FROM THE OFFICE OF PUBLIC AFFAIRS

Thank you, Dean Harker, Vice Dean Allen, trustees and overseers, members of the faculty, students, alumni, families and friends. Thank you, especially, to the Wharton MBA Class of 2000 for allowing me to share this occasion with you. And congratulations. I shall try to remember the advice that Mario Cuomo was once given: that commencement speakers should think of themselves as the body at an old-fashioned Irish wake. They need you in order to have the party, but nobody expects you to say very much.

Three years ago, during an official trip abroad, I was handed a mobile phone to talk to then Secretary Rubin about the IRS, and I did not give it a second thought. Even though I was sitting in a canoe two hours outside Abidjan at the time. It occurred to me afterwards that just seven years earlier in Chicago I had called my wife from the back of car - simply to tell her that I was in a car that had a telephone.

That experience brought together some of the most important forces in the world today: technology, markets, global integration and the move from an economy built on bricks and mortar to one built on bytes and ideas.

This new economy is going to demand different skills and approaches from every one of us. Today I want to talk about four things that it will be particularly important for you all to keep in mind in the course of your careers - wherever you are. They were probably always important but they take on special significance today.

Karl Marx captured a crucial difference between man and beast when he said that the most skilled bee simply constructs the cells of the beehive, whereas the worst of architects will first erect his structure in his mind. That distinction takes on added salience today, as we approach a world where what you can imagine matters more than what you can physically build, and what you know matters more than what you can lift.

In such a world, those who make the greatest contribution will be those who bring to the table something distinctively new: a new idea; a new product; a new way of marketing it; a new way of relating to a customer; or a new way of conceiving a business.

• For individuals and businesses, this shift is going to require a greater willingness to change, and greater openness to new ideas. There was a time when the image of business was people in gray flannel suits; and conformity and efficiency in completing pre-defined tasks were highly prized. In today's world, distinctiveness and creativity will be the assets with the highest return.
• And for nations and governments, it is going to mean fostering, and maintaining, a climate of innovation - the same kind of climate that has brought many of you here from overseas. It is no accident that the country that has so far benefited most from the new economy is also the only place where you can raise your first $100 million before you buy your first suit.

In a new economy, it has never been more important for individuals, businesses or countries to be integrated with the rest of the world - both because of the benefits that a global market can afford, and because you never know where the next great idea may come from.

To many outside the US, the World Series is an American enterprise with global pretensions. But increasingly, the World Wide Web - like the new global economy - rather better lives up to its name. We see that in Europe, with the rise of M-commerce and European companies such as Nokia now at the cutting edge of cellular telephony. We see it, to a lesser degree, in Japan - in its own "bit valley" and Nasdaq Japan. And we see it in Mozambique, even, when I spoke not so long ago to an Internet provider who feared he was about to face competition.

These examples remind us that we need as individuals to stay interconnected with the broader world. And the laws of arithmetic tell us that the same applies to the economy as a whole - because the larger and more open the global trading system is, the more of today's good ideas can become tomorrow's going concerns.

Just as orphan drugs cost much more than drugs with a larger market, and bestsellers cost much less than academic monographs, the new knowledge-based industries are ones where snowball effects and increasing returns will be much more important. So the efficiency of a business and the returns it can earn will be more directly related to the number of consumers it can reach. At a time when more than three-quarters of the world's population lives in the developing countries, that has to mean a public strategy of opening markets and supporting successful economic integration overseas.

Third, Now More Than Ever, People need to feel that they belong.

An economy driven by networks and the exchange of ideas is one in which people will be motivated less by orders or bribes - and much more by a sense of being part of a team. This will apply to you in your day-to-day dealings with your colleagues. And it has crucial implications for national policy as we consider how best to realize the nation's potential.

Some worry that a globalized, digitized world will be a lonely world - a global community in which everyone interconnects, but no one inter-relates. I believe that is possible. But history tells us that such a community will achieve less than it is capable of, and certainly less than the sum of its parts. For our success to continue - and for this next century to be what we would want it to be - we all need to be mindful of the people we are bringing with us as we move forward in this new world, and the people we are leaving behind.

That is partly a matter of keeping our economy strong, investing in education and increasing support for the working poor. It is also and crucially a matter of bringing more people into the networks upon which this new economy depends. Notably, if the challenge of universalization a half a century ago was to ensure that all had access to electricity and running water, the task today is to ensure that all have access to telecommunications, to information technology and to basic financial services.

Most of you have chosen careers in the private sector. And the success of our private sector will determine our success as a nation in doing everything from helping families provide for their children, to staying strong in the world, to fighting poverty, to curing disease. But, as citizens of your countries and as pursuers of enlightened self-interest, never lose sight of the fact that public choices matter, and will matter very profoundly, to the shape of the world in which you live.

It is, in many ways, a critical moment in our nation's history. America is the world's largest economy and strongest nation with no single, dominant competitor. At the same time, Americans are growing wary of global entanglements. Market ideas are in ascendancy; there is high regard for business and the rights of capital; but while successful investors are heroes, those at the bottom of the ladder still feel insecure. Internationally, the breakdown of empires and the absence of large power balances have made the world ripe for ethnic and nationalist conflicts.

I suppose I could be describing the world of today. I am actually describing the world of the late 1920s. That was a time of high optimism, a time when continued peace and stability was widely foreseen. And yet, over the next 15 years, governments made decisions that would ultimately send the world system spiraling out of control: the decision to erect tariffs and turn inwards; the decision to collect crippling debts from countries that could not reasonably repay; the decision to leave behind the residents of the dust bowl; the failure to respond to gathering economic distress. The period of depression and World War that followed are perhaps the darkest two decades of the 20^th century and, arguably, among the darkest of that millennium.

History does not repeat itself. Any historical analogy between the world of today and the world of the 1920s is surely imperfect. But that experience reminds us that public choices can have enormous impacts:

• In an economy driven by information, it matters to all of us that our government decides to invest in the users of producers of information - namely people. The digital divide is a very important problem. And the greatest source of the digital divide is the inability to read.
• In a world built on ideas, it matters that our government invests in basic research that will pave the way for the technological breakthroughs of tomorrow.
• And in a global economy, it matters that we as a nation continue to look outward, and our government works to extend and deepen the global trading system.

In the future, as in the past, the people who make the public choices that will shape our nation's future will be our public servants. One can value public service in a number of ways. But it has to be a concern that in the past 5 years there have been more than 800 cases of physical abuse or threats against employees of the IRS. And I believe in market forces - but one has to ask questions of a labor market that rewards the actors who portray our most senior officials in the "West Wing" ten times more than their real-life counterparts who actually do the nation's work.

There is no better way for you to invest in public institutions that will make the right choices for your country than to spend some part of your career in public service yourselves. I do not think it is an accident that the country that has seen perhaps the most successful collaboration between the private and public sectors in recent years is the country with the strongest tradition of individuals moving between the two. With your support, that strong tradition can continue.

Finally, if there is one message I would hope you might take away with you today, it would be not to take our current prosperity for granted. Just as the world today looks very different today than it did when I was sitting in the back of that car in Chicago - so too did things look very different in 1990 than in 1980 - and so, just as surely, will 2010 look very different from today.

We cannot know what our economy will look like a decade from now. What we do know is that we are now enjoying a very prosperous moment. The reality for all of us - for businesses, for households and for government - is that we cannot be complacent or take these good times for granted.

Many things have changed in this new economy. But the basic uncertainties of economic life have not changed. Enjoy today, and enjoy this remarkable moment in American and global history. But do not forget to prepare for the time when the winds of change may be blowing the other way. Thank you, and well done.