Baltimore, Maryland – February 19, 2014
It’s really great to be with all of you here at Johns Hopkins. It’s wonderful to be asked and invited and it’s a humbling honor to speak with you at the Johns Hopkins Foreign Affairs Symposium.
Though as I looked at that title and looked around this room, I think perhaps even that word ‘foreign’ is a little outdated to your generation. You understand there is nothing foreign, there is one human longing the world over. I think you understand that better than your parents, better than your older brothers and sisters.
I wanted to speak with you tonight about three things and they’re all related and they’re all connected to one another.
One, the primary will of our world today.
Two, the importance of making better balanced and more mindful choices together, if we are to create an economy with a human purpose.
And three, I’d like to share with you why it is that I believe that the cause of a stronger American middle class, a middle class with more opportunity, is not only a domestic policy imperative, but it is a vital goal for the future security of our nation and this one Earth that we all share.
So let’s begin, shall we.
In his 2011 book, The Coming Jobs War, Jim Clifton of Gallup Polling concludes –
“The primary will of the world is no longer about peace or freedom or even democracy; it is not about having a family, and it is neither about God nor about owning a home or land. The will of the world is first and foremost to have a good job.”
This of course is not to say that our pursuit of peace, freedom, democracy, and family, and the freedom to worship, can, or should ever be, discarded. They can’t. And global governments should never turn a blind eye to the urgent work of promoting and advancing and protecting those values.
But as long as the simple human dignity of a decent job remains so elusive for so many of our citizens and citizens of nations the world over, the attainment of our greatest ideals will falter.
To govern is to choose – and together we must choose to build an economy that actually works. An economy with a human purpose and a global perspective.
Notwithstanding the temporarily polarized politics of our day, today we are more connected than ever and in very profound and irreversible ways.
By technology, by the global economy, by our understanding, deeper understanding, of just how our actions are affecting populations a world away. By the unavoidable fact that our fast-growing human population inhabits this one small Earth.
The Swiss sustainability advocate, Mathis Wackernagel, recently wrote:
“August 20 was Earth Overshoot Day 2013, the approximate date [that] humanity’s ecological resource consumption exceeded what Earth can renew [in] this year. A mere 34 weeks into
2013, we demanded a level of ecological resources and services — from food and raw materials to sequestering carbon dioxide from fossil fuel emissions — equivalent to what Earth can regenerate for all of 2013.”
This is without a doubt the daunting challenge of our time. But on a shrinking planet, our responsibility to confront sustainable consumption, I would submit to you, is not just a moral imperative, it is also an economic imperative. And they both go together.
If we destroy our ecological resources, we will soon have no economies left to speak of.
So we need to achieve more innovation, we need to achieve more and better education, better science and technology, more entrepreneurial activity, more productions of solutions to human problems, which is the true definition of generational wealth, whether for nations or for our planet. And achieving those solutions will require bold and significant new investments.
For some it might appear easier to sit on the sidelines and allow the old policies of “cut, cut, cut,” and “no investments are good investments,” that failed ideology of the past, that we too often have resorted to for the last 30 years, that reached its culmination in the worst recession that we’ve seen as a nation since the Great Depression.
But that economic model, I submit to you, is a linear one – and ultimately, it is unsustainable. It is a straight line to hell that none of us has the right to choose for our children’s children.
Nations that succeed on the global stage will be those nations that actually develop circular economies – where leaders in both private enterprise, and public life make decisions with total life-cycle costs and benefit in mind.
Circular economies create jobs that feed, and fuel, and heal our people in better and more sustainable ways,
And you already see it happening around us. Ensuring not just a short-term profitable future, but a prosperous long-term future as well. And they’re both connected.
In the midst of the recent global recession, the resolve of our leaders was certainly tested, wasn’t it? No country or state escaped the need to make the difficult fiscal choices.
When a crisis strikes, should we choose austerity, and dismantling of social safety nets and the abandonment of investments to balance the books? Or is it actually possible to take a more balanced approach of both cuts and investments?
Today, upward economic mobility, sad to say, is lower in the United States than it is in virtually any other highly-developed country on the Earth. That’s a shocking statement and one that could not have been said when I was sitting in an auditorium like this at Catholic University many years ago. Can we really say that our economy is working if our stock market’s booming, but middle class earnings are declining?
