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Fareed Zakaria GPS

Encore: Restoring the American Dream

Aired October 31, 2010 - 10:00   ET


FAREED ZAKARIA, CNN HOST: Welcome to all of our viewers in the United States and around the world. This is a special edition of "FAREED ZAKARIA GPS," "Restoring the American Dream."

Tuesday is Election Day in the United States but, for many Americans, their dream of middle class stability and contentment is on the line. In recent polls, 63 percent of Americans say they do not believe they will be able to maintain their current standard of living. Most Americans seem to understand that this is not a normal business cycle, with a recession that has been followed by a powerful recovery. They sense they are in the midst of a structural transformation, in a new world that squeezes the middle class family, pressures the American wage, and endangers the American dream. It's a crucial issue. And we're devoting an hour to it.

I spent a lot of time thinking about this problem, and writing about it. I had a cover story about it in "Time" magazine. On this show, I will bring you solutions, but first, let's understand the problem.

If you break unemployment down by race, the hardest hit group, by far, have been African-Americans and Hispanics. While the national unemployment rate is 9.6 percent, for blacks, it's a whopping 16.1 percent, for Hispanics, 12.4 percent. And these numbers understate the problem. But whether you break it down by race or not, you see a key troubling battle. While most low-wage jobs have actually grown and highway jobs have mostly remained flat over the past two years, middle class jobs have declined. I call it the hollowing out of the middle class.

To help us figure out why this is happening and how to fix it, I gathered four of America's top businessmen. We're often reminded that it is business not government that creates jobs, and many complain we don't hear enough from businessmen. So now we will listen for much of this hour to four leaders in American business, in global business, who have worked in an incredibly diverse set of industries from technology to aluminum to tobacco.

Eric Schmidt is the CEO of Google; Muhtar Kent is the chairman and CEO of Coca-Cola; Lou Gerstner has actually run three American Giants, R.J. Reynolds, American Express and IBM; and Klaus Kleinfeld is CEO of Alcoa, the aluminum giant.

Let's first attack the problem. Why have American jobs come under so much pressure? We'll focus on three causes. First up, globalization. Why is it threatening the American dream? It wasn't supposed to be this way. For the last 20 years, most global trends have seemed to go America's way. The Soviet empire collapsed, the world gravitated towards free markets and freer trade, information became instantaneous, technology seemed more powerful than politics. Isn't this all good news for the leader of all these trends, the United States of America? Well, the world is going America's way, but the trends pushing it actually present enormous challenges to America.

Listen now to Muhtar Kent. He is the CEO of perhaps the iconic American brand, Coca-Cola, and he describes when this new world began once the Soviet system collapsed. The first affect was only upside for American companies, hundreds of millions of new customers.


ZAKARIA: Coke's potential market doubled, tripled, quadrupled? When you think of it, what was the scale of the expansion?

MUHTAR KENT, CHAIRMAN & CEO, COCA-COLA: I think if you take the consumers in China and India where in the late '80s we were not serving, if you take the Islamic world where we were not serving, if you take many parts of Africa where there was restrictions in operations, and including other places like southeast Asia, Vietnam and Laos and Cambodia, if you take the whole number, I think in terms of opportunities and consumers, our business probably increased by twofold overnight, when really the world started opening up, globalization became the norm, when technology and communications started developing at a rate that no one ever assumed or imagined.

ZAKARIA: And American companies took advantage of these new markets. So much so that the 500 largest American companies now generate 46 percent of their profits outside the United States. Coca-Cola now makes nearly 80 percent of its revenue outside of the United States and an even greater percent of its workers are in foreign countries.

How many countries does Coca-Cola operate in now?

KENT: 206. And when we say operate, we don't mean loading containers in a U.S. port and sending our products there. What we mean is operating plants, operating infrastructure, operating distribution systems, hiring people and generating a local business that is connected to a wonderful global fusion of brands.

ZAKARIA: But you say 206. That's more than the United Nations.

KENT: It is. I believe it is, yes.

ZAKARIA: And in each of these places you have factories?

KENT: We have plants and we have partners, wonderful bottling partners.

ZAKARIA: Do you have U.S. partners in Afghanistan?

KENT: We have a bottler in Afghanistan, a wonderful partner in Afghanistan.

