That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back

JOANNE MYERS: Good morning. I am Joanne Myers, director of Public Affairs Programs, and, on behalf of the Carnegie Council, I would like to thank you for joining us.

Our speakers, Tom Friedman and Michael Mandelbaum, are here to discuss That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back.

Many of you may recall that Tom and Michael have both spoken here before, and for those of you who are curious about their remarks, they can be found by visiting our website at www.carnegiecouncil.org.

Rare is the book that genuinely deserves to be called long overdue. But this is most emphatically true of Tom Friedman's and Michael Mandelbaum's collaborative effort, That Used to Be Us.

At a time when Americans seem more disconnected than ever, more resigned to the way things are, and a pervasive belief that our best days are behind us, it is refreshing to have these two serious men, both outstanding foreign-policy thinkers, help us to remember the way we were. By offering a ticket back to the future, they ask us to rediscover America's greatness.

That Used to Be Us addresses the challenges on which our future depends. Whether it is globalization, the revolution in information technology, chronic deficits, energy consumption, or the paralysis of our political system, our speakers posit that if we just take a moment to review our history, revisit the core values that have shaped and made our country successful in the past—such as education, discipline, and hard work—we can, as the subtitle indicates, return to the world we invented.

Although I know a bit more about Tom, whom I will get to a moment, this is the first time that I've met Michael. Even so, his reputation for possessing an extraordinary knowledge of philosophy, politics, history, and economic matters precedes him. He is the author of ten books and the editor of 12 more. Since 1985, he has written a regular foreign affairs column for Newsday and contributes to a monthly column at The New Republic's foreign affairs blog entitled "Entanglements."

Michael has been cited by Foreign Policy magazine as one of the top-level thinkers of 2010, and the World Affairs Councils of America named him one of the most influential people in American foreign policy.

He was educated at Yale, Cambridge, and Harvard. Currently he is the Christian A. Herter Professor of American Foreign Policy at the Johns Hopkins University School of Advanced International Studies.

Now for Tom. I promise this time, unlike the last, I will not show pictures from your high school yearbook. Nevertheless, as you are still Tom Friedman, some things bear repeating. For example, it is a well-known fact that you, Tom, remain not only one of the most widely read but also one of the most readable columnists in the world. As a three-time Pulitzer Prize-winning journalist, New York Times best-selling author, your ability to make complex issues accessible for non-specialists is legion. That, combined with your remarkable knack for a memorable turn of phrase, use of metaphors and analogies, are legendary and are remembered, repeated, and recited for years.

So the question that most readily comes to mind is: How does one develop these skills—skills that make you one of the best explainers in the business, to see things which others do not? Where does your enthusiasm, idealism, and pragmatism originate, all characteristics which you use to inform your work?

Although you alone know the answer, I have a hunch. And I think it has something to do with growing up in the Midwest in what used to be a very liberal state, at a very can-do time, in a small Minneapolis suburb called St. Louis Park. How do I know? It just so happens that Tom and I grew up in that same suburb. My sister and Tom worked together on the school paper, The Echo. It was a time when life was simple; values were important; you worked hard so that you could play hard and enjoy the fruits of your labor.

Although we all have gone our separate ways, I think it is fair to say that exposure to these traditional values imbued us with a sense of pride in who we were and what we could become, so that, in turn, we could contribute to our nation's strength and be proud of who we were as a country.

However, now as we face a pivotal moment in our nation's history and we look towards our future, I would like to ask our speakers what it will take to return to those values. Can we remain the global leader that we have been and the leader the world needs us to be? How can we affirm the values that used to be us?

For the answers, please join me in giving a very warm welcome to our guests, who have been, still are, and will always be Tom Friedman and Michael Mandelbaum. Thank you so much for joining us.

THOMAS FRIEDMAN: Thank you, Joanne. It's a treat to be back here at the Carnegie Council. Speaking for myself and Michael, we have both been here individually, and it's great to be here in tandem.

Joanne has outed me as being from St. Louis Park, Minnesota, and it is true that I grew up there at the same time as the Coen brothers and Al Franken, Norm Ornstein, and Michael Sandel. I don't know what was in the water in that little suburb, but the Coen brothers say it's like that town in Transylvania where all the Draculas came from.

What we are going to do today is a little duet that Michael and I have been doing from the book. I am going to speak a little, Michael will speak a little, I'll speak a little, and he'll speak a little. And, hopefully, we can condense then into a half hour or so, and then leave time for your questions, because we are really eager to hear from you.

That Used to Be Us. Whenever we tell people about the title of the book, they always have sort of a quizzical look. Then we give them the subtitle, How America Fell Behind in the World It Invented and How We Can Come Back. That usually produces the following question: "But does it have a happy ending?" We tell everybody the same thing: "It does have a happy ending. We just don't know whether it's fiction or nonfiction." That will depend on us, what we do and what we don't do, the choices we make and don't make.