I recently led a trade mission to Brazil, along with some really great and innovative Maryland companies. They told us at the embassy that it was the largest trade delegation ever to come from a state to Brazil.
These companies from Maryland traveled to Brazil for one reason— and that was for greater opportunity. Why?
Even with the slow-down of these past couple of years, Brazil’s economy is actually booming, its middle class is actually and truly growing—with more than 40 million people having been lifted out of poverty in just the last decade alone. That means there are more jobs and more opportunities for growth—opportunities for Brazilian companies and for companies like those Maryland companies that are seeking business partnerships in Brazil, to do business in Brazil, to sell to a growing middle class in Brazil.
During our trip, we announced expansions on both sides of our American hemisphere.
There was a company called Cambridge International. Cambridge International on the Eastern Shore is a 100 year-old company and it’s now expanding their operations in Sao Paulo. They make industrial machine netting, conveyer belts and other architectural applications and the like.
Another company was DK Diagnostics, a Brazilian biotech company, announced that it was
going to be putting its U.S. headquarters, which goes by the name Brace Pharmaceuticals, right here in Maryland – in Rockville, Maryland.
I hold up Brazil as a counterpoint to another economic approach on the international stage, and that is austerity in Europe.
Since 2010, much of Europe has embraced austerity in an attempt to climb out of the recession. Many of Europe’s leaders promised that by slashing spending and investments that that would reduce deficits and it would create growth. In countries like the United Kingdom and many others across the Eurozone, despite attempts to slash government spending,… deficits and  public borrowing have remained high, while growth has actually stalled.
You see, austerity was very successful at stalling growth, but not so very successful at reducing deficits, or at creating jobs or growing a middle class, which in turn, grows an economy. When 12 percent of people are unemployed across the EU , and a quarter of families are living in, or on the brink of, poverty – they cannot be good customers, good investors, or good taxpayers. Many of you read the articles in the Washington Post about the sort of suffering that’s been going on in Greece – heartbreaking stuff. When economic activity declines, government revenues fall or remain stagnant at best. And that’s not an opinion, that’s math. That’s realism.
Austerity created a downward spiral, of falling demand, and declining optimism, and economic stagnation that actually pushed many European states into a double-dip recession. Hardly the result intended.
But the evidence is now clear—austerity actually delayed and hindered economic recovery because it expanded poverty and it weakened the buying power of the middle class. Economists estimate that even in countries like Germany that actually fared better than most during the recession, the cumulative effect of austerity reduced GDP growth by over 8 percent.
Austerity, in short, has been a waste of valuable time for Europe’s economy. But more importantly, it’s been an enormous waste of talent. Millions of young people, who’ve been prevented from entering the labor market. Millions more that have lost their jobs. Their ideas and energy are sitting on the sidelines of their country when they’re most needed, when they could be helping to build a better future for their nation, for their families, for the continent, for this world.
In many countries the net has been pulled out from under those most in need. Nearly a quarter of EU citizens have found themselves falling into poverty, or at greater risk of marginalization and social exclusion. Half of the young people living in Greece and in Spain, and a quarter of young people across the continent are out of work, out of education, out of opportunity . And economists tell us that those who struggle to enter the labor market during their youth are often the most plagued by long term unemployment and poverty throughout their lives.
What we have seen throughout history is that no country has ever been able to cut its way to prosperity. It’s never happened. Never. A balanced approach is always required. We made different choices here in Maryland. One state among the United States, but one state nonetheless.
In 2007, when I was first elected to serve as governor, Maryland had a $1.7 billion structural deficit already looming on our horizon. Things had been taped together, the can had been kicked down the road, and the chickens had come home to roost.
No sooner had we taken action, tough action, unpopular action, things that nobody stood up to applaud for, but necessary action, to address that deficit, than the recession hit us.
Even as we fought to help every family we could – to save every home and every job we could– our State revenues took a huge hit, right along with the incomes of so many families across our state. We made tough choices to move forward, but we also made balanced choices.
What am I talking about?
We asked the wealthiest Marylanders to do a little more. We used the challenge of these times to make our government more efficient and more effective. We became one of only seven states to maintain a Triple-A bond rating all through those recessionary years and to date. We have made $9.1 billion in cuts—which is more than any administration in modern Maryland history. And yet, we balanced those cuts with strategic investments—investments to better educate our people, to accelerate the innovation curve in places like Hopkins, and NIH and the I-270 corridor, and also to rebuild a modern infrastructure – not only more lately our transportation infrastructure but our wastewater infrastructure, record investments in building modern classrooms in our public schools. And yes, thanks to President Obama’s help and the Recovery and Reinvestment Act, we also completed a $115 million cyber infrastructure connecting broadband throughout our state.
We acted knowing that a modern economy requires modern investments to create jobs. And it requires a strong and growing middle class, in order to make our economy grow. Even in tough times, we’ve been able to make these record investments and we’ve seen a return on those investments.
Will mentioned the fact that we’ve been named the #1 public schools in America five years in a row.
We were the only state that went four years in a row freezing college tuition, so that in real dollar terms measured against inflation, the cost of in-state tuition at public universities in the state of Maryland has only risen 3.3% over these seven years – which is less than the cost of inflation. No state has done a better job of holding down those costs and it wasn’t an accident. It was conscious; it was an intentional choice.
We’re investing to spur innovation in high-demand sectors, growing sectors, the new sectors that create the new jobs with long-term prospects for promotion and upward mobility, like biotech, cybersecurity, green tech, advanced manufacturing – and to move innovations out of the labs of our universities and into the bloodstream of our entrepreneurial marketplace.
We’re investing to build a 21st century infrastructure and we’re doing other things as well. We raised the Earned Income Tax Credit, to better reward hard work. We’ve maintained the highest goals of any state in the nation for minority and women-owned business participation in state contracts, and for the first time ever, and in the middle of a recession, we actually exceeded our goal.
We became the first state in the country to pass a living wage statute. We put in place for the first time in Maryland a progressive income tax,… which while it lowered income taxes for 86 percent of us, it asked the top earning 14 percent of us to do more.
Just last calendar year, we moved more people than ever in a single year from welfare to work, a positive sign that our economy is coming back.
The U.S. Chamber of Commerce, which is hardly a mouthpiece for the O’Malley-Brown administration, has named your state-has named Maryland the #1 state for innovation and entrepreneurship these last two years in a row.
The Pew Foundation now ranks Maryland as one of the top three states in the country for upward economic mobility, at a time when all across the nation as a whole wages have stagnated or even started to dip.
And this year – and I ask for your help, write to your delegates and senators – we are seeking to raise the minimum wage in Maryland to $10.10 an hour.
So why should we care if we’re making these choices here in our state; why should we care what path our countries might follow? Well I’d submit to you, for one, given the interconnectedness of economies, locally, nationally and internationally, these choices have an undeniable ripple effect on your job prospects, on your prospects for greater opportunity.
We know that the slow recovery in Europe has actually hampered economic recovery here at home.The EU is the largest economy in the world and the EU also happens to be our largest trading partner . And had the recovery come quicker there, there would have been greater economic growth and greater economic opportunity here at home.
Additionally, our long-term economic and national security, I believe, are vitally linked to the cause of a rising global middle class.
Many years ago, Franklin Delano Roosevelt, in beautifully clear language, articulated America’s national purpose in this way and I wanted to share it with you tonight.
He said that in the future days, which we seek to make more secure, we look forward to a world founded upon four essential freedoms: the first is freedom of speech and expression, everywhere in the world; the second is the freedom of every person to worship God in his own way, everywhere in the world; the third is freedom from want, everywhere in the world; and the fourth is freedom from fear, anywhere in the world.
The greatest power, the greatest power that we possess as Americans, is the power of our own example and that includes the power of our economic example. The sort of economy we choose to create, the economy we choose to build, restoring our own economy — rebuilding it with a human purpose — is the urgent work of this generation.
Our economic work as a nation here at home, our ability to create jobs through the building of circular economies, is a critical, indispensable, leading piece of what it will take to ensure that our children and grandchildren have even more opportunity than we have had. This is what it means, isn’t it, in our time, to secure the blessings of liberty for ourselves and our posterity.
The challenges that are unfolding all around us are not things that are happening to us, they are things that are happening for us.
If we choose again to act as Americans, what we stand for is what we stand on. And the future is most definitely watching.
Thanks very much.