SPEECH BY FORMER PRESIDENT F W DE KLERK TO UPS
NEW YORK, 29 APRIL 2004
LIVING IN A SYNCHRONISED GLOBAL ECONOMY
Ladies and Gentlemen:
There is an undeniable tendency in nature for systems to evolve into ever more complex forms. The simple elements in the early universe coalesced into the first generation of stars. When the first stars came to their end in the cataclysmic explosions of super novae they created the more complex elements of which our world and we ourselves are composed. At some time more than three billion years ago complex organic molecules evolved into the first simple living organisms. Over the eons those organisms in turn developed into our own species, homo sapiens, probably somewhere in southern Africa around 120 000 years ago.
We human beings are very, very complex systems, containing more than 100 trillion cells, all working together with remarkable harmony and purpose. During the past fifty thousand years or so human society has grown in complexity from primitive hunter-gatherer groups to the enormously complex systems represented by modern industrial states. These systems include highly developed social, logistic and economic networks involving trillions of daily interactions.
Now, at the beginning of the third millennium, we are involved in another great quantum leap in the evolution of complexity in the process that we call globalisation.
During the past decades we have begun to lay the foundations of a new international global economic and information community:
- Mass jet transportation has brought every corner of the earth within the reach of a single day’s travel.
- Satellite telecommunication now makes it possible to communicate with anybody, anywhere at any time and has enabled us to view breaking news and sports events on the other side of the world. Over 1.4 billion people now have cell-phones.
- The internet and the world-wide-web – perhaps more than anything else – represents the most recent and most exponential development of extremely complex global systems. After only a few years it already enables more than 600 million people all over the world to communicate with one another instantaneously and gives them immediate access to a virtually limitless universal data base.
The fascinating thing is that the internet was neither planned nor foreseen. It developed and grew exponentially and organically – driven, perhaps, by the universal tendency for systems to evolve into ever more complex forms.
The question that I would like to deal with today is how this new evolving world system that we call globalisation is likely to effect us all as countries; as companies and as individuals in the period that lies ahead.
Globalisation confronts us – not only with breath-taking opportunities – but also with awesome realities and challenges:
- The first reality is that globalisation is making us more interdependent.
- The second reality is that in our global village we are going to have to learn very quickly how to coexist with neighbours with different clutures, values and views of the world.
- The third reality is that globalisation will inevitably make us increasingly aware that we all share the same fragile global environment.
One of the central implications of globalisation is that the world is becoming more inter-dependent. In a shrinking world, the problems of one region will inevitably become the problems of other regions and ultimately of the whole world:
- Diseases like AIDS – which first appeared in Africa – do not observe international boundaries;
- As we saw a few years ago, economic crises in emerging markets can have serious negative consequences for the whole of the global economy; and
- Conflicts and instability in distant societies can reverberate throughout the whole international community. The attacks on New York and Washington on 11 September 2001 brought this fact home with chilling clarity. Who would have thought that religious fanatics hiding in caves in distant Afghanistan could possibly pose a threat to the hi-tech nerve centre of the world’s most powerful economy in down-town New York?
In our globalised society such problems and conflicts will sooner or later breach international borders and affect the interests of us all. It is equally true that the problems confronting a globalised world can no longer be dealt with unilaterally by any single country – regardless of how powerful or rich that country might be. Problems of global development, global security and protection of the global environment can be dealt with only if the international community works in concert. The United States can – and must – play a pivotal leadership role in this process – but it cannot achieve success alone.
In the sphere of the economy, the developed countries should help to promote economic growth in the least developed societies.
- More attention needs to be given to the debt burden of the world’s 41 highly indebted poor countries – 34 of which are in Africa. Some steps are now being taken by the IMF to address this problem, but more needs to be done.
- Steps should also be taken to increase the third world’s share in global trade. For example, Africa, with almost one-sixth the world’s population accounts for only one fiftieth of global trade. Third World exports need more favourable access to first world markets. The unacceptable reality is that the world’s most developed nations spend US$ 300 billion on subsidies to their own farmers and only US$56 billion on foreign aid. What is worse is that first world’s agricultural subsidies often make it impossible for developing countries to compete in global markets for agricultural products – the one area where they have a competitive advantage.
- The poor countries also require higher levels of foreign and domestic investment. They have to achieve at least 5% per annum growth levels if they are to break out of the grip of poverty. And they are simply not getting the investment required to achieve this.
Our second great challenge in the new millennium will, I believe, be to learn to co-exist in the global village with people from different cultures, different religions and different world-views.
People living in the United States often have little idea of how powerful and pervasive their culture has become. Other cultures throughout the world fear that globalisation poses a direct threat to their cultures and religions.
Everywhere regional and national cultures and identities are under pressure. It has been estimated that half of the world’s 6 000 languages will disappear during the next century. Our cultural diversity is now under greater threat than the bio-diversity of our planet.
We are, in effect, beginning to experience the ‘clash of cultures’ predicted by Samuel Huntingdon. Nearly everyone wants the products and prosperity that globalisation brings – but conservative societies fear that these factors are undermining their cultures, traditions and religious values
We will have to develop approaches to enable societies all over the world to enjoy the fruits of globalisation without having to surrender their cultural and religious identities and values.
Finally, our globalising world is confronted with the pressing challenge of learning to live in harmony with our global environment.
- In 1999 the human population finally exceeded six billion – four times greater than it was in 1900;
- In 1998 the hole in the ozone layer above the Antarctic reached its largest size ever;
- The 10 warmest years in this century all have occurred in the last 15 years. Of these, 1998 was the warmest year on record.