ZAKARIA: Let me try this on you. You have a factory in the West Bank?

KENT: We do have a factory in the West Bank in Ramallah, a great factory, great partners.

ZAKARIA: Do you have a factory in Inner Mongolia?

KENT: We have a factor in Mongolia, in Ilambotor (ph), a factor with local bottling partners. And then, Inner Mongolia, which I will be going tomorrow to China to inaugurate a new factory. I'm very excited about that.

ZAKARIA: Lou Gerstner watched all this from his perch as CEO of American Express, later IBM, as all these shifts were taking place, first to globalization, meaning new customers, but then to a globalization that meant new producers, new competitors for American products and companies. The new competitors can make the same stuff at much lower prices.

The S&P 500 now 46 percent of the profits come from abroad. What about the doubles of the potential labor pool, the doubling of the potential workforce. Is that also a huge part of this story that you can now make anything in the world using skilled labor, but at a tenth of the price?

LOU GERSTNER, CEO, IBM & FORMER PRESIDENT, AMERICAN EXPRESS: Yes. I was at American Express when this all started to happen. And all of a sudden, you know, you say, gee, are we going to have 100 million, 200 million Chinese carrying cards, credit cards? How about travel? So the size of the market in terms of consumers is what I think started to really drive globalization for American companies. I think the idea of then producing your products in those countries came secondarily.

But that became a powerful, powerful force. And today, as you well know, as your question indicated, you can have things made in India and China that are of the quality you could find in the U.S. at a significant lower cost. And that is of course one of the problems for the American economy.

ZAKARIA: But as much as we can see the effects of trade, we all buy cheap Chinese goods. Probably the largest force at work has been technology, not trade. American companies embrace new technologies that made them more efficient every year. And in the 1990s, information technology really began transforming American companies from top the bottom, making fewer workers necessary.

Jack Welch says something very interesting. He says we had technology in the '80s -- '70s and '80s, even in the early '90s. It didn't do much. All of a sudden, there was a critical mass phenomenon. And then by the middle '90s you suddenly see technology producing mass efficiencies for corporations, where suddenly it all came together. You ran IBM. Do you -- why did that happen? Why did it take a while for information technology to suddenly kind of produce this seismic change?

GERSTNER: The reason for that, I believe, is that information technology started out in the back office. It took decades before the people who ran the line businesses, the people who ran manufacturing, the people that ran sales, the people that ran distribution, to realize that this technology had a powerful impact in improving those processes.

ZAKARIA: So technology, globalization, both having this effect of making companies hyper-efficient, making them global, making them sell anywhere, buy from anywhere, what does this do to the average American worker?

GERSTNER: Well, I think it puts real pressure on having the kinds of skills that allow us in this country, in America, to build new industries, to go to new industries. If you look at the history of America, we started out making shoes. We started out making clothes. We started out with basic manufacturing industries. What has proven to be enormously successful over 100 years is we have moved up the chain, those industries moved to other countries that were more than happy to take those commodity industries. and we moved up into electronics. We moved up into material sciences. We moved up into different industries, aircraft manufacturing. And so we have always been able to evolve.

But the problem in America today is the next level of industries require a level of skill, educational level that we're not producing in this country. We're not producing workers who have the skills to move up the next step. So we got a competition for high-paying, high- return jobs, and we're not, in America, investing in the skills of our workers to allow us to compete in those industries today.

ZAKARIA: So globalization and technology acted like a one-two punch, strengthening American companies but putting pressure on the American worker.

The knockout blow perhaps came with the financial crisis and ensuing recession which put companies in a fight for survival. Suddenly, they had to become hyper-efficient or die.

Klaus Kleinfeld is the CEO of Alcoa. "Fortune" says Alcoa is the 127th largest American company. And it is the largest aluminum producer in the world.

Take a look at what the prices did to this American giant.

When I look at what you faced -- you took over, I think, in May 2008. Revenues dropped almost $10 billion, right, somewhere in the $28 billion range to $17 billion. You affected a restructuring of the company. You laid off thousands of workers all over the world.


ZAKARIA: Do you think that even when you come back to profitability in that range, will you be hiring back all those people or have you learned to do -- to make -- to do more with less?

