[Congressional Record Volume 140, Number 38 (Tuesday, April 12, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: April 12, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]


                              {time}  1710
 
                     LESSONS FROM A VISIT TO RUSSIA

  The SPEAKER pro tempore. (Mr. Farr of California). Under a previous 
order of the House, the gentleman from Georgia [Mr. Gingrich] is 
recognized for 60 minutes.
  Mr. GINGRICH. Mr. Speaker, I am going to talk this evening about 
renewing American civilization, lessons from a visit to Russia. I want 
to share with my colleagues that, led by the gentleman from Missouri 
[Mr. Gephardt], the gentleman from Illinois [Mr. Michel], a group of us 
just spent 6 days in Russia. We visited Moscow, St. Petersburg and 
Petrozavodsk, and it was a very, very useful 6 days. The thing which, I 
guess, most struck me is how much we Americans have to learn. As my 
colleagues know, we tend to go to places like Russia, and we are going 
to teach them how to be a democracy. We are going to talk to them about 
what they need to do. We are going to suggest to them what they should 
do about economic growth, about creating jobs, about solving their 
problems.

                              {time}  1720

  Yet I found that as we talked to people, I was learning an awful lot 
of lessons about what we need to do. And I guess it was first brought 
home to me, it took several days for this to sink in, because this was 
our second visit in a year, and we had been there last year at about 
Easter. When you first arrive in Moscow, you are so struck by the 
differences, and by the physical differences, by the differences in 
attitudes, by the differences in language.
  Then you begin to listen to what people worry about. For example, the 
top two issues in Russia everywhere we went, with every group we talked 
to, were taxes and crime.
  Now, when I go to town hall meetings, taxes are often one of the top 
issues in the United States. When we sat down to compare notes, 
Russians would talk about bureaucracy, and they sounded an awful lot 
like American small businessmen or like doctors or people who were 
dealing with their local, State or Federal Government.
  We went to a defense conversion plant in St. Petersburg. It was one 
of the places where I first began to realize how similar our concerns 
were. I discovered that people were worried about shrinking the defense 
budget, laying people off, and where were the changes going to be.
  Then as I listened to our dialog, I began to realize that many of the 
mistakes we are making in the United States we are now encouraging the 
Russians to make in Russia, and that many of the weaknesses that we 
have in dealing with the future are weaknesses that they are going to 
have.
  Now, they have much bigger problems than we do. They have no real 
tradition of democracy. They have no tradition of private property of 
rule of law. They have no experience of entrepreneurial free 
enterprise. They have no habits of a work ethic that makes sense.
  Yet I would suggest that the three great facts which are going to 
change America are the same three major facts that are going to change 
Russia.
  The first is that we are both going to go through an information 
revolution on a grand scale, what Alvin Topper describes as the third 
great wave of change in human history. You can see it in Russia just as 
much as you can see it in the United States.
  The second is we are both tied into the world market. We are going to 
create jobs in the future competing not just inside our own country, 
but competing not just inside our own country, but competing across the 
world. And we are going to have to create jobs that are good jobs and 
are value creating jobs by being able to compete with Singapore and 
China, with Stuttgart and with Thailand, and that is going to be a big 
change.
  The third great change is that both in Russia and in America, the 
welfare state has failed. The big difference is that in Russia the 
welfare state was a lot bigger, so its failure is a lot more painful. 
But the objective fact is that the economic redistribution, 
bureaucratic model, of making people clients and then taking care of 
them, has clearly failed in Russia, just as it has failed in the United 
States.
  Now, the reason I think we have to be a little thoughtful and a 
little cautious in dealing with the Russians and in giving them too 
much advice is we ought to be a little humbled by our own failures. It 
is a fact that American Indian reservations have about as many human 
tragedies and impediments to productivity as any place in the world, 
and that our efforts to help native Americans who decide to stay on the 
reservation have been generally speaking a pretty dismal failure.
  It is a fact that in many of our inner cities, we have almost no 
capacity to teach people the work ethic entrepreneurship and how to 
create jobs, and we ought to be a little careful before we condemn the 
Russian failure for the same situation.
  It is a fact that in places like West Virginia, where there has been 
a two or three generation long period of families that are on welfare, 
that we do not know very well how to encourage job creation and 
productivity and entrepreneurship. So again we ought to be a little 