Now, some of you may be wondering why two foreign policy wonks have written a book about American domestic politics. The answer is very simple. Michael and I are old friends and actually neighbors, and we've been talking about foreign policy weekly, almost daily, for the last 20 years. Our wives are really sick of it.

We noticed in the last couple of years something different. We noticed that every conversation would start with us talking about the world, but would end with us talking about America. We realized finally that America's fate, future, vigor, and vitality was actually the most important foreign policy issue in the world; that America really is the tent pole that holds up the world, and if it splinters or buckles, this tent pole, your kids won't just grow up in a different America, they will grow up in a different world.

Finally, Mike's wife Anne got on the phone one morning and just said, "Excuse me, would you two just write a book about this already?" That's really where the idea came from, and that is indeed what we have done.

We're worried. We're two worried guys. When I think about the fix that we're in right now, what most comes to mind is a phrase that—Michael is a movie buff, blessedly, and we do have a lot of movie allusions in the book. I want to just share with you one of them, which really summarizes to us the fix that we're in right now.

It comes from Orson Welles' 1958 movie, A Touch of Evil, about murder, kidnapping, conspiracy, and corruption in a town on the Mexican-American border. Welles, as you may recall, plays a crooked cop who tries to frame his Mexican counterpart for a murder. At one point Welles stumbles into a brothel and finds the proprietor, Marlene Dietrich, who is also a fortune teller, with cards spread out in front of her. "Read my future for me," Welles says. "You haven't got any," she replies. "Your future is all used up."

If we don't reshape our budgets, if we don't properly put in place the policies we need to thrive again, that will be us, a country with its future all used up.

We are convinced that absolutely does not need to be us, that we are capable of much more, and one need only read our past to understand that. That's why the book is called That Used to Be Us.

Just to kick off our discussion this morning, I am going to read you a few paragraphs from the very opening of the book.

This is a book about America that begins in China. In September 2010, Tom attended the World Economic Forum's summer conference in Tianjin, China. Five years earlier, getting to Tianjin had involved a three-and-a-half-hour car ride from Beijing to a polluted, crowded Chinese version of Detroit. But things had changed.

Now to get to Tianjin, you head to the Beijing South Railway Station, an ultramodern flying saucer of a building with glass walls and an oval roof covered with 3,246 solar panels. You buy a ticket from an electronic kiosk offering choices in Chinese and English, and you board a world-class high-speed train that goes right to another roomy, modern train station in downtown Tianjin. Said to be the fastest in the world when it began operating in 2008, the Chinese Bullet Train covers 115 kilometers, or 72 miles, in 29 minutes.

The conference itself took place at the Tianjin Meijiang Convention and Exhibition Center, a massive, beautifully appointed structure, the likes of which exist in few American cities. As if the convention center wasn't impressive enough, the conference's cosponsors in Tianjin gave some facts and figures about it. They noted that it contained a total floor area of 230,000 square meters, and that the construction of the Meijiang Convention Center started on September 15, 2009, and was completed in May of 2010. Reading that line, I was walking around my room counting on my fingers. Let's see, that's September, October, November, December—eight and a half months.

Returning home to Maryland, I called Michael and was sharing with him my story of Tianjin. At one point his wife Anne interrupted. "Excuse me, Tom," she said. "Have you been to our subway stop lately?"

We all live in Bethesda, Maryland, and often use the Washington Metrorail subway to get to work in downtown Washington. I had been at the Bethesda station and knew exactly what Anne was talking about. The two short escalators there had been under repair for nearly six months. While the one being fixed was closed, the other had to be shut off and converted into a two-way staircase. At rush hour, this was creating a huge mess. Everyone trying to get on and off the platform had to squeeze single file up and down one frozen escalator. It sometimes took ten minutes just to get out of the station. A sign on the closed escalator said that its repairs were part of a massive escalator modernization project.

What was taking this modernization project so long? We investigated. Cathy Asato, a spokeswoman from Washington Metro Transit Authority, said the repairs were scheduled to take about six months and are on schedule. Mechanics need ten to 12 weeks to fix each one. A simple comparison made a startling point. It took China's Tada Construction Group 32 weeks to build a world-class convention center from the ground up, including giant escalators in every corner, and it was taking the Washington Metro crew 24 weeks to repair two tiny escalators of 21 steps each.

We searched a little further and found that WTOP, a local radio station, had interviewed the Metro interim general manager, Richard Sarles, who said, "The escalators have not been kept in a state of good repair. We're behind the curve on that, so we have to catch up."

On November 14, The Washington Post ran a letter to the editor from Mark Thompson of Kensington, Maryland, who wrote the following: "I have noted with interest your reporting on the $225,000 study that Metro hired to conduct a survey of the sorry state of our escalators. I'm sure the study has merit, but as someone who has ridden Metro for more than 30 years, I can think of an easier way to assess the health of the escalators. For decades they ran silently and efficiently. But over the past years, when the escalators are running, aging or ill-fitting parts have generated horrific noises that sound to me like a Tyrannosaurus Rex trapped in a tar pit screeching its dying screams."

