Clintonomics: The Information Society and the New Global Market Economy

Wriston, Walter B.


Clintonomics, the Information Revolution, and the New Global Market Economy

Clintonomics, the Information Revolution, and the New Global Market Economy


When we think about the world and the never-ending stream of events that capture our attention, we tend to break the passage of time into neat segments delineated by years and months, but world events move at their own pace paying little attention to man-made metrics.

The new Clinton administration which has just taken office will find a new world waiting for it that has been years in the making. During the campaign we all heard a great deal about change, each candidate vying to excel as agent of change to move the country forward. If one listens to the rhetoric and even to the music at the inaugural galas, it is clear that much of the change being suggested is merely an attempt to return to yesterday. The problem is that that world no longer exists. Instead, we find ourselves in the midst of a great transition that is working fundamental changes in the structure of our society.

Despite the campaign verbiage about the decline of American manufacturing, the percent of our GDP contributed by manufacturing has not changed in any significant way in the last ten years. What has changed is that the number of people employed in that sector has been steadily declining as productivity has gone up. Indeed the American worker is the most productive in the world. But those manufacturing jobs that were a mainstay of our society for so many years are never going to come back, anymore than we will ever see again American farms employing the 20 million people who worked there at the turn of the century.

These massive historical transitions are not only disruptive, and often painful, but also upset long-held beliefs and require us to think anew--itself a painful process. The industrial age in which we all grew up is slowly fading into the information society, and as much as some may wish to do so, we can't go back again. As the journalist Mike O'Neill put it: "Today's world cannot be remodeled with yesterday's memories: there are no U-turns on the road to the future." This is the new reality that the Clinton administration will have to deal with. Old solutions will not yield answers to new problems. Examples abound.

The information revolution has been often announced by futurists, but many of the innovations that have been predicted have never arrived. No one has yet seen the paperless society, nor a helicopter in every back yard. What we have seen instead is that information technology has demolished time and distance, but instead of increasing the power of government and thus validating Orwell's vision of big brother watching our every move, the proposition has been stood on its head. And we have all wound up watching big brother. No one who has lived through the last few years and watched on live television as the Berlin Wall came down or the first protesters in Prague in 1988 chanting at the riot police: "The world sees you," can fail to understand that information technology is changing the way we think about the power of government, about the way the world works, the way we work, and indeed the nature of work itself.

The massive upheaval in the former Soviet Union is a case in point. While governments maintain elaborate intelligence gathering facilities, when a crisis arises, eyes in all countries turn to the CNN monitor which is standard furniture in all government crisis management offices. The foreign minister of the former Soviet Union, Edward A. Shevardnadze, during the Yeltsin coup put it this way, "Praise be information technology! Praise be CNN...Anyone who owned a parabolic antenna able to see this network's transmissions had a complete picture of what was happening." And this from a senior officer of what used to be a closed and secretive society. The only ones in Moscow who did not know what was going on was the American Embassy which did not have CNN.

While historians rarely identify these sea changes when they are living through them, I would argue that the signs are unmistakable that we are now in the midst of a new revolution at least as drastic and far reaching as that which occurred in what the great historian Paul Johnson describes as the birth of the modern world society in the beginning of the 19th century.

Different people see different talismans, each constructs his or her own scenario, as we are all the product of the velocity of our own experience. Social analysts observe political and social change, while scientists tend to emphasize their own specialties.

The start of this revolution may perhaps be dated in this country from the passage of the G.I. Bill which made it possible for so many returning service men and women to get a college education and begin to build the base of knowledge workers. The importance of intellectual capital to the future of the world is not lost on the people of what used to be called the Third World.

Today more than half of all the college graduates in the world are from the Third World, and indeed Mexico has more graduate engineers than France, and India more than all of Europe. By the year 2000 it is estimated that students from the developing nations will make up three-fifths of all university students.

The idea has gotten through to large segments of the world that economic progress is largely a process of increasing the relative contribution of knowledge in the creation of wealth. Knowledge which at one time was a kind of ornament for the rich and powerful to display at conferences is now combined with management skills to produce wealth. The vast increase in knowledge in the last decade has brought with it a huge increase in our ability to manipulate matter, increasing its value by the power of the mind, generating new substances and products unhinted in nature and undreamed of a few years ago.