careful about our assumptions about Russia.
  It is also a fact that the defense conversion projects in southern 
California are in many ways just as much a boondoggle and lack 
effectiveness and lack job creation, just as many of the defense 
conversion projects in Russia do.
  Finally, it is a fact that we are in the same boat in terms of 
inventing the 21st century, that the information revolution, which is 
going all throughout Russia, is an information revolution which is 
going all throughout the United States.
  I was very struck, for example, a very minor, very human 
illustration, the last night we were in Russia, each member of the 
delegation, there were nine of us, was invited to go to a private home. 
The home that I went to had a young 6-year-old named Nicholas, and 
Nicholas had a Bart Simpson towel and a Bart Simpson hair shampoo, and 
I chatted briefly. He watches the Simpsons on Russian television, they 
are translated into Russian. I looked at the shampoo. I was just 
curious. I was fascinated to be here in the middle of St. Petersburg 
looking at a beach towel-size towel of the Simpsons, and the shampoo 
was made in Germany.
  So here was a young Russian in the middle of a transition watching 
what I have to say is not one of our most eloquent or intellectual 
shows, but attracted to the Simpsons, identifying with America, and 
buying a German product based on an American character shown on Russian 
television. I thought, it sort of all began to come together in one 
place.
  We talked about crime a lot. The Russians have two kinds of crime, 
one that we have in tragically large amounts, and one we have much less 
of. The one is violent crime, which they have to a growing degree with 
the collapse of the dictatorship. But the other, which the Russians are 
very worried about, is what they call the Mafia. This is not a 
reference to Sicily or Italian crime lores in Chicago or New York, but 
rather the use of the word which has become a Russian word to describe 
local people, someone who used to be in the KGB, who run local 
protection services all over Russia, where they literally show up at 
your store or business and suggest to you you are either going to pay 
them or something bad is going to happen to you. Recently, for example, 
the owner of a restaurant in St. Petersburg was killed for not paying 
protection money. So there is a very large level of concern about 
crime.
  You can see organized crime being a tax on creating jobs. You set up 
a small business. You are trying to save money so you can hire more 
people. The local criminal comes by and takes 20 percent out of your 
wallet.
  What was fascinating was among Russians there was a belief that the 
Mafia was less dangerous than the tax commission; that the government 
wanted to take more of your money, and that the government was more 
dangerous and killed more jobs than did organized crime.
  So as we listened to Russian after Russian complaining about taxes--
and some of the Russian taxes are truly grotesque--they just announced 
a 23-percent tax on investment. So if you want to invest $100,000 in 
Russia in order to create jobs, you have to pay $23,000 of it to the 
Russian Government before you can invest any of it in Russia, which is 
such a disincentive that unless it is repealed, it is going to 
dramatically slow down and maybe stop foreign investment.
  Yet this tradition of a large government with a large tax structure 
with a big bureaucracy is not one that we can necessarily assume is 
only Russian. I thought of some of our own fights in this country over 
high taxes, redtape, regulations, and a paperwork.
  One of the Russians wanted to open up a cranberry farm in a bog which 
the Russian Government thought was so useless they were going to let 
him grow cranberries in it. It occurred to me under our Wetlands Act, 
he probably would have to spend 3 to 6 years dealing with our 
bureaucracy before he could even get permission to consider using it. 
And if they found a snail or a turtle or a small fish or something else 
that might in some way be endangered by his cranberries, that our 
bureaucracy in terms of that particular bog might actually be worse 
than the Russian bureaucracy.
  So I found as we went on this trip an awful lot of things in common. 
The sense of a common future, a common destiny, was compounded for me 
by watching CNN, because everywhere we went in Russia, you could get 
CNN. Of course, representing Atlanta, it was sort of interesting to me 
to be there and to watch the Atlanta newsroom, which I have been in 
many times and see the newsroom in Moscow, St. Petersburg, 
Petrozavodsk. And in looking at the CNN coverage, we happened to be in 
Russia, which was having its government instability at a time when the 
Italians are having their government instability, and their newly 
elected parliament is having a hard time forming a stable government. 
That instability was caused by a massive Italian corruption scandal 
which led virtually to the entire political elite to be knocked out of 
politics, and many of them are probably going to go to jail.
  At the very middle of this instability, we were watching what 
happened with Prime Minister Hosokawa, who resigned as the Prime 
Minister of Japan because of a corruption scandal involving some things 
he had done back in the early 1980's.

