The Hon. Deborah L. Wince-Smith, Council on Competitiveness President and CEO, and Mr. Brian Moynihan, Bank of America Chair and CEO and Council on Competitiveness Chair, kicked off the 2024 National Competitiveness Forum with a fireside chat, discussing the issues and opportunities facing U.S. competitiveness.
Mr. Moynihan started the conversation unpacking a major, emerging trend that will drive change in the coming decade, “deglobalization.” While he was skeptical of the idea the interconnected global economy could truly disconnect, he acknowledged the impulse for nations to insulate themselves from the impacts of technological innovation, climate change, and price wars could lead to future turbulence. However, no matter how far deglobalization might go, the United States is in a strong position, with its 350 million consumer economy and the “perpetual motion machine” of research and innovation rewarded by capitalism.
“We have a perpetual motion machine, which is core research and innovation rewarded through the capitalist process.”
Mr. Brian T. Moynihan
Chair and CEO, Bank of America and
Chair, Council on Competitiveness
While there is a great deal of economic, political, and social upheaval today, Mr. Moynihan reminded participants the United States has dealt with tough times. Looking back to 1969, the United States was embroiled in the Vietnam War, suffered two high-profile political assassinations, and was beset with riots across the country. At the same time, innovators and entrepreneurs were developing the personal computer, and along with that development came predictions that computers would replace middle management professions, leaving millions jobless. Yet, that dire prediction did not come to pass. Indeed, the American workforce grew from 75 million then to 150 million today, outpacing population growth thanks to higher female workforce participation. Mr. Moynihan cautioned many of the same fears we have today, of technology replacing large categories of the workforce, are not new, and we have previously overcome them. New innovations will undoubtedly replace some jobs, but the new opportunities they present will more than make up for this churn.
When asked what sets the American economy apart from its international competitors in innovation, Mr. Moynihan praised the ability for American innovators to secure the funding they needed for their creations to have a global impact. He offered an example from an entrepreneur he had met at dinner the night before: a Notre Dame student who invented a device to improve the experience for those needing CPAP ventilators during sleep was able to secure funding. Because of this access to capital, the student was able to build a successful business – shipping product around the world – within a year. This capitalistic ecosystem is a differentiator for the United States compared to much of the world.
While other nations have invested heavily in research, the United States has the greatest ability to leverage its university system and capital markets to turn those ideas into products, crossing the so-called “valley of death.” This system of incredible reward for marketable research has led to many innovators globally to migrate to the United States. It also has led to the U.S. economy growing to 160 percent the size of Europe’s from a position of parity in 2007.
However, Mr. Moynihan is less concerned about the “valley of death” than many others have expressed. The phenomenon, in his view, would be more accurately thought of as “time and money” getting out of sync — a mismatch between long-term returns and short-term investors.
Looking at the pace of AI deployment in banking and finance, Moynihan sees it as a next step in the long-running trend of automation of financial decisions. His bank has been using data-driven models to make decisions about loans and credit for twenty-five years, with a large literature already existing on the nexus of finance and computing. To him, AI is going to serve as the next iteration of that arch of innovation, giving banks more refined and flexible tools to make smarter and more complex decisions. However, he noted that AI would truly show its impact in the analysis work being done by Bank of America, informing their strategies and recommendations for clients. Bank of America is already reaping the rewards, seeing large savings in how much they spend on analysis and an increased ability to process customer data to make smart decisions.
Mr. Moynihan acknowledged there are ongoing challenges related to AI regulation, such as managing copyright protections. However, he anticipates that within five to seven years, AI will be capable of performing large-scale data analysis, delivering tremendous productivity gains. He referred to this advancement as "Einstein at 50," in contrast to today’s "Einstein at 13" models. He expressed concern that regulators might pursue overly stringent regulations on AI, potentially stifling its transformative potential. Instead, he proposed that the responsibility for content generated by AI—whether a financial statement or a new type of medicine—should reside with the companies creating it. This content should be held to the same regulatory standards as any product developed by humans. By doing so, existing regulatory frameworks can be applied, placing the onus on companies to act responsibly rather than creating an entirely new set of regulations for AI.
On cybersecurity, Moynihan warned the bad guys are out there, and they are getting more sophisticated. The classic spam email full of misspellings has given way to complex and realistic communications designed to deceive even those on the lookout for fraud. Bank of America’s cybersecurity department is constantly playing “whack-a-mole.” To combat cyber-criminals, more diligent enforcement by government authorities is needed. If someone robs a bank with a gun, they can expect severe repercussions. But using digital techniques for the same end can obfuscate culpability and involvement. What is needed, according to Mr. Moynihan, is a robust public response.
At the nexus of energy and sustainability, Mr. Moynihan argues that corporate actors have an indispensable role to play. Collaborating with Council Chair Emeritus Chad Holliday, Mr. Moynihan reflected on how he developed a framework known as “Sustainable Energy for All,” which asserts that everyone in the world has a right to energy and electricity. This is easiest for developing countries to achieve through fossil fuels, but that presents environmental drawbacks. Renewable infrastructure is therefore necessary, but that presents a financing challenge. Fortunately, private industry is stepping up. Bank of America, for example, has increased its commitments from $25 million to over $500 billion for renewable energy projects. When combined with efforts from other financial institutions, private enterprise can significantly surpass the $100 billion commitments outlined in the Paris Climate Accords.
These investments in sustainable energy are becoming increasingly widespread, benefiting regions from small island nations to Texas, which has emerged as the fifth largest producer of renewable energy in the world. Bank of America has also assisted developing nations in restructuring their debt to safeguard vital natural resources, such as those in the Bahamas, Ecuador, and, more recently, Gabon. By offering improved debt structures, banks encourage these nations to invest more in environmental protection, which Moynihan considers a critical "asset class." In this way, private finance can drive more effective sustainability initiatives by public entities globally.
However, Moynihan pointed out the United States is not currently leading in the renewable technology race. China and India, which aim to reduce dependencies on global energy markets, have made significant investments in renewable technology.
Looking ahead in the next decade, Mr. Moynihan reminded the participants of the importance of the value of the United States’s research institutions. The U.S. Department of Energy National Laboratories, universities, and the organizations which commercialize innovation provide tremendous returns to the American people, but periodically, those investments come under attack as an unnecessary expense. Those investments have produced and continue to produce world-changing innovations, from computers to lasers to solar panels to oil drilling. The intellectual power in these research institutions is an invaluable national asset that requires vigilant, robust maintenance and investment.
In closing, Mr. Moynihan noted how a successful United States powers global economic activity. By reminding people of the value of investment in innovation, and advancing a bipartisan agenda to ensure that investment remains strong, the Council is helping shore up American innovation and competitiveness leadership for years to come.