KLEINFELD: I think everybody has learned to do more with less. At the same time, you will be hiring people back once the economy comes back. That's what the question is, how much additional demand is there. But we will not give up the productivity we have gained through this period and learn it through a very, very hard lesson.

ZAKARIA: You said we're not going to give up the productivity we gained.

KLEINFELD: Absolutely.

ZAKARIA: And what you mean by that is you're going to make sure that you stay as lean as possible?


ZAKARIA: What is it that achieved this level of productivity that you now have? Is it that you use technology more efficiently? Or is it that you are manufacturing in places where you can find low-cost labor that's also highly skilled?

KLEINFELD: Yes, yes and yes, I would say.


ZAKARIA: So even when the U.S. manages to climb fully out of this recession, most CEOs won't be bringing their payrolls back to pre- recession levels. But surely there will be some job growth in new industries, of course.

And let's talk to a company that has been one of the fastest growing in American history. Here is Google's CEO Eric Schmidt.

Google keeps hiring, but his prediction about when growth comes back to the economy is sobering.

ERIC SCHMIDT, CHAIRMAN & CEO, GOOGLE: The typical deleveraging cycle is about a 7-year cycle. We're about in year three of that. So if I were to say we have four more years of this pain ahead of you, that's not a good answer from a political perspective and it's a terrible comfort to the people who are so terribly affected by what's going on now. We need to address that.

ZAKARIA: We do need to address that. And that's exactly what we're going to do coming up. Much more from these power house CEOs, the people who run America's biggest corporations. What will make them hire more people? We'll focus on solutions, theirs and mine, when we come back.


ZAKARIA: So we have got to bring back jobs in America, and the first step is innovation and investment, the two "I". Much of America's job growth of late has come from new industries and new companies. New companies or new divisions within established companies need everything from lawyers to line workers, computer programmers to graphic designers. There is a path to these jobs. It's tried and tested. But it requires cash, lots of it. We all know America has been and always will be number one in technology, right? Actually, not. According to the World Economic Forum, we now rank sixth in innovation.

Google CEO Eric Schmidt, who knows a thing or two about innovation, says we need to be a step ahead, as we have always been in the past, but now we're losing out big-time to some of our competitor nations.

SCHMIDT: The real problem we have now is we have other countries that are copying us, Singapore, Korea, China and so forth, that have very directed industrial policies around sectors. China, for example, has decided to focus on green energy. And there's some evidence that some of the key companies will now be founded in China. That's a real loss to America where much of this technology was originally invented.

ZAKARIA: But isn't that inevitable in the sense that -- I hear about solar panels being made in China. Even if we invent the next great solar idea, wouldn't the manufacturing of the product move to China because solar panels, after all, are a manufactured product and China has much lower costs of manufacturing? So even if you innovate, does the manufacturing go somewhere else?

SCHMIDT: That's an example of fighting the last war. The next war is over nanotechnology, new mineral surfaces, the touch-and-move, when you use them, and all sorts of amazing new things that have been invented here in America. The opportunity is to actually build those businesses in America before the other countries get them. The solar panel one may be one that was made a decade ago, but there's a new set now that we need to stay focused on.

ZAKARIA: So what does that sort of innovation look like in the real world?

Alcoa CEO Klaus Kleinfeld offers an example.

KLEINFELD: We have a chunk of all businesses where we can differential, where we can bring innovation. And once we bring innovation in, for instance, new coatings of our materials that actually become several cleaning or even our -- of such a magnitude that they are eating pollutants. We have some building and construction materials, which are -- which you put on buildings and they absorb their pollutants, right? So those types of things are highly innovative. And those types of things very often come from the U.S., right? So you have high-level intelligent innovation that's absolutely strong here in the U.S. I believe that will be the growth engine of the future.

ZAKARIA: Innovation is indeed the growth engine of future. But that engine is stalled right now. Corporate America spends some on R&D, but not enough. And much of what they spend is really directed at making existing products better or working on the next product. They don't do enough basic research.

Now, Google, of course, pours billions of dollars and 20 percent of its employees' time into innovation and R&D. But Google can do that, because, well, it's Google. But historically, it was the government who spent massive money on research.

Eric Schmidt says that's where the government needs to step in.

Is there something the government can do in the legal framework, in the business -- I mean, is there something we should be doing to get more of this?