The quote we found most disturbing came from a Maryland Community News story about the long lines at rush hour. It was from Benjamin Ross. He wrote, "My impression standing in line there is people have sort of gotten used to it."

People have sort of gotten used to it. Indeed, that sense of resignation, that sense that, well, this is just how things are in America today, that sense that America's best days are behind it, and China's best days are ahead of it have become the water cooler, dinner party, grocery line, and classroom conversation all across America today.

We do not share that view. We refuse to resign ourselves to that. But the opening chapter of this book is called, "If You See Something, Say Something."

Yes, that is the mantra of the Homeland Security Department. We use it here because we have seen something much more threatening, we believe, than a suspicious package under the stairs. We've seen something that is hiding in plain sight. It is our beloved country in a slow decline. This book is our way of saying something.

Thank you.

MICHAEL MANDELBAUM: We face four major challenges. Those four challenges form the spine of That Used to Be Us.

• We face the challenge posed by globalization. Over the last two decades, two billion new workers have been added to the global labor pool. Now, that creates enormous opportunities, but also enormous challenges. They put almost every American job under unprecedented pressure.

• We also face the challenge of the information technology revolution. The rapid, indeed, dizzying, pace of technological change has had many effects. One of them is that it stripped away whole categories of jobs that people used to have and made decent livings at. Those jobs are now gone, and that's a huge challenge.

• Third, we face the challenge of deficits and debt, the large and expanding annual deficits that we've run up, the cumulative total of which is our national debt. It is even worse than that, because this problem exists not only at the national level, where recently it has gotten so much publicity, but at the state and local levels as well. State and local governments in the United States have obligations for the future that they cannot possibly meet.

• Fourth and finally, we face the challenge of our pattern of energy consumption and its impact on our climate and our environment.

The stakes involved with these challenges could not be higher. Whether or not, and to what extent, we manage to meet these challenges will determine, among other things, the rate of economic growth in the United States in the future. And economic growth underpins almost everything that we value about our country.

Specifically, whether or not we can sustain a respectable rate of economic growth will determine whether or not we can sustain what has come to be known as the American dream, the capacity of each generation to pass on to its successor a country in which the succeeding generation can hope to do better than the previous one.

More than that, whether or not the United States can master these four challenges and sustain a robust rate of economic growth will determine whether the United States continues to play the kind of role in the world that we have played for the last seven decades, and especially, for the last two.

Tom and I believe that the United States plays a uniquely valuable role in the world. The world needs us, whether or not the world always publicly acknowledges that. But whether we can continue to sustain this role will depend on a respectable rate of economic growth. Without economic growth, we will not have the resources to continue this expansive global role. We won't have the political will and the political consensus to do so either.

So it is not just the future of the United States, but, in a real sense, the future of the world that hangs on how we address these challenges. And right now, we are doing poorly. We are not meeting these challenges. In some cases, we are not even really recognizing them.

We spent two decades in drift. We began the post-Cold War decade with the impression that we had just won a great victory, and it was time to party and relax. Well, we did win a great victory, no doubt about that. But the end of the Cold War also created a huge challenge for the United States, an economic challenge, a challenge of two billion more would-be Americans, people who were willing to work and save and dream and innovate as we do, or at least as we used to do.

We didn't recognize that. We made, in a way, the most serious mistake any individual or any firm can make. We did not fully recognize the environment in which we found ourselves.

Then, in the second post-Cold War decade, the first decade of this new century, we really went off the rails. We drifted so far away from our values, our best practices, and the policies we need to sustain the American dream and the American role in the world that Tom and I, in a chapter devoted to this subject, call the last decade the "terrible twos."

It is also true that these challenges are difficult to address because in some ways they are not obvious. They don't stare us in the face. They are not dramatic and menacing, as were the challenges created, for example, by the attack on Pearl Harbor on December 7, 1941, or more recently by the attacks on this city and on Washington, D.C., almost exactly ten years ago.

These are more subtle; they are more incremental.

We are risking not dramatic decline but slow decline, and slow decline is in some ways more insidious, a more formidable threat, simply because it is not so easily recognized.

It is also the case that these challenges are difficult to meet, because they require from all of us something that we've gotten out of the habit of doing—sacrifice. Sacrificing for the future, sacrificing for the common good, sacrificing to meet challenges, that used to be us. But in the decade of the terrible twos, we got far away from that. We fought two wars for the first time in American history without taxing ourselves to pay for them. This failure to pay for these wars is symptomatic of a larger drift in our values about which we will have more to say later.

One other failure is important to note here. We drifted away from what in That Used to Be Us Tom and I call our historic formula for success: a formula for a public-private partnership to underwrite and underpin the economic growth that the United States has achieved for two centuries. That crucial formula has five parts, and one of the keys to renewing America is to get back to that formula, to remember it, to renew it, to refresh it.

