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National Defense > Blog > Posts > Augustine: Decline in U.S. Competitiveness Creates Security Vulnerabilities
Augustine: Decline in U.S. Competitiveness Creates Security Vulnerabilities 
By Steff Thomas

Lockheed Martin's F-35 factory in Fort Worth, Texas

In the 1950s, the United States rose to the top of the world in terms of economic competitiveness as other countries were still recovering in the aftermath of World War II. However, it is no longer in first place, a recent study stated.
“We had been dynamic, innovative, and entrepreneurial — it was those other countries that were all tangled up in red tape and delay, but now it is us,” said Michael Porter, a professor at Harvard Business School and a leading authority on competitive strategy.
A 2012 study by the World Economic Forum showed that out of 144 countries, the U.S. ranked seventh in global competitiveness. This was a dramatic drop from the first-place spot held by the United States up until 2011. The top spot is now held by Switzerland. The U.S. definition of competitiveness is the ability to succeed in global market places while simultaneously raising the living standards of the average American, Porter said.  
These problems reflect the structural challenges on the United States that have been a generation in the making, said Jan Rivkin, also a professor at the Harvard Business School. The issues are “not just a hangover of the great recession,” he said June 10 at an American Security Project panel held in Washington, D.C.
The rising national debt and a growing pool of Americans no longer looking for work are part of the problem, according to a 2012 American Security Project report, “American Competitiveness: A Matter of National Security.” Studies conducted by the Harvard school yielded similar results to the ASP report, the professors said.
If the national debt were to rise even further, the defense industry would be the first to take a cut because it accounts for about half of the government’s discretionary spending, the report stated. “Looking weak and ineffective is the same thing as being weak and ineffective, particularly in the world credit markets where national governments are key players in shoring up the global financial system,” it said.
Norman Augustine, former president and CEO of Lockheed Martin, said, “I have come to a strong conclusion that if we have a weak economy, we won’t be able to afford a strong military.”
Further increasing the debt would prompt China and other countries to stop buying U.S. bonds. Should this happen, the U.S. military would then have to downsize. This would further degrade the nation’s global competitiveness, the report said.
The U.S. military may be one of the strongest in the world in spending and technology, but the nation’s economy is still on edge. While the United States focused its efforts on preventing collapses in the financial and auto sectors, the economies of other countries were on the rise, said Augustine.
One reason the United States has been able to stay as competitive as it has is because of foreign-born students. However, passage of strict immigration policies has prompted them to seek out residency in other countries or to bring their skills back home after the completion of their degrees, Augustine said.
Without a qualified science, technology, engineering, and mathematics [STEM] labor force, U.S. industries may further decline, which would also threaten U.S. military strength, the competitiveness of U.S. economy and the nation’s infrastructure, the report said.
Most of the advanced STEM workers are members of the Baby Boom generation. The economy may suffer when they retire, the report said. This shortage of STEM trained workers has and will continue to cause companies to move overseas. “If most of the market growth is not in the United States, what do you do? You go where the action is,” said Augustine.
This puts pressure on the defense industrial base and the Defense Department as a whole. The lack of skilled workers in this field hinders advances in technology, which may result in the nation’s weapons becoming “outdated or at risk much sooner than predecessor systems,” the report said.
Lawmakers don’t understand the importance of these problems and therefore aren’t sponsoring any legislation to remedy them, the report said. They “need a financially healthy and responsive defense industry, yet do not want to be held captive to the costs of propping it up when demand for the most expensive and sophisticated weapons system is so low,” it stated.
This decline in competitiveness is not due solely to “the ups and downs of the economy. Those have happened and they will continue to happen,” said Augustine. It is the rise of other nations’ economies, and their boosting of research funding that the United States must worry about, he said.

Photo Credit: Lockheed Martin


Re: Augustine: Decline in U.S. Competitiveness Creates Security Vulnerabilities 

Very interesting study. Since it was published, the US competitiveness improved and Switzerland's decreased due to the crisis of the banking sector. While private banks and institutions have thrieved thanks to the vaccum created by the various lawsuits, the overall economic Swiss climate has taken a toll, while the US economy has remained somewhat stable.
Anthony Cooper, Swiss banking analyst
Anthony Cooper at 7/31/2015 2:28 PM

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