way	to	reduce	healthcare	costs.	
of	working	Americans	for	as	long	into	the	future	as	we	can	              Think	of	it—the	average	employee	works	about	235	days	
reasonably	predict.	                                                  a	year.
   With	that	in	mind,	corporate	leaders	need	to,	well,	lead.	            So	if	anyone	is	out	sick	for	more	than	five	days,	that’s	two	
   We	can	no	longer	let	employee	health	simply	be	the	prov-           percent	in	productivity,	right	off	the	top.
ince	of	Human	Resources.	                                                If	someone	offered	you	a	way	to	boost	productivity	by	two	
   We	as	corporate	leaders	need	to	manage	healthcare	with	            percent—in	one	year—would	you	be	interested?	
the	same	attention	we	give	to	our	factories	and	sales	forces.	           The	point	is	that	there	are	gains	to	be	made	right	now,	
   Before	we	at	Pfizer	took	healthcare	back	from	our	HR	de-           and	employers	need	not	wait	for	some	sort	of	Congressional	
partment—not	an	easy	thing	to	do,	by	the	way—I	discovered	            “grand	bargain”	to	take	action.
we	were	paying	for	cancer	treatments	and	surgery,	but	not	to	            We	can	take	action—the	right	actions—right	now.
help	people	stop	smoking.	                                               On	to	my	prescriptions	for	the	nation’s	healthcare	system,	
   How	smart	is	that?	                                                and	these	come	straight	from	Chapter	13	of	A	Call	to	Action.
   Also,	like	most	of	you,	we	subsidized	our	cafeterias.	                My	list	starts	with,	as	I	discussed,	taking	responsibility	for	
   Healthy	food,	unhealthy	food,	all	of	it	received	the	same	         our	own	health,	and	transforming	employee	healthcare.
subsidy.	                                                                And	it	goes	on.
   So,	in	essence,	we	were	paying	people	to	eat	the	unhealthy	           Get	personal	injury	lawyers	out	of	healthcare;	replace	the	
food	that	was	driving	up	our	healthcare	costs!	                       current	tort	system	with	specialized	medical	courts.
   Needless	to	say,	we	changed	our	approach,	and	so	can	you.	            Reform	the	direct-to-consumer	advertising	of	pharmaceuti-
   Now,	 can	 this	 approach—better	 incentives	 for	 healthy	        cal	companies,	already	implemented	by	Pfizer	and	others.
behavior—be	expanded?	                                                   Adopt	Health	Savings	Accounts	for	all,	and	give	those	who	
   It	can,	and	we	are	encouraged	by	the	actions	of	an	orga-           are	self	employed	a	level	playing	field,	tax-wise,	for	health	
nization	called	“Leading	by	Example,”	under	the	auspices	of	          insurance.
The	Partnership	for	Prevention.	                                         End	the	“free	riding”	by	other	nations	on	American	bio-
   Through	 this	 initiative,	 more	 businesses	 are	 helping	        medical	research.

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   Maintain	the	incentives	for	innovation,	including	a	just	                 It’s	time	to	change	things.
and	fair	patent	system.                                                      Like	building	a	cathedral,	the	challenges	of	transform-
   Demand	electronic	medical	records	to	cut	medical	errors	               ing	our	“sick-care”	system	will	take	many	years	and	many	
and	improve	the	productivity	of	healthcare	workers.                       hands.
   And	initiate	a	Global	Health	Corps,	where	we	tap	the	skills	              There	will	be	no	shortcuts,	no	magic	bullets,	none	of	
of	our	employees	in	the	fight	against	infectious	diseases.                the	quick-fixes	that	politicians	love.
   These	are	some	ideas.                                                     It	will	take	new	and	bold	thinking,	and	an	admission	
   There	are	clearly	many	others.                                         that	no	single	industry	or	group,	however	large,	has	all	
   But	no	matter	how	our	nation’s	healthcare	system	may	                  the	answers.
ultimately	have	to	change,	the	fact	is	that	we	can’t	wait	for	               Wherever	 we	 stand	 in	 the	 system,	 patient	 or	 payer,	
perfect	political	consensus.                                              provider	 or	 regulator,	 we	 have	 no	 choice	 but	 to	 work	
   There’s	too	much	“sick-care”	going	on—and	not	enough	                  together.
healthcare.                                                                  We	owe	it	to	ourselves,	and	more	critically,	to	the	genera-
   That	point	was	made	clear	by	Dr.	Mark	McClellan,	who	                  tion	represented	so	ably	by	the	young	people	here	today,	to	
runs	the	Center	for	Medicare	and	Medicaid	Services,	the	                  come	together	as	partners,	and	make	change	happen.
world’s	single	largest	healthcare	payer.                                     We	at	Pfizer	are	willing	to	work	as	partners	with	anyone	
   Here’s	what	he	said:	“When	50	percent	of	our	beneficia-                who	understands	the	limits	of	“sick-care”.
ries	do	not	get	recommended	preventive	care	and	over	45	                     Together,	we	can	move	forward	now,	to	help	all	Ameri-
percent	do	not	get	proven	effective	care	for	their	illnesses	             cans	benefit	from	a	healthcare	system	that	puts	into	action	
we	are	spending	much	more	than	we	should	on	prevent-                      what	Mother	always	said	best…
able	complications	and	inappropriate	care.                                   “When	you	have	your	health,	you	have	it	all.”
   “All	I	can	say	is,	“Amen	to	that.”                                        Thank	you.	 	



                                            Global Transportation
                                     KEEPING UP WITH THE EXPANDING GLOBAL COMMERCE
                                    Address by MIKE	ESKEW, Chairman & CEO, UPS
               Delivered to the World Affairs Council of Philadelphia, Philadelphia, Pennsylvania, April 6, 2006


T     hank	you,	and	good	afternoon,	everyone.	It’s	a	real	honor	
      to	be	here	with	you	today.
    Like	some	of	you,	I’m	a	late-night	C-SPAN	viewer	…	and	I		
                                                                              And	at	every	one	of	those	speeches	I	try	to	remind	audi-
                                                                          ences	 that	 we	 have	 dual	 responsibilities	 when	 it	 comes	 to	
                                                                          ensuring	that	global	trade	benefits	everyone	it	touches.
can’t	remember	how	many	times	I’ve	tuned	into	provocative	                    On	the	one	hand,	we	must	ensure	that	our	present	and	
speeches	here	at	the	World	Affairs	Council	of	Philadelphia.               future	generations	of	workers	have	the	education	and	training	
                                                    	
    As	much	as	I’ve	enjoyed	those	broadcasts	…	being	here	in	             needed	to	compete	in	a	global	economy.	
person	is	much	better.                                                        Part	of	this	is	making	sure	those	whose	jobs	have	been	
                                                                	 t
                                                                …
    It’s	also	especially	rewarding	to	be	in	Philadelphia	in	this	 	 he	   displaced	by	global	trade	have	other	opportunities	available	
                            	 o
                            …
300th	anniversary	year	 	 f	Benjamin	Franklin’s	birth.                    to	them.
    Your	city’s	greatest	son	has	much	bearing	on	my	discus-                   At	the	same	time,	we	must	ensure	that	the	backbone	of	
sion	today.                                                               trade—our	nation’s	transportation	infrastructure—is	prepared	
    As	 the	 nation’s	 first	 Postmaster	 General—and	 as	 one	 of	       to	meet	the	demands	of	21st	century	global	commerce.
our	first	foreign	diplomats—Franklin	planted	the	seeds	for	                         	                          	
                                                                              Today	…	in	this	great	port	city	…	I	want	to	focus	on	this	
America’s	 over-land	 commerce	 and	 over-seas	 trade	 infra-             latter	responsibility—the	nation’s	infrastructure.
structure.	                                                                   And	I’d	like	to	begin	this	discussion	by	taking	you	on	a	
    Franklin	reminded	us	250	year	ago	that	“no	nation	has	                                	
                                                                          quick	journey	…	to	the	year	2050.
ever	been	ruined	by	trade.”                                                   Imagine,	if	you	will,	a	world	where	trade	has	never	been	
    His	 thoughts	 on	 this	 subject	 have	 never	 been	 more	        	   healthier.	A	world	that’s	never	been	more	inter-connected.
important.                                                                    In	2050,	the	world	economy	accounts	for	$300	trillion	
    Over	the	past	few	years,	I’ve	probably	given	a	hundred	               dollars—six	times	what	it	is	today.
speeches	on	the	merits	of	globalization.                                      The	U.S.	remains	the	world’s	largest	economy.	The	interna-
    You	 could	 say	 I’m	 an	 unabashed	 advocate	 of	 free	 and	     	   tional	trade	lanes	that	have	fueled	our	economic	development	
fair	trade.                                                               have	expanded	in	the	past	four	decades.

                                                                                                                                  MAY 2006
448                                                                                                 VITAL SPEECHES OF THE DAY

    In	2050,	our	largest	trading	partners	and	economic	rivals	          Improvements	in	transportation	have	also	led	to	environ-
are	China,	India,	Brazil	and	Russia.	                                mental	protection	and	enhancements.	
    In	fact,	the	BRIC	countries	now	have	larger	economies	              Air	quality	in	our	nation’s	largest	cities	is	now	better	than	
than	the	G6.	Their	booming,	urban	middle-class	popula-               it	was	at	the	turn	of	the	21st	century.
tions	 make	 up	 the	 world’s	 largest	 market	 for	 consumer	          In	cities	like	Los	Angeles	and	Philadelphia,	air	quality	in	
goods	and	services.                                                  2050	is	actually	better	than	it	was	in	1950.
    Here	in	America,	where	our	population	has	grown	to	400	             Urban	sprawl	has	been	curtailed.	The	beauty	of	our	coun-
million,	the	affluent	sons	and	daughters	of	Generations	X,	Y,	       tryside	preserved.
and	Z	are	now	in	their	peak	earning	years.                              Our	children	and	grandchildren	enjoy	the	same	trips	to	
    They’ve	enjoyed	a	bull-market	economy	through	most	of	           the	Poconos	and	to	the	Jersey	and	Delmarva	shores	as	we	
their	careers—fueled	by	expanding	global	trade.                      did—only	they	can	get	there	faster	now	because	of	new	rail	
    They’ve	benefited	from	imports,	improved	competition,	           links	and	less	traffic	on	the	highways.
greater	choice	and	lower	prices.	At	the	same	time,	they’ve	             Life	is	good	in	2050.
                                     	
benefited	 from	 greater	 exports	…	and	 from	 reaching	 new	           Thanks,	in	no	small	part,	to	a	highly	functional	transpor-
developing	 markets	 and	 the	 rich	 cultures	 of	 people	 from	     tation	system.
around	the	world.                                                                                                	
                                                                        Now,	 you	 may	 be	 asking	 yourself	…	is	 this	 all	 wishful	
    The	melting	pot	is	still	functioning.                            thinking?
    They	 live	 in	 revitalized	 urban	 neighborhoods,	 like	 Rit-                               	
                                                                        I	contend	it’s	not.	Not	…	if	we	do	it	right.
tenhouse	 Square,	 and	 close-in	 Mainline	 suburban	 villages	         In	fact,	I	would	say	we	have	to	get	to	this	vision	if	we’re	
re-designed	to	mitigate	sprawl	and	shorten	commute	times.            going	to	compete	in	a	global	economy	and	sustain	the	quality	
    On	any	given	day,	half	of	them	telecommute	to	work.	Of	          of	life	we	so	enjoy	in	this	great	nation.
those	that	do	show	up	at	an	office,	most	commute	by	energy-             But	the	reality	today	paints	a	less	rosy	picture.
efficient	rapid	transit.                                                Our	highways,	waterways,	railroads	and	aviation	networks	
    The	 companies	 they	 work	 for	 and	 the	 businesses	 they	     are	simply	not	keeping	up	with	ordinary	demands.
run	 have	 prospered	 from	 a	 masterfully	 planned	 and	 fully	        Five	years	ago,	the	U.S.	House	held	hearings	on	our	trans-
integrated	national	transportation	infrastructure.                   portation	challenges.
    One	that	moves	goods	and	information.                               Congressman	Don	Young	from	Alaska	didn’t	mince	words.	
    Investments	in	technology,	materials	research,	alternative	      He	said:	
fuels	and	physical	infrastructure	have	produced	a	highly	co-            “Congestion	is	a	national	crisis.	Anyone	who	drives,	flies	
ordinated,	efficient,	secure	and	expedited	network	of	ocean	         or	takes	the	train.	.	.and	every	business	that	ships	freight	over	
and	air	ports,	regional	and	cross-country	rail	lines,	interstate	    the	highways,	railroads,	airways	or	waters	knows	that	our	
highways	and	byways.                                                 transportation	system	is	overburdened.	.	.
    Ocean	 vessels	 with	 cargo	 from	 Africa,	 Europe,	 Latin	         We	have	reached	national	gridlock.”	
America	and	Asia	sail	into	the	Port	of	Philadelphia	and	are	            Perhaps	this	conclusion	is	a	bit	dramatic,	but	the	Congress-
immediately	off-loaded	into	inter-modal	rail,	ground	and	air	        man	is	on	to	something.
networks.	                                                              I	don’t	think	we’ve	reached	gridlock	yet,	but	if	we	don’t	
    These	intelligent	systems	are	synchronized	and	integrated	       do	something	about	it,	it’s	only	a	matter	of	time.
with	perfect	information.                                               And	why	do	I	say	this?
    And	this	perfect	information	allows	routes	to	be	optimized,	        Well,	it’s	just	a	simple	matter	of	supply	and	demand.
delays	minimized,	and	exceptions	notified.                              On	 the	 supply	 side,	 we	 have	 4	 million	 miles	 of	 public	
    Vibrant	rail	networks	keep	planes	out	of	the	skies,	cars	and	    roads	and	bridges.
trucks	off	the	roads,	and	commerce	moving	freely.                       More	than	5,200	airports.
    Price,	 quality	 and	 environmentally-conscious	 consum-            163,000	miles	of	railroad.
ers	spend	as	much	as	half	of	their	retailing	dollars	online	            9,000	commercial	docks,	wharves	and	piers.
in	2050.                                                                It’s	an	infrastructure	valued	at	$2.2.	trillion	dollars,	repre-
    Their	tastes	are	decidedly	global.	South	American	beef.	Asian	   senting	7	percent	of	all	fixed	assets	in	the	U.S.
electronics.	African	coffee.	Eastern	European	glassware.                But	 even	 all	 these	 assets	 aren’t	 enough.	 Because	 of	 the	
    Truly	all	nations	participate	in	the	global	economy.             growth	in	global	trade,	demand	is	rapidly	outpacing	supply.
    Many	of	these	purchases	are	brought	to	their	offices	and	           Consider	our	waterways.	Most	of	our	global	imports	and	
doorsteps	 by	 those	 beautiful	 brown	 trucks	 you	 see	 rolling	   exports	arrive	or	depart	on	cargo	ships.
down	Broad	and	Chestnut	streets.                                        Port	congestion	is	already	a	problem	as	we	saw	almost	four	
    UPS	 consolidates	 these	 deliveries,	 keeping	 millions	 of	    years	ago	during	the	West	Coast	strikes.
cars	off	the	road	each	year,	enhancing	customer	service	and	            It’s	only	going	to	get	worse,	as	ocean	cargo	volume	is	ex-
producing	 better	 bottom-line	 business	 results	 for	 shippers	    pected	to	double	by	2020.
around	the	country	and	the	world.                                       And	 yet	 few	 U.S.	 ports	 have	 channels	 deep	 enough	 to	