SCHMIDT: The single biggest act that the government did many years ago was the funding that is known as the DARPA, the advanced research projects agency, and other governmental programs. Those are periodically under federal budget attack for one reason or another and, yet, they are literally the start of billion0dollar industries. It's important that that investment occur. and even at a time now when everyone's worried about spending money, the investments we make now in universities and research that allow these entrepreneurs to get their start, will create the employment 10, 20 years from now that we'll all be so excited about.

ZAKARIA: So you're talking about government investment. You're talking about DARPA. You're talking -- you talked about industrial policy. You really see a big role for government in jump-starting growth?

SCHMIDT: Well, people assume that somehow America's government was not involved in the world 50 years ago. Almost all of the science and technology research that we take for granted now came out of the Defense Department spending post World War II.

ZAKARIA: Let's just stop here for a second and tally up some of those government-sponsored inventions.

The semiconductor industry, for example, would not exist if not for the DOD, the Department of Defense. The Internet, well, Al Gore didn't invent it, but DARPA did, the defense agency that funds new technologies. The computer industry, for years, NASA was its main client and kept it alive and brewing. And what about GPS? I'm not talking about this show, but about the worldwide network of satellites that can tell you, within feet, where you are almost anywhere on the globe. That's powering the next waive of innovation on the web. Mobile telephony (ph), that's going to be an industry with tens of billions of dollars in revenue. And that was also a Defense Department project.

All of the CEOs I have spoken to, especially those running technology companies, say that government investment in research and development has been crucial to driving technological change.

So if we get innovation going again, will that be enough to make Americans competitive in the new world?

Klaus Kleinfeld --

So if you were talking to an average American worker, not somebody with a fancy degree, not highly super-skilled in engineer -- this person now faces competition from places, people around the world. His competitors -- his pool of competitors to him has probably doubled or quadrupled in the last decade. They come out of China, India, South Africa, Indonesia. What do you say to him? How does he make himself competitive? How does he ensure that he has a good job?

KLEINFELD: First of all, I would say America and the American dream are still very much alive. The foundation is there. There are new- formed companies every day. We just don't know about it. It's around the corner. It's the new Googles. It's the new Facebooks of the future, right?

Secondly, there will always also be jobs for people that don't necessarily have to have a college or university degree. And the reason for that is there are new industries coming on. Currently, we have a scientific revolution coming on, like we have not seen it before. This is the foundation for innovation. So if we are reasonably smart, there will be lots of new companies, lots of new businesses, also lots of services businesses. So if we continue to keep this attitude of can-do, continue to make sure that we have the right talent, and continue to innovate, I am absolutely certain that everybody will find a job.

ZAKARIA: A job for everybody. What more could we ask for?

But before we get there, as Kleinfeld just alluded to, we will need to fix our education problem. Actually, we have problems at all levels, elementary, high school, college, all the way to retraining 50-year- olds who have just lost one job and need another. How do we fix the system? When we come back.


ZAKARIA: What will make Americans competitive? I don't mean American companies. They can serve this new world economy and take advantage of the new technologies. but average Americans, who work hard, play by the rules and expect a decent standard of living as a result, what do they do? There are many answers, but probably the single most important of them is one word -- education.

Let me give you one alarming statistic to give you a sense of the problem. The United States now ranks 52nd in the world in quality of science and math education. And our education crisis doesn't stop at the elementary or high school or graduate level. All of that is important, especially a revitalization of science and math education for Americans at all those levels.

Now, at their best -- think of Harvard, Yale, Stanford -- American education is unbeatable anywhere in the world. But the average American worker is not going to Harvard or Yale. and he or she is not going back to high school either. He or she needs retraining. The industries of the past are moving offshore. Those of the present are changing. The future ones are likely to be intensely knowledge based in knowledge-based industries. So Americans need training and retraining, and fast. It's a daunting challenge.

First up, Lou Gerstner.

So you spent most of your time, both when you were at IBM and after IBM, trying to deal with what you see as the central problem in America, which has been the collapse of the education system. What is the problem and what is the solution?

GERSTNER: Well, the problem --


-- the problem is that we started out being number one in graduation rates from high school, and we're now down to 12. We started out with very high levels of performance in math and science, and we're now roughly in the mid 20s. So what do we need? We need much higher standards. We must have expectations for all kids that they're going to learn, and they're going to learn the things that we need to learn. So that's standard.

