In the five decades since I began working in the aerospace industry, I have never seen American business and academic leaders as concerned about this nation's future prosperity as they are today.
On the surface, these concerns may seem unwarranted. Two million jobs were created in the United States in the past year. Citizens of other nations continue to invest their savings in this country at a remarkable rate. Our nation still has the strongest scientific and technological enterprise -- and the best research universities -- in the world.
But deeper trends in this country and abroad are signs of a gathering storm. After the Cold War, nearly 3 billion potential new capitalists entered the job market. A substantial portion of our workforce now finds itself in direct competition for jobs with highly motivated and often well-educated people from around the world. Workers in virtually every economic sector now face competitors who live just a mouse click away in Ireland, Finland, India, China, Australia and dozens of other nations.
Soon the only jobs that will not be open to worldwide competition are those that require near physical contact between the parties to a transaction. Visitors to an office not far from the White House are greeted by a receptionist on a flat-screen display that controls access to the building and arranges contacts; she is in Pakistan. U.S. companies each morning receive software that was written in India overnight in time to be tested in the United States and returned to India for further refinement that same evening. Drawings for American architectural firms are produced in Brazil. Call-center employees in India are being taught to speak with a Midwestern accent.
This movement of U.S. jobs to other countries has few natural limits. Manufacturing jobs were the first to go, but jobs developing software and conducting various design activities soon followed. Administrative and support jobs are starting to move overseas, and even "high-end" jobs such as professional services, research and management are threatened.
Other nations will continue to have the advantage of lower wages, so the United States must compete on the basis of its strengths. Throughout the 20th century, one of these strengths was our knowledge-based resources -- particularly science and technology. But the scientific and technological foundations of our economic leadership are eroding at a time when many other nations are building their innovative capacity.
This nation's trade balance in high-technology goods swung from a positive flow of $33 billion in 1990 to a negative flow of $24 billion in 2003. Two years from now, for the first time ever, the most capable high-energy particle accelerator in the world will be outside the United States. Low-wage employers in this country, such as McDonald's and Wal-Mart, create many more jobs than do high-wage employers. In 2001 U.S. industry spent more on tort litigation and related costs than on research and development.
Today, high-technology firms have to be on the leading edge of scientific and technological progress to survive. Intel Corp. Chairman Craig Barrett has said that 90 percent of the products his company delivers on the final day of each year did not exist on the first day of the same year. To succeed in that kind of marketplace, U.S. firms need employees who are flexible, knowledgeable, and scientifically and mathematically literate.
But the U.S. educational system is failing in precisely those areas that underpin our competitiveness: science, engineering and mathematics. In a recent international test involving mathematical understanding, U.S. students finished 27th among the participating nations. In China and Japan, 59 percent and 66 percent, respectively, of undergraduates receive their degrees in science and engineering, compared with 32 percent in the United States.
I've recently had an opportunity to review these trends as chairman of a 20-member committee created by the National Academy of Sciences, the National Academy of Engineering and the Institute of Medicine. Congress asked the committee to examine the threats to America's future prosperity. The panel was a diverse group that included university presidents, Nobel laureates, heads of companies and former government officials. We agreed unanimously that the United States faces a serious and intensifying economic challenge from abroad -- and that we appear to be on a losing path.
Our committee emphasized that the United States needs to focus on fundamentals. We recommended the recruitment of 10,000 new science and math teachers each year through the awarding of competitive scholarships. The skills of a quarter-million current teachers should be improved through enhanced training and education. We recommended establishing 25,000 competitive science, mathematics, engineering and technology undergraduate scholarships and 5,000 graduate fellowships.
To boost scientific and technological innovation, we recommended that the U.S. government increase research funding by 10 percent annually over the next several years, with primary attention devoted to the physical sciences, engineering, mathematics and information sciences. We urged the federal government to create an Advanced Research Projects Agency-Energy (ARPA-E), modeled after the Defense Advanced Research Projects Agency, which would support out-of-the-box, transformative research aimed at ending our crippling dependence on foreign sources of energy. We asked the government to provide permanent tax incentives for U.S.-based innovation.
The United States wants other nations to do well economically. Broadly based prosperity can make the world more stable and safer for all. What worries business leaders is that the United States could easily fall behind as the rest of the world prospers.
The writer is the retired chairman and chief executive of Lockheed Martin Corp.