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MIKE ESKEW                                                                                                                           449

accommodate	the	largest	ocean-going	container	ships.                         Our	aviation	system	got	a	D+.
    Our	inland	waterways	that	help	move	goods	within	the	                    Navigable	Waterways	a	D-.
country	are	also	aging	and	stressed.                                         Roads	a	D…
    Nearly	 half	 of	 all	 the	 locks	 on	 these	 inland	 waterways	         And	Rails	a	C-.
are	 functionally	 obsolete,	 according	 to	 the	 Army	 Corps	 of	           Now,	 before	 we	get	 too	 depressed,	let	 me	 just	add	that	
Engineers.                                                                none	of	these	problems	is	insurmountable.	American	resolve	
    Back	on	terra	firma,	things	aren’t	any	better.	We	depend	             and	ingenuity	can	tackle	anything—including	our	nation’s	
on	trucking	to	transport	90	percent	of	the	products	made	or	              troubled	transportation	infrastructure.
shipped	in	the	U.S.                                                          But	here’s	the	deal:	We	can’t	wait	on	this.	We	need	to	move	
    But	trucks	are	increasingly	stuck	in	traffic,	going	nowhere	          forward	now.
      	
fast	…	and	burning	fuel.                                                     I	have	a	personal	sense	of	urgency	and	it	is	probably	self	
    Between	1970	and	2003,	vehicle	travel	on	highways	shot	               evident.
up	by	161	percent.	Yet	new	road	mileage	increased	by	only	                   UPS	 manages	 one	 of	 the	 largest	 ground	 transportation	
6	percent.                                                                fleets	in	the	world.
    In	America’s	85	largest	metro	areas	in	2003,	54	percent	                 We	run	the	world’s	9th	largest	airline.
of	travel	involved	heavy	to	extreme	congestion,	up	from	20	                  We’re	the	largest	user	of	rails	in	the	U.S.
percent	in	1982.                                                             We	ship	containers	over	the	oceans	and	manage	multi-
    Road	 congestion	 costs	 the	 U.S.	 economy	 more	 than	          	   modal	transportation	and	supply	chain	networks	for	com-
$63	billion	dollars	every	year—and	the	price	tag	is	going	to	             panies	around	the	world.
go	up.                                                                       On	any	given	day,	UPS	handles	7	percent	of	the	nation’s	
    Road	use	is	expected	to	increase	by	nearly	two-thirds	in	             GDP	and	2	percent	of	the	world’s	GDP.
just	the	next	20	years.                                                      Yes,	we	have	a	huge	stake	in	the	health	of	our	transporta-
    The	story	is	similar	on	the	railways,	where	rail	freight	ton-         tion	system.
nage	is	expected	to	increase	by	at	least	50	percent	by	2020.                 But	that	health	is	not	just	a	UPS	concern.
    The	U.S.	rail	system	is	experiencing	unprecedented	volume	                                                              	
                                                                             It	 should	 concern	 everyone	 in	 this	 room	…	both	 as	 a	 	
of	international	freight.	In	fact,	half	of	all	rail	intermodal	traffic	   consumer	and	as	a	business	leader.
today	is	international.                                                      An	 inefficient	 transportation	 network	 results	 in	 higher	
    That’s	4.5	million	trailers	and	containers.                           prices	at	the	checkout	line:
    To	put	that	into	perspective:	In	1980,	domestic	and	in-
ternational	traffic	combined	equaled	3	million	trailers	and	                 …
                                                                             	 out	of	stock	products
containers.                                                                  …m
                                                                             	 	 ore	inventory	sitting	idly	by—or,	in	other	words,
    Problem	is,	since	1980,	railroads	have	been	cutting	costs	                   cash	that’s	not	flowing
and	shutting	down	capacity	and	lines.                                        …c
                                                                             	 	 ostly	delays	in	getting	products	to	market	…
    At	UPS,	we’ve	experienced	this	problem	firsthand,	which	is	a	            …s
                                                                             	 	 liding	customer	service	…
big	issue	when	you	offer	guaranteed	package	delivery	times.	                 …a
                                                                             	 	 nd	weaker	financial	results	…
    That’s	 why	 we	 recently	 redesigned	 our	 ground	 package	             …j
                                                                             	 	 ust	to	list	a	few.
network	to	move	more	package	volume	off	railcars	and	onto	
our	overcrowded	national	highways.                                           And	then,	of	course,	there’s	the	bigger	issue	of	ensuring	
    Are	things	any	better	in	the	skies?                                   that	our	future	generations—your	children	and	grandchil-
    Well,	air	cargo	volume	increased	almost	17	percent	be-                dren—have	 everything	 available	 they’ll	 need	 to	 work	 and	
tween	2000	and	2004.                                                      compete	in	a	global	economy.
    And	it	is	expected	to	increase	by	5.1	percent	each	year	                 To	live	in	that	2050	world	I	spoke	of	earlier.
between	now	and	2016.                                                        Hopefully,	by	now,	I’ve	given	you	enough	evidence	to	suggest	
    Supply	is	lagging	demand	here,	too.                                   that	it’s	Rush	Hour	on	our	nation’s	transportation	systems.	
    And	while	each	new	runway	will	increase	airport	capac-                                                      	
                                                                             Now,	we’ve	got	to	ask	ourselves	…	How	do	avoid	sliding	
    	
ity	…	we’ve	 only	 opened	 nine	 new	 runways	 in	 the	 last	 six	        into	gridlock?
years—and	only	two	new	public-use	airports	since	2002.                       Ultimately,	I	think	we	need	to	look	out	to	the	year	2050	
    Now	you	know	the	statistics.	What	does	the	overall	report	            and	develop	a	comprehensive	national	transportation	infra-
card	on	our	national	transportation	infrastructure	look	like?             structure	vision.
    Well,	let’s	put	it	this	way:	If	your	kids	brought	home	report	           That’s	going	to	require	government	and	business	working	
cards	like	this,	someone	would	be	grounded.                                                	
                                                                          closer	together	…	identifying	what	our	world	is	going	to	look	
    Every	few	years,	the	American	Society	of	Civil	Engineers	                  	
                                                                          like	…	and	creating	a	vision	of	where	we	want	to	be.
assigns	grades	to	our	nation’s	transportation	systems.                       In	the	meantime,	there	are	a	number	of	immediate	steps	
    In	 2005,	 here’s	 what	 our	 infrastructure	 report	 card	       	   we	can	start	taking	action	on.
looked	like:                                                                 This	first	is	to	sound	the	alarm.

                                                                                                                                MAY 2006
450                                                                                                  VITAL SPEECHES OF THE DAY

    Organizations	like	the	American	Society	of	Civil	Engineers	           Finally,	there’s	something	else	that	we	in	the	private	sec-
are	highlighting	the	problems	and	issuing	report	cards,	and	          tor	can	do	to	avoid	gridlock	on	our	nation’s	transportation	
that’s	good.                                                          infrastructure.
    What	 we	 need	 now	 is	 more	 business	 and	 government	             We	 can	 be	 smarter	 about	 how	 we	 manage	 our	 supply	
leaders	to	step	forward	and	publicize	the	need	for	upgrades	          chains.
to	our	transportation	infrastructure.                                     Yes,	our	transportation	infrastructure	is	having	a	hard	time	
    After	all,	we	are	the	ones	who	benefit	most	from	smooth-          keeping	up	with	demand.
flowing	transportation	systems.                                           But	that	doesn’t	mean	we	can’t	streamline	our	logistics	so	
                                   	                    	
    And	there’s	not	a	university	…	a	local	chamber	…	an	eco-                                        	
                                                                      our	goods	keep	flowing	…	even	in	crowded	trade	lanes.
                               	
nomic	development	agency	…	or	any	type	of	business	club	                  At	UPS,	we’ve	expanded	our	vision	in	recent	years	to	help	
that	wouldn’t	be	receptive	to	hearing	your	thoughts	on	trade	         our	business	customers	synchronize	commerce.
and	transportation—especially	here	in	Philadelphia.                       By	“synchronizing	commerce,”	I	mean	coordinating	the	
    Second,	we	need	to	view	our	transportation	network	ho-            movement	of	goods	and	information.
           	
listically	…	and	develop	a	long-term	plan	that	both	optimizes	            When	 goods	 and	 information	 about	 those	 goods	 move	
financial	resources	and	provides	sustainable	transportation	          together,	 shipments	 are	 speedier,	 more	 accurate	 and	 more	
solutions	for	future	generations.                                     responsive	to	customer	timetables.
    In	2004,	the	federal	government	spent	about	$91	billion	              Ford	came	to	us	a	few	years	ago	and	said	“you	guys	know	
dollars	on	transportation	construction.                               where	every	$6	package	is	in	your	system.”
    But	spending	money	isn’t	the	only	solution.	We	need	to	               “We,	on	the	other	hand,	have	no	idea	where	our	$75,000	
target	that	money	strategically,	using	a	holistic	strategy.           dollar	Jaguars	are	once	they	leave	the	factory	floor.”
    By	holistic,	I	mean	taking	into	account	how	all	the	air,	             They	take	several	days	to	arrive	at	dealers.
ground	 and	 water-based	 systems	 work	 together	… 	a nd	 	              We’re	 now	 working	 with	 Ford	 and	 providing	 complete	
increasing	 the	 integration	 of	 all	 these	 different	 modes	 of	   visibility	into	their	network	from	the	factory	floor	to	the	car	
transport.                                                            dealership.	
    After	all,	the	trend	toward	intermodal	supply	chains	means	           Synchronizing	goods	and	information	flows	has	cut	Ford’s	
that	bottlenecks	on	one	type	of	system	can	lead	to	bottlenecks	       delivery	time	almost	in	half	and	has	reduced	inventory	car-
on	others.                                                            rying	costs	by	$1	billion	dollars.
    For	example,	all	the	port	capacity	in	the	world	won’t	pre-            Information	helps	avoid	waste	by	allowing	inventory	to	
vent	bottlenecks	if	there	isn’t	enough	rail	freight	capacity	on	      become	more	just-in-time	and	lean.
which	to	unload	the	ocean	shipments.                                      We	 believe	 synchronized	 commerce	 will	 result	 in	 even	
    In	2001,	the	Federal	Transportation	Advisory	Group	put	           larger	savings	and	improved	business	results	across	the	board	
together	a	very	thoughtful	white	paper	calling	for	an	inte-           in	years	to	come.
grated	national	transportation	system.	                                   I	like	to	think	of	UPS	as	a	metaphor	for	how	goods	and	
    In	that	paper,	they	urged	the	president	to	appoint	a	bipar-       information	 can	 be	 synchronized	 to	 improve	 the	 nation’s	
tisan	committee	to	develop	a	national	plan.                           transportation	network.
    I	couldn’t	agree	more.	                                               When	you	think	about	the	problems	the	rails	are	having	
    Which	gets	to	another	way	we	can	avoid	gridlock.	                         	
                                                                      today	…	much	 could	 be	 corrected	 by	 synchronizing	 goods	
    And	that	is	for	private	and	public	entities	to	work	together	     and	information.	
to	more	efficiently	use	existing	infrastructure	to	advance	goods	         In	fact,	the	technologies	and	planning	exist	today	in	the	
and	build	security	into	the	process.                                  form	of	the	North	American	Intelligent	Railroad	Transportation	
    One	example	of	such	a	partnership	can	be	found	at	our	            System	and	another	program	called	Positive	Train	Control.	
main	UPS	air	hub	in	Louisville.	Here	you’ll	find	135	miles	of	            Both	use	advanced	technologies	to	improve	the	operational	
conveyors	that	move	up	to	400	feet	per	minute.	If	one	wanted	to	      effectiveness	and	capacity	of	the	railroads.
we	could	stop	those	conveyors	and	pinpoint	each	package.                  Unfortunately,	 our	 rail	 network	 has	 fallen	 behind	 some	
    Here,	we	also	provide	customs	officials	with	a	UPS-devel-         of	 our	 European	 and	 Asian	 competitors	 in	 deploying	 this	
oped	online	tool	called	Target	Search.                                technology.
    Target	Search	allows	inspectors	to	query	electronic	ship-             One	nation	that	has	elected	to	make	an	aggressive	invest-
                                                     	
ping	manifests	using	any	search	filter	they	choose	…	including	       ment	in	rail	technologies	and	infrastructure	is	China.
type	of	good	or	shipper	name,	or	country	of	origin,	etc.                  China’s	doing	it	as	we	speak.
    This	automation	allows	customs	officials	to	target	suspicious	        In	fact,	this	past	fall,	I	had	lunch	with	the	mayor	of	Tianjin	
air	shipments	through	complex	technologies	and	algorithms	            and	he	talked	passionately	about	the	promise	of	new	high-
while	expediting	the	processing	of	non-risky	shipments.               speed	rail	links	that	were	being	constructed	between	his	city	
    The	overall	objective	is	to	make	most	efficient	use	of	exist-     and	Beijing.
                      	
ing	infrastructure	…	and	to	build	checking,	verification	and	             These	trains,	I	was	told,	will	clip	along	at	200	miles	per	
security	into	the	process	of	advancing	goods.                         hour	 and	 provide	 direct	 connections	 to	 the	 airports	 and	

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downtown	districts	of	Beijing.                                         the	grain	of	Benjamin	Franklin.
   The	 mayor	 also	 said	 the	 trains	 would	 leave	 every	 2-3	         If	we’re	going	to	take	our	rightful	place	as	a	nation	in	the	
minutes	throughout	the	day.                                            world	of	trade,	we	must	have	the	best	infrastructure.
   I	told	him	that	seemed	too	close.                                      By	now,	we	all	know	that	it’s	Rush	Hour	on	our	nation’s	
                           	
   He	said,	“Don’t	worry	…	we’ll	have	12	lines	running.”               transportation	systems.
   China,	by	the	way,	is	also	planning	to	build	44	new	airports	          And	statistics	tell	us	it’s	only	going	to	get	worse	as	global	
by	 2010.	 Those	 airports	 will	 complement	 a	 series	 of	 new	      commerce	expands.	
north-south	rail	lines	that	will	crisscross	the	nation’s	historical	      We	need	to	ask	ourselves,	whether	we’re	in	the	public	or	
east-west	trade	routes	along	the	Pearl	and	Yellow	rivers.              private	sectors:	
   I	mentioned	at	the	start	that	I	am	an	unabashed	advocate	              Are	 we	 willing	 to	 stand	 by	 and	 watch	 as	 we	 slide	 into	
of	free	and	fair	trade.	As	such	I’m	concerned	about	obstacles	         gridlock?
that	impede	fair	trade.	Few	obstacles	are	more	daunting	than	             Or	 are	 we	 willing	 to	 take	 the	 necessary	 steps	 today	 to	
an	antiquated	transportation	system.                                   ensure	a	vibrant	economy	today,	tomorrow	and	in	decades	
   A	failing	transportation	system	will	impose	far	more	physi-         to	come?
cal	quotas	than	any	political	quotas.	And	not	only	between	               Are	 we	 willing	 to	 create	 2050	 National	 Transportation	
                                       	
the	U.S.	and	the	rest	of	the	world	…	but	U.S.-to-U.S.	trade	           Infrastructure	vision?
as	well.                                                                  Do	we	really	have	a	choice?
                                                                                                                                       	
   Indeed,	I	can’t	think	of	anything	that	goes	more	against	              Thank	you	for	your	time	and	attention	this	afternoon.