The world is changing not because computer operators have replaced clerk typists, but because the human struggle to survive and prosper now depends on a new source of wealth; it is information applied to work to create value. Information technology has created an entirely new economy, an information economy, as different from the industrial economy as the industrial was from the agricultural. And when the source of the wealth of nations changes, the politics of nations change as well.

There are many in the new administration who long for the increased regulation of all phases of our economy. Sometimes the concept is expressed as an industrial policy, and sometimes in more primitive terms. Whatever way it is phrased, it is designed to increase the power of government.

In an economy whose products consist largely of information, this power erodes rapidly. As George Gilder has written: "A steel mill, the exemplary industry of the industrial age lends itself to control by governments." It's massive output is easily measured and regulated at every point by government. By contrast, the typical means of production in the new epoch is a man at a computer work station, designing microchips comparable in complexity to the entire steel facility, to be manufactured from software programs comprising a coded sequence of electronic pulses that can elude every export control and run a production line anywhere in the world."

Intellectual capital is the most mobile in the world and it will go where it is wanted and it will stay where it is well treated. It will flee from manipulation or onerous regulation of its value or use and no government can restrain it for long. The President in his inaugural address acknowledged that "investment is mobile," but gave no hint as to whether his administration will try to create the conditions to attract it.

The pursuit of wealth is now largely the pursuit of information. The competition for the best information is very different from the competition for the best bottom land. Today the proliferation of information technology ranging from the telephone and fax machine to fiber optic cables has flooded the world with data and information moving at near the speed of light to all corners of the world. This does not just mean more of the same as it is a well-established principle that a change of degree--if carried far enough--may eventually become a difference in kind.

In biology this is how new species are created and old ones die out. Speed is what transforms a harmless lump of lead into a deadly rifle bullet. This explosion of information and the speed at which it can be transmitted has created a situation which is different in kind and not just in degree from any former time. This change affects not only the creation of wealth but also military power, the political structure of the world and thus international relations.

For thousands of years news could travel only as fast as a horse could run or a ship could sail. Military power was similarly impeded. Indeed Napoleon's armies could move no faster than those of Julius Caesar. Great national leaders were almost anonymous to all but those who had seen them in person.

Today the minicam is omnipresent, but in the late 18th century there were no photographs of Washington or Jefferson, and the Tsar of Russia traveled unrecognized throughout Europe. The ability of the sovereign to keep information secret and thus a tight grip on power, began to erode with the invention of the paved road, the optical telegraph, and the newspaper. Richard Brown has observed that when "the diffusion of public information moved from face-to-face to the newspaper page, public life and the society in which politics operated shifted from a communal discipline to a market-oriented competitive regimen in which the foundation of influence changed."

Government viewed all of these developments with a wary eye. In 1835 Emperor Francis I of Austria turned down a request for permission to build a steam railroad lest it carry revolution to his throne. He was more right than he knew. Years later with the advent of the telephone another sovereign saw danger in a new technology. Leon Trotsky reportedly proposed to Stalin that a modern telephone system be built in the new Soviet State. Stalin brushed off the idea, saying "I can imagine no greater instrument of counter-revolution in our time."

What would he have thought if he had lived to see the Yeltsin coup which utilized an independent computer network called Relcom that links Moscow with 80 other Soviet cities and can and was plugged into similar networks in Europe and the Untied States to spread the news of the coup. Even more ironic was that after the KGB blocked many trunk lines, Yeltsin communicated with his greatest ally, Mayor Sobchak in Saint Petersburg via the government's own telephone network. This is in sharp contrast to the fact that it took four to six weeks for the news of Czar Nicholas' abdication to reach the people.

In America each new administration comes into office with an agenda and the 7 a.m. staff meetings in the Roosevelt room are full of optimism. After a month or two the meeting opens with "Did you see what the Post said this morning, or Brokaw said last night and what is our response." As Jack Kennedy once remarked: "The Ship of State is the only one that leaks from the top." While one can argue and should argue whether this is good or bad for public policy, in the late 20th century it is reality.

There are other realities President Clinton will face in this new world. Fernard Braudel in his great historical work has written that the sovereign's first task has always been to "secure obedience, to gain for itself the monopoly of the use of force in a given society, neutralizing all the possible challenges inside it and replacing them with what Max Weber called "legitimate violence." In the Middle Ages the central government took over the private armies of the feudal lords and the city states to create that monopoly of power.

Today the new administration will find that we are once again facing new private armies, not loyal to feudal lords, but terrorists controlled by small countries or factions within countries. No one understands information technology and its uses better than the modern terrorist. The terrorists who stormed the American Embassy in Teheran on November 4, 1979, were equipped with their own television cameras and their own microwave links to Iranian T.V. U.S. television networks outdid themselves to cover the event. Indeed ABC's Nightline, now a fixture of late night television, was originally created just to cover the hostage crisis every day. They gave the terrorists, in Margaret Thatcher's words, "the oxygen of publicity."

Whatever your views of the matter, few would doubt that it presents difficult dilemmas for the sovereign. There are just some problems that are too big for any one country to handle and terrorism is one of them. Many years ago, sovereigns in many different countries came to the same conclusion about piracy, and banded together to outlaw the practice. Slavery is another case in point. The first significant international agreement was reached in 1885 at the Berlin Conference which was followed in 1890 by the Brussels Act signed by 18 countries. The security of our modern states may require similar joint treaties to outlaw terrorism.

All of these events are being played out against a background of massive shifts in the political structure of the world. There are fewer and fewer dictatorships and more and more democratic regimes. At the same time that freedom is sweeping the world, old tribal values are being reasserted, and more, not fewer nations are being formed. This is good news for the people of the world, but makes the practice of diplomacy and the formation of national security policy more difficult. Dealings between super powers is a high stakes game, but at least one knew all the players. Today, new players are being created, and doubtless more are on the way.

The President referred to the fact that his inauguration was seen in real time by virtually the whole world. He might have added, and surely understands that since the whole world is now tied together by an electronic infrastructure we now have what amounts to a continuous global conversation.

The implications of the global conversation are about the same as the implications of a village conversation, which is to say enormous. In a village there is a rough sorting out of ideas, customs and practices over time. A village will quickly share news of any advantageous innovation. If anyone gets a raise or a favorable adjustment of his or her rights, everyone else will soon be pressing for the same treatment. The global conversation prompts people to ask the same questions on a global scale. To deny people human rights or democratic freedoms is no longer to deny them an abstraction articulated by the educated elite, but rather customs they have seen on their TV monitors. Once people are convinced that these things are possible in the village, an enormous burden of proof falls on those who would deny them.

Today village and indeed national borders have ceased to be boundaries. Data of all kinds move over and through them as if they did not exist. Arthur C. Clarke who first postulated the viability of a geosynchronous satellite put it this way. "Radio waves have never respected frontiers, and from an altitude of 38,000 kilometers, national boundaries are singularly inconspicuous." Satellites now peer down into every corner of a nation state, data and news are received by people within national borders on every device ranging from a hand-held transistor radio to personal computers at home and work tied into huge data networks. In short, the sovereign has totally lost control of what people can see and hear, and can no longer maintain the fiction that there are no alternate types of political structures.

Not only does the information revolution make the assertion of territorial control impossible with regard to what people can see and hear, but also less relevant in other ways. The physical control of territory has always been one of the most important elements of sovereignty, but this control in many important respects is fading away. Not long ago armies fought and men died for the control of the iron and steel in the Ruhr basin, because the ownership of these assets conferred real economic and political power. The same was true of the rubber in Malaysia. Today these once fought over assets may be a liability. To the extent that new technology replaces once essential commodities with plastics or other synthetic materials the relative importance of these areas to the vital interest of nations is bound to change.

Even control of the so-called geographic "choke points" have less significance than they once had. A few years ago the conventional wisdom told us that all the lights would go out all over the world if the Suez Canal were ever closed. The power of a sovereign state, in this case Egypt, to block the flow of oil from the Middle East was believed to be absolute. The conventional wisdom did not take into account the technology that would allow the building of supertankers that could carry oil around the Cape of Good Hope economically. This velocity of change is shifting the tectonic plates of national sovereignty and power in ways that are still unfolding and only partially understood.

Whatever facet of sovereignty people discuss, in the end the central concept is that the actions of the sovereign are not subject to contradiction by any other power. The development of sovereignty as a political theory has a long history dating back at least to Roman Law, moving through the absolutism of Bodin in the 17th and 18th centuries, to Hobbes and then John Locke and Rousseau.

While the ruler, in whatever era, could always find a political philosopher to validate his or her assertion of power, the information revolution has now given history a new reverse twist which stands conventional wisdom on its head. So great is the desire of some nations for the approval of the world that they call in outsiders to validate their own national elections. This is an extraordinary development far removed from the assertion of absolute power in conducting a nation's internal affairs.

