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Top CEOs agree: US is down the crapper

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CES 2011 The leaders of Cisco, GE, and Xerox are worried that the US is losing its competitive edge, and that it's high time to stop grandstanding and do something about it.

"I'm optimistic, but I think that's partly because that's in my DNA, but I think we're at an inflection point, unfortunately," warned Cisco chairman and CEO John Chambers, who shared a panel with the similarly titled Ursula Burns of Xerox and Jeffrey Immelt of GE at the Consumer Electronics Show in Las Vegas.

That inflection point, in Chambers' view, refers to whether the US will go forward or slip back, because the country is not only being challenged by other economies, but also because in its education and immigration policies, it's shooting itself in the foot.

"I would not give us such a good grade as I'd like to see in terms of being an innovator five to ten years out," said Chambers. "We're still leading, but our leadership is shrinking."

Immelt agreed. "As a country, the rest of the world is moving faster than we are," he said. "The world's not standing still; China's not standing still."

The GE CEO and chairman also noted that although the Asian economic upsurge has gotten a lot of press, the US is falling behind other countries, as well. "We all like to talk about China and India, but Germany has come out of the recession stronger than it went in because they've focused on competitiveness, job creation, productivity, and innovation. So the US is going to have to play in a very competitive way."

Burns noted that the US isn't preparing for its own future. "I'm nervous because we're not investing in some of the downstream efforts that we have to invest in, like education."

Not that things are desperate – yet – she said. "We still do have these functional pillars: an education system ... an industrial infrastructure, a government infrastructure. But we don't actually coordinate them with a long-term view as well as some nations do. We have to change that to continue to be competitive."

Simply put, Burns said, "In educating the mass population to be productive in the future, we are failing."

Chambers agreed. "I think our K-through-12 system is broken. The [international] scores have recently come out, and not only are we not in the top 10, we're not in the top 20. We're 25th," he said, adding: "I think education is the most important long-term change we need to do in this country."

It's not that the business community is standing on the sidelines, not trying to help to fix the US educational system, said Immelt. "If you took the Fortune 50 companies, I'd bet we collectively invest billions out of our foundations and things like that in [secondary] education."

One problem is coordination and commitment. "This is a place where government and business should work together, can work together," Immelt said. "There ought to be a call to arms on education in this country. It's a complete no-brainer for business and government to be aligned, because our interests are completely aligned."

Chambers said that a national, focused effort is necessary, not merely more incremental steps. "Whenever you face a crisis, you have a chance to make very gradual improvement – which doesn't get you very far, you could move from 25th to 21st – or you have a chance to go back and say, 'Let's fix this once and for all'."

Burns said that although businesses are trying to help education, much of the money is being wasted. "I don't spend a lot of money without measuring outputs," she said. "We spend hundreds and hundreds of millions of dollars, and if you look at it honestly, at the output of this money that we're spending for the education system, we would say it's failing, because the outputs really haven't changed that dramatically.

She also said that a coordinated, measured effort is key. "We have to coordinate better, we have to work better with the ... educational systems, and with each other, and actually keep programs that work and kill the ones that don't work."

Chambers was of the opinion that the educational system could learn a thing or two from the folks at CES. "This show is all about rapid innovation. If you're two years behind in this industry, you're history," he said. "We have not changed the way we teach our children. We haven't changed the way collaboration is occuring.

Immelt said that the number of engineers that a country produces is a measure of how competitive that country will be in the future. "There's a million and a half engineers graduated in China every year. There's still more sports therapists graduated in the US than electrical engineers. So that's a losing equation. We're going to have to switch this. I mean, a good massage is still good, but it shouldn't stay that way."

"We're sliding," Chambers said. "Our global competition is increasing." He then added another problem area in which he think the US is screwing up. "If you only have around 300 million people, and haven't got a good immigration policy to bring in the best and the brightest from the rest of the world, and you don't educate your young people well, then planning ahead – for 20 years – gets tougher."

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