                              {time}  1730

  Of course, in the middle of all that we are watching the various news 
reports on CNN and the International Herald Tribune and the 
International USA Today. USA Today now has an international edition, 
which it did not have, to the best of my knowledge, a year ago. And you 
could also get it as well as the Wall Street Journal. In all three of 
those we were reading about the problems of Whitewater and the 
questions being raised about American political leadership. You had 
this common sense that all across the modern industrial world the 
working, taxpaying middle class voters are unhappy. They are unhappy in 
Russia. They are unhappy in Italy. They are unhappy in France. They are 
unhappy in Britain. They are unhappy in Canada. They are unhappy in 
Japan, and they are unhappy in the United States.
  I came back home to see two recent polls. One was done by the 
Princeton group and said that 77 percent of the American people think 
that things are not going the way they should be. Another poll taken 
about the same week by Dick Wirthlin and the Wirthlin group said that 
62 percent of all Americans thought America was on the wrong track. And 
I could not help but reflect on what I hear in my townhall meetings in 
Roswell and in Marietta and what I had been hearing while I was 
traveling throughout Russia, because they are very similar.
  First of all, people want a chance to create jobs, to create wealth, 
to have the income left after taxes that they can pursue a decent life. 
And people, whether in America or in Russia, in Italy or Japan, do not 
think they are getting a very good buy out of their Government. That 
is, I think, being compounded by the changes that are occurring in 
Alvin Toffler's Third Wave of Change, this concept of an information 
revolution. Because what is happening is, people are discovering, in 
the private sector, whether it is buying a microwave oven or a cellular 
telephone or it is getting cable television or buying a videotape 
recorder, that in the private sector that there are more and more goods 
and services being offered. And you have a greater range of choice.
  You can have, for example, a bank card and you can go and you can get 
the money almost all over the world with a plastic card. And you can 
get it 24 hours a day by showing up and putting in your card and the 
bank will give you money. And so people have more services, more 
choices, more goods in the private sector. But then everywhere in the 
world, when they turn to government, the bureaucracy is slower. It is 
more expensive. It is more arrogant. Instead of being user friendly, as 
businesses increasingly are, open 7 days a week, in many cases open 24 
hours a day, government is still 9 to 5 or 9 to 4. Government still 
operates with coffeebreaks in a sense of ``You are not our customer, 
you are our client, wait in line, we will get around to taking care of 
you when we want to.''
  So that you have, in the private sector, tremendous pressure that you 
could call up and you could today, anybody who is listening to me, 
could call up as a test to an airline. You get a little impatient if 
there are a lot of calls because you might have to wait 2, 3, 4 minutes 
to get somebody. At that point you could say, I want to travel from 
Atlanta to New York on the third Sunday in May and I want to sit in an 
aisle seat. In about 409 seconds they would tell you, fine. You are now 
on flight such and such at such and such a time. You have 23-C, and it 
will cost you this amount of money. All that done when you are sitting 
at your home, 24 hours a day.
  Then you are a veteran and you call the Government. You say, gee, I 
would like to get my records.
  I just had a veteran that came in to see me today for whom this was a 
real human problem. He had been told in Atlanta that they could not 
take care of him because he had to go to St. Louis where his records 
were. He literally went to St. Louis physically and was told in St. 
Louis, no, his records are not in St. Louis. They were in Maryland. He 
came to Washington to go to Maryland suburbs, went out and was told, 
no, they must be in St. Louis.
  He came to me in despair and said, ``Can't you try to get the 
Government, I have now made two trips to go to two different 
bureaucracies who are giving me contradictory information.''
  I think this is the gap between what happens in the private sector. 
If you buy a computer software in the private sector, you actually get 
computer software. If you pay your taxes or get education in the public 
sector, you may or may not get any education. That is the kind of gap 
we have.
  So I would suggest to people, the next time you go into a McDonald's 
or a Wendy's or a Burger King or a Pizza Hut or any large chain like 
that look at the services you get. Look at what you pay for it. And 
then walk into a government agency. Walk in to get your driver's 
license or your license tags to pay your property tax, to register to 
vote, any government service. Look at the difference in the rhythm and 
the attitude and the style. Look at the difference as people, in terms 
of speed of information and speed of service and quality of service, 
and you can begin to understand why people are restive about 
government.

  I think there are two or three deeper pieces to this. People do not 
just think government is a bad buy. People almost everywhere in the 
world think that the bigger bureaucracy has gotten, the more arrogant 
it has gotten. The more out of touch with them it has gotten. The more 
frustrating it is. And so you have not just this passive sense of, gee, 
down at city hall or over in the State government or up in the Federal 
Government, government is not doing its job. You have a deeper sense 
that not only is government no doing its job very well but it is 
interfering in my life.
  The complaints I heard in Russia were remarkably like the complaints 
I hear in Georgia, about government interference, about bureaucrats 
telling us what to do, about too much redtape and about them trying to 
control our lives.
  And I think that is compounded everywhere in the world by the sense 
that is, I believe, universal that we have to come to grips with in the 
Congress, that somehow politicians, elected officials are getting a 
special deal.
  Every Member of Congress knows what I am talking about. You go back 
home. People automatically assume that you re doing very well.
  I read a fascinating article by Chris Matthews, the former press 
secretary for Speaker Tip O'Neill, who is now a columnist for the San 
Francisco newspaper, who I think is a very interesting columnist. 
Matthews sat in on several focus groups where people had been asked, 
imagine that you have been invited to dinner by your Congressman. What 
would it be like.
  And people had said, well, they assume they would go to some very, 
very expensive house where everybody would be dressed in tuxedos and 
where they would have livery servants who would deliver food and the 
food they would deliver for dinner that night would, in fact, be so 
elaborate and such gourmet food that probably the average American 
voter could not even tell you the names of the food that their 
Congressman would be serving.
  This is not true, by the way, for, I would say, 85 or 90 percent of 
the Congressmen tend to be middle class, tend to live in fairly small 
houses or rent apartments and certainly are a long way from having 
servants who provide food.
  But Chris Matthews' point was that the average American now feels so 
alienated from their government, their elected officials, they feel 
such a distance from the life that they think that Congressman and 
Senator and Presidents and Vice Presidents have and the life that they 
have that their level of anger is sort of permanent. Their level of 
alienation is increasing.
  I think it is important to recognize the two levels. First of all, 
this is exactly the same attitude that is growing in the middle class 
of Italy, France, Germany, Russia, Japan, Canada, England. And, 
therefore, we ought to look at the notion that maybe this is a 
universal phenomenon. Maybe this is not just about America but maybe, 
as part of this third wave of change that Al Toffler writes about, you 
are actually seeing the information revolution create a new standard 
for participation and create a new standard for relationships. And 
frankly, we in public life do not know how to answer it. We do not know 
how to answer it whether we are Russian-elected officials or Italian-
elected officials or American-elected officials. And it is a very, very 
big challenge.
  So I would say that not only do you have the problem of people who 
are upset about government not being a good buy, not only do you have 
the problem of people who are upset because the bureaucracies are 
increasingly isolated and arrogant and increasingly act in dictatorial 
ways, you also have the problem that people virtually everywhere in the 
industrial world are increasingly alienated from their governments and 
that this is a worldwide phenomenon.

                              {time}  1740

  It is a worldwide problem, which is weakening the structure of 
authority and weakening our ability to have healthy self-government 
everywhere on the planet.
  I think all of this is then compounded. By itself these would be, 
frankly, pretty big problems. I think they are then compounded by two 
other difficulties, the difficulty of creating jobs in the world 
market, and the difficulty of replacing the welfare state now that it 
has failed. Let me talk briefly about each of those.
  Listening to Russians try to explain the kind of jobs they wanted to 
create was fascinating in part, because in many ways, if we look at the 
Toffler model of what he describes as the first wave of change, which 
was from hunting and gathering to agriculture, the second wave of 
change, which was from agriculture to the industrial revolution, and 
now the third wave of change, which is from the industrial revolution 
to an information revolution, that much of what the Russians want to do 
is somehow go back to the industrial revolution, that they are trying 
to find a way to rebuild the system that has been there, rather than 
looking at the system that is coming in the future.
  I will give two or three examples of the scale of what we are 
describing.
  First of all, there is a tremendous focus on trying to convert very 
big, very old factories, some of which employ 10,000, 15,000, 20,000 
people, a few of which employed 40,000, 60,000, 80,000 people, and 
trying to get them to convert. And yet what was happening was exactly 
as every American has experienced as they begin to convert.
  If we had, let us say, a steelmaking area that employed 1,000 people, 
if you moved into modern American, or Austrian, or Japanese, or 
Swedish, or German systems, all of a sudden you cut 80 percent of those 
workers out and you increase production; that the new information age 
computerized systems are so powerful that actually the faster they were 
converting, the more people they were laying off, so their choice was 
do not convert and you are all going to go broke, or do convert and 
maybe as many as 80 percent to 90 percent are going to be laid off 
anyway, so even success meant downsizing.
  In fact, we have learned painfully in America that that is exactly 
what is happening to manufacturing. The most successful manufacturing 
companies are consistently downsizing as they use computers better, 
they use automation better, they use Demmings' concept of quality to 
build a systems approach with continuous improvement every day. All 
these things mean that fewer and fewer people produce more and more 
goods and services, so that the manufacturing sector, in terms of 
value-added, is actually about as big as it was in 1980, but in terms 
of employment is substantially smaller, because each person is having a 
tremendous increase in their productivity.
  That actually means that the faster you convert, the more people you 
lay off, the better off you are and the more likely you are to be 
successful. But if you think about it for a second, if you are the 
local political leadership and you get told, ``Gee, we can do a really 
great job, this factory could drop from 40,000 to 8,000 in the next 
year,'' and that would leave 32,000 people on the street, you would not 
necessarily think that was a success.
  Yet in the industrial area, that is the only way to compete in the 
world market, is to downsize, modernize, use quality approaches, and 
get more and more productivity per person.
  What it leads you to, though, is the sudden realization that you had 
better find a way to grow brand new jobs for those 32,000 people; that 
the trick here is not how do I prop them up and subsidize them at old 
jobs, it is not how do I keep them making jet fighter planes that are 
obsolescent, it is not how do I get them pushing paper around or how do 
I get them to show up at work and walk around not doing anything; that 
precisely part of this third wave information revolution is how do I 
suddenly explode the number of small businesses that are brand new, 
that are going to grow up and that are going to become the giant 
businesses of 20 years from now.
  It is very important to recognize the differences between a small 
business that is going to be permanently small, say a one- or two-
person shoe repair store where neither person wants to grow any bigger, 
they are quite happy earning a decent living, all they what to do is 
show up 40 hours a weak, run their little shoe repair shop and make a 
nice living. That is a classic small business.
  What we have to recognize is that in the age of the information 
revolution, of the third wave of change, that we are actually faced 
with the need for baby businesses. Now, baby businesses are very much 
like small businesses when they start. They do not have much money, 
they may be one or two or three people, they may operate in the 
basement of somebody's house, they are not very impressive, and yet 10 
years later they are Apple Computer or they are Microsoft.

  Suddenly, last year Microsoft passed IBM in total capitalization on 
the stock exchange. Now, that was inconceivable 50 years ago. How could 
this company, led by Bill Gates, who is a college dropout, possibly 
grow that big? Yet a decade earlier the miracle story of Apple 
Computer, led by Steve Jobs, a college dropout.
  Most of the best hackers in America today are college dropouts, and 
yet they are brilliant people, each pursuing the technology and the 
information system on their own, each out there trying to create a 
better future.
  Suddenly you have to say, ``Wait a second, maybe a bureaucracy in 
Moscow could have some relationship with a large defense contractor in 
St. Petersburg.'' That is a big enough company, you can see it from 
Moscow.
  But if what you need are--I'm going to stay with my example of 32,000 
people on the street. If the first year the average small business is 
going to hire no more than five people, that means you had better 
create 6,400 small businesses in order to have enough jobs to absorb 
all the people who are being laid off as the defense plant downsizes 
and modernizes and becomes competitive in the world market.
  Now, in order to have 6,400 people, brand new small businesses, that 
is, in order to employ everybody, that means that you have to have a 
tremendous explosion of entrepreneurship. Yet, to have the explosion of 
entrepreneurship, three things have to happen that the classic welfare 
state approach cripples and blocks.
  First, you have got to create an entrepreneurial spirit. Second, you 
have to drastically cut taxes. Third, you have to eliminate most of the 
regulatory bureaucracy. Let me talk about all three.
  You have to find a way to encourage people to go out to take the risk 
of starting a business on their own, to have the courage to take their 
family savings and maybe the savings of their friends and neighbors, to 
put those into doing something, to work extra hard, to maybe work at a 
regular job fulltime and then in the evenings worked at a part-time 
job. Whatever it is, you have to have this commitment which is at the 
heart of creating jobs.
  It is the commitment which we do not seem to understand how to create 
in American Indian reservations, it is the commitment we do not 
understand how to create in the inner city, and it is the commitment 
which we do not seem to be able to understand how to create in long-
term welfare areas like most of West Virginia.
  So we frankly are not in a very good position to say to the Russians, 
``Here is how you do it.'' We can tell them they have to do it, we can 
tell them it is tremendously important, we can tell them ``Look at 
Silicon Valley, look at the north Atlanta area, between Nor-cross and 
Roswell and Marietta,'' we can tell them, ``Look at the Research 
Triangle area,'' we can tell them, ``Go look at all the successful 
entrepreneurs who have made America great.''
  The truth is we do not know today how to encourage the 
entrepreneurial spirit. Frankly, when you hear American politicians 
attacking the successful, when you hear American politicians attacking 
business, when you hear American politicians making fund of and 
deriding and talking about a decade of greed for a period which was in 
fact a decade of job creation, you sort of wonder if maybe a lot of 
American politicians are not forgetting about the spirit of 
entrepreneurship.
  The second problem we have is, even if we get people sort of 
interested in starting their own business--and I had dinner with 
several entrepreneurs in Russia who are right at the starting point, 
they have 4, 5, 10 people who work for them they are barely making ends 
meet, they are just beginning to grow, they are just beginning to have 
a chance to create a little wealth, they are excited by the prospects 
of the future. And yet their biggest threat is taxes, because it is the 
nature of every bureaucracy to cut a deal with the big boys, to take 
care of the very rich, and then to soak small business and soak the 
working middle class. That is what is happening in America, and that is 
what is happening in Russia.
  For example, imagine that instead of having given Donald Trump all of 
the tax breaks that New York City gave him over the last 15 years, that 
that number of dollars had been given to small businesses that were 
startup, baby businesses that were the job future of New York, that 
were going to hire Hispanic and black and Asian and women employees, 
and have Hispanic and black and Asian and women owners, imagine the 
difference in incentives.

  What happened? In New York City taxes were raised on the small 
businesses in order to allow the city to give a tax break to a multi-
multimillionaire. The same thing happens in Russia. The bureaucracy 
takes care of its friends at the defense industry. That means they need 
a lot more money. They get that money by soaking small business and 
soaking baby businesses and killing the jobs of the future.
  In order to prop up and subsidize the old, decaying jobs of the big, 
heavy industries, they are raising taxes on the very entrepreneurs and 
the very small businesses that are the future job creators who are 
going to absorb those currently subsidized people when they leave.
  What happens when you do that is tragic. You can never fully convert 
the people you are subsidizing over here in the old business, and there 
are no new jobs being created over here by the baby businesses, and so 
eventually the defense industry collapses and those people go into 
permanent, long-term unemployment, and you have created a new 
generation on welfare reform, which gets me to the third problem.
  First, remember, you have to create entrepreneurship. You have to 
encourage people to go out and get started. You have to encourage them 
to create new baby businesses. You have to encourage them to create 
jobs.
  Second, you have to cut taxes on small business and cut red tape on 
small business so it has the incentive to go out and has the resources 
to go out. After all, if you do not leave money in a small business' 
pocket, it cannot invest in the next job. If you don't leave money in 
the small businesswoman's pocket, she cannot go out with an incentive 
to create another generation of opportunity for more people.

                              {time}  1750

  But the third problem is bureaucracy. Big businesses can hire lawyers 
and they can hire accountants and they can hire clerks and big 
businesses fill out all the paperwork and that just becomes a part of 
doing business. But if you are a baby business, if you are brand-new, 
if you are out there working 6 days a week, 12 to 15 hours a day trying 
to find customers, trying to get things done, trying to market your 
product and you are right at the breaking point, you are just barely 
making enough money to grow and to get along and now along comes the 
government with all sorts of red tape you have to fill out on Sundays 
and in the evenings, along comes the government and says, ``Now if you 
want this to happen, take a half-day off of work, show up at city hall, 
wait in line, and maybe eventually we will get around to taking care of 
you.''
  Well, the fact is that the bureaucracy and the red tape and the 
domination by lawyers and politicians simply drives people underground. 
I was told again and again in Russia by business people, ``We frankly 
lie to the government.'' We did not meet a single person who paid all 
their taxes. They would tell us in private, ``Look, we all cheat, we 
all know you'd be crazy to pay the Russian Government all its taxes, we 
know it's impossible to stay in business if you pay them everything 
they're asking for. And so we simply hide.'' And it was very, very 
frightening in a sense because it is what we're seeing happening in 
some of America's biggest cities where people increasingly shelter 
their income, increasingly underreport and there is a very real danger 
of what has been the most successful voluntary tax system in the world 
breaking down.
  And yet it is the nature of a large bureaucracy and the nature of a 
big central government to gradually impose more red tape, more taxes, 
more controls, more bureaucracy, and it is the nature of individual 
people, then, to hide more and more of their life and report less and 
less, to see the government as an adversary and a threat rather than as 
a partner and as a helper. And I think that this is a worldwide 
phenomena.
  Notice what I said earlier. The thing that was the most fascinating 
about being in Russia was how similar our problems are. Theirs are more 
acute, they have more pain, they have more difficulty. Their welfare 
state is bigger. Their bureaucracy is bigger. Their taxes are even 
dumber. But the underlying attitude when I would talk to a working man 
or woman, to somebody in business who had a small business, the 
attitudes and concerns were exactly the same. Then when one talks to 
people in Italy, Canada, in Japan, or France, their attitudes are the 
same. You have to start saying to yourself, maybe there is something to 
this concept of Toffler's Third Wave of Change and an information 
revolution which is sweeping all across the world and which is putting 
all of us under tremendous pressure to change our political approach, 
to change our standard of ethics, to change the way we do business, to 
rethink the bureaucracies from the ground up and to rethink the tax 
codes. And what makes this particularly important is the function of 
the world market coming on top of the third wave information 
revolution. Because what the world market says is, that if Russia 
raises taxes too much, businesses just won't invest in Russia. They 
will go to Singapore or to China. They will go to Mexico or to Japan. 
If Russia has too much red tape and too much regulation, businesses 
just will not build the next factory in Russia. They will build them in 
Finland, or in Poland, or in India, or in the United States.
  Well, the same thing is true here in America and what we have got to 
realize is that the very lessons we are trying to teach the Russians 
are lessons that we need to be in a position to teach ourselves.
  Now, I first got interested in this not in dealing with Russia but in 
dealing with Somalia. When the United States sent forces to Mogadishu, 
the capital of Somalia, in December of 1992, I met with a good friend 
Owen Roberts in Tampa, FL, and we were doing long-range planning. He 
said:

       The tragedy is, we don't know how to teach people in 
     Somalia how to govern themselves. We don't know how to teach 
     them how to be productive, we don't know how to teach them 
     the importance of the rule of law and of private property and 
     of free elections. We don't know how to teach them how to be 
     entrepreneurs, to create baby businesses and to create the 
     wealth of the future. We don't understand how to teach the 
     people of Somalia about the world market and about the 
     information revolution that is creating a third wave of 
     change through our lives.

  And as we got to talking about it, I realized that Owen Roberts was 
right. And, of course, if you watch what is happening in Somalia, if 
you watch the enormous human tragedy in Burundi which is going on right 
now, if you look at what is happening in Haiti, you have to be very 
humbled as an American to realize that 218 years after the Declaration 
of Independence, we really do not know how to teach people what we 
believe. That we have lost our nerve and our willingness to say what we 
said so clearly in 1776. Remember that the Declaration of Independence 
said:

       We hold these truths to be self-evident, that all men are 
     created equal and that they are endowed by their creator with 
     certain unalienable rights, among which are life, liberty and 
     the pursuit of happiness.

  And behind that simple quote is a whole body of theory, a whole way 
of life, things which have grown up from the Magna Carta in Britain up 
through the American colonial experience where American colonial 
governments with colonial legislatures had practiced the rule of law 
and free elections and free speech, where the rights of private 
property and the rights of entrepreneurship and commercial behavior and 
the rise of the free market had grown steadily.
  I think it is no accident that Adam Smith's great work, the Wealth of 
Nations, came out the same year as the Declaration of Independence in 
1776. Nor is it any accident that Smith's work on economics, the Wealth 
of Nations, is based on his earlier book which is on moral sentiments 
and talks about the nature and importance of human beings as moral 
creatures and creatures of conscience. And clearly Smith saw the whole 
structure of economics as occurring within a framework of morality and 
ethics which is at the core of the Founding Father's sense of virtue, a 
Roman concept which they saw themselves bring into the modern world.
  In this framework, we need to reestablish both for ourselves here at 
home and in our ability to work around the world our commitment to the 
basic core values of American civilization. Not because they are 
American. I am a patriot and I love my country. But I do not think that 
the primary value of the Declaration of Independence was that it was 
written in Philadelphia by a group of European descendants living on 
the eastern part of the North American Continent. I think the great 
value of the Declaration of Independence is that it is a universal 
document. It does not say all Americans, it says all men. And, of 
course, that is a usage for their generation which today would mean men 
and women. It would say today probably all people. They did not say 
that this was something that applied only to North Americans. They 
said, ``We hold these truths to be self-evident.'' That is so obvious, 
so logical, so clear you did not have to argue them. They would be 
self-evident and every person would understand them. They did not say 
that we Americans have a handful of technical legalities. They said 
that we are endowed by our creator. That is, that God was giving us 
certain unalienable rights, among which were life, liberty, and the 
pursuit of happiness, and in the first draft Jefferson had written the 
pursuit of property because he thought if one did not have property 
rights and did not have the right to have your home as your castle and 
the right to own things and protection from the government taking 
things away from you, you did not have rights.
  Now, that core motto which the Founding Fathers developed and which 
evolved over the following 11 years into the Constitution of the United 
States, that model is, I believe, a model the world can study and as it 
developed over the following 200 years, it became a model which allowed 
more people from more backgrounds to pursue happiness than ever in 
American history. That is, it was a model which allowed people of 
African and Asian, European, Native American, Indian, Latin American 
descent, all to work together. More people have sought happiness in 
America and from more ethnic backgrounds than ever in the history of 
the human race.

