Remarks by Ambassador Heyman at Thomson Reuters Financial and Risk Summit

Good afternoon, and thank you Lisa (Rowsell, Head of Thomson Reuters Canada) for that kind introduction.

I’d like everyone to pause a minute to reflect on how far we’ve come in the last few years. It would be an understatement to say 2008 was a difficult year economically. The truth is, the world was on the brink of an economic catastrophe. Many financial firms were forced to merge in order to survive, while others went out of business entirely. The stock market was in chaos. Few companies were immune to what was happening; small firms, and yes, even big, long-established firms like Lehman Brothers would eventually succumb Lehman Brothers! Housing prices were in free fall as an over levered system began to collapse. Job losses were piling up; in fact, the United States alone lost about 900,000 jobs in January 2009 and unemployment would later peak at 10 percent. The auto industry was near bankruptcy and restructuring was underway.

Ambassador Heyman at the Thomson Reuters Risk Management Summit
Ambassador Heyman at the Thomson Reuters Risk Management Summit

I remember March 9, 2009 so vividly. I remember, it was early in the morning — before sunrise — I was driving into work and reflecting on the markets. And, while I have experienced market corrections and recessions before, including the crash of 1987 and the famous dot-com bubble of 2001, this felt different. Much worse, you know? The normally short 20-minute drive seemed unusually long. I contemplated what new difficulties the day would bring; clients were beginning to panic and our employees were looking for leadership. Many clients instructed us to sell everything. Some tried to rush into gold and wanted the bars shipped to their homes!

Eventually, I pulled into the garage at my office, and the ever effervescent attendant Yvonne wished me a happy birthday and told me things were going to look up starting that day. Little did we know at that time, that that would be the market bottom for this crisis.

I couldn’t help remembering that just six weeks earlier I had joined the throngs of thousands of people who had gathered in our nation’s capital to cheer as our 44th president was sworn in. I might add that Inauguration Day 2009 also marked the culmination of several years of my personal effort to support then candidate Obama’s run for the presidency.

I’ve taken you back to that time to underscore the state of the United States that President Obama inherited nearly seven years ago. Ours was a country in deep pain and suffering as millions lost jobs, life savings, their homes, and yes, their dignity. This wasn’t just limited to the United States by the way. Global economic stresses continued as aftershocks of the world financial crisis reverberated from continent to continent.

But President Obama took action and today we live in a markedly different reality. With the President’s steady hand plotting a course ahead and the support of Congress, a combination of a large economic stimulus, new legislation protecting our financial system, a revamped auto industry, assistance to homeowners, the U.S. recovery began to take hold.

Fast forward to the present. The economy that President Obama stewarded has a firm footing. Unemployment, which peaked at 10 percent, is down significantly to five percent. In fact, we have created over 13.5 million new jobs in 68 straight months of positive job growth; the housing market has stabilized and many markets are showing continued signs of health; the auto market has recovered with record setting sales figures; the financial service industry, yes the banking system, is strong, and that stock market has nearly tripled in value and the federal budget deficit has been cut by two-thirds as a share of GDP to about 3 percent. And yes, as if that wasn’t enough, we can now boast that millions of Americans have healthcare for the first time

So let me be clear: The state of the U.S. — Canada economic relationship today is strong. Really strong. What makes it so remarkable is that it has grown by 52 percent since the very worst of the global financial crisis. The facts are staggering actually and we should be proud. Total trade and investment between our two countries is an astounding 1.4 trillion U.S. dollars. Last year, we had 759 billion U.S. dollars in two-way trade in goods and services. That’s more than 2 billion U.S. dollars per day, or 1.4 million dollars each and every minute. Last year, a whopping 77 percent of all of Canada’s merchandise exports went to the United States. Our people benefit from nearly 700 billion U.S. dollars in two-way investment between our two countries, a figure that increases by tens of billions of dollars every year.

In a nutshell, even though 2015 numbers will be impacted by declining commodity prices and changing currency values, what Canada and the United States share is a deeper, broader, more harmonious and complementary relationