For reasons lost to the ages, I was fortunate enough to be the top graduating senior in the college of engineering that year. As punishment, I was asked to give the student response at the College of Engineering Honor Awards Convocation.
All these years later, it's good to see that I was as contrarian, presumptuous, and (extra) long winded at the age of 20 as I am today, although I would like to think that I have become a bit more sophisticated about capital and economics since then (ouch).
I have mentioned a couple times in this blog that I have been waiting 20 years for us to begin the revitalization of America in earnest, doing what I could along the way. Although it was shocking at the time to have anyone question the impact of the Reagan Revolution (let alone a punk kid with a funny name and an Electrical Engineering degree), it was amazingly gratifying to have so many parents and students come up after my presentation to thank me for putting into words the discomfort they were feeling for the direction of the country at the time.
To all 2008 graduates, my exhortation to you (with apologies to Harry Chapin): When in doubt, build something! Providence smiles when you break the second law of thermodynamics.
College of Engineering Honor Awards Convocation
University of Illinois at Urbana-Champaign
Friday, April 24, 1987
Student Response by Ray Ghanbari
When Dean Wakeland informed me last week that I was supposed to give the student response this afternoon, he neglected to mention what I was supposed to be responding to. This "oversight" was probably for the best since I was going to talk about what I wanted to talk about anyway.
The issue I would like to address today can best be described as responsibility. We students who are here today have, for the most part, 16 years of formal preparation behind us. As a group, we are almost ready to make meaningful the extravagant investment in time and effort we have made and, perhaps more importantly, others have made on our behalf (parents, teachers, and associates).
The questions we need to ask ourselves is how can we best apply our abilities to their greatest benefit. I suggest that in order for the answer to this question to be meaningful in an way, it is critical for us to be aware of what is happening, out here, in the "real world".
Towards this end, I will start with a little bit of history and a little bit of economics, then move into particulars.
During the period from 1960-70, the gross national product (GNP), after being adjusted for inflation, rose an average of 3.8% per year. Indeed, these were prosperous times for America. U.S. industry was the best in the world and had little difficulty competing in the world market. The baby boomer generation, who grew up during the amazing period of industrial growth following World War II, was entering the job market with a great deal of zeal and idealism. Their standard of living was significantly better than that of the previous generation and prospects for continued growth looked excellent.
During the 1970s, real growth in the GNP slowed to only 2.8% per year. This drop didn't really seem to bother people all that much. In fact, for the most part, this slow down didn't really significantly affect their lifestyles. As a group, Americans just kept spending like they were getting the same real raises they received during the 1960s. In these times of high inflation, it just didn't make any sense to save money. The general feeling was, spend it before you lose it.
When income fell short of expectations, the difference was simply made up by borrowing. The thinking was that since an anticipated raise was just around the corner, there was no reason to slow down the quest for the American dream. Unfortunately, when that raise finally came, it wasn't even enough to keep up with the increased cost of living, let alone get ahead.
In 1980, a new administration entered the White House, and the Reagan Revolution showed us the way back to prosperity. Since then, inflation has been brought down to virtually nothing, interest rates are sane once more, and America is seemingly standing proud once again. Indeed, what can be seriously wrong with an economy when there are now seven different types of Coca Cola to choose from instead of one?
The unfortunate fact is that since 1980, real GNP growth has been 2.4% a year (roughly 40% less than that experienced during the 1960s and 15% less than the 1970s). More startling is the fact that average real wages in 1986 were at the same level as 1969, and have actually declined since 1972. Even with the increased number of two-income families, median household income was 8% higher in 1973 than in 1983. What that means is that today, two people must work to hope to maintain the standard of living one person could provide in times past.
Another indicator of the current economic slow down, which has been in the news quite a bit lately, is the trade deficit. Since 1981, America's trade balance in manufactured goods has gone from a surplus of $18 billion to a deficit of $151 billion in 1986. Not surprisingly, in 1986, U.S. consumption was $150 billion more than U.S. production. Studies suggest that currently, the ratio of personal debt to income is 30% above that normally expected for this stage of economic expansion. It is readily apparent that we, as a nation, are simply living beyond our means.
The most distressing feature of the current situation is the increasing amount of money which is owned to other nations. Even in the best scenario, U.S. debt to foreigners will probably be $750 billion by 1990. Unlike internal debts, which for the most part can be continuously juggled and shifted around, these external debts will have to be repaid eventually, primarily in goods. A service economy, which many envision for the U.S., simply will be unable to generate sufficient exports to generate a surplus in the trade balance. It is clear that the U.S. must rely on manufacturing to deal with this situation.
It is we, as engineers, who must have a primary role in the required revitalization of American industry.
It is we, as future innovators, entrepreneurs, and managers who must spearhead an effort to update manufacturing processes to make them more responsive to changing technology, technology which is being developed here, in the United States.
It is crucial that U.S. industry be able to take the basic science advances, in which the U.S. is the world leader, and incorporate them into new technology and new products. New flexible manufacturing methods need to be developed and implemented so that U.S. manufacturing will be able to respond quickly and decisively to new technology.
As Mr. Hallene mentioned earlier today, it is the development and implementation of this technology which holds the greatest promise for increased productivity and increased U.S. competitiveness.
It is we, as future politicians, administrators, and businessmen who must aid in a reevaluation of societal priorities. It seems to me that, except for a few important exceptions, our society tends to emphasize the short term and the consumable. Unfortunately, this is usually at the expense of things like factories and education, which require long-term commitments.
Currently, U.S. corporations invest less in capital equipment than any industrial country except Britain. Nevertheless, corporate debt is up, but not to pay for new factories and equipment, but to finance mergers, acquisitions, and leveraged buyouts.
There is no question that those who are being honored today will succeed technically. It is my sincere hope that we will also succeed at a higher level; a level which requires awareness of the "big picture."
I urge those here today to develop this awareness. As was mentioned this morning, each generation seems to have a dilemma which must be addressed and overcome. I suggest that the responsibility of our generation is to revitalize and restore the promise of the American Dream. After listening to the credentials of the Bronze Tablet recipients this morning, I wouldn't bet against us.
Thank you for your kind attention.