                              {time}  1800

  I want to report to my colleagues that I think the problems we face 
here at home are less acute but exactly parallel to the problems facing 
our friends in the industrial world around the planet. Like the 
Japanese and the Italians, we have a problem in the ethical structure 
of our politics, and we need to rethink from the ground up how in the 
information age we should perform as a self-governing free society and 
what the standards should be.
  I think all of us are in the middle of a mess in trying to sort out 
what our ethical principles should be. I think that, like all of our 
friends in the industrial world, we have to adjust to a world market, a 
true world market in which not only our CNN and Coca-Cola are worldwide 
but so are all the standards of competition, and a true world market 
means the price of labor will be established in south China, and if we 
want to have a higher standard of living than the Chinese, we are going 
to have to be more productive, more creative, more entrepreneurial in 
order to have the highest value-added jobs in the world with the 
highest take-home pay and greatest job security. That is going to mean 
very dramatic changes, changes that affect litigation, taxation, and 
regulation, changes that require us to rethink almost everything about 
how America functions, because we have not had to be in this kind of 
competitive world market since before World War II.

  In addition, we have to face the fact that the welfare state has 
failed everywhere on the planet. The bureaucratic model of economic 
income redistribution, it is said, we will take from this group over 
here, we will transform it through a bureaucracy, we will hand it out 
to this group over here, and that has just failed. It has created much 
more red tape. It has trapped people. It reduced citizens to client 
status. And it meant that people, instead of getting stronger and more 
daring and more courageous and more entrepreneurial, people became 
weaker, and they became more victim-oriented, and they became more 
helpless, and they became trapped in the very bureaucracy which claimed 
it was going to try to help them.
  And so we have to, here at home, I think, think through seriously how 
we replace that particular system. The concepts of the principles of 
American civilization, the principles which I would define basically as 
being five: First, personal strength, because without personal strength 
you do not have any ability to be effective. You cannot be a free 
citizen. You cannot open up a business. You cannot keep a job. You 
cannot raise a family. So personal strength, I think, is the keystone 
on which all the rest of American civilization is based.
  Second is the concept of entrepreneurial free enterprise, the spirit 
of cutting through red tape, getting the job done, accomplishing 
something, and the spirit of entrepreneurship that is very aware that 
the marketplace matters, and it goes out to create new jobs and new 
services and new goods and new products and creates a better future by 
having creativity and energy.
  The third principle would be the principle of the spirit of invention 
and discovery, the notion that we can create a better future because as 
humans we have minds that allow us to be creative, that allow us to go 
out and discover about nature, and go out and invent a better future 
mechanically. We take this kind of spirit of invention and discovery 
and we create consistently a better future.
  The fourth principle, I think, is Edwards Deming's concept of 
quality, what he called a system of profound knowledge. Deming is the 
man who taught the Japanese the concept of quality. He later brought it 
to places like Ford Motor Co. It is a very powerful transforming 
experience to work in a quality-oriented environment, one which knows 
that the customer determines value, but the producer creates value, one 
which knows you get real improvement a little bit every day through 
continuous improvement with little changes every day, something which 
is legally impossible in our bureaucratic, legal, lawyer-dominated 
governmental structures of today.
  So I think if you take those four concepts, personal strength, 
entrepreneurial free enterprise, the spirit of invention and discovery 
and quality as defined by Deming, and then you cap them off with the 
lessons of American history, when we really wanted to create jobs, how 
did we do it? When we really wanted to help people get ahead in life, 
how did we do it? When we really wanted to lock up criminals and have 
safe streets, how did we do it?
  If America has been historically the most successful society in 
history, then maybe the correct thing for us to do is to look at the 
lessons of American history and ask ourselves: What did the Founding 
Fathers know? How did they apply it? Over the years how did other 
people like Thomas Edison, the Wright Brothers, Henry Ford, Theodore 
Roosevelt, Abraham Lincoln, how did they apply these ideas? How did 
they create a better future? And what can we learn from them?
  I think we can learn some very powerful principles of replacing the 
welfare state with a system that is volunteer-oriented, incentive-
oriented, decentralized, and really rebuild the family structure, the 
community structure, the local controls that were at the heart of the 
creativity of the American system prior to the rise of the welfare 
state.
  Now, I believe by taking those principles we can teach ourselves a 
lot that can help us frankly dramatically improve the quality of life 
on Indian reservations, dramatically have a revival of our inner 
cities, and bring to our rural impoverished areas new opportunities in 
the information age when anybody anywhere can have a chance to have a 
good education, good health care, and earn a good living, because 
electronics makes it less of a handicap to live in rural areas, if we 
are clever and creative about how we bring that information revolution 
to everyone everywhere in America.
  I have tried to outline all of this, I say to my colleagues, in a 
course called ``Renewing American Civilization,'' which was offered 
winter quarter at Reinhardt College in Georgia. That course is 
available on cable television, on National Empowerment Television. The 
course, which is 20-hours long, ten 2-hour segments, which lay out the 
principles of American civilization, the course is available on 
National Empowerment Television, which is a satellite channel every 
Wednesday from 1 to 3 Eastern Time and will be shown all year, so it 
will be shown a total of five times this year. The course is also 
available in audiotape and videotape form, and any of my colleagues or 
their staffs or any of their constituents who would be interested, you 
can learn more about that by calling 1-800-TORENEW, which is an 800 
number that was set up to allow people to learn more about the course.
  The reason I taught a 20-hour course in Renewing American 
Civilization is I think the core of our problems in America today and 
the core of the problems both in the industrial world that is under 
stress, Russia, Italy, Japan, France, Germany, Britain, and Canada, and 
also, frankly, in the world that has not quite industrialized, places 
like Somalia, Haiti, and Burundi, I think the crisis is not money. I 
think the crisis is intellectual. I think the great problem is we have 
had the wrong model. We keep trying to have a bureaucratic big system, 
big corporation, big redtape, command economy role which is just wrong.