Secondly, we need far better teachers. We have wonderful teachers in America, but not enough of them. We have too many teachers that are not strong enough today.

And, you know, it's a - it's a basic fact, up until the mid '60s, we had a captive labor force in public America - public school America. It was called women. They could either go into nursing or teaching, if they wanted a career.

There were no women in my Harvard Business School class in 1965. Today, the class is more than half women. The same is true in med school. The same is true in law schools, and we're still acting as if, you know, we can underpay people in public schools to teach our kids.

It's the profession that makes all professions possible, but we don't treat it like a profession.


ZAKARIA: And what happens when and if we get our education system back to where it needs to be? I asked Google CEO Eric Schmidt.


ZAKARIA: Is the American dream still possible? Are opportunities really boundless if somebody has the smarts and the motivation? Can everybody be the designer of an iPod or a programmer at Google? Or is this essentially, by nature, a rarified group that's going to be the top end of America?

SCHMIDT: Well, America has 19 of the top 20 universities in the world today, and we're not even taking advantage of that tremendous strength. I'm a strong believer that education matters, and that people can learn these new technologies and that there's every reason to believe that people want to be part of this new world and they can get there too.

ZAKARIA: And one of the things we're not helping with, when you think about the universities, is we train all these people and then we let them go before many of them are formed (ph). SCHMIDT: No, it's a brilliant strategy, educate the top people in the world and then kick them out of the country, just when they're about to get very high paying jobs, create new companies and create enormous wealth for Americans. It's a bad strategy, it's a bad policy that needs to get addressed.


ZAKARIA: But education shouldn't end at high school or college or grad school for workers or anyone else.

Alcoa CEO Klaus Kleinfeld's job before running Alcoa was running Siemens, the German engineering firm that is the 40th largest company in the world.

Despite some of the highest wages in the world, strong unions, lots of regulation, Germany has maintained a very powerful manufacturing base, employing millions. It has held in good stead during this economic crisis. Germany's unemployment rate has actually fallen for the past 15 months straight, an unbelievable record in this economic climate.

How do they do it? For one thing, training and retraining workers. How does their system work?


ZAKARIA: It's a technical education?

KLAUS KLEINFELD, CHAIRMAN AND CEO, ALCOA: It's a technical education that goes far down in the ranks. I mean, I think that's one of the things that's very often misunderstood. We're not just talking about a college education, we're actually talking about the foremen, you know? Or - and even somebody who's a normal line worker, you know? You need to make sure that that people get constantly educated, and also have a desire to get educated.

So one of the things, for instance, that - that companies typically give credits for is - or have programs, often together with the unions, is a constant reeducation program. I mean, I've seen people that - that were laid off when we established a reeducation unit, which had only one purpose. It was there for about 18 months, and the only purpose was to reeducate the workforce that was getting laid off.

I think that in the U.S., this - this understanding is much better, but there could be a little bit more of a support system, I agree.


ZAKARIA: Career training in America is not a priority, they say, and it needs to be. Here again, former IBM CEO, Lou Gerstner.


GERSTNER: I think that skills training, career training, has got to be more important, more relevant, and more focused in America. You know, we can create jobs in these new industries, but people have to be responsible for developing the skills.

I mean we came from a world where, you know, we - we sort of had it made. The American dream was a reality. But it was driven by factors that no longer exists. We were alone in the world after -

ZAKARIA: After World War -

GERSTNER: -- World War II. In fact, the war itself got us out of a depression and got us into investments and in - in important technologies and industries.

And then we had, you know, kind of the, you know, the - the Cold War. We had - we had Sputnik. We had all these things that drove us to have a common purpose in America, to build our economic base.

Today, I don't see that. I don't see a sense of urgency. I don't see a sense that we're in a competitive battle here for jobs, for leadership in - in industry.


ZAKARIA: You've heard great ideas from these four CEOs and you'll hear more from them later in the show. But, when we come back, some of my ideas for fixing the nation's job problem.

Back in a moment.


ZAKARIA: You just heard from four of the top CEOs in the world on what they think can help fix America's middle class crisis, what would bring back good jobs for America. Let me add some of my own thoughts.

The first thing we can do is what we've been doing for almost a generation now, which is kicking the can down the road. We've faced the twin pressures of technology and globalization since the mid-1970s - remember the rise of Japan, South Korea? - and incomes for the middle class started to stagnate around that time.

But rather than restructuring and reinventing ourselves, we found a painless way to boost the economy - consume more. You see, from the 1950s to the 1980s, American consumer spending made up between 60 and 65 percent of GDP. From the 1980s, we started spending more, and that number kept rising until by 2001, consumer spending was 70 percent of GDP, where it has stayed ever since.

Now, unfortunately, all that increase in consumption came not from rising incomes or wages - remember, they stayed stagnant - but from expanded credit. We borrowed and spent, as people and as governments at every level. That credit bubble has burst, but we still haven't really reformed our ways.

Fundamentally, we have to shift the American economy from its emphasis on consumption to investment, massive investment. The one thing all the CEOs agreed on was large scale investments by the government in research and technology. Most also argued for an upgrade in our infrastructure, including our digital infrastructure.

The federal government, despite big increases under the Obama administration, isn't spending as much on R&D as a percentage of GDP as America did in the 1950s. I think spending on R&D should be up twice that level.

Now, in the 1950s, there were million of new jobs being created in basic manufacturing, in steel, in cars. Today, the new jobs will come from knowledge industries, like biotech and nanotech, and in all those areas we are falling behind. Six percent of GDP is $800 billion, about what we spend on the military these days, but it's a big chunk of change, and I don't believe in a free lunch.

So I'm going to tell you how I'll pay for it - an innovation tax. Many nations have a value added tax, the United States doesn't. But I think it needs one, a national sales tax of maybe five to seven percent, which will be the lowest in the industrialized world but would bring in a lot of revenue. And, by the way, if it causes Americans to consume a bit less, that's actually a good thing.

So, that's the money.

The toughest piece of this puzzle, of course, is getting Washington to get the nation's fiscal house in order. It needs to get health care and other entitlements under control. It needs to rationalize taxes. Basically, the effort should be to reduce spending on consumption, which is what tax cuts are, which is what bigger pensions are, and start spending on investment.

That's a lot of the things that need to happen to kick start jobs in America. Will any of it get done? I'll ask our CEOs what they think the future holds when we come back.


DON LEMON, CNN ANCHOR: I'm Don Lemon. Here are your headlines this hour.

We begin with the latest on the plot to send explosive packages into the U.S. aboard cargo planes. Here's what we know right now. A woman was arrested today by Yemeni authorities in the capital of Sana'a. Her alleged role is not yet known, but one of her relatives is being questioned.

U.S. law enforcement says all suspected packages from Yemen have been accounted for and do not pose a threat. FedEx and UPS offices in Yemen have been closed until further notice.

A political farce or a political force? The joke was on Washington today as two funney men took over the National Mall with just three days left to the elections. Jon Stewart, the host of "The Daily Show" and Stephen Colbert drew a massive crowd for their rally to restore sanity and/or fear. A bunch of guests joins Stewart and Colbert on stage like The Roots, Sheryl Crowe, Kid Rock and Ozzy Osbourne.

Evacuated residents in Boulder, Colorado are returning to their homes as firefighters tame a raging wildfire. The blaze has scorched 152 acres and is now about 70 percent contained. The cause of the fire, still under investigation.

Those are your headlines at this hour. I'm Don Lemon.

RESTORING THE AMERICAN DREAM continues right after this.


ZAKARIA: The CEOs of major American companies have an incredibly unique perspective on America. They can look at their spreadsheets and know what the American consumer is feeling, what the American marketplace is thinking, where the American psyche is, often long before the rest of us.

So what do these four CEOs see when they look into their crystal balls?


ZAKARIA: Do you see a common purpose? Do you see Americans coming together?

GERSTNER: No, I - I don't think Americans are together at all. I think it's a - we're in the worst time I've ever seen in my life of divisiveness in our country. I mean, I - you know, I think you're - you talk about the American dream. I mean, my view is, we've got to get this country to come together around America first. We've got to put America first.

You know, what does that mean? It means we can't spend a trillion dollars in wars across the globe without asking ourselves whether that trillion dollars is needed at home. We can't have politicians saying, I don't care if we need to do something for the good of America, it doesn't work in my district. So they've got to come back to America first.