• The first part of that formula is education. Historically, we've always educated our population up to the level of technology, so our workforce could take advantage of the latest technology.

• The second element of this historical formula is infrastructure. Beginning with the Erie Canal, Americans have built canals, roads, bridges, water systems, power systems, ports, and airports that really undergird economic activity.

• Third, especially since World War II, we have invested mainly, although not exclusively, through our federal government, in research and development. Research and development in the 21st century will be even more important than it was in the 20th, in pushing out the frontiers of knowledge and creating ideas, technologies, and innovations that will lead to economic growth.

• Fourth, we've always had a system of immigration that brought enormous benefit to the United States. We've always attracted and welcomed what we call high-IQ risk takers, people who have enormously enriched our country. We have a huge problem today of illegal or undocumented immigrants, people who are in the country illegally, and there may be 12 million of them. That's an important issue. But just as important, even more important and receiving far less attention, is the problem of making sure that people all over the world with ideas, with energy, with talent, know that they are welcome in the United States.

• The fifth and final part of our historical formula that has been so important for our success over the generations is an appropriate system of regulation. We need and we have had a kind of Goldilocks system of regulation, not too hot and not too cold, or in this case, not so loose as to permit things that damage the country—what economists call externalities—but not so tight as to choke off the innovation and risk-taking that we need.

Well, in the terrible twos, we got the worst of both worlds. On the one hand, we clearly have too much regulation. We have thousands of pages of regulation. But on the other hand, in crucial areas, especially in the financial system, as we learned to our regret with the meltdown of the investment bank Lehman Brothers on September 15, 2008, and thereafter, in this crucial area, we had too little regulation. So we have to get back to our formula, the one embedded in our history that goes all the way back to the founders, back in our view to Alexander Hamilton, and which has been crucial for our success in the past and will be crucial for our success going forward.

Each of the four challenges is important, but we believe that over the long term the most important challenge to the United States is the one created by the merger of globalization and information technology. Tom will say more about that challenge, and what we need to do to meet it.

THOMAS FRIEDMAN: As Michael said, we do face four great challenges: information technology, globalization, debt and deficit, and energy and climate. I am going to just spend a few minutes talking about what we consider to be the most important, this merger, really, of globalization and the IT revolution.

But the reason we start our book by talking about these four challenges and then, looking back historically, what were the five pillars of our success, how we dealt with these challenges before (education, immigration, infrastructure, rules, and government-funded research)—is that what distresses us most about what is going on in the country today is that we are not approaching it, I would argue, the way we historically have done and the way we must do.

And that is by starting the conversation with a very simple question: What world are we living in? That's where the conversation has to start. What are the big trends in the world out there? What does one need, then, to thrive in that world? Therefore, what policies do we need to put in place? Therefore, how do we need to amend and reform those policies? That's where the conversation needs to start.

That's not where it started. We spent a long time discussing whether President Obama was actually born in this country. That's where the conversation was starting. We spent a lot of time with both parties waking up in the morning saying, How do I take this metal bar and put it into the wheel of my opposition? That's where the conversation is starting.

So one reason we've written this book is simply we don't have all the answers. But could we at least be debating and arguing about—and we recognize there should be conservative and liberal approaches to these—what world we are living in.

The most important thing, we believe, about this world, and that has happened, really, under the umbrella of the subprime crisis and the war on terrorism, the actually most important thing going on is we've gone in the last two decades from a world that was connected, to a world that is actually hyperconnected. That's actually the biggest thing that has happened.

The last time I was in this room, it was to discuss a book that I published in 2005 but wrote in 2004 called The World Is Flat. We've actually gone from Flat World 1.0 to 2.0. I only really realized it in sitting down to write this book, when I called Michael one day and I said, "You know, Michael, I started writing the book, The World Is Flat, in 2004. I went back the other day and picked up the first edition of that book. I looked in the index under F, and Facebook wasn't in it.

So when I wrote and I said the world is flat, we're all connected, Facebook basically didn't exist. "Twitter" was a sound, the "cloud" was in the sky, 4G was a parking place, "application" was what you send to college, "linked in" was a prison, and for most people "skype" was still a typo. All of that happened in just the last six years. That has actually taken us from connected to hyperconnected.

If you don't think that matters, let me take you to the revolutions in the Middle East. When I wrote The World Is Flat, I said we've connected Boston and Bangalore in India; the world is flat. We've actually now connected Boston, Bangalore, and Sirsi. You say, Where is Sirsi? Sirsi is down 90 miles to the interior with 90,000 people that, thanks to Smartphones, is now completely on the grid, collaborating and competing with your kids and mine.