Consider the Council of Freely Elected Heads of State who Noriega called in Panama to observe the election. Former President Jimmy Carter and some European counterparts told the world in no uncertain terms that the Panama election in 1989 was dishonest and in a sense paved the way for the American military action which followed. The same group was asked to witness the Nicaraguan elections in 1990 and gave their seal of approval which started that country along the road toward a fragile democratic government.

World opinion focused and illuminated by the global television net achieved what few, if any, armies could ever achieve. The same pressure is felt in the whole field of human rights which is rapidly becoming a world concern transcending national sovereignty.

Today, as the chanters in Prague told the police, the world sees what is going on. The cold print in the newspaper now has a human face in living color and in real time. It makes all the difference. The Kurds, for example, have suffered from subjugation by others on and off since the Arabs conquered them in the 7th century. But it was the images of horror on CNN last year that awoke the world to their plight in Iraq. Indeed the history of the last few years has seen the growing popular support for the rights of individuals in all nations against the prerogatives of sovereigns, wherever located.

Since the beginning of time intelligence gathering has played a big part in national security. Whatever new team the President appoints to take over the various facets of our intelligence agencies, they will find that while the agent in place still plays a vital role, information technology has made us both more secure and more vulnerable at the same time. Weapons of war are no longer the exclusive product of the armorers' art.

It is generally estimated that computer software is about 80% of United States' weapons systems now in development. From the point of view of our enemies, attacking the software that controls or operates these weapons may be the most effective and cheapest way to cripple our defenses. Extensive work on this possibility has been done by Scott Boorman of Yale and Paul Levitt of Boston. Software attacks, they have written, can "strike key civilian targets, such as electronic funds transfer systems...air traffic control systems, and even vote-tallying machinery at the heart of the democratic process--the so-called 'logic bomb' which was planted in the computer software of the Los Angeles Department of Water and Power in the spring of 1985 made it possible for that utility to access its own files for a week."

In today's world, wars can be won or lost in a week. If nothing happens when the President presses the button, if our communication network froze and our radar failed to function, our defense posture would be changed dramatically. With the story of the John Walker family fresh in our minds, it does not take much imagination to imagine that some software programmer might sell out to our adversaries and plant a few logic bombs to disrupt our military response. This would be a very cheap way to attack and is open to even very small countries.

Lest this sound like science fiction, we should remember that in 1985 a hacker, who turned out to be in Germany, broke into the computer files in the Lawrence Berkeley Lab, to say nothing of dozens of military bases in the United States. A man called Clifford Stoll tracked the hacker to Germany where it was discovered he was selling information to the KGB. Stoll summed up the problem from the point of national security this way: "I might train an agent to speak a foreign language, fly her to a distant country, supply her with bribe money, and worry that she might be caught...or I could hire a dishonest computer programmer. Such a spy need never leave his home country...And the information returned is fresh--straight from the target's word processing system." The impact of these facts on the way we think about our national security is significant--physical security can be by-passed, and we have to devise other ways to insure military effectiveness.

Another traditional aspect of sovereignty that is fading away is the power to issue currency and control its value. From the earliest times governments have wished to monopolize this powerful medium and control its value in the world markets.

Until recently governments retained substantial power to manipulate the value of their currencies, but as the information revolution has rendered borders porous to huge volumes of high speed information, the task has become difficult if not impossible. The control of currency has always given the sovereign great leverage over the most crucial material endeavors of his citizens. The regulation of money markets is the regulation of a society's resources in their most convenient and fungible form. The new Clinton Administration is already firing warning shots across the bow of the Federal Reserve.

Until recently what we call money, be it a piece of paper or a bookkeeping entry, or a physical object has been linked to a physical commodity which put some limit on a sovereign's ability to inflate the currency. The nature of the commodity varied with the interests of the people using it. American colonists used tobacco money. American Indians favored the cowrie shells or wampum and of course the more familiar copper, gold and silver still circulate in the world. The link between commodities and money became slowly attenuated over time. On March 6, 1933 President Franklin D. Roosevelt issued a proclamation prohibiting American citizens from holding gold. The Congress followed on June 5 that year by passing a joint resolution repudiating the gold clause in all private and public contracts. While various other actions were taken to weaken the tie to gold, the final blow was administered on August 15, 1971 when President Nixon terminated the convertibility of the dollar into gold and the era of floating exchange rates began.