  We have to replace that model by going back to the America that de 
Tocqueville described in his great book on democracy in America. De 
Tocqueville understood America's genius was in voluntarism. It is in 
Kiwanis Club, Business and Professional Women, Girl Scouts, Boy Scouts, 
the YMCA, the YWCA, all the different kinds of voluntary groups that 
spring up in America and that launch their own new ideas and new 
approaches and new creativity.
  My suggestion to my colleagues, as we look at trying to help Russia, 
is that unless we thoroughly ground ourselves in the principles of 
American civilization, unless we have studied how we are prepared to 
replace our welfare state, unless we have studied how we are going to 
replace our bureaucracy with a system that makes sense in the 
information age, unless we have looked at the requirements of the world 
market and we are prepared to create a competitive America where we 
change the regulation, the litigation, and the taxation which are 
crippling us today, until we are sure that we in fact have a firm grip 
on how to create the jobs of the future, create the wealth of the 
future, create the opportunities of the future, I think we should be a 
little cautious about telling the Russians to rush in and rebuild and 
reinvent our welfare system.
  It seems to me we ought to focus on how to create small businesses, 
how do you create baby businesses, how do you encourage those baby 
businesses to grow, how do you use electronic information systems to 
replace bureaucracy, how do you decentralize so people at the most 
local level possible are making the decision, how do you allow people 
to pursue happiness on their own rather than having the bureaucracy 
define happiness for them? I think these are very profound questions. I 
think they are at the heart of where we are today as a country.
  We have had a remarkable two centuries. We have gone an amazing 
distance.
  When you are in Russia and you look back on America and you see us 
almost everywhere in blue jeans, in music, on television, in commercial 
products, in the positive warm way in which people talk about America, 
people who have not visited tell you how much they want to, you feel 
great pride in America.
  And yet we face very real problems. For all the crime in Russia, the 
murder rate in Washington, DC, is greater than the murder rate in any 
city in Russia. The murder rate in New York is greater than the murder 
rate in any city in Russia. The crisis of poverty in America, of poor 
children trapped in neighborhoods surrounded by violence, no prenatal 
care, living in government-run housing, and it is astonishing. Russian 
public housing owned by the government resembles American public 
housing owned by the government, because when the government owns 
things, people do not take care of them as well. They are not as 
pretty, and they do not have personalities, and they are large, bland, 
grey concrete boxes.

                              {time}  1810

  And walking into a Russian public housing building was like walking 
into an American public housing building. It was astonishing to see 
what the absence of private property, the absence of ownership, the 
absence of pride, the absence of a sense that, ``This is mine, it is my 
castle, and I will take care of it.'' It did the same things in Russia 
that it does in America.
  So I simply want to suggest to my colleagues that all of us should 
study principles of American civilization, all of us should relearn the 
lessons that used to work in America; that we have an obligation not 
only to tell the Russians or the Somalians how they should in fact 
change their country; we have an obligation to bring, here at home, the 
same lessons to ourselves and to recognize that we need enormous 
changes in America if we are going to compete in the 21st century.
  We need enormous changes in America if we are going to be safe from 
violent crime, we need enormous changes if we are going to have a 
small, centralized, user-friendly government that actually cares about 
its citizens and operates in a nonbureaucratic model. All of those 
things are possible, all of those things can be created using the 
principles of Alvin Toffler's ``Third Wave of Change.'' All of those 
things are made necessary by the world market because if we do not 
change, we are going to lose jobs and lose income and become a lot 
poorer in the next 25 years.
  And I would argue that all those things are morally necessary because 
they are what make us Americans; that America can be proud that we 
really do believe that all people are endowed by their Creator with 
certain inalienable rights and that we in fact have an obligation to 
try to redesign American Government, to try to replace the welfare 
state, and to try to create an opportunity society in which every 
person has an opportunity, actually, to live out life to its fullest, 
to be a citizen, not a client, to create a baby business, to pursue 
happiness, to create wealth, and to have a sense that their property is 
theirs and that their government, frankly, is their servant and not 
their master.

                          ____________________