ZAKARIA: When - when you look at the start-up world and you're now the head of this enormous company, Google, but you - you've been around Silicon Valley a long time and you were at, you know, companies that were once much smaller.

What is it that makes start-ups happen? What is it that fuels entrepreneurship?

SCHMIDT: Feeding and nurturing entrepreneurship is the American way, so we need to find them and host them. They typically are very young. They typically are coming right out of the university, right out of a graduate program and they typically need a little bit of money. And America is particularly good at getting them seed capital. And they have a vision. One out of 10, one of 20 survive and the others then try again.

A unique aspect of the American culture is the ability to fail and fail quickly. So the most important thing with an entrepreneur is for them to get the experience, try something, fail, try something else, boom and hit it and then it just explodes.

ZAKARIA: Give us your picture of the - of the American economy, because you have a unique bird's-eye view on the American consumer.

MUHTAR KENT, CHAIRMAN AND CEO, COCA-COLA: The latest data that's come in says that the U.S. economy is growing about two percent and that's largely led again by consumer spending. About 70 - 80 percent of that led by consumer spending, which shows you one thing that the American consumer is very resilient. The American consumer still is a consumer that believes in his or her future.

ZAKARIA: So you're bullish on America?

GERSTNER: I am bullish. I think we have - I'm a little apprehensive about the very short term, you know, in the next sort of 12 to 18 months.

But over the longer period of time, I'm very - I think - you know, when I first came to the United States in 1978 to get - and I got employed by the Coca-Cola Company in 1978. Started my career at the Coca-Cola Company, everyone was apprehensive about Japan. Everybody thought Japan is going to take every single job in the United States.

And what did the United States successfully do in the '80s? It's reinvented - it's reinvented itself. It innovated and re-innovated and created 25 million new jobs, mostly technology-related jobs. But I think the United States has that capability.

ZAKARIA: So you think America could revive its manufacturing?

KLEINFELD: Absolutely, absolutely. I think - I think we could - could absolutely revive our manufacturing. But I wouldn't just focus on manufacturing. I think - I think I would focus on all job opportunities.

If there's one thing where I think we can also improve, it's the glass half full instead of the glass half empty, which I have always concern, always seen as one of the strengths in the U.S. and I find it odd that very often in groups, I'm the most positive one about the American dream and how I see America. And I think that we should allow ourselves, to remind ourselves of the great past of this country and there will be a great future. I'm absolutely certain about it.


ZAKARIA: How can you make sure that you are a part of that great future?

We've talked a lot about what the country needs to do to get back jobs. But what do you do need to do? That's what we'll tackle when we come back in a moment.


ZAKARIA: So we have solutions to the problems of the American middle class, problems, by the way, that affect most western middle classes. But they're all top down. What can government do? What can companies do?

But what can you do if you're someone thinking about your career at age 25 or 55? What can you do to make yourself thrive in this new global economy?

I've written on some of these issues, as has Tom Friedman in his mega bestseller, "The World is Flat." And I put together some of his ideas in mind.

First, try to do something that is really a specialized craft or art, something that is as much art as craft, something that feels more like artisanship than routine work, things that are custom and custom-made still survive. Things that are commodities get made in China.

Second, go local. Do something that can't be outsourced, jobs involving personal face-to-face contact will never go to India. You cannot get a janitor, an electrician, a maintenance engineer, a fireman, a physical trainer, a garbage collector, a dentist, a nurse or an interior designer to work for you from India.

Can everyone become indispensable? Well, no, but if you learn a difficult craft and are good at it, if you can collaborate well, synthesize well, put things together, work with others and work well across countries and cultures, you will have a leg-up.

One example, it is never too late to learn another language and that itself would be a powerful step in the right direction. If you are fluent in Spanish or Mandarin or Hindi, all of a sudden this new world has many new opportunities for you.

The other language that would be a huge advantage anywhere is math. If you are good at math, you will be able to manipulate data, algorithms, symbols, graphs, balance sheets and all of these skills are the essential skills for a knowledge-based economy.

I could go on, but you will have your own ideas about how to stay competitive and how you have stayed competitive. Send them to us by e-mail.

That is our show for today. Thank you for being part of it. I will see you all next Sunday morning at 10:00 A.M. Eastern and Pacific.