- The snow cover in the Northern Hemisphere and floating ice in the Arctic Ocean have decreased and the sea level has risen 4-10 inches over the past century.
We dare not ignore these warning signals. We must ensure that our governments move beyond declarations and lip service in their efforts to protect the global environment. Out future and the future of our children depends more on this than perhaps on any other factor.
It is not by coincidence that opposition to globalisation has focussed on the three areas that I have just identified. Anti-globalisation movements from Seattle to Prague have condemned globalisation for
- widening the divide between the rich and the poor;
- subjecting the world to the Western consumer culture and for
- degrading our global environment.
The anti-globalisation movement is, however, wrong: the problems that they cite are often due not to globalisation – but to the fact that the principles underlying globalisation are not correctly implemented:
- The central problem for many developing countries is not globalisation but continuing trade restrictions.. Access to developed markets and the abolition of farm subsidies can do far more for developing countries than all the foreign aid that they now receive.
- The ‘clash of cultures’ is not created by globalisation but by a lack of sensitivity in inter-cultural relations.
- The threat to the environment is not caused by globalisation but by the failure of governments to implement global decisions to protect the environment.
All of these issues call for more global interaction – not for less.
In the final analysis the anti-globalisation movement has as little chance of success as King Canute had when he tried to stop the incoming tide.
Whether we like it or not globalisation is here to stay – and it is the countries and companies that embrace globalisation that will succeed.
Your company, UPS, has unambiguously accepted the challenge of globalisation. Through the services that you provide you are helping to create the arteries, muscles and sinews of our globalising world.
UPS is also part of the great process of commerical evolution. Since you were established in Seattle a little less than a hundred years ago you have evolved into a highly complex multinational corporation. You employ more than 357 000 people throughout the world; you have a fleet of more than 88 000 vehicles; you run the world’s eleventh largest airline and you deliver more than 13 million parcels in the United States each day. Just imagine the complexity of the systems that enable you to play your global role in such an effective manner!
To put things into perspective your annual sales of more than 33 billion dollars exceed the combined gross national products of ten African countries between the Democratic Republic of the Congo and Zimbabwe with a population of almost 100 million people.
The laws that determine success in all evolving systems also determine the success of companies like UPS:
- Success is determined by the ability to survive in highly competitive environments;
- Success can ultimately be achieved only by those who are really excellent at what they do, and
- Success depends on the ability to adapt quickly and effectively to rapidly changing environments.
There is a tendency in some advanced societies to try to avoid competition by imposing trade barriers to protect companies from the rigours of international competition or by paying huge subsidies to unproductive businesses and farmers. As President Reagan once put it:
‘If it moves tax it; if it keeps on moving regulate it; if it stops moving subsidise it’.
Competition is the engine of innovation and progress. Our species – homo sapiens – achieved our present position because we competed successfully against all other species and won. As you at UPS know, countries and companies that are unable or unwilling to compete in rapidly expanding global markets will simply be left in the dust.
UPS also knows that if you wish to compete successfully in global markets there is no alternative to excellence. Throughout evolution it is those species that have been really good at what they do that have survived and prospered. We may not like great white sharks – but they have been around for tens of millions of years because they are really excellent at what they do.
It is clear from the awards that UPS has received that your company has a passion for excellence: Earlier this month UPS was ranked highest in customer satisfaction by J.D. Power and Associates for all types of package delivery. In February this year, for the 21st consecutive year, UPS was rated “America’s Most Admired” company in its industry by FORTUNE magazine.
Finally, evolution teaches us that it is those organisms that can adapt quickly and effectively to rapidly changing environments that succeed. Our species homo sapiens really took off during the past 50 000 years because we learned to adapt quickly and effectively to the recurrent ice-ages and dramatic changes of climate.
Our environment is now changing much more rapidly than ever before. Change is accelerating; it is unpredictable; and it is fundamental.
During the past century – and particularly since World War II – there has been an exponential acceleration in the pace of change.
Change is also unpredictable. Some of the main developments that have fundamentally transformed the world in which we live today were entirely unforeseen only twenty years ago: think of the internet and the world-wide web; the collapse of the Soviet Union and international communism, the threat of global terrorism and AIDS. The scary probability is that the world in which we will live in fifteen years from now will be dominated by new realities that few of us can now imagine.
The change that we are experiencing is also fundamental. It affects virtually every aspect of our lives.
- It is changing relationships between men and women, husbands and wives and parents and children.
- It is affecting our value systems and traditional conceptions of morality.
- It transforming existing markets and creating exciting new ones – like China.
- It will continue to transform the way we work; the way we spend our free time and the way we communicate and obtain information.
Our ability as countries, as companies and as individuals to deal with this accelerating, fundamental and unpredictable change will be a key factor in determining our success in highly competitive global markets.
All of us – individuals, companies and countries – are involved in an ongoing process of evolution that has brought us from the simplicity of the universe at the beginning of creation to the extraordinary complexity of human society today. We now find ourselves on the threshold of a quantum leap in human interaction, in the process that we call globalisation.
Our success in this rapidly developing network of global communication, transportation and commerce systems will depend on the factors that have determined success throughout evolution: it will depend on
- our ability to compete;
- our commitment to excellence and
- our ability to adapt rapidly and effectively to changing environments.
I have no doubt that UPS will continue to be a leader in the exciting, rewarding and unstopable process of globalisation.