             Past, Present and Future of Alternative Fuels
                                WE ALL NEED TO WORK TOGETHER TO HELP THE ENVIRONMENT
          Address by BETH	LOWERY, Vice President, Environment and Energy, General Motors Corporation
                   Delivered to Amelia Island Concours d’Elegance, Amelia Island, Florida , March 10, 2006


G     ood	afternoon.	Welcome	to	General	Motors’	look	at	the	
      past,	the	present	and	the	promise—of	alternative	fuels:	
what	we	can	realistically	expect	in	the	future	from	alterna-
                                                                          We	have	the	technology,	we	have	the	desire	and	we	have	
                                                                       the	will.	What’s	still	needed	to	make	it	happen	is	more	R&D,	
                                                                       more	 testing,	 a	 lot	 more	 financial	 investment—and	 more	
tives	to	petroleum.	                                                   cooperation	between	business	and	government—and	even	
    Thank	you	for	making	our	seminar	part	of	your	first	full	          between	competitors	in	this	industry.	
day	 here	 at	 Amelia	 Island.	 Despite	 the	 danger	 of	 talking	        As	an	industry,	when	we’re	talking	about	the	history	of	
technology	this	late	in	the	day,	we	are	going	to	proceed	with	         alternative	fuels,	it	is	easy	to	point	to	Henry	Ford	and	his	
a	seminar	we’re	pretty	excited	about.                                  experiments	with	soybean	fuel.	It	seems	that	Mr.	Ford	had	a	
    We’ve	 learned	 that	 we	 can	 draw	 plenty	 of	 inspiration	      great	fascination	with	soybeans—and	took	great	interest	in	
from	the	history	of	alternative	fuels	development—and	even	            finding	new	uses	for	the	soybeans	he	personally	grew.	Not	
more	 encouragement	 from	 the	 petroleum	 alternatives	 that	         only	did	he	create	soybean	meals—sometimes	to	the	dismay	
are	available	today	and	those	that	will	be	coming	to	market	           of	his	family	and	staff—he	also	used	soybeans	to	produce	
in	the	future.                                                         plastics	used	in	Ford	vehicles,	as	well	as	ethanol	produced	
    Our	excitement	is	really	due	to	our	recognition	that	all	          as	a	gasoline	alternative.
of	us,	in	2006,	are	part	of	a	truly	momentous	period	in	the	              Since	those	days	in	the	1930s	and	‘40s,	ethanol	has	defi-
history	of	our	industry.	Like	the	automotive	pioneers	who	             nitely	hung	around.	We	think	E85	fuel—currently	available	in	
competed	 to	 put	 commercially	 viable	 internal	 combustion	         some	markets	today—makes	a	compelling	case	for	reducing	
engines	 on	 the	 market	 100	 years	 ago,	 today	 we	 know	 the	      our	dependency	on	oil	and	improving	the	environment.	It’s	
                                                   	
race	 is	 on	 to	 do	 something	 completely	 new	…	something	          time	to	Live	Green	and	Go	Yellow—but	I’ll	have	more	to	say	
totally	different.	                                                    about	that	later.
    This	industry—driven	by	the	demands	of	our	customers,	                The	 most	 significant	 development	 of	 ethanol	 has	 taken	
and	recognizing	that	doing	the	right	thing	is	the	best	way	            place	 in	 Brazil,	 Sweden	 and	 the	 United	 States.	 Brazil	 has	
to	 secure	 your	 business	 future—is	 competing	 to	 develop	         excelled	in	developing	a	brand	of	ethanol	derived	from	sugar	
powertrain	systems	that	are	almost	perfectly	clean.	We	are	            cane,	while	U.S.	ethanol	has	been	made	mainly	from	corn.	
close	to	being	able	to	build	cars	and	trucks	that	give	us	the	            Brazil’s	ethanol	industry	got	going	in	the	late	1970s.	Today,	
power	and	performance	we	want,	but	minimize	impact	to	                 ethanol	production	from	sugar	cane	is	very	strong	there,	and	
the	environment.	                                                      GM	supports	the	industry	by	offering	many	popular	vehicles	

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452                                                                                                    VITAL SPEECHES OF THE DAY

that	offer	Flexpower—the	ability	to	run	on	100	percent	ethanol.	           And,	in	the	long	term,	the	best	solution	is	hydrogen	fuel	
In	fact,	approximately	80	percent	of	all	vehicles	sold	by	GM	           cell	vehicles.
Brasil	can	run	on	100	percent	sugar	cane-based	ethanol.                    Before	I	spend	a	little	time	on	each	of	these	solutions,	al-
    When	it	comes	to	widespread	use	of	other	alternative	fuels,	        low	me	to	note	that	there	is	clearly	not	One	Single	Solution	
prominent	examples	include	the	production	of	automotive	                to	the	challenges	we	face.	There’s	no	magic	bullet.	So	we’re	
fuel	 from	 coal—in	 Germany	 during	 World	 War	 II,	 and	 in	         concentrating	our	energies	on	a	number	of	different	fronts,	
South	Africa	during	the	world	economic	boycott	in	the	1980s	            and	believe	that	many	of	these	technologies	will	co-exist	in	
over	its	Apartheid	policies.	                                           the	marketplace.
    The	history	of	the	past	century	shows	us	that	whenever	                Let’s	 start	 with	 our	 current	 advancements	 with	 internal	
a	nation	has	developed	a	resolve	to	run	cars	and	trucks	on	a	           combustion	engines.	These	include	improved	variable	valve	
certain	fuel,	it	has	set	a	national	fuel	policy,	gotten	businesses	     timing	systems,	six-speed	automatic	transmissions,	and	Active	
on	board,	mobilized	public	opinion—and	met	its	goals.	These	            Fuel	Management,	formerly	referred	to	as	Displacement	on	
examples	should	encourage	all	of	us	who	hope	for	increased	             Demand,	and	advancements	in	diesel	technology.	
use	of	alternative	fuels	here	in	America.                                  Here	in	the	U.S.,	our	focus	on	fuel	economy	has	provided	
    Let	me	continue	my	brief	discussion	of	the	history	of	al-           results.	 For	 2006,	 GM	 has	 more	 models	 than	 any	 other	
ternative	fuels	by	noting	that	GM	has	unquestionably	been	a	            manufacturer	that	achieve	30	miles	per	gallon	or	better	on	
major	player	in	fuels	research	and	development	for	decades.	            the	highway.
As	many	of	you	know,	at	GM	we	have	a	long	history	of	techno-               And,	in	terms	of	model-to-model	comparisons	based	on	
logical	innovations	with	positive	environmental	impact—the	             Ward’s	segmentation,	GM	wins	66	of	116	segments	for	cars	
first	catalytic	converters,	the	first	extensive	emissions	control	      and	trucks	in	combined	highway	and	city	miles	per	gallon.	
systems,	and	among	the	first	unleaded	fuel	systems,	to	name	            This	is	57	percent	of	segments	where	GM	competes	and	is	
but	a	few.	                                                             more	than	any	other	manufacturer.	
    And	just	to	give	you	a	sampling	of	the	experimenting	we’ve	            A	quick	word	about	our	new	full-size	sport	utilities.	The	
done	through	the	years,	we	have	brought	down	a	number	                  media	have	correctly	portrayed	their	introduction	as	a	critical	
of	vehicles	from	the	GM	Heritage	Collection	for	display	at	             product	launch	for	GM.	We	are	also	pleased	the	media	are	
this	 year’s	 Amelia	 Island	 Concours	 event.	 If	 you	 are	 really	   accurately	 reporting	 that	 consumers	 have	 responded	 even	
into	classic	cars,	a	trip	to	the	GM	Heritage	Center	in	Sterling	        better	 than	 we	 thought	 they	 would.	 They	 have	 been	 won	
Heights	Michigan,	just	north	of	Detroit,	would	be	worth	your	           over	by	excellent	exterior	and	interior	design,	and	by	great	
while.	We’ve	got	hundreds	of	classic	production	models	as	              performance,	including	a	10	percent	gain	in	fuel	economy.	
well	as	concepts	there.	If	you	haven’t	seen	the	alternative	fuel	          The	 new	 2007	 Tahoe,	 Yukon	 and	 Escalade	 feature	 the	
cars	we	brought	down,	I	invite	you	to	stop	by	the	display	              lowest	aerodynamic	drag	of	any	fullsize	SUV	in	the	world.	
and	look	them	over.                                                     With	our	Active	Fuel	Management	system,	you	can	carefully	
    We’ve	got:                                                          manage	when	and	how	often	you	go	on	four	cylinders	and	
    A	 1970	 Pontiac	 Grand	 Prix	 powered	 by	 an	 innovative	         you	can	do	better	than	the	EPA	ratings.
regenerative	steam	engine;	                                                Now,	let’s	talk	about	E85	ethanol.	If	I	say	“LIVE	GREEN,”	
    The	Chevrolet	Express,	a	four-passenger	concept	car	built	          you	say	[Audience	answers:	“GO	YELLOW.”]
in	1987	that	uses	an	experimental	GM	AGT-5	turbine	engine	                 I	think	it’s	safe	to	say	that	our	E85	Live	Green	/	Go	Yellow	
in	an	ultra-low	drag	aero	body;	                                        campaign—launched	during	the	Super	Bowl	and	the	Winter	
    Autonomy,	 the	 world’s	 first	 vehicle	 designed	 expressly	       Olympics—has	raised	awareness	of	the	advantages	of	E85	
around	a	fuel-cell	propulsion	system;	and	Sequel,	a	concept	            ethanol	as	much	as	any	other	initiative	in	recent	history.
car	which	debuted	in	2005,	that	takes	fuel	cell	vehicles	to	               You	also	might	say	that	timing	is	everything.	Just	as	we	
the	next	level...With	Sequel,	we	offer	a	300	mile	range	and	            were	 about	 to	 launch	 our	 consumer	 awareness	 campaign,	
0-60	mph	in	under	ten	seconds.	                                         President	Bush	raised	the	stakes	during	his	State	of	the	Union	
    Again,	you	owe	it	to	yourself	to	stop	by	and	take	a	look	           address	where	he	talked	about	reducing	our	dependency	on	
at	these	vehicles.                                                      oil	and	the	benefits	of	ethanol.
    We	are	convinced	that	with	our	years	of	experience,	the	               In	North	America,	we	currently	have	nine	FlexFuel	vehicles	
knowledge	and	skill	of	our	people	and	our	global	resources,	            equipped	to	run	on	E85,	including	the	Tahoe	and	Yukon.	
GM	is	well	equipped	and	well	positioned	to	give	consumers	              As	you	know,	E85	is	85	percent	bio-ethanol	and	15	percent	
the	environmentally	responsible	cars	and	trucks	they	want	              gasoline.	We	have	a	million	and	a	half	such	vehicles	on	the	
between	now	and	2010—our	goal	for	the	introduction	of	a	                road	right	now,	and	current	plans	call	for	us	to	have	2	million	
fuel	cell	vehicle	for	the	mass	market.	                                 on	the	road	by	the	end	of	2006.	
    In	the	meantime,	advances	on	current	technology—such	                  E85	 is	 clean-burning—it	 reduces	 hydrocarbons.	 It’s	 a	
as	Active	Fuel	Management	systems—and	E85	vehicles	are	                 domestically	sourced	and	renewable	fuel,	since	it’s	typically	
great	solutions.	                                                       corn	or	sugar	cane-based.	The	real	future	here	will	be	with	
    You’re	also	going	to	see	the	best	hybrids	ever	come	from	GM.	       cellulosic	ethanol	production.	

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    If	 you	 compare	 a	 vehicle	 using	 E85	 to	 a	 typical	 hybrid	   planning	for	all	of	them,	so	that	we	will	be	ready	when	the	
vehicle,	you	may	notice	better	gas	mileage	from	the	hybrid.	            market	decides	which	way	to	go.	No	single	technology	will	
However,	the	E85-powered	vehicle	will	save	hundreds	more	               resolve	the	environmental	and	energy	challenges	we	face.	
gallons	of	petroleum	per	vehicle	per	year,	because	only	15	                Hybrids	are	an	important	part	of	that	strategy.	We’ve	had	
percent	 of	 what	 you	 put	 in	 the	 tank	 is	 petroleum-based,	       them	on	the	road	since	2003,	when	we	launched	our	two-
compared	with	100	percent	in	the	hybrid’s	tank.                         mode	hybrid	system	for	buses.	
    I’ve	 mentioned	 the	 prevalence	 of	 FlexPower	 vehicles	 in	         Since	then,	we’ve	delivered	more	than	380	hybrid	systems	
Brazil,	where	80	percent	of	all	GM	vehicles	sold	can	use	100	           for	transit	buses,	operating	in	29	cities	in	the	US	and	Canada.
percent	ethanol.	                                                          In	addition,	we’re	close	to	delivering	our	first	hybrid	bus	
    In	Europe,	the	Saab	9-5	Bio-power	is	Sweden’s	best-selling	         system	to	Shanghai,	China.
environmentally	friendly	vehicle,	and	accounts	for	80	percent	             Our	hybrid	buses	are	off	to	a	strong	start	this	year	with	an	
of	all	9-5	sales	there.	What’s	more,	it	was	also	recently	named	        additional	203	hybrid-powered	buses	scheduled	for	delivery	
to	Popular	Science	magazine’s	“Best	of	What’s	New”	list.	               to	six	U.S.	cities.	
    In	 addition	 to	 the	 obvious	 benefit	 of	 a	 renewable	 fuel,	      GM	has	targeted	traditionally	high-consumption	light-duty	
performance	of	the	vehicle	is	actually	enhanced.	For	example,	          vehicles	for	our	initial	hybrid	options	for	the	mass	market.	
the	Saab	Bio-power	gets	180	horsepower	while	running	on	                We	believe	that’s	the	way	to	maximize	the	benefits	for	the	
E85,	compared	to	150	on	gasoline.	                                      environment	and	make	the	fuel	savings	equation	more	at-
    Turning	back	to	the	U.S.,	we	need	to	expand	the	infrastruc-         tractive	to	the	consumer.	
ture,	because	the	potential	benefits	are	staggering.                       For	 instance,	 we	 forecast	 a	 20	 percent	 improvement	 in	
    That’s	 why,	 at	 General	 Motors,	 we	 are	 partnering	 with	      fuel	economy	for	the	Saturn	Vue	Green	Line,	which	we	are	
government	 and	 fuel	 providers—anyone	 who	 shares	 our	              launching	this	year.	The	hybrid	system	will	sell	for	less	than	
common	 interest	 on	 ethanol.	 For	 example,	 in	 California	          $2,000—allowing	us	to	offer	the	Vue	Green	Line	at	a	starting	
we	have	a	partnership	with	the	State,	Chevron	and	Pacific	              price	around	$23,000—$4,000	less	than	the	nearest	com-
Ethanol	to	study	the	feasibility	of	making	E85	more	widely	             petitor.	Simply	put,	the	Saturn	Vue	Green	Line	will	offer	the	
available	in	the	State	of	California.	The	State	will	purchase	          best	real	world	fuel	economy	of	ANY	SUV—hybrid	or	non	
over	80	E85	General	Motors	cars	and	trucks	to	place	them	               hybrid—and	we	did	it	for	substantially	less	money.	We	agree	
in	their	fleet.	                                                        with	David	Cole	of	the	Center	for	Automotive	Research,	who	
    In	Illinois	last	month	we	announced	a	partnership	with	             said	the	Saturn	Vue	Green	Line	might	have	been	the	most	
Shell	Oil,	VeraSun	and	Gas	City	to	deliver	20	E85	stations	to	          significant	 vehicle	 unveiled	 at	 this	 years	 North	 American	
greater	Chicagoland.	And	just	this	week	announced	another	              International	Auto	Show	in	Detroit.
partnership	with	VeraSun	and	Erickson	Oil	Products	to	bring	               In	 2007,	 the	 new	 fullsize	 SUVs—Chevy	 Tahoe,	 GMC	
another	10	E85	stations	to	Minnesota.	                                  Yukon,	 and	 the	 2008	 Cadillac	 Escalade—will	 be	 available	
    Worldwide	production	of	ethanol	has	risen	steadily—and	             with	our	patented	next-generation	two-mode	hybrid	system	
dramatically—in	the	last	25	years,	as	this	chart	shows.	                increasing	their	composite	fuel	efficiency	even	more,	about	
    Ethanol	production	is	expected	to	triple	between	now	and	           25	percent,	while	maintaining	SUV-like	performance.	
2020,	and	the	sooner	this	country	gets	the	infrastructure	in	              Our	Two-Mode	hybrid	system	features	two	hybrid	drive	
place,	the	sooner	we	can	put	more	of	these	vehicles	on	the	             modes,	each	separately	optimized	for	city	and	highway	driv-
road	in	huge	volume.	Don’t	get	me	wrong,	our	high-volume	               ing,	which	maximizes	fuel	efficiency,	and	reduces	the	need	for	
products	such	as	Chevrolet	Silverado	and	Impala	and	GMC	                large	electric	motors	found	in	typical	single-mode	systems,	
Sierra,	to	name	a	few,	are	E85	capable.	However,	as	an	indus-           making	it	adaptable	for	use	in	a	broad	variety	of	cars,	trucks	
try,	there	are	more	opportunities	when	it	comes	to	E85.                 and	SUVs.
    If	 market	 conditions	 supported	 unconstrained	 ethanol	             To	 achieve	 economies	 of	 scale	 and	 associated	 cost	 ad-
supply	and	infrastructure	...	we	could	save	45	million	barrels	         vantages,	we	have	entered	into	a	collaboration	with	Daim-
of	oil	annually,	and	reduce	greenhouse	gas	emissions	by	6.9	            lerChrysler	and	BMW	to	efficiently	develop	the	Two-Mode	
million	metric	tons	per	year.                                           hybrid	system.
    Right	now,	ethanol	represents	just	2.5	percent	of	our	fuel	            The	 combined	 development	 and	 market	 power	 of	 this	
supply,	but	is	predicted	by	some	to	increase	tenfold	in	the	            group	 of	 companies—each	 with	 its	 own	 significant	 and	
next	10	or	15	years.                                                    unique	strengths—is	moving	the	two-mode	hybrid	system	
    Such	 an	 amount	 could	 help	 offset	 future	 growth	 in	 oil	     into	the	technology-of-choice	for	the	industry.
demand,	act	as	a	hedge	to	future	oil	supply	and	price	shocks,	             And	we	may	add	some	more	companies	to	the	partnership	
and	help	diversify	our	transportation	energy	supply.	                   before	all	is	said	and	done...	
    E85	is	just	one	element	of	the	near-term	component	of	                 Before	I	conclude	I’d	just	like	to	mention	that	we	remain	
GM’s	multi-pronged	energy	strategy.	                                    committed	to	our	long-term	strategy,	the	hydrogen	fuel	cell.	
    As	I	said	earlier,	the	whole	point	of	our	strategy	is	that	we	      That’s	the	logical	next	step	to	reinventing	the	automobile...	
see	a	number	of	solutions	to	the	energy	equation,	and	we’re	            and	to	transforming	our	entire	industry.	