Or to put it in Middle East terms, when I wrote The World Is Flat, I said we've connected Detroit and Damascus. We've now connected Detroit, Damascus, and Daraa. Daraa, Daraa, Daraa, where have I seen that name? Daraa is the dusty Syrian border town on the Syrian-Jordanian border where the rebellion there began, where from day one they've been feeding out Flip Cam video and cell phone pictures of what's going on in their revolution. Daraa is now on the grid. This is actually the most important thing happening in the world because it has had a fundamental impact on the labor market.

Drawing on the research of Lawrence Katz at Harvard, we show basically how the labor market has been completely truncated, thanks to this hyperconnecting of the world.

Labor economists traditionally talk about routine and non-routine work. You want to be someone who does non-routine work, either at the high end—a surgeon, an accountant, a lawyer, a musician—or at the low end—a butcher, a baker, a candlestick maker. If you're doing non-routine high-end work or low-end work, traditionally you're okay. If you were doing routine work, historically there was doing backroom processing in a bank or whatever, you were fine. Right now we've entered a world, thanks to the hyperconnecting of the world, where not only has all routine work come under threat, because it can be automated, digitized, roboticized, but now non-routine work is under challenge.

So what we did, we wrote four chapters on education. The first is called "Up in the Air." For those of you who have seen the George Clooney movie, that movie is the movie of our time. A man whose job was to go out and fire people face to face gets replaced when a younger employee invents a system to fire people over the Internet. That is the movie of our time. He had a non-routine job that was ultimately phased out due to automation.

So what we did, we lay that out in one chapter, is discuss this kind of hyperconnecting of the world and the pressure it puts on everyone, to not just be a creator or a server, to be someone who does creative work, non-routine work, or a server, someone who just basically does work that can be routinized. You now have to be a creative creator or a creative server.

How do we get to this? It's the next chapter in the book. It's called "Help Wanted." Again, we work completely inductively. So we said, if we're going to talk about education and how we need to educate people, maybe first we should talk to employers and ask them who they're looking for.

This was very revealing to us. In this hyperconnected world, we interviewed four generic employers, one a low-end white-collar employer, the person who started the outsourcing firm in India where I started The World Is Flat. Second, high-end white-collar employer, the head of a Washington law firm, a national law firm, Nixon Peabody. Third, a blue-collar employer, DuPont and Ellen Kullman, the CEO of DuPont. And fourth, the biggest green-collar employer in America, the U.S. Army.

What was fascinating to us was how all four employers are looking for the same employee, someone who not only has critical reasoning and critical thinking skills—if you have critical reasoning and critical thinking skills, that will get you an interview. That's not table stakes. What they actually are looking for are people who can invent, reinvent, reengineer, and readapt their job, because when the world gets this hyperconnected, change happens so fast now that every employer needs people who can not only do their job but invent and reinvent their next job. That's what everybody is looking for.

I actually got into this first by talking to the head of this law firm, who happens to be my wife's best friend's husband. I was speaking to him in the subprime crisis, in 2008. I said, "Jeff, what has happened at your firm because of the subprime crisis?" He said, "We're having to let people go." I said, "Well, that's interesting. Like in a law firm, who gets fired first? Is it last in, first out?"

He said, "No, not this time. Now the people we're letting go are those we had when we had a lot of work in the bubble, and we handed them the work and they handed it back. A lot of them are gone. The people whom we are keeping are people who say,'You know, Jeff, we could do that old work in a new way,' or, 'We could do new work in a new way.' They're the ones we're keeping."

The most interesting interview was with General Martin Dempsey, a name you may have heard of. He is about to become our new chairman of the Joint Chiefs of Staff. But when we interviewed him, he was head of the U.S. Army Education Corps. But even more interesting is that General Dempsey first came to our attention because he commanded the First Armored Division that took Baghdad from Saddam Hussein in 2003.

In 2008, five years later, he found himself as the head of CENTCOM, the Middle East Command. He was in Afghanistan, at a far-flung base near the Hindu Kush, interviewing the captain at that base. General Dempsey tells us he realized, in talking to that captain, that that captain had access to more intelligence, both at the tactical and national level, and more firepower, from his base near the Hindu Kush, than Martin Dempsey had when he took Baghdad from Saddam Hussein in 2003.

Therefore, how he trained that captain and the kind of person he recruited for that job had fundamentally changed, and that's why General Dempsey explained to us that now in boot camp he changed the training program where new recruits are given an iPhone on day one and on many days told, "You download the app, you teach the course; the drill sergeant will be sitting in the front row."

So underneath all this yakkety-yak about subprime and terrorism and all the madness, actually something really big has changed. The way we summarize it is in the last chapter of this education section: "Average Is Over." Average is officially over because, you see, every employer today has in this hyperconnected world access to above-average computer software, robots, and not just cheap labor, but cheap genius, from so many different places.