In today's world, the value of a currency is determined by the price that the market will pay for it in exchange for some other currency. Indeed the market is no longer a geographic location, instead it is more than 200,000 computer screens in hundreds of trading rooms all over the world all linked together by an electronic infrastructure.

The latest political joke, the newly released GDP figures, or the statement of some world leaders appears instantly on all screens and the traders vote by buying and selling currency. The market is a harsh disciplinarian. When Francois Mitterrand became President of France in 1981, he was elected as a committed Socialist, and almost immediately money began to flow out of the country, foreign exchange reserves were rapidly depleted, and within six months Mitterrand had to reverse course and become pro-capitalist. This is not to say that governments can no longer influence the value of their currencies. They can and do, but their ability and those of their central banks ready to manipulate that value in world markets is declining. Increasingly currency values will be experienced less as a power and privilege of sovereignty than as a discipline on the economic policies of imprudent sovereigns.

This new discipline is being administered by a completely new system of international finance. Unlike all prior arrangements, the new system was not built by politicians, economists, central bankers or finance ministers. No high level international conference produced a master plan. The new system was built by technology. The system is partly the accidental by-product of communication satellites and engineers learning how to use the electromagnetic spectrum up to 500 gigahertz.

The convergence of computers and telecommunications has created a new international monetary system, and even a new monetary standard by which the value of currencies is determined. The Information Standard has replaced the gold standard. We sit at home and watch a live broadcast of riots in a country on the other side of the earth, and a currency falls, in minutes. We hear by satellite that a leadership crisis has been resolved and a currency rises. Ten minutes after the news of the disaster at Chernobyl was received, market data showed that stocks of agricultural companies began to move up in all world markets. For the first time in history, countless investors, merchants and ordinary citizens can know almost instantly of breaking events all over the earth, their desire to hold more or less of a given currency will be inescapably translated into a rise or fall of the exchange value.

The natural first response to this claim is, it has ever been so. The pressure of events has always been a major factor in determining the value of currencies. But the speed and volume of this new global market makes it something different in kind and not just in degree. Cherished political, regulatory, and economic levers routinely used by sovereigns in the past are losing some of their power because the new Information Standard is not subject to effective political tinkering. It used to be that political and economic follies played to a local audience and their results could be in part contained. A relatively small club of central bankers and politicians representing their sovereign governments believed it could control the value of a given currency. This is no longer true. The global market makes and publishes judgments about each currency in the world every minute and every hour of the day. The forces are so powerful that government intervention can only result in expensive failure over time.

Governments do not welcome this Information Standard any more than absolute monarchs embraced universal suffrage. Politicians who wish to evade responsibility for imprudent fiscal and monetary policies correctly perceive that the Information Standard will punish them. Moreover, in contrast to former international monetary systems, there is no way for a sovereign to resign from the Information Standard.

Like many administrations before it, the Clinton team displays a wide spectrum of economic philosophy. The new Secretary of the Treasury has been a strong supporter of supply side economics, while the designated Chairperson of the Council of Economic Advisors believes that "there is no relationship between the taxes a nation pays and its economic performance."

To complete the confusion, the new head of OMB--a former congressman--is distressed to learn the deficit was bigger than had previously been thought. It was a performance reminiscent of that of Inspector Louis Renault in Casablanca who was shocked to learn there was gambling in the back room of Rick's Saloon. It will be interesting to see how the market sorts this out. Whatever political leaders do or say, the screens will continue to light up, traders will trade, and currency values will continue to be set not by sovereign governments but by global plebiscite on the soundness of their fiscal and monetary policies.

The new global market is not limited to trade in financial instruments. Indeed the world can no longer be understood as a collection of national economies. The electronic infrastructure that now ties the world together, as well as great advances in the efficiency of conventional transportation, are creating a single global economy.

The new administration will learn, despite the walls of the special interest groups, that the very phrase "international trade" has begun to sound obsolete. It can be argued that the very concept of a trade balance is an artifact of the past. As long as capital--both human and money--can move toward opportunity, trade will not balance; indeed, one will have as little reason to desire such accounting symmetry between nations as between California and New York. Commerce and production are increasingly transnational.

More and more products have value added in several different countries. The dress a customer purchases at a smart store in San Francisco may have originated with cloth woven in Korea, finished in Taiwan, and cut and sewed in India according to an American design. Of course a brief stop in Milan, to pick up a "Made in Italy" label, and leave off a substantial licensing fee is de rigueur before the final journey to New York. Former Secretary of State George Shultz recently remarked in a speech: "A few months ago I saw a snapshot of a shipping label for some integrated circuits produced by an American firm. It said 'Made in one or more of the following countries: Korea, Hong Kong, Malaysia, Singapore, Taiwan, Mauritius, Thailand, Indonesia, Mexico, Philippines. The exact country of origin is unknown.' That label says a lot about where current trends are taking us."