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454                                                                                                 VITAL SPEECHES OF THE DAY

   We	 have	 recently	 developed	 a	 novel	 stack	 concept	 that	    do.	And	we’ll	do	it	in	such	a	way	that	provides	a	solid	busi-
enables	an	additional	50	percent	reduction	in	size	over	the	         ness	case,	too.	
stack	that	debuted	in	our	Sequel	show	car.	That	50	percent	              As	we	all	know,	every	initiative	to	lessen	our	dependency	
reduction	 represents	 an	 improvement	 by	 a	 factor	 of	 14	 in	   from	fossil	fuels	is	important.	It	is	estimated	that	by	the	year	
just	seven	years.                                                    2020,	there	could	be	as	many	as	1.1	billion	vehicles	on	the	
   We	are	also	making	excellent	progress	on	durability,	cost	        planet.	That’s	enough	to	circle	the	earth	125	times!	
reductions	and	hydrogen	storage.                                         Earlier	 this	 year,	 Peter	 Hart	 and	 Associates	 conducted	 	
   We	are	on	the	cusp	of	breakthrough	technology.	We	are	            a	 survey	 of	 Americans	 and	 found	 that	 reducing	 depen-
going	to	get	this	new	mode	of	propulsion	developed	to	the	           dence	on	foreign	oil	and	diversifying	our	energy	supply	are	       	
point	that	it	provides	the	same	performance,	range	and	cost	         top	priorities	
as	today’s	internal	combustion	engine,	which	is	the	key	to	              It’s	pretty	clear	we	must	find	solutions	to	the	energy,	en-
realizing	high	volume	sales.                                         vironmental	and	congestion	impacts	of	automobiles.	All	the	
   Our	concern	at	this	point	is	that	we’ll	be	all	dressed	up	for	    while,	we	must	enhance	the	passion,	fun	and	affordability	
the	party	with	nowhere	to	go.	We	need	continued	cooperation	         they	offer.
from	government	and	industry	to	get	the	world’s	infrastruc-              Getting	to	solutions	will	require	an	integrated	approach	
ture	ready	for	the	hydrogen	economy.                                 including	 not	 just	 new	 vehicle	 technology,	 but	 enhanced	
   There	are	some	positive	examples	of	engagement	on	both	           transit	alternatives,	cleaner	fuels,	infrastructure	required	to	
sides	of	the	Atlantic,	but	here	in	the	U.S.	we	have	partnerships	    produce	and	deliver	them	and	more	efficient	roads.	
with	DOE,	with	Shell	Hydrogen,	a	hydrogen	refueling	station	             Automakers	 and	 fuel	 providers	 have	 much	 of	 the	 re-
in	Washington,	D.C.,	and	in	California’s	Hydrogen	Highway	           sponsibility—but	 it	 will	 take	 the	 engagement	 of	 govern-
initiative	and	its	Fuel	Cell	Partnership.                            ments	and	individual	consumers,	as	well.	In	2005,	we	had	
   GM	is	committed	to	making	the	hydrogen	economy	hap-               important	 discussions	 with	 the	 federal	 government	 and	
pen	and	we’re	prepared	to	go	even	further	by	being	open	to	          made	progress	on	a	number	of	fronts.	We’ve	witnessed	a	
partnerships	with	other	automakers,	suppliers,	oil	companies,	       tremendous	level	of	support	on	critical	issues	in	the	area	of	
governments	 and	 universities—whoever	 and	 whatever	 it	           research	on	game-changing	technologies	such	as	hydrogen	
takes,	to	develop	the	technology	and	implement	the	change	           and	fuel	cell	vehicles.	
more	quickly,	and	more	broadly.	                                         We	will	push	for	even	more	cooperation	going	forward—
   More	 research	 and	 development	 funding	 is	 needed,	 fo-       because	the	history	and	the	current	state	of	alternative	fuels	
cused	on	improving	performance	and	reducing	the	cost	of	             development	tell	us	anything	is	possible	if	we	are	determined	
hydrogen	storage,	especially	in	the	areas	of	how	to	best	deploy,	                                  	
                                                                     to	get	it	done.	And	at	GM	…	we	are!
store	and	dispense	hydrogen.                                             In	closing,	we	are	proud	of	our	history	of	innovation	at	
   Obviously,	 the	 development	 of	 both	 vehicles	 and	 infra-     GM,	and	working	to	reinvent	the	automobile	for	tomorrow.	
structure	will	take	a	joint	effort	between	governments	and	          I	brought	along	our	newest	advertisement	which	shows	just	
industries	that	will	need	to	be	as	carefully	coordinated	as	a	       how	 important	 it	 is	 to	 draw	 on	 your	 heritage	 to	 create	 a	
lunar	landing.	                                                      bright	future.
                                                                                                                              	
   But	if	that’s	what	it	takes,	that’s	exactly	what	we’ll	need	to	       Thank	you	very	much	and	enjoy	the	Concours.



                  The Synergy of Libertarianism and Islam
                                         AFFAIRS OF RELIGION AND AFFAIRS OF STATE
               Address by M.	ZUHDI	JASSER, Chairman of the American Islamic Forum for Democracy
              Delivered to the Economics Discussion Group of Phoenix, Phoenix, Arizona, October 19, 2005


W       hen	it	comes	to	libertarian	ideology	and	its	synergy	with	
        Islam,	mine	is	a	minority	opinion	within	the	“current”	
Muslim	community.	My	prayer	is	that	it	is	a	majority	opinion	
                                                                     Islam	as	I	know	it	and	practice	it	is	a	personal	faith	without	
                                                                     encumbrance	external	to	my	own	physical	being,	to	myself.	
                                                                     It	is	unencumbered	by	clergy,	or	a	man-made	hierarchy.	
within	the	Muslim	conscience.                                            It	is	my	belief	as	a	Muslim	that	liberty	is	necessary	for	re-
   It	is	my	belief	as	a	Muslim	that	libertarianism	is	a	prereq-      ligion	and	religion	is	necessary	for	liberty.	The	independent	
uisite	for	piety	and	for	a	pure	unadulterated	relationship	with	     nature	of	this	relationship	is	at	the	core	of	the	success	of	both	
God.	Faith	must	be	personal	in	order	to	be	“faith”.	Moreover,	       ideologies—a	virtual	covalent	bond.
what	is	faith?—but	a	belief	in	that	which	cannot	be	proven	              What	is	Islam	as	a	religion?	What	is	Islam	to	me?
but	does	exist	and	for	which	one	may	be	held	accountable.	               Islam	is	derived	from	the	root	term	selama,	“to	surrender	

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M. ZUHDI JASSER                                                                                                             455

or	submit”	to	God.	Thus,	in	reference	to	the	relationship	of	  Gabriel	to	the	Prophet	Mohammed	beginning	in	610	C.E.	
the	soul	with	God,	the	almighty	creator,	the	soul	is	only	at	  and	ending	in	633	C.E.	This	revelation	intermittently	was	
“peace”	[selam]	if	it	has	completely	submitted	to	the	will	of	 compiled	to	form	the	Muslim	holy	book—the	Holy Qur’an.	
God.	One	will	achieve	the	ultimate	free	will—the	purest	of	    The	faith	was	not	revealed	to	Jews	or	Christians	in	order	to	
liberty	and	truth—if	a	Muslim	has	submitted	to	God.	The	       convert	them,	but	rather	to	the	pagans	of	Arabia	who	had	
                                                               no	 moral	 code,	 and	 wallowed	 in	 materialism,	 arrogance,	
crux	 of	 the	 matter	 is	 thus	 what	 is	 exactly	 meant	 by	 this	
submission.	I	could	elaborate	ad	nauseam	about	what	this	      ignorance,	and	tribalism.	
concept	is	“not”.	But	today	I	will	only	focus	on	what	it	“is”	     In	the	Qur’an,	God	retells	many	of	the	stories	of	Judaism	
to	me.	I	will	focus	on	what	my	faith	is,	in	forming	who	I	am	  and	 Christianity	 to	 the	 Muslims	 of	 Arabia	 from	 Adam	 to	
as	a	libertarian	Muslim.	                                      Abraham	to	Moses	to	Jesus.
    Interestingly,	while	we	may	have	a	few	quibbles	on	whether	I	  Mohammed	wore	many	hats,	and	in	reading	the	Qur’an	
                                                               one	notes	that	it	is	very	clear	in	the	passages	when	God	is	
tow	the	line	of	libertarianism	in	areas	of	a	forward	foreign	policy	
or	accepting	government	payments	in	my	medical	practice,	I	    referring	to	Mohammed	as	His	Prophet,	as	His	Messenger,	or	
believe	the	area	in	my	life	in	which	I	am	a	strict	uncompromis-as	the	head	of	state.	This	shared	role	certainly	stretches	one’s	
                                                               ability	to	purely	separate	the	concepts	of	religion	and	state.	
ing	libertarian	is	in	my	relationship	with	God.	This	relationship	
is	unidirectional.	While	I	am	a	creation	of	God,	my	understand-But	in	the	scheme	of	history,	the	revelation	of	Islam	had	been	
ing	and	manifestation	of	that	relationship	is	entirely	created	a	profound	step	forward	in	the	journey	toward	liberty	and	
by	me	and	enacted	by	me.	The	vehicle	of	internal	harmony	      in	the	journey	to	separate	that	of	this	world	from	that	of	the	
                                                               next.	The	creation	of	the	city-state	of	Medina	and	its	compact	
which	I	utilize	to	achieve	peace	in	my	relationship	with	God	is	
one	based	on	the	Truth	that	my	perception	of	God	is	that	He	   with	the	many	tribes	of	various	faiths	in	the	region	rests	in	
is	real	and	all	encompassing,	omnipresent,	omnipotent,	and	    history	as	one	of	man’s	greatest	steps	forward	in	establish-
                                                               ing	 an	 example	 of	 pluralism	 and	 a	 governmental	 contract	
all	empowering	in	a	divine	humility.	In	the	absence	of	a	belief	
in	a	Creator	and	the	free	will	He	(the	Creator)	placed	within	 guaranteeing	liberty	and	freedom	from	government	and	of	
me	to	choose	to	believe	in	Him,	I	am	left	inexorably	with	the	 religion	regardless	of	faith.	This	was	based	upon	a	founda-
emptiness	of	self-worship	(this	is	a	binary	formula	similar	to	tion	of	Islamic	law,	the	sharia.	So	a	knowledge	of	the	legal	
many	other	binary	choices	in	life).	The	presupposition	of	His	 processes	of	the	faith	of	Islam	was	prerequisite.	
creation	is	initiated	with	Free	Will	(Liberty).	                   For	centuries	this	foundation	became	the	basis	of	a	new	
                                                               global	liberty.	Many	in	fact	fled	Europe	to	escape	the	perse-
    In	the	Koran,	God	tells	Muslims—“If	I	so	desired	to	I	could	
have	forced	you	to	believe,	but	I	did	not”	Thus	to	believe	in	 cution	of	medieval	Christianity	of	the	time	in	exchange	for	
God	and	his	faith	is	to	believe	an	individual’s	choice	is	his	 the	open	society	of	the	Islamic	world.	Paul	Johnson,	in	the	
or	hers	alone	and	must	be	free	of	coercion	or	else	the	entire	 History of the Jews	refers	to	this	period	in	the	12th	Century	
                                                               as	the	Golden	Age	of	Judaism.	Islamic	renaissance	brought	
faith	is	abrogated	and	irreconcilable.	The	purity	of	this	choice,	
                                                               forward	Greek	philosophy,	new	sciences	of	algebra,	applied	
this	liberty	to	believe,	is	unequaled	in	life	for	it	is	this	choice	
over	which	all	else	is	measured	and	over	which	I	believe,	as	  mathematics,	 astronomy,	 advanced	 medicine	 (Avicenna’s	
a	believer,	I	will	be	judged	in	the	Hereafter.	The	existence	  Canon of Medicine),	and	a	cumulative	experiential	law	based	
of	a	Day	of	a	Judgment	by	the	creator	establishes	the	binary	  upon	local	precedents	with	little	central	authority.	
nature	of	life.	Good	and	bad,	joy	and	sadness,	or	pleasure	        The	positive	contributions	to	the	world	of	Islamic	society	
and	pain	without	both	we	know	neither.	                        from	650	to	1500	are	numerous	and	are	the	subjects	of	trea-
    The	decision,	or	any	of	our	exercises	of	freedom	and	free	 tises.	But,	what	followed	is	also	a	complicated	history	which	
                                                               through	a	number	of	stages	led	to	the	deconstruction	of	the	
will,	are	meaningless	if	they	are	not	finalized	with	a	judgment	
or	an	observation	from	the	Creator.	Joy	is	meaningless	without	Muslim	community.
pain.	Love	is	meaningless	without	hate	or	apathy.	This	choice	     With	the	Ottoman	Empire	closed	were	the	days	of	religious	
and	final	arbitration	is	the	ultimate	chance	and	the	ultimate	 ijtihad—the	 interpretation	 of	 Islamic	 scripture	 in	 light	 of	
test	of	liberty.	While	we	always	seek	to	understand	life,	to	  modern	day	understanding.	The	independence	of	religious	
understand	God	is	to	have	that	comfort	of	an	explanation	for	  centers	of	higher	learning	was	a	thing	of	the	past.	The	dynamic	
all	that	in	life	which	defies	explanation	no	matter	how	hard	  nature	of	religious	law	in	a	precedent	system	similar	to	that	
I	try.	This	is	the	submission.	With	liberty	as	the	core	truth	 of	western	courts	of	today	was	no	more	under	the	militarized	
upon	which	we	all	agree,	the	variation	of	that	Truth	whether	  Ottomans.	This	culminated	in	Ataturk	outlawing	the	Arabic	
the	God	of	Abraham	through	Moses,	Jesus,	Mohammed,	or	         language	and	stifling	any	ability	for	attempts	at	ijtihad.	
any	other	faith	is	very	personal	with	all	being	possibly	the	      The	Twentieth	Century	brought	Muslims	a	colonial	change,	
‘right	path’.                                                  a	change	which	distanced	them	even	further	from	a	modern	
                                                               interpretation	of	their	faith.	After	the	World	Wars	the	abrupt	
3	Relevant	historical	landmarks	of	the	Islamic	faith           withdrawal	of	foreign	forces	left	some	hope	for	democracy	
  The	religion	of	Islam	was	brought	to	this	world	from	God,	 and	 freedom,	 but	 the	 vacuum	 and	 demilitarization	 of	 the	
Muslims	believe	through	a	revelation	transmitted	by	the	angel	 people	empowered	coups	and	installed	dictatorships	across	