So Woody Allen's observation that 90 percent of life is showing up is, as they say, N/A, no longer applicable. If you just show up to your job and do average, whether you are a lawyer, an accountant, or a butcher, a baker, a candlestick maker, there is a machine, a software, a robot, or a foreign worker now that is so much more quickly, cheaply, and easily available to take you out. So you had better be a creative creator or a creative server.

I will just end by saying this. You may say, "Oh, Friedman, very easy for you to say, a columnist at The New York Times lecturing us about average." No, no, you don't understand. You see, I took over this column in 1995, and I actually inherited James Reston's office. What an honor. I inherited James Reston's office at the Washington Bureau of The New York Times, a great columnist in the 1960s and 1970s. And I would bet Mr. Reston showed up at work every day in the 1960s and would probably think, "I wonder what my seven competitors are going to write today." He actually knew all seven—[Walter] Lippmann, [Joseph] Alsop, Mary McGrory

I do the same thing, just like Mr. Reston. I show up to work and I say, "I wonder what my 70 million competitors are going to write today," because if I can't write better than the best Iraqi blogger when I write about Iraq—wait a minute; you have access to the best Iraqi blogger, and you can hold them up. 'Friedman says this guy says this.'"

So average is over for all of us. I can't just be a columnist for The New York Times; I had better be a creative columnist for The New York Times. Therefore, that is going to have a fundamental impact on education. We don't have time to talk about it now, but we go into it in depth in the book.

Michael, over to you.

MICHAEL MANDELBAUM: We have some excuse for not addressing the first two challenges, the challenge of globalization and the information technology revolution, head on, because they're incremental, subtle, complicated. But we have no excuse for not dealing with the third and fourth challenges, the challenges of deficits and debt, and energy and climate. We know all about them. And yet, in the last decade, not only did we not launch policies to deal with these challenges effectively; a lot of us simply denied that they even existed, that they were challenges.

We have a quote in the book from former Vice President Cheney talking to Paul O'Neill, then the secretary of the Treasury, who was objecting to the proposal for another tax cut that he felt the country couldn't afford. He protested that it would increase the deficit. The vice president said, according to a quote that has not been denied, "Reagan proved that deficits don't matter."

In a recent poll, it was found that almost half of us, almost half of all Americans, believe that climate change, that the greenhouse effect doesn't exist, that it's all a hoax. Well, would that it were true. Would that it were true that deficits don't matter and that global warming doesn't exist. Unfortunately, they do and it does.

Now, on deficits and the debt, whatever else may be said for or against the Tea Party, it has at least focused our nation's attention on the problem of deficits. The Tea Party has made it clear that deficits do matter. And yet, in dealing with our deficits, we're still in denial. We're in denial because the political system has not presented the formula we need for dealing appropriately with this challenge.

It's a three-part formula: We're going to have to cut. We're going to have to cut programs. We're going to have to cut popular programs, important programs and necessary programs. We're going to have to cut our two most popular, most important, and most expensive programs: Social Security and Medicare. That will impose real hardship on needy people. But there is no alternative. We simply cannot afford to pay for all of the promises we've made. Anybody who says that we can't cut or modify these programs in any way is simply not being serious.

But at the same time, we've got to raise more revenues. We cannot solve our deficit and debt problem without increasing tax revenues. As a matter of fact, Ronald Reagan understood that. He raised taxes five times. He just didn't call them tax increases; he called them revenue enhancements.

But somewhere, somehow, our government, especially at the federal level, is going to have to collect more in taxes. Anybody who says that we must never, ever increase taxes of any kind, whether by closing tax loopholes or doing something that Tom and I strongly support in the book—that is, increasing our energy taxes—anybody who says that is not being serious.

But cutting and taxing are not enough. Even as we do those two things, we have got to spend more. We've got to spend more on certain aspects of our historic formula. We've got to spend more on infrastructure. By one estimate the gap in infrastructure spending, what it will take to bring us up to the level where we should be, is $2.2 trillion. And we've got to spend more on research and development.

So anybody who says that we simply can't spend more on any federal program is not being serious about the future of the country.

As for climate change, the most important point to make is that it does exist. The geophysical effect at its heart, the accumulation of heat-trapping gases in the Earth's atmosphere, which then reflect heat back to the Earth, raising the Earth's temperature, has been known for some time. In fact, without the greenhouse effect, none of us would be here. Without the greenhouse effect, the Earth's surface would be too cold for human habitation.

So we know that this phenomenon exists, and we know that this blanket of greenhouse gases has been increasing because we can measure it, and we really have no plausible explanation for the increase in the thickness of this blanket other than the emission of so-called greenhouse gases by humans burning fossil fuels. So we know that the blanket is thicker, and we know that the temperature of the Earth is rising.

We've just been through the hottest decade on record. We know that because we can measure it, and we have no plausible explanation, according to the vast majority of scientists, for this recorded increase in temperature, no plausible explanation other than human-generated emissions of greenhouse gas. So there are some things that we basically know for sure.