Whatever the correct word for these phenomena, "trade" certainly seems an inadequate description. How does one account in the monthly trade figures for products whose "exact country of origin is unknown?' How are national governments to regulate the complexities of transnational production with anything like the firmness with which they once regulated international trade? How are politicians to whip up nationalist fervor against foreign goods when American car companies build cars in Mexico for export to Africa and pay the profits to pensioners in Chicago, and the Japanese build cars in Tennessee for export to Europe and use the income to refinance real estate in Texas? Nevertheless, if the new interventionists get their way, it could cripple the global economy.

The new president will find that many of the terms we use today to describe the economy no longer reflect reality. Everyone knows, for example, that all the lights would go out, all the airplanes would stop flying, and all the financial institutions and many of the factories would shut down if the computer software that runs their systems suddenly disappeared. Yet these crucial intellectual assets do not appear in any substantial way on the balance sheets of the world. Those balance sheets, however, are chock full of what in the industrial age were called tangible assets--buildings and machinery--things that can be seen and touched.

How does a national government measure capital formation, when much new capital is intellectual? How does it measure the productivity of knowledge workers whose product cannot be counted on our fingers? If it cannot do that, how can it track productivity growth? How does it track or control the money supply when the financial markets create new financial instruments faster than the regulators can keep track of them? And if it cannot do any of these things with the relative precision of simpler times, what becomes of the great mission of modern governments: controlling and manipulating the national economy? Even if some of these measurement problems are solved, as some surely will be, the phenomena they measure will be far more complex and difficult to manipulate than industrial economies of old.

These remarks today have not dwelt on the wonders of the gee-whiz technology emerging from your Silicon Valley, not because they are not wondrous--they are--but because revolutions are not made by gadgets, but by a shift in the balance of power. The technology is the enabling factor, not the cause. When a system of national currencies run by central banks is transformed into a global electronic marketplace driven by private currency traders, power changes hands.

When a system of national economies linked by government regulated trade is replaced--at least in part--by an increasingly integrated global economy beyond the reach of much national regulation, power changes hands.

When an international telecommunications system, incorporating technologies from mobile phones to communications satellites, deprives governments of the ability to keep secrets from the world, or from their own people, power changes hands.

When a microchip the size of a fingernail can turn a relatively simple and inexpensive weapon into a "Stinger" missile, enabling an illiterate tribesman to destroy a multi-million dollar armored helicopter and its highly trained crew, power changes hands.

When the President picks up the phone to talk to another head of state rather than have an ambassador deliver a meticulously drafted note to the foreign ministry, power changes hands.

This is not to say that sovereign power will disappear--it will not--but what it does mean is that no government, over time, can act alone not subject to contradiction. The protesters in Prague were right-the world is watching, and the power of world opinion is transmitted and focused and reported by the telcon network. The world looks and reacts and brings pressure on everything from the destruction of the rain forest, the allegations of global warming, the disposal of toxic waste, to the violation of human rights anywhere on the planet.

All of this is good news for freedom. Ronald Reagan's powerful speech on May 31, 1988, delivered at Moscow State University, was literally heard around the world. He spoke of the power of freedom in a land that had seen little of it; he spoke of economic freedom to release the innovations of entrepreneurs; he spoke of the information revolution "quietly sweeping the globe, without bloodshed or conflict." Few realized at the time how this message carried on the global electronic network, was working on the hearts and minds of people. Our new President in his inaugural address recognized that "profound and powerful forces are shaking and remaking our world..."

All of these forces profoundly affect the way the new administration has to go about its business, because they affect the very foundation of modern society and international relations. The President said the "urgent question of our age is whether we can make change our friend and not our enemy." Americans handle change better than most of the world's people. We know that new circumstances will require new solutions, but diplomats and politicians like old soldiers, often concentrate on fighting the last war, not the new one. Whatever the new policies, the screens will light up all over the world and judgments will be instantly reflected in the cross rate of our currency. There no longer is any place to hide.

Walter B. Wriston is former chairman of Citicorp. His remarks were presented at the Independent Policy Forum on January 28, 1993.