                                                                                                                        MAY 2006
456                                                                                                VITAL SPEECHES OF THE DAY

the	 Middle	 East.	 These	 dictatorships	 and	 oil	 monarchies	  bear	the	sin	(thus	the	major	deviation	from	Christianity	over	
ultimately	completed	the	destruction	of	Muslim	civilization,	    ‘salvation’	or	‘Jesus	taking	on	our	sins’	or	‘the	assurance	of	
institutionalized	corruption,	and	brought	much	of	the	com-       heaven	based	only	on	salvation—there	is	no	assurances	of	
munity	back	to	pre-Islamic	tribalism,	and	morale	vacancy.	The	   heaven	in	Islam	regardless	of	what	some	may	say).	Confes-
only	religious	institutions	fostered	were	those	which	catered	   sion	or	absolution	of	sins	by	a	third	party	is	antithetical	to	
to	the	despots	and	fostered	radicalism.	Witness	the	spread	      Islam.	The	need	for	baptism	to	wash	away	sins	of	birth	is	
of	 salafism,	 Wahhabism,	 the	 Taliban,	 the	 Muslim	 Brother-  also	not	in	line	with	the	essence	of	Islamic	concepts	of	faith,	
hood,	and	the	litany	of	other	fundamentalist	ideologies	and	     liberty.	The	analogy	of	Adam	choosing	sin	and	thus	we	are	
their	offspring	militant	organizations.	The	exploitation	of	the	 all	born	to	sin	is	also	antithetical	to	Islamic	concepts	of	sin	
religion	of	Islam	for	political	divisiveness	spread	throughout	  and	purity	at	birth.
the	Muslim	world.	Political	Islam	(Islamism)	was	born	and	           As	I	stated	at	the	outset,	it	is	my	belief	as	a	Muslim	that	
remains	the	primary	affliction	of	the	Muslim	world.              liberty	is	necessary	for	religion	and	religion	is	necessary	for	
                                                                 liberty.	 The	 independent	 nature	 of	 this	 relationship	 is	 at	
    That	which	is	sacred	is	above	the	scientific	and	the	rational	
which	is	open	to	critique	and	deconstruction.	As	Abdelkarim	     the	core	of	the	success	of	both	ideologies—a	supernatural	
Soroush,	author	of	Reason, Freedom, and Democracy in Islam:	     covalent	bond.	In	the	first,	as	I	mentioned,	the	loss	of	liberty	
the Writings of Abdelkarim Soroush	states,	“religious	geometry	  negates	actual	faith	and	God’s	tests	or	challenges	of	free	will	
or	religious	thermodynamics	are	possible	in	only	as	far	as	one	  then	become	rote	actions	of	coercion.	In	the	second,	religion	
presupposes	that	the	world	has	a	common	source	of	truth	         brings	 with	 it	 the	 definition	 of	 a	 value	 system	 or	 morality	
otherwise	the	“religious”	is	separate	from	science.”	He	further	 which	forms	the	superego	and	allows	society	to	function	in	
asks,	“How	can	human	beings	fraught	with	error	create	‘infal-    security	in	the	absence	of	the	‘state’.	
lible	governments	or	churches?                                       Now	‘Godless’	individuals	can	have	a	similar	value	system	
    Religion	in	Islam	from	the	Qur’an	is	a	language	of	duties	   as	a	utilitarian	argument.	However,	it	is	my	belief	that	in-
not	rights.	Humans	are	simply	being	given	commandments	          grained	within	free	will	is	an	arrogance,	a	vacuum	of	humility,	
by	a	supreme	authority	in	a	language	of	sharia’	(rules	of	God	   which	without	reigning	in	by	religion	and	by	a	‘fear’	or	put	
transmitted	to	Muslims	no	different	from	‘mitzvot”	of	Judaism).	 more	precisely	a	‘respect’	for	God,	could	not	otherwise	lead	
But	yet	it	remains	that	the	ultimate	acceptance	and	governance	  to	a	globally	moral	society.	We	have	seen	this	in	the	pagan	
is	still	divinely	individual—in	point	of	fact	libertarian.	      societies	 before	 Judaism,	 Christianity	 and	 Islam.	 It	 is	 in	 a	
                                                                 way	absurd	to	assume	that	the	freedom,	and	liberty	of	today’s	
    If	 one	 were	 to	 sit	 down	 and	 write	 rules	 for	 one’s	 own	
home,	even	though	there	is	a	strict	set	of	rules,	it	would	still	society	 and	 our	 great	 advancements	 came	 from	 anywhere	
be	libertarian	since	the	introduction,	acceptance,	continua-     else	other	than	as	a	result	of	a	pious	Judeo-Christian-Islamic	
tion	or	the	end	of	the	rules	would	remain	voluntary.	While	      culture	albeit	after	wresting	control	away	from	religion	(but	
much	of	the	Qur’an	is	rules,	the	acceptance	of	them	is	purely	   still	in	the	ever-presence	of	religion	and	its	values).	To	say	
individual	and	is	to	be	left	inviolable	by	society.              that	atheism	or	paganism	can	now	be	successful	whether	or	
                                                                 not	moral,	is	like	allowing	the	Chinese	to	claim	a	benefit	from	
3	The	Muslim	concept	of	sin	and	forgiveness	as	it	relates	 globalization	and	then	saying	that	their	communism	created	
to	liberty                                                       the	success	of	their	free	markets.
   To	a	Muslim,	infants	are	born	pure	and	sin-free	without	
need	for	baptism.	In	fact,	it	is	felt	in	Islamic	theology	that	 3	Complete	Equality	of	all	human	beings
children	who	die	before	the	age	of	reason,	age	of	true	choice	       Islam	has	no	‘church	structure’,	no	institutional,	hierarchy:	
or	liberty,	are	not	judged	by	God	negatively	for	any	reason	 all	human	beings	are	equal	(even	the	Messengers	of	God)	
and	are	believed	to	go	to	heaven	by	His	decision	as	a	result	        This	lack	of	institutionalization	is	certainly	not	obvious	
of	their	purity.	Once	beyond	the	age	when	the	superego	and	 to	a	student	of	the	so-called	Muslim	world,	but	as	a	devout	
the	soul	understand	right	from	wrong,	at	death	an	individual	 libertarian	Muslim,	it’s	the	only	way	I	see	my	faith.	The	Koran	
awaits	God’s	judgment.	Muslims	believe	that	life’s	actions	are	 is	the	only	direct	communication	of	the	creator	with	Muslims	
the	ultimate	barometer	of	faith	on	earth.	In	the	end,	Muslim	 and	nothing	else	represents	him.	Thus	the	communication	
theology	imparts	that	God	will	judge	these	actions	in	a	“bal- was	 one	 way	 via	 our	 messenger	 just	 as	 prior	 messengers	
anced”	fashion	with	an	all-encompassing	assessment	of	our	 and	now	we	communicate	personally	in	the	other	direction	
good	and	bad	deeds	of	our	life.	The	only	beliefs	judged	are	 through	prayer.	This	communication,	this	relationship	would	
those	in	regards	to	Him.	The	others	are	opinions	related	to	 be	inexorably	altered	if	an	intermediary	were	to	step	in	with	
this	earth	and	are	part	of	the	shades	of	gray	of	human	interac- constricting	rules	as	to	the	mechanism	or	‘permission.’	In	the	
tions.	On	earth	it	is	not	obligations	but	a	measure	of	gain	and	 end	if	it	is	clear	that	God	will	judge	individuals	on	Judgment	
loss	as	measured	by	a	number	of	issues	form	one’s	intentions	 in	isolation	from	anyone	else,	then	they	must	be	free	of	any	
to	the	final	arbiter—God.	                                       hierarchical	control	or	interpretative	leadership.
   Thus,	individuals	choose	alone,	and	sin	alone.	No	one	else,	      In	fact,	in	my	own	tradition	of	Sunni	Islam	(as	compared	
not	even	the	parent	will	be	there	on	the	day	of	Judgment	to	 to	Shia)	it	is	felt	that	‘ceremonial’	practice	is	discouraged	since	

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it	empowers	a	pseudo-clergy	which	may	in	the	end	interfere	                 hand,	and	the	‘virtue	of	selfishness”	are	all	precepts	to	which	
in	this	liberal	relationship	between	an	individual	and	God.	                I	find	no	conflict	within	my	faith	and	in	fact	I	find	encourage-
From	this	innate	close	relationship	comes	the	need	to	main-                 ment	within	my	faith.	
tain	its	pure	monotheism.	Thus,	in	Islam	one	finds	a	distinct	                  I	 am	 going	 to	 use	 an	 analogy	 to	 the	 Islamic	 injunction	
differentiation	or	theological	disagreement	with	the	Christian	             against	clergy.	God	states	in	the	Qur’an,	that	he	created	natural	
concept	of	the	Trinity.	The	supernatural	power	and	nature	of	               needs	of	hunger,	thirst,	and	intimacy	and	the	clerical	need	
God	in	his	spirit	is	acknowledged	but	never	separated	from	                 to	remain	celibate	is	unnatural	and	violates	the	virtue	of	the	
his	oneness	(tawhid).	The	Qur’an	strictly	describes	that	God	               sanctity	of	marriage.	Free	markets	are	the	same.	As	long	as	
begets	none	and	is	not	begotten.	This	variant	understand-                   we	utilize	our	wealth	in	moral	ways	investment	in	capitalistic	
ing	of	Jesus	Christ	as	messenger	of	God	in	Islam	versus	son	                institutions	is	very	Islamic	and	encouraged.	
of	God	in	Christianity	is	the	primary	theological	difference	                   Some	cite	the	prohibition	of	interest	as	anti-capitalistic.	
between	the	faiths.                                                         First	of	all,	it	is	strictly	usury	which	is	discussed.	Since	lower	
    Thus,	one	understands	the	prohibition	in	Islam	of	giving	               interest	rates	could	be	interpreted	as	fees	by	simple	semantic	
God	 a	 human	 characteristic	 and	 also	 the	 prohibition	 of	 a	          changes.	But	the	intent	of	the	theological	argument	is	that	all	
picture	of	any	of	the	prophets	or	deification	of	individuals	               parties	in	a	financial	capital	risk	in	fact	share	the	risk.	There	
no	matter	how	great	or	pious.	                                              should	be	no	involved	parties	insulated	from	risk	in	the	free	
                                                                            market.	For	example,	Islamic	charity	is	prescribed	to	be	2.5%	
3	The	Legal	Tradition	of	Islam                                              of	one’s	savings	(assets).	Thus,	the	more	one	spends	and	the	
    The	 sharia	 evolved	 in	 Islam	 as	 a	 legal	 framework	 from	         less	one	hoards,	the	less	charity	God	commands	us	to	spend.	
which	to	enact	the	moral	guidance	of	God	as	enumerated	in	                  This	seems	to	be	a	resounding	endorsement	of	the	free	market	
the	Qur’an.	This	was	lent	to	over	centuries	by	scholars	and	                and	concept	of	‘virtue	of	selfishness’.	
jurists	schooled	in	the	religious	law.	The	evolution	was	simi-                  It	is	interesting	to	also	note	that	Rose	Wilder	Lane	in	her	
lar	to	the	development	of	any	precedent	based	juristic	law.	                book,	Islam	and	the	Discovery	of	Freedom	cites	the	period	
Just	as	our	own	American	law	evolved	side	by	side	with	the	                 of	the	introduction	of	Islam	into	the	Arabian	peninsula	as	
original	U.S.	Constitution,	religious	law	can	evolve	similarly	             one	of	the	three	major	revolutions	in	man	toward	capitalism	
side	 by	 side	 with	 the	 Qur’an.	 Its	 dynamic	 modernization	            and	free	markets.
is	 reflected	 off	 of	 the	 original	 intent	 of	 the	 primary	 docu-
ment	and	its	current	understanding.	This	is	with	the	most	                  3	Libertarianism	and	Islam
important	caveat	that	these	two	legal	systems	should	remain	                   Is	Islam,	is	this	a	system	of	government?	Islamism	most	
completely	separate.	                                                       certainly	is	while	Islam	most	certainly	is	not.	Islam	does	carry	
    This	separation	is	the	essence	of	the	conflict	between	the	             a	set	of	laws	and	thus	has	an	inherent	rule	of	law	which	is	
Muslim	world	and	the	non-Muslim	world	of	the	twenty-first	                  inherent	also	within	that	which	we	understand	as	classical	
century.	I	am	an	originalist	in	U.S.	law	and	separately	and	                liberalism	or	libertarianism.	But	this	is	separate	and	without	
similarly	a	classically	liberal	originalist	and	modernist	in	my	            government.
own	interpretation	of	the	Holy	Qur’an.	                                        Religion	is	negated	by	the	abrogation	of	free	will	to	the	state.	
                                                                            Actions	prescribed	by	God,	once	they	are	prescribed	by	the	
3	Accepting	and	rejecting	Islam                                             state	no	longer	become	actions	of	faith	but	are	actions	of	slavery	
    While	history	of	the	spread	of	Islam	is	rife	with	assertions	           imposed	by	a	state.	From	charity	to	civic	service	to	morality	in	
of	 the	 meanings	 of	 ‘jihad’,	 in	 today’s	 world	 it	 is	 clear	 that	   dress	and	conduct,	freedom	and	liberty	allow	one	to	exercise	a	
this	word,	jihad	is	one	of	a	militaristic	coercion	of	religion.	            moral	faith.	Just	as	libertarianism	is	abrogated	by	governmental	
Based	on	the	libertarian	ideology	of	faith	which	I	practice,	               control	so	to	is	a	pious	individually	practiced	Islam.	
any	individual	who	expresses	vocally	let	alone	physically	a	                   The	concept	of	inalienable	rights	is	a	deeply	religious	one	
need	to	change	another	individual	has	violated	his	own	faith.	              which	without	this	foundation	one	could	argue	we	should	
Faith	 is	 simply	 limited	 to	 God’s	 role	 with	 that	 individual.	       rather	have	a	Darwinian	society	of	the	survival	of	the	fittest	
Any	interference	by	any	other	individual	violates	the	whole	                rather	than	the	freest.
premise	of	faith	in	God.	                                                      Predicated	upon	the	Muslim	belief	of	God	passing	judg-
    In	my	understanding	of	my	own	faith	of	Islam,	even	the	                 ment	is	that	this	judgment	is	not	only	over	the	test	of	life’s	
correction	of	minor	transgressions	of	religious	law	are	forbid-             challenges	and	of	one’s	moral	failures	and	successes	as	an	
den	between	individuals	for	our	moral	behavior	teaches	us	to	               independent	 soul	 but	 upon	 the	 specific	 utilization	 of	 an	
honor	individual	independence	and	teach	by	subtle	example	                  individual’s	 gifts.	 Society	 if	 it	 were	 to	 make	 rules	 could	
not	by	coercion	or	even	suggestion.	                                        never	 create	 a	 situation	 other	 than	 in	 complete	 liberty	
                                                                            where	 an	 individual’s	 gifts	 from	 God	 are	 tested	 without	
3	Free	markets	and	Islam                                                    encumbrance.	
  The	very	nature	of	Islamic	banking	is	free	of	collectivism	                  The	 actions	 of	 prayer,	 fasting,	 paying	 alms	 to	 the	 poor,	
and	 inherently	 decentralized.	 Profit-making,	 the	 invisible	            pilgrimage	to	Mecca,	and	bearing	witness	to	one	God	must	