Now, there are lots of things we don't know. We don't know how fast the planet's temperature will warm. We don't know what the physical effects will be. Scientists write about floods and droughts and extreme storms. But we cannot predict such things with any precision, and therefore, we don't know what the economic and social costs will be. All that means that there is plenty of room for debate about the appropriate response to global warming.

But that is not the debate we're having. We're having a debate about something that is settled—whether or not this phenomenon exists—and we are simply not debating the urgent question we face; and that does require serious debate, and that is what we should do. We are off on the wrong track.

Now, there is another reason that we discuss in an entire chapter in That Used to Be Us, that we are not meeting the challenges that will determine our future. Our political system is broken, and it is broken not because our politicians are worse people than the politicians we had in past generations. It is broken because of broad and deep changes that have been going on for a long time, and I will mention three of them.

First, the Republicans and Democrats have, for a variety of reasons, become much more polarized than they have ever been before. By some measures, our national political system is more polarized now than at any time since the 1850s, and we know how that turned out.

Moreover, our system is paralyzed by ever more powerful interest groups whose power derives from the increasing importance of money. Now, you are never going to get money out of politics, but there are limits, and we've gone over the limits.

Third, this paralysis through polarization is encouraged by the new media. The new media encourage, whip up, foster polarization and paralysis. Just as you're never going to get money out of politics, we're not going to roll back the new media. We're not going to do away with the Internet, nor should we. Tom and I believe that this explosion of new media, although it puts more pressure on him in writing a column, is on balance a good thing. But we have to recognize what it has done to our political system, and some of its effects have not been benign. Some of its effects are making it more difficult for us to meet the challenges that we face.

Now, there is both bad news and good news from here. The bad news that it isn't only the political system that is obstructing us from meeting our challenges. But the good news is that in our view, and as we say in That Used to Be Us, there is reason for optimism. Tom will discuss both.

THOMAS FRIEDMAN: We're getting late here, so I am going to speed through this, basically.

As Michael and I say in the opening of the book, we are optimists, but we are frustrated optimists. A reader at this point would be entitled to ask, "We get your frustration; why are you still optimists?"

We are optimists because we believe that this country is still full of people who just didn't get the word. They just didn't get the word. And so they go out and invent things and start things and create things and organize things. They just didn't get the word that we're down and out. They just didn't get the word that Washington is paralyzed.

In fact, if you want to be an optimist about America, stand on your head, because the country looks so much better from the bottom up than it does from the top down. The last three chapters of the book basically first focus on those people, profiles of those people.

We go from there to then talk about how we think we can break out of this paralysis, and we believe we need a third party. We believe the system needs shock therapy. Just like the shock therapy we once thought we had to administer to the post-Soviet Union, we are now the ones in need of shock therapy.

As Michael said, the political system is paralyzed today because of structural features. Our politicians today are no better or worse than any others or any others, I would argue, in American history. It's the incentives that are all screwed up, the incentives created by money and politics, by the media culture we have right now, by gerrymandered political districts.

We really believe life is about incentives. Change the incentives, change the behavior. Move the cheese, move the mouse. Don't move the cheese, the mouse doesn't move.

We think we need a third party to demonstrate that 40 to 50 percent of the American public, the cheese, is actually somewhere these politicians do not understand, and only a third-party politician who demonstrates that to the two big parties—once that happens, they will have to go after the cheese.

We had a graphic demonstration of that with Ross Perot in the Clinton-Bush election, who at one point had 40 percent of the vote for deficit reduction. And Ross Perot was nuts. He thought little black helicopters were chasing him. He in the end still got 19 percent of the vote. So imagine a sane third-party leader and what he or she could do today.

We close the book with a chapter called "Rediscovering America." It is to simply underscore the point that we don't have to learn from China, we don't have to learn from India. Everything we need to do is all in our history. The history books we need to read are our own, and the country we need to rediscover is America. That used to be us, and it can be again.

Thank you very much.

QUESTION: I am Edward Marschner.

We are the largest, most powerful military force in the world. In your excellent presentation, I didn't hear the word "military" once. The military contribute to all of these factors that you describe, to global warming, to the debt, to education, and so forth.

Could you comment on where the military fits into your analysis of what we need to do?

MICHAEL MANDELBAUM: A year ago, I had the pleasure of being on this stage in a conversation with my friend David Speedie about a book that I had published called The Frugal Superpower, which deals with this issue. The role that the United States plays in the world is a stabilizing role. The American military and the American military presence, especially in East Asia but also in the Middle East and to some extent in Europe, does contribute to stability. It is importance for global peace and prosperity to continue that role.

That requires a substantial military, but we cannot afford precisely the military and especially the military missions that we now have. We have to cut back. My recommendation in that book, and we briefly summarize it in this book, is that we abandon the kinds of interventions that we have conducted in the post-Cold War period, which inevitably led to nation building.

