Wharton Doubles Down On The Bay Area

Studying at the University of Pennsylvania Wharton School – Ethan Baron photo


He says that claims by European schools that they are more global than their U.S. counterparts has some merit. “The global statistics are always going to work better in Europe because you have 29 countries with more or less the scope of the U.S. So you just look more global as a result. But I do think it’s a fair criticism of U.S. business schools in general. Wharton is a global school in the sense that our faculty and students come from all over the world, and this is my personal biography. I came to the U.S. for my education and that changed my life. But I also think that the U.S. has been a magnet for talent and ambition for 150 years and that is the secret sauce of the U.S. economy. To my mind, there is no doubt about that. But if you grew up in America, you think you don’t need to go to the world so much. Why? Because the world has always come to you. If you grow up in a small country like Australia as I did, you don’t think the world comes to you. You’ve got to go to the world.

“What I want to do is a little more balancing there. Yes, we want to be a global magnet but I think it is really important to be out there in the world, too. So for me that is the third dimension. Online is a really important part of a global play. Why? Because it massively increases access. Think about the hundreds of thousands of people who have completed courses online. Most of them could never come here for any number of reasons. But at the end of the day, there is no substitute for being on the ground somewhere. You can read as many books as you want about the scale of China. But until you get stuck in a Beijing traffic jam for two hours, you have no idea about the scale of China.”

When Garrett sat down for the Poets&Quants’ interview, he had only recently returned from a meeting of the seven deans from the M7 business schools where there was concern over the decline in international applicants. Many internationals, of course, have been less enthusiastic about coming to the U.S. for an MBA because of all the anti-immigration rhetoric and difficulty in getting work visas after graduation. “This is one I care passionately about,” Garrett says. “The big change in migration policy in the U.S. happened after September 11th. That is when the H1b visas were cut. It didn’t happen with the election of Donald Trump. But I do think that the problem right now is that what Donald Trump tends to do is send up flares and by the time they come down to the ground, the change in policy isn’t very big. But the perception impact has been enormous.


“For us, it means that we have to think very carefully about career and internship opportunities for our students. We have to think more about internship and job opportunities outside the U.S. That is easy for big firms to do. If you are a big multi-national, you can move employees around quite easily but it’s harder for a smaller firm. So I think career management has already changed in one sense. We need to do much more to help students do individualized job searches and make them more internationally oriented.

“Everyone is having the challenge that (HBS Dean) Nitin Nohria calls the individualized job search. That’s the first reality. And then the second is that we have so many international students who want to stay and work in the U.S. but under current policy that is proving harder. So we have to respond to their needs by thinking about international career management as well.”

Does he think that talk of a trade war with China or Europe will also harm the U.S. role in the global economy? “The headlines are all about trade wars, but if you dig just an inch under that it’s actually about competition and innovation. It’s not about steel and soybeans, solar panels or sorghum. It’s about artificial intelligence and electric vehicles. China is an innovation economy and what Donald Trump is saying is that China has become an innovation economy unfairly, and we have to do something about that. Trade wars are simple headlines, but profoundly misleading. What we really are talking about is who is going to lead in innovation in the world in the next 25 years. And our students need to know that.


“It will be a more global, more de-centered world and that means we are bound to be more global in the U.S. How that plays out I’m not so sure. Think about this in U.S.-China terms. You can use a dial to determine when China will become the biggest economy in the world. Depending on assumptions, it could be five, ten or 15 years from now, but it is going to happen. The day it happens is going to be a really big deal because the U.S. has been the largest economy in the world for more than 100 years. And yes, when China passes the U.S., it will be a poor country, with one quarter the per capita income. But psychologically for the United States, that is going to be a shock to the system.

“That is why I think this innovation point is so profound. We tend to dismiss Chinese firms, saying all they do is adopt our technology and scale it. Well, yeah, but look at how well they scale it. A favorite example of mine is high-speed rail. There is more high-speed rail in China than in the rest of the world put together and they built it all in the last ten years. They didn’t invent the technology. I think the Japanese bullet train was the first high-speed train. But now there are more high-speed trains in China and there is no high-speed rail in the United States. They want to build one in California between San Francisco and Los Angeles and the timeline is that it will take 20 years to do that.

“I call it innovation that China leads in high-speed rail,” says Garrett. “I call it innovation that China leads in online payments. Even if PayPal invented it, it has been scaled in China by Alibaba and Tensen. The assumption still in the U.S. is that it must lead in innovation. That is true but that doesn’t mean that China isn’t an innovation economy and that is what the Trump Administration is concerned about. The real underlying economic issue is competition for innovation and market access to American firms in China.”


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