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458                                                                                                      VITAL SPEECHES OF THE DAY

be	entirely	free	in	order	to	be	real.	Coerced	virtues	are	no	             religion	and	state	with	the	absence	of	religion.	I	believe	it	is	
longer	virtues.                                                           rather	the	contrary—the	most	pious	system	for	a	society.	They	
    A	society	based	upon	liberty	and	free	markets	is	predicated	          have	equated	the	separation	of	religion	and	state	as	immoral.	
upon	the	presence	of	a	moral	code	and	the	inherent	trust	of	              I	believe	it	is	rather	the	contrary—the	most	moral	system	for	
all	of	the	participants	(as	Fukayama	eloquently	writes	about	             society.	They	have	equated	the	separation	of	religion	and	state	
in	Trust).	Thus,	the	more	individually	pious	a	society	is,	the	           with	a	distance	from	God.	I	believe	there	is	no	society	which	
more	able	they	are	to	practice	a	libertarian	philosophy	within	           permits	a	closer	more	genuine	un-coerced	relationship	with	
the	society.	The	less	pious	and	thus,	the	less	ethical	they	are,	         God	than	one	founded	upon	libertarian	principles.	
the	more	autocracy	they	may	need.	                                            It	is	for	this	reason	that	my	parents	fled	the	oppression	
    Working	within	the	acts	of	this	earth—studying	this	earth	            of	the	Syrian	government	in	the	1960’s	in	order	to	come	to	
and	its	sciences	is	equivalent	in	Islam	to	reading	the	book	              America	and	live	the	American	dream.	I	was	raised	believ-
of	God.	Both	are	in	fact	felt	to	be	a	form	of	communicating	              ing	and	experiencing	the	fact	that	in	no	other	place	on	earth	
with	God,	the	God	of	Abraham.	This	stimulation	of	human	                  do	I	have	the	freedom	and	the	liberty	to	practice	my	faith	
creativity	 is	 at	 its	 depth	 very	 free	 market,	 very	 libertarian	   unencumbered	by	government	as	I	do	in	the	United	States.	
and	very	Muslim.	For	Muslims	are	taught	that	creativity	in	               While	we	do	see	a	sadly	increasingly	interventional	govern-
science,	nature,	technology,	art	is	equivalent	to	communicat-             ment	into	our	daily	lives,	the	fact	is	until	this	very	day,	that	
ing	with	God.	                                                            scriptural	and	theological	argumentation	are	not	part	of	our	
    This	is	one	Muslim’s	view	of	his	own	faith.	It	is	not	only	           governmental	lawmaking	in	America.	We	simply	use	the	logic	
of	interest	because	it	is	compelling	to	me,	but	the	spread	of	            of	our	human	interactions	to	enact	our	values.	It	is	this	system	
a	 libertarian	 ideology	 within	 the	 Muslim	 community,	 the	           which	political	Islam	detests	and	it	is	this	system	which	I	as	
ummah,	is	one	of	the	primary	issues	of	the	day.	As	we	look	               a	freedom-loving	classically	liberal	Muslim	love.	
at	the	threats	to	American	and	western	security,	the	radical	                 My	hope	is	that	other	libertarian	Muslims	wherever	they	
Islamists	do	not	hate	the	west	because	of	our	affluence	or	of	            may	be	wake-up	and	realize	that	their	day	has	come	now	to	be	
our	free	markets.	They	have	been	able	to	form	an	image	of	                accounted	and	lead	the	ideological	battle	waged	by	Islamists	
America	and	the	west	which	the	rank	and	file	Muslim	views	                against	Muslims	who	separate	the	affairs	of	religion	from	the	
as	“godless”.	The	Islamists	of	the	Muslim	community	(perhaps	             affairs	of	the	state.
                                                                                                                       	
the	majority	of	the	ummah)	have	equated	the	separation	of	                    Thank	you	for	your	time	and	attention.



                    Could Non-Citizens Elect The President?
                                            INEQUALITY IN VOTING IN THE UNITED STATES
             Address by REN	RENFRO, physicist, attorney, author, entrepreneur and chair of ReMarln Co.
      Delivered to a conference organized by the World Technology Foundation, Palm Beach, Florida. January 20, 2006


O     ne	person,	one	vote?	Equal	protection	of	the	law?	Not	
      so	fast.	Not	in	American	elections	where	one	vote	can	
equal	as	many	as	four.	Even	in	Iraq—at	best,	a	democracy	at	
                                                                          apportioning	districts.	Indeed,	even	after	Baker	cured	inequality	
                                                                          of	obsolete	apportionments,	votes	cast	in	state	elections	are	still	
                                                                          not	equal—federal	inequalities	infect	state	elections	as	well.	
birth—all	votes	are	equal.                                                    In	the	2004	election,	the	power	of	each	vote	depended	
   With	all	the	progress	in	voting	rights	over	the	past	century,	         on	the	district	where	it	was	cast.	The	great	attention	focused	
this	seems	impossible.	It	is	not.	There	are	two	components	               on	re-apportioning	Congressional	Districts	assured	equality	
to	voting	equality:	first	is	equality	of	the	right	to	cast	votes;	        of	district	populations.	The	inequality	comes	from	how	the	
second	is	equality	of	votes	cast.	                                        district	populations	are	determined.
   Equality	 of	 the	 right	 to	 vote	 has	 been	 the	 focus	 of	 	           When	the	House	of	Representatives	was	re-apportioned	
voting	rights	for	a	century—from	rights	for	women	to	mi-                  in	 2000,	 each	 congressional	 district	 had	 on	 average	 about	
norities.	Until	now,	the	equality	of	the	votes	cast	has	been	             650,000	 people—i.e.,	 the	 total	 population	 divided	 by	 the	
largely	ignored.                                                          436,	the	number	of	Representatives,	including	one	for	Wash-
   The	most	fundamental	principle	of	democracy	is	the	right	to	           ington,	DC.	The	number	of	Representatives	per	state	was	in	
vote—with	equal	votes.	The	inequality	of	votes	cast	in	state	elec-        turn	determined	by	dividing	the	population	of	each	state	by	
tions	was	addressed	in	Baker vs. Carr,	the	famous	1962	“one-man,	         this	average	number.	Since	this	does	not	result	in	nice	even	
one	vote”	decision—apportionment	of	a	legislature	must	be	fair	           numbers,	some	rounding	up	and	down	among	the	states	is	
and	based	on	current	population	data	to	avoid	debasing	votes.	            required—e.g.,	Michigan’s	population	is	more	than	enough	
   As	in	Baker	at	the	state	level,	national	inequality	stems	from	        for	15	Representatives,	but	not	enough	for	16.	

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REN RENFRO                                                                                                                            459

    In	the	2000	re-apportionment	faster	growing	states	gained	         effects	of	non-citizens	are	concentrated	in	those	few	states,	
                     	
one	or	more	seats		…	e.g.,	Arizona	and	Florida,	while	slower	          but	all	states	are	affected.	In	a	citizen-based	apportionment,	
growing	 states—New	 York	 and	 Pennsylvania—lost	 seats.	             each	 Member	 would	 represent	 on	 average	 about	 600,000	
Overall,	the	re-apportion	was	as	equal	as	possible,	given	the	         citizens,	not	650,000	people.	Based	on	its	2000	population,	
necessity	of	rounding	to	whole	numbers.	                               California	was	apportioned	53	seats.	In	a	basic	scenario	using	
    The	 Constitution	 requires	 apportionment	 of	 the	 House	        a	citizen	apportionment—i.e.,	excluding	its	5.7	million	non-
be	 based	 on	 the	 ‘’whole	 number	 of	 free	 Persons’’	 based	       citizens,	California	would	be	apportioned	47	seats.	(Totals	
          	
on	 an	 “	…	Enumeration	 which	 shall	 be	 made	 	…	within	            depend	on	mathematical	method	used	in	rounding	to	whole	
       	
every		…	Term	of	ten	Years,	in	such	Manner	as	(Congress)	shall	        numbers		Since	the	number	of	seats	gained	and	lost	must	
by	Law	direct.”	(Article	1,	Section	2,	Clause	3,	as	restated	and	      be	equal,	either	the	gaining	or	those	losing	states	or	some	
affirmed	by	the	14th	Amendment	in	1868.)	                              compromise	of	both	gained	and	lost,	requires	rounding	at	
    The	great	inequality	between	votes	in	different	districts	comes	   the	margins—rounding	which	viewed	alone	may	not	seem	
from	one	rapidly	growing	group—a	group	not	allowed	to	vote,	           mathematically	justified.	Internal	inconsistencies	in	the	of-
but	 included	 in	 determining	 apportionment—non-citizens.	           ficial	federal	population	data	is	also	source	of	results	which	
(Other	smaller	inequalities	include:	most	of	our	two	million	          vary	slightly	from	one	set	of	official	data	to	another.)	
prisoners,	though	certainly	not	“free	Persons,”	are	included	in	           In	this	basic	scenario	and	using	simple	rounding	to	whole	
apportionment	while	most	of	the	million-plus	soldiers	overseas	        numbers,	an	apportionment	based	only	on	citizens	indicates:	
and	their	dependents	as	well	as	the	six	million-plus	citizens	         Texas	loses	three	seats;	Florida,	Arizona	and	New	Mexico	lose	
living	abroad	are	not.	Again,	Iraq	sets	the	standard—voters	as	        one	each.	A	total	of	twelve	seats	was	lost	among	the	five	states,	
well	as	their	votes,	at	home	and	abroad,	are	equal.)	                  with	Rhode	Island,	Colorado	and	North	Carolina	each	being	
    As	apportionment	determines	the	number	of	votes	each	state	        candidates	to	lose	a	seat	in	a	more	expansive	scenario.	
has	in	the	House,	it	also	determines	the	votes	attributed	to	each	         In	this	basic	scenario,	twelve	states	each	stand	to	gain	a	seat:	
state	in	the	Electoral	College.	Could	the	inclusion	of	non-citi-       Indiana,	Kentucky,	Maryland,	Michigan,	Mississippi,	Montana,	
zens	“elect”	a	President?	Not	only	could	it,	it	almost	has.            Ohio,	 Oklahoma,	 Pennsylvania,	 South	 Carolina,	 Utah	 and	
    Inclusion	 of	 non-citizens	 in	 apportionment	 affects	 every	    Wisconsin,	 with	 Oregon,	 Virginia	 and	 Washington	 next	 in	
branch	 of	 government:	 the	 Legislature	 via	 apportioning	 the	     line	to	gain	a	seat	in	a	more	expansive	scenario.	Percentages	
House;	the	Executive	via	the	Electoral	College;	and	remotely,	the	     of	voters	actually	voting	which	are	based	on	total	populations	
federal	Judiciary—impeachments	of	judges	begin	in	the	House.	          are	lower	where	large	numbers	of	non-citizens	live	who	are	not	
Eleven	times	the	authors	of	the	Constitution	distinguished	be-         allowed	to	register	or	to	vote.	Too	often	these	lower	percentages	
tween	citizens	and	others,	but	they	left	any	distinction	which	        are	used	to	indicate	citizen	apathy.	Nationally,	almost	80%	of	
might	be	made	in	the	enumeration	in	the	hands	of	Congress.	A	          eligible	citizens	register—and	almost	90%	of	these	actually	
decade	after	independence	it	would	seem	reasonable	to	assume	          voted	in	2004	or	more	than	70%	of	all	eligible	voters.		
that	all	persons	in	the	United	States	were	citizens.	However,	the	         Since	each	state	has	two	seats	in	the	Senate,	only	the	House	is	
authors	of	the	Constitution	did	not	make	that	assumption	in	           affected	by	apportionment.	The	same	holds	in	elections	for	state	
11	other	cases.	While	they	realized	the	importance	of	who	is	          Houses	and	Senates	apportioned	on	the	national	model.	
included	in	the	“enumeration”	by	the	exception	made	for	“all	              The	 inequality	 of	 2004	 votes	 is	 shown	 by	 comparing	
others”—those	who	were	not	free—including	three-fifths	of	the	         Montana’s	one	district	with	California’s	four	districts	with	the	
slaves	in	the	enumeration.	Thomas	Jefferson	would	not	have	            most	non-citizens:	436,000+	votes	in	Montana	elected	one	
won	his	squeaker	election	without	the	slave	“vote.”	Madison	           Representative;	four	districts	in	California	cast	an	average	of	
and	Jackson,	among	others,	probably	would	never	have	seen	             115,000	each	to	elect	four	Representatives.	
the	oval	office.	Curiously,	after	the	Civil	War,	the	former	slaves	        Similarly,	435,000+	voted	in	Ohio’s	12th	district—380,000+	
were	included	in	the	1870	enumeration	as	full	citizens,	increas-       in	Minnesota’s	6th—for	one	seat.	Two	Wisconsin	districts	re-
ing	the	number	of	votes	in	the	House	from	southern	states	at	the	      ported	800,000+	votes	cast—which	almost	equals	the	votes	
expense	of	the	victorious	northern	states.	                            cast	in	eight	California	districts.	The	low	vote	totals	in	some	
    	Though	they	may	not	vote,	the	18.6	million	non-citizens	          California	districts	are	not	due	to	uncontested	races,	not	due	to	
included	in	the	current	apportionment	have	as	many	“repre-             low	registration	nor	low	voter	turnout.	California’s	2004	voter	
sentatives”	in	the	House	and	votes	in	the	Electoral	College	as	        registration	and	voter	turn-out	were	roughly	equal	to	national	
the	citizens	of	16	states—Alaska,	Delaware,	Hawaii,	Idaho,	            averages.	Percentages	of	voter	registration	and	voter	turn-out	of	
Maine,	Montana,	Nebraska,	Nevada.,	New	Hampshire,	New	                 voting-age	citizens	vary	little	across	districts	(10-15%)—at	least	
Mexico,	North	Dakota,	Rhode	Island,	South	Dakota,	Vermont,	            when	compared	with	the	inequalities	of	votes	(up	to	400%).	
West	Virginia,	and	Wyoming.	If	a	state	were	comprised	only	                In	six	districts	across	the	nation,	more	citizens	voted	to	elect	
of	non-citizens,	it	would	be	larger	than	every	other	state	save	       their	one	representative	than	voted	in	Rhode	Island	to	elect	its	
California—a	state	having	no	senators,	no	representatives,	no	         two	representatives.	Examples	of	inequalities	abound—some	
state	government—no	citizens	to	vote,	elect	or	be	elected.             even	within	a	state—12	New	York	districts	each	cast	more	votes	
    Since	non-citizens	are	concentrated	in	a	few	states,	the	          for	one	seat	than	the	total	votes	two	other	NY	districts	cast	for	