But what is important about the American global role in the world requires a substantial and expensive military force, and that is another reason that the renewal that we call for in this book is so important, because without that renewal we will not be able to afford it, and then everyone will be sorry.

JOANNE MYERS: As we were video-streaming this, a question came over the Internet, so I would like to address it to you: "It seems inevitable that people without college degrees have less access to middle-income jobs. What is the outlook for their future income and opportunities?"

THOMAS FRIEDMAN: What happens basically in this hyperconnected world is that if you don't have a high-school degree, there is just nothing for you. Think about Baltimore. Fifty years ago, the biggest employer in Baltimore was Bethlehem Steel. Today the biggest employer in Baltimore is Johns Hopkins University Medical Center. They don't let you cut the grass at Johns Hopkins without a BA. Michael teaches at Johns Hopkins; he can tell you. So there is just nothing for you anymore.

There is also nothing for you if you don't have a high-school degree that prepares you to get through college, really, without remediation. So one needs advanced education, either a college degree or a technical degree, to even begin to hope to have not just a job but a career.

So we basically have two education challenges right now. We need to bring the bottom up to the average. We have so many people who are at the bottom of the education spectrum and really have no possibility for a job. We've got to bring them up to the average. But we also have a second problem. We need to bring our average so much higher in order to compete at the global average for these jobs of creative creators and creative service.

QUESTION: Craig Charney.

I wanted to see if I could pull out two things from your last comments. One was that when you talked about the importance of a sane Ross Perot as kind of a deus ex machina, that also seemed to the fact that of the five challenges, the single most essential one would be the ability to raise revenue, which is basically what the Perot campaign gave the Clinton Administration.

The second question would be, in that case, aside from the presidential level, wouldn't one of the more important changes we need be non-partisan redistricting at the congressional and state and local levels in order to pull representatives at those levels towards the center?

THOMAS FRIEDMAN: Both points are great points, Craig. First, what the country needs to do is what California just did, which is in California now they've passed a resolution that says all of the state legislative districts for the state senate and congress will now be drawn up by bipartisan, independent boards. So you won't have these crazy-looking districts that, with the aid of Google Maps, can now basically take gerrymandering to the atomic level. What California did statewide we need to do nationally.

On the third party, your question was?

CRAIG CHARNEY: [Inaudible] the single key [inaudible] one of the five challenges. It sounds like number one is actually the ability to raise more revenue.

THOMAS FRIEDMAN: I kind of disagree. I think you have to deal with them as a package. What Michael and I argue is that the agenda for the third party—we have a very specific agenda—is really threefold.

We need this third-party candidate, first of all, to do what the other candidates are not doing: begin the conversation by describing the world we're in. Then we think it needs a basically three-legged policy agenda. We need to cut spending. That will be just as hard for some constituencies, because we have made promises, as Michael said, that we cannot keep. We need to raise revenue, and we need to invest in our formula for success. So the third party would be for all three.

Now, people sometimes say to me, I've got all these bloggers who are saying, "Don't you read the newspapers, Friedman? That's Obama's agenda." To that I say, "I guess I'm not reading the right newspapers," because I think that's in his heart what his agenda is, but he is kind of the guy who walked away from Simpson-Bowles, so I'm kind of trying to square that—do you know what I mean?—with the reality.

So what we are basically arguing is we need a hybrid politics today that does not correspond to the actual agendas of either party but actually draws from the two, and that's what the third party would do.

QUESTION: James Starkman.

For those of us who might not have caught your words on Meet the Press, I wonder if you would be good enough to repeat the optimism metaphor of the rocket ship, which I thought lifted me out of my psychological bunker, being a news junkie.

THOMAS FRIEDMAN: I appreciate that.

Well, the point I was simply making was that when I think about America today, and the way we put it in the book is that there are all these people out there, as I say, who just didn't get the word. Michael and I have done a chapter profiling many of them. What is so exciting is that they come from all walks of life.

In fact, I think my favorite quote in the book is from a Marine colonel we interviewed. We asked him why they did that surge in Iraq, and he said, "You know, we were just too dumb to quit." This country is still full of people who are just too dumb to quit. They are like all this thrust coming from below. That's why, if we were to draw a picture of America today, it would actually be a picture of the space shuttle taking off. You've seen the space shuttle. All that incredible thrust coming from below, that's America today.

But right now our booster rocket, Washington, D.C., is cracked and leaking energy, and the pilots in the cockpit are fighting over the flight plan. As a result, our country cannot achieve the escape velocity it needs to actually get into the next level of development we need to, as Michael said, pass on the American dream to another generation.

We are the first generation that is in serious danger of not passing on the American dream to its kids, and I do not want to be on duty, and Michael does not want to be on duty, when that happens. That's why we wrote this book.

JOANNE MYERS: Michael and Tom, I just want to thank you on behalf of all of us here for giving us a memorable morning. Thank you.

THOMAS FRIEDMAN: Thank you very much.