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460                                                                                                        VITAL SPEECHES OF THE DAY

their	two	seats.	Since	districts	have	about	the	same	population,	         I	 also	 realize	 these	 are	 at	 best	 very	 preliminary	 findings	
the	more	non-citizens	in	a	district,	the	fewer	the	citizens—the	          which	will	have	to	be	checked	and	verified	many	times	by	
more	powerful	their	votes	become	at	the	expense	of	votes	cast	            the	Congress,	the	Courts,	appropriate	governmental	agencies	
in	other	districts	across	the	state	and	in	other	states.                  and	political	scientists.	I	have	used	only	official,	published	
    The	political	impact	of	these	few	changes	can	be	surprising.	         government	data	from	the	2000	Census	and	results	of	the	
Non-citizens	tend	to	live	in	urban	areas	where	they	find	bet-             2004	election.	Math	no	more	sophisticated	than	the	most	
ter	employment	opportunities,	lower-cost	housing	as	well	as	              basic	grade	school	math	has	been	used—addition,	subtrac-
many	citizens	of	similar	origins,	languages	and	cultures.	(This	          tion,	 multiplication	 and	 division.	 Considering	 the	 impor-
description	of	areas	with	concentrations	of	non-citizens	is	as	           tance—and	 obvious	 nature	 of	 the	 problem,	 it	 is	 difficult	
bland,	neutral	and	dispassionate	as	can	be	and	still	convey	              to	believe	no	one	who	works	with	election	results—in	the	
the	idea.)	Historically,	such	urban	areas	overwhelmingly	elect	           public	 or	 private	 sector—has	 not	 noticed	 (or	 more	 likely,	
             	
democrats		…	and	more	liberal	democrats,	at	that.	Therefore,	it	          not	mentioned)	the	tremendous	inequality	and	injustice	of	
is	not	true	“democrats”	want	open	borders	to	win	“immigrant	              our	current	election	process.	
votes”—in	elections	for	President	and	the	House,	democrats	                   When	it	takes	437,000	votes	to	elect	a	Member	of	Congress	
already	have	these	“votes”—or	more	correctly,	the	political	              in	one	District	and	only	104,000	in	another,	a	little	spark	of	
power	 of	 these	 “votes”—in	 both	 Presidential	 and	 House	             curiosity	should	twinkle	bright	enough	to	awaken	even	the	most	
elections.	Hence,	the	Democrats	have	nothing	to	gain—and	                 slumbering	dullard.	Of	course,	the	alternative	is	that	those	who	
the	Republicans	have	nothing	to	lose	by	granting	non-citizens	                                 	 a
                                                                                               …
                                                                          should	notice	did	 	 nd	decided	to	do	nothing.	As	one	political	
citizenship.	Representatives	with	large	numbers	of	non-citizens	          scientist	noted—	this	is	a	back-door	method	of	compensating	for	
in	their	districts	will	have	to	be	apportioned	additional	staff	and	      the	power	given	to	the	smaller	states	in	the	Senate.	Well,	we	must	
district	office	resources	as	Senators	are,	according	to	the	size	         not	amend	the	Constitution	by	such	a	back-door	method.	
of	the	state	populations	they	represent.	Representatives	with	                Perhaps	this	is	why	no	national	newspaper	or	magazine	will	
large	numbers	of	non-citizens	in	their	districts	will	have	to	            recognize	this	issue.	I	have	had	some	brave	publishers—one	ran	
be	apportioned	additional	staff	and	district	office	resources	            an	article	that	forced	the	27th	Amendment	to	ratification	within	
as	Senators	are,	according	to	the	size	of	the	state	populations	          five	weeks.	Another,	ran	a	guest	editorial	calling	for	a	slavery	
they	represent.	                                                          museum	on	the	Mall—and	after	11	years	and	11	months,	Con-
    Inclusion	of	non-citizen’s	political	power	in	House	and	not	          gress	has	passed,	President	Bush	has	signed	a	bill	authorizing	
Senate	elections	tends	to	make	the	House	more	liberal	than	               a	site	on	the	Mall	near	the	Washington	Monument.
the	Senate.	This	inclusion	also	increases	the	power	of	liberals	              However	on	this	issue,	all—including	the	Wall Street Journal,	
in	Presidential	elections.	A	citizen-based	apportionment	of	              USAToday,	Christian Science Monitor—have	ducked.	Even	my	law	
the	House	eliminates	this	systemic	tendency.	                             school	ducked.	But	my	undergraduate	college—Rensselaer	with	
    In	House	elections	the	political	effect	cannot	be	seen	due	to	re-     Dr.	Shirley	Jackson	leading	a	renaissance	in	science	education	
districting	within	states	gaining	and	losing	seats:	the	majority	party	   published	an	abbreviated	paper	this	winter—yet	to	be	noted	by	
in	each	state	legislature	will	seek—and	likely	find—opportunities	        opinion	leaders.	Also,	one	Member	of	Congress	has	broken	ranks	
for	gerrymandering	to	gain	(or	hold)	seats.	The	democrat-to-re-           and	introduced	legislation,	albeit,	I	believe	to	be	misguided	in	
publican	trend	is	likely	to	remain,	if	not	increase.	California	and	      calling	for	a	Constitutional	Amendment,	but	drawing	at	least	a	
Texas	will	likely	see	the	number	of	districts	with	large	non-citizen	     minimum	of	coverage.	As	I	mentioned	earlier,	the	vote	inequality	
populations—primarily	in	urban	areas—decline,	while	those	low	            issue	is	not	an	attack	on	non-citizens,	though	demagogues	on	
in	non-citizen	populations—suburban	and	rural—grow.	                      both	sides	will	no	doubt	abuse—and	confuse—the	issue.	We	
    The	impact	of	a	citizen-based	apportionment	on	the	2004	              citizens	have	done	this	to	ourselves—with	no	help	from	others.
presidential	election	would	not	have	been	large:	a	net	of	four	               As	I	have	not	spent	my	career	in	this	seemingly	small,	well	
seats	 moves	 from	 democrats	 to	 republicans—a	 change	 of	             settled	area	of	constitutional	law—i.e.,	vote	equality,	I	didn’t	see	
eight	Electoral	votes,	increasing	the	margin	of	Bush’s	victory	           a	spark	of	curiosity	to	ask	the	basic	question	of	the	impact	of	
from	34	to	42	votes.	                                                     non-citizens	on	apportionment	of	the	Congress.	In	his	book,	The	
    However,	 if	 Ohio’s	 20	 Electoral	 votes	 were	 democratic,	        Negro	President,	Gary	Wills	lit	my	imagination	with	his	analysis	of	
Kerry	would	have	been	our	first	“non-citizen”	President	by	               the	impact	of	the	Constitution’s	including	three-fifths	of	slaves	in	
272	 to	 266.	 In	 a	 citizen-based	 apportionment,	 Bush	 wins	          the	“enumeration”	which	was	used	to	expand	(balance?)	political	
by	just	two	Electoral	votes—the	method	of	apportionment	                  power	of	under-populated	southern	states—and	the	very	real	like-
would	determine	the	outcome.	                                             lihood	that	Thomas	Jefferson—among	other	ante-bellum	southern	
    	Pennsylvania—possibly	even	Florida	in	a	very	expansive	              presidents,	would	have	never	made	it	to	the	presidency.	
scenario—could	have	the	same	potential	effect	as	Ohio	did	                    	It	took	a	few	years	to	gather	the	data,	perfect	the	simple	
in	the	2004	election—or	could	in	a	future	election,	especially	           math	and	verify	to	the	extent	possible	these	basic	findings	
if	non-citizens	populations	grow	rapidly	and	the	inequality	              whose	direction,	if	not	detail,	shown	in	the	official	govern-
of	votes	is	not	corrected.                                                ment	documents,	points	to	the	preliminary	results	presented	
    I	realize	these	are	extraordinary	conclusions	and	results.	           here.	 All	 this	 is	 by	 way	 of	 saying,	 “Just	 the	 facts,	 ma’am.	

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Just	the	facts.”		I	merely	discovered	the	question.	I	did	not	       different	groups	in	the	eyes	of	the	law:	distinctions	resulting	
compose	the	answer.	I	feel	a	little	like	the	poor	NSF	climate	       from	government	action	between	otherwise	equal	groups—in	
researchers	at	the	South	Pole	whose	research	results	cannot	         this	case,	qualified	voters	in	different	districts—must	serve	a	
hide	the	finding	of	a	dramatic	cooling	of	more	that	1.2	degrees	     “legitimate	state	purpose,”	a	standard	which	voter	distinctions	
Celsius	per	decade—in	career-killing	defiance	of	the	politi-         do	not	appear	to	meet.	
cally	correct	global	warming	stampede.	                                  On	the	other	hand,	the	Supreme	Court	has	held	that	all	
    “The	truth	will	make	you	free”	is	a	principle	that	ignores	      persons	in	the	United	States	are	entitled	to	the	same	rights	as	
economics…and	takes	no	nod	to	professional	viability,	much	          citizens,	at	least	in	terms	of	due	process	in	legal	proceedings,	
less	career	security.	At	Rensselaer	I	was	educated	by	profes-        specifically	in	INS	proceedings.	It	is	clear	the	Supreme	Court	
sors	practicing	another	principle:		“We	teach	the	truth	as	it	       did	not	extend	the	right	to	vote	to	non-citizens.	Some	obvious	
                  	
is	known	today	…	and	prepare	our	students	for	the	day	they	          limits	on	this	broad	expansion	of	rights	are	required.	
will	change	the	truth.”	But	I	digress…                                   Similarly,	exclusion	of	non-citizens	from	apportionment	cal-
    Does	the	Constitution	require	apportionment	of	the	House	        culations	has	to	serve	a	“compelling	state	interest,”	a	standard	
to	be	based	on	citizens?	The	14th	Amendment’s	“equal	protec-         which	does	appear	to	be	met—equal	protection	under	the	law.	
tion	clause”	as	interpreted	in	Baker vs. Carr,	seems	to	say	so:	     The	inclusion	or	exclusion	of	non-citizens	in	apportionment	
debasement	of	votes	cast	in	one	district	thereby	denies	equal	       does	not	affect	rights	of	non-citizens	as	they	do	not	vote—and	
protection	to	all	voters.	(Tennessee—home	state	of	Baker	vs.	        who,	incidentally,	are	not	responsible	for	voter	inequalities	
Carr—originally	based	its	apportionment	on	citizens,	but	later	      citizens	have	created,	but	whose	political	power	no	doubt	will	
adopted	federal	standard	of	using	population	data.)                  be	seen	when	the	House	considers	corrective	legislation.
    The	Constitution	gives	Congress	the	power	to	conduct	the	re-         Given	the	choice	between:	1)	excluding	non-citizens	in	
quired	enumeration	“in	such	Manner	as	(Congress)	shall	by	Law	       apportionment	 to	 achieve	 voter	 equality;	 or	 2)	 allowing	
direct.”	Hence,	Congress	has	Constitutional	the	power	to	correct	                                                          	
                                                                     inequality	among	voters	in	different	districts		…	well,	this	is	
vote	inequalities—to	base	apportionment	on	citizen	population.	      not	exactly	a	Hobson’s	Choice.	
More	importantly,	Congress	has	the	responsibility	to	make	the	           This	is	not	a	question	of	whether	this	inequality	will	be	fixed:	
correction.	 No	 Constitutional	 amendment	 is	 required—mere	       continued	high	increases	in	non-citizen	populations	tells	us	a	
legislation	will	do.	Even	this	mandate	is	not	seen	as	requiring	a	                                  	 e
                                                                                                    …
                                                                     correction	will	be	necessary	 	 ventually.	The	question	is	which	
citizen-based	apportionment,	the	more	fundamental	principle	         branch	will	do	it—Congress	or	the	courts.	The	Congress	is	re-
of	democracy—voter	equality—clearly	must	prevail.                    apportioned	every	decade	within	two	years	following	our	de-
    More	importantly,	even	if	Congress	finds	it	does	not	have	       cennial	“enumeration.”	A	citizen-based	re-apportionment—and	
the	authority	to	direct	the	enumeration	to	be	based	on	citi-         in-state	 redistricting	 as	 required	 in	 states	 having	 significant	
zens,	clearly	Congress	alone	does	not	have	the	authority	to	         non-citizen	populations—can	certainly	be	completed	within	
amend	the	Constitution	by	action	or	inaction	through	the	            the	two	years	before	the	2008	presidential	election—after	all,	
manner	in	which	it	conducts	the	enumeration.                         the	required	“enumeration”	has	already	been	completed.	
    If	Congress	demurs,	the	Supreme	Court	will	be	petitioned	            We	can	avoid	the	risk	of	national	and	international	embar-
to	correct	the	inequalities.	It	will	do	so	by	applying	estab-        rassment—not	to	mention	political	turmoil—of	having	our	
                                                                                                                                  	
lished	Constitutional	standards	for	inclusion	and	exclusion	of	      non-voting,	non-citizens	“elect”	our	next	President.



                                                U.S. Economics
                                                DEFENDING WORKING FAMILIES
                              Address by JOHN	J.	SWEENEY, President of the AFL-CIO,
                Delivered to D.C. Economics Club/Howard University, Washington, D.C., April 21, 2006


T   hanks	to	Bill	Spriggs	for	his	introduction	and	for	the	invita-
    tion	to	be	here—and	thanks	to	Bill	for	his	continued	lead-
ership	on	the	things	that	matter	to	all	of	us.	We’re	especially	
                                                                     here.	In	the	labor	movement,	we	really	have	some	exciting	
                                                                     career	 opportunities	 for	 passionate	 young	 people	 who	 are	
                                                                     interested	in	social	change.	Careers	in	economics,	organiz-
thankful	for	the	role	he	played	in	fending	off	the	Bush	raids	       ing,	the	law,	labor-management	relations,	you	name	it.	So	if	
on	Social	Security—we	left	the	Bush	Administration	in	shreds	        you’re	interested	after	what	you	hear	today,	please	grab	my	
and	they	needed	that	kind	of	humiliating	experience.                 arm	before	I	leave.
   Also	want	to	thank	all	of	you	for	coming	out	to	hear	what	           I	also	want	to	use	this	opportunity	to	recognize	the	contri-
labor	 has	 to	 say—and	 especially	 glad	 to	 see	 Dean	 James	     butions	of	students	all	across	our	country	when	it	comes	to	
Donaldson	and	students	here.	I’ll	get	in	my	commercial	plug	         human	rights,	the	anti-sweatshop	movement,	and	the	cause	of	

                                                                                                                                MAY 2006
462                                                                                                   VITAL SPEECHES OF THE DAY

workers’	rights	here	in	our	country—and	around	the	world.	             like	wild	men	with	machetes	at	the	already	ragged	safety	net.	
Without	 the	 student	 movement	 at	 Georgetown	 University,	          Poor	children,	the	very	sick	and	the	disabled	are	among	those	
service	 workers	 on	 that	 campus	 never	 would	 have	 gained	        most	likely	to	fall	into	the	abyss.”
union	representation.                                                      Unions	and	industrial	jobs	in	Detroit	made	African	Ameri-
    The	same	is	true	all	across	the	country	and	right	now,	of	         cans	 in	 Detroit	 the	 highest	 paid	 African	 Americans	 in	 the	
course,	students	at	the	University	of	Virginia	are	marching	and	       country.	But	what	we	are	now	witnessing	is	the	largest	redistri-
fasting	and	sitting	in	and	going	to	jail	on	behalf	of	the	work-        bution	of	income	and	wealth	in	our	nation’s	history—one	that	
ers	there.	It’s	heartening	to	see	such	a	rebirth	of	the	student	       is	shrinking	our	middle	class	and	ballooning	our	underclass.	
movement—because	for	our	country,	it	comes	just	in	time.               It’s	clearly	class	warfare—waged	by	the	upper	class.
    Just	to	let	all	of	you	know	where	I’m	coming	from,	let	me	             Conservative	politicians	and	the	corporations	they	serve	
introduce	 myself	 a	 little	 further	 by	 saying	 my	 mother	 and	    have	put	forth	a	set	of	integrated	economic	policies—which	
father	were	both	immigrants	from	Ireland.	I	grew	up	in	the	            we	call	the	“Wall	Street	Agenda”—to	shift	political	and	eco-
Bronx.	My	mother	was	a	domestic	worker,	my	father	was	a	               nomic	power	as	well	as	wealth	away	from	workers	towards	
New	York	City	bus	driver.	He	was	a	member	of	a	strong	union,	          employers	and	the	super-rich.
Local	100	of	the	Transport	Workers	union—and	I’ll	have	a	                  The	same	Wall	Street	Agenda	puts	corporate	profits	over	
little	more	to	say	about	Local	100	in	a	moment.                        people	and	as	a	result	we	find	a	disregard	for	workers’	rights,	
    My	early	education	at	Iona	College	was	in	economics,	and	          human	rights	and	the	environment,	whether	it’s	in	America,	
I’ve	done	my	graduate	studies	for	50	years	at	the	“University	of	      Africa,	Asia,	or	South	America.	And	they’re	trying	to	spread	
Trade	Unionism	and	Human	Suffering.”	Before	being	elected	             their	crackpot	combination	of	tax	cuts	for	the	rich,	free-mar-
President	of	the	AFL-CIO—I	was	President	of	SEIU,	the	giant	           ket	greed,	austere	economic	policies,	deregulation,	privatiza-
service	workers	union—and	before	that	President	of	SEIU’s	             tion,	and	de-unionization	around	the	world.	It	is	a	strategy	
70,000-member	janitors	union	in	NYC.                                   as	short-sighted	as	it	is	selfish	because	its	end	game	leaves	
    Those	 experiences	 combined	 don’t	 qualify	 me	 as	 an	          businesses	with	goods	and	services	they	cannot	sell	because	
economist,	 or	 even	 as	 a	 labor	 research	 expert,	 but	 they’ve	   consumers	don’t	have	enough	money	to	spend	or	save.
made	my	common	sense	compass	pretty	dependable.	And	                       And	 it	 leaves	 government	 at	 all	 levels	 with	 more	 and	
right	now	that	compass	tells	me	that	the	strongest	capitalist	         more	 demand	 for	 public	 services	 and	 subsidies	 and	 fewer	
democracy	in	the	world	is	headed	in	a	disastrous,	self-de-             and	fewer	tax	dollars	to	pay	for	them.	That,	my	friends,	isn’t	
structive	direction.                                                   just	immoral	and	ugly—for	a	capitalist	democracy,	it’s	just	
    The	contradictions	we’re	confronting	are	mind-boggling.	           short	of	suicidal.
At	a	time	when	our	nation	is	wealthier	than	at	any	time	in	                Earlier	this	month,	we	hosted	a	reception	for	Kevin	Phillips	
our	history,	poverty	and	inequality	of	income	and	wealth	are	          at	the	AFL-CIO	headquarters	and	his	views	on	where	this	all	
higher	than	they’ve	been	in	85	years.                                  takes	us	are	frightening.	He	says	we’re	abandoning	a	manu-
    At	a	time	when	CEO	compensation	and	corporate	profits	             facturing	economy	for	a	financial	services	economy	driven	by	
are	skyrocketing,	workers’	wages	are	still	stuck	right	there	          insurance,	banking,	investment,	and	credit.	Similar	shifts	led	
where	they	were	in	1972.	15	million	people	are	unemployed	             to	the	decline	of	Holland	in	the	16th	Century—Spain	in	the	
and	many	more	have	dropped	out	of	the	workforce	altogether.	           17th	century—and	Great	Britain	in	the	20th	century.
In	my	hometown	of	New	York	City,	unemployment	among	                       In	a	recent	speech,	Bill	Moyers	addressed	another	side	to	
black	males	is	over	50	percent.                                        the	story	by	commenting	on	an	analysis	published	by	The	
    At	a	time	when	we’re	sending	our	best	jobs	overseas	by	the	        Economist	 last	 year	 that	 documented,	 quote,	 “Great	 and	
millions—including	“knowledge	jobs”—we’re	still	barely	cre-            growing	income	disparities.”	They	found,	Moyers	said,	that	
ating	enough	jobs	to	match	the	growth	in	our	workforce—and	            American	corporations	are	no	longer	agents	of	upward	mobil-
the	jobs	we	are	creating	are	low-wage,	no-benefits	jobs—with	          ity	and	that	while	30	years	ago	the	annual	compensation	of	
fewer	rights	and	no	prospects.                                         the	top	100	chief	executives	was	30	times	that	of	the	average	
    And	at	a	time	when	our	population	is	steadily	growing	             worker,	today	it	is	1,000	times.	The	Economist,	Moyers	said,	
older,	we’re	allowing	employers	to	weaken	and	even	destroy	            believes	that	the	United	States,	quote,	“risks	calcifying	into	a	
the	 guaranteed	 pensions	 that	 help	 make	 sure	 retirement	         European-style,	class-based	society.”
security	 doesn’t	 come	 totally	 at	 the	 expense	 of	 individual	        We’re	faced	not	only	with	an	economy	that	isn’t	work-
taxpayers.	And	our	health	system	is	a	wreck.                           ing	for	working	families	but	a	war	that	is	destroying	faith	
    To	compound	the	damage,	the	U.S.	House	of	Representatives	         in	our	country,	draining	our	resources	and	extinguishing	
earlier	this	year	approved	a	Bush	budget	bill	that	dumps	more	         many	of	our	young	lights,	a	Supreme	Court	now	stacked	
medical	costs	onto	poor	families	and	seniors	and	whacks	the	           with	right-wing	justices,	and	an	administration	that	holds	
loan	program	of	the	students	we	hope	someday	will	be	making	           our	constitution	inoperative	when	it	comes	to	spying	on	
enough	money	to	keep	our	Social	Security	system	afloat.                American	citizens	and	leaking	classified	information.
    In	the	words	of	syndicated	columnist	Bob	Herbert,	and	I	               These	are	multiple	cancers	that	are	eating	away	at	our	
quote:	“This	is	ugly	stuff:	Mean-spirited	legislators	hacking	         values	and	our	nation	and	they	are	crying	out	loudly	for	

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JOHN J. SWEENEY                                                                                                                463

cures.	 Fortunately	 for	 working	 families	 as	 well	 as	 our	      months.	 It	 should	 come	 as	 no	 great	 surprise	 that	 Local	
myopic	employers	and	elected	officials,	the	“Wall	Street	            100	 is	 a	 predominantly	 black	 union,	 and	 the	 transport	
Agenda”	is	beginning	to	flounder	in	its	own	excesses.                workers	are	some	of	the	most	under-compensated	work-
    And	with	stories	of	corruption,	illegality	and	incompe-          ers	in	New	York.
tence	still	pouring	out	into	the	public,	the	Administration	             Our	experience	as	a	labor	movement	in	the	aftermath	
as	well	as	the	majority	party	in	Congress	is	doing	a	great	          of	Katrina	is	another	reminder	of	our	nation’s	slide	back	
job	of	destroying	its	own	credibility.                               to	a	class-based	society.	We	were	all	horrified	at	the	sight	
    In	 developing	 countries	 in	 South	 America	 where	 the	       of	the	victims	when	they	were	waiting	to	be	rescued	and	
“Wall	 Street	 Agenda”	 has	 failed—poor	 families	 and	 the	        stunned	that	the	vast	majority	were	African-American.
working	class	are	already	in	open	revolt.	Here	in	the	United	            The	AFL-CIO	and	many	other	organizations	plunged	
States,	worker	insecurity	and	frustration	are	at	record	levels	      into	the	relief	effort,	raised	millions	and	millions	of	dol-
and	senior	citizen	anxiety	is	spilling	over	into	the	politi-         lars,	and	we’re	about	to	announce	a	huge	investment	of	
cal	arena.	Fortunately,	we’re	already	deep	into	an	election	         our	pension	funds	in	helping	rebuild	low	and	moderate	
year	and	there	are	some	signs	of	change.	Former	Speaker	             income	housing	in	the	city—so	important	because	prior-
of	the	House	Newt	Gingrich—all	people—suggested	that	                ity	must	be	given	to	affordable	housing.	Sad	to	say	private	
we	simply	ask	working	families,	“Have	you	had	enough?	               sector	investment	has	been	painfully	slow	in	coming	and	
Have	you	had	enough?”                                                the	 federal	 government	 has	 continued	 to	 largely	 ignore	
    It	is	in	this	environment	that	our	unions	are	facing	the	        the	needs	of	the	city	despite	the	economic	impact	of	the	
most	daunting	challenges	we’ve	ever	encountered—and	                 devastation	on	the	entire	Gulf	Coast	region.
perhaps	the	most	exciting	opportunities	we’ve	had	in	many	               The	 Bush	 Administration	 moved	 quickly	 to	 suspend	
years.	It	is	our	job	to	lead	the	progressive	movement	and	           Davis	Bacon—we	had	to	fight	to	get	it	back	and	I	thank	Bill	
to	speak	for	working	families	and	poor	families.                     Spriggs	for	all	he	did	to	speak	out	and	the	state	moved	to	
    In	 order	 to	 do	 that	 we’ve	 launched	 the	 most	 aggres-     eliminate	the	collective	bargaining	rights	of	New	Orleans	
sive	political	mobilization	in	our	history	to	educate	and	           public	school	teachers—it’s	just	an	outrage.
mobilize	 our	 members	 and	 their	 families	 and	 to	 regain	           To	add	insult	to	injury,	now	we	are	seeing	the	federal	
control	 of	 our	 government	 and	 our	 agenda.	 And	 we’re	         government	 ignore	 the	 violation	 of	 voting	 rights	 in	 the	
lucky	because	we	are	a	diverse	movement	with	members	                New	Orleans	elections	scheduled	for	tomorrow.	Needless	
in	every	neighborhood—every	community—every	church	                  to	say,	one	cannot	even	imagine	this	kind	of	neglect	of	a	
in	our	nation.                                                       city	that	was	majority	white	instead	of	majority	black	and	
    Of	course,	our	movement	is	also	under	constant	attack	           it	is	the	shame	of	our	nation.
from	greedy	corporations,	from	the	Bush	Administration,	                 The	attacks	on	labor	and	the	neglect	in	New	Orleans	
and	from	employers.	One	of	those	attacks	took	place	ear-             have	brought	our	movement	together	at	this	critical	time	
lier	this	year	when	members	of	Local	100	of	the	Transport	           and	I	can	report	that	we	are	more	committed	and	organized	
Workers	had	to	go	out	on	strike	in	New	York,	forced	there	           than	ever.	Our	entire	movement	is	united	in	our	continuing	
by	an	employer	that	had	plenty	of	money	to	meet	their	               quest	for	good	jobs,	healthy	communities,	and	equality	
reasonable	demands.                                                  for	working	families.	Our	country	is	headed	in	the	wrong	
    I	took	a	special	interest	in	that	strike	because	I’m	a	native	   direction—and	we’re	determined	to	start	turning	it	around	
New	Yorker	and	Local	100	was	my	father’s	union.	I	was	               in	the	elections	this	Fall	when	we	get	a	chance	once	more	
proud	of	the	way	the	workers	stuck	together	in	the	face	of	          to	hold	our	elected	leaders	accountable.
all	the	race-baiting	and	labor-bashing	and	they	achieved	                Someone	once	said,	“There	are	two	things	we	must	give	
a	 great	 victory—they	 demonstrated	 what	 real	 solidarity	        our	children.	One	is	roots	and	the	other	is	wings.”	When	I	
can	achieve.                                                         was	growing	up	in	the	Bronx,	our	family	and	our	church	pro-
    Of	course,	that	victory	has	now	been	dismantled	by	a	            vided	the	roots	and	my	dad’s	union	provided	the	wings—in	
federal	judge	who	has	fined	this	fairly	small	union	$2½	             the	form	of	a	good	job	with	decent	benefits	so	he	and	my	
million	dollars—cut	off	the	union’s	dues	collecting	capabil-         mom	could	lift	up	me	and	my	brother	and	sisters.
ity—and	is	sending	the	union	president,	Roger	Toussaint,	                The	American	labor	movement	remains	the	wings	of	
a	Caribbean	immigrant,	to	jail.                                      hope	for	working	families—and	with	your	continued	help	
    To	 add	 insult	 to	 injury,	 the	 New	 York	 Ports	 Author-     and	support	we	will	continue	to	spread	those	wings	wide	
ity	has	now	rejected	a	vote	by	the	workers	accepting	the	            on	behalf	of	equality	and	economic	and	social	justice.
new	contract	and	is	insisting	that	the	dispute	be	settled	               Thank	you	and	God	bless	all	of	you	and	your	families,	
by	 arbitration,	 which,	 of	 course,	 will	 take	 months	 and	      and	God	bless	America.	




                                                                                                                           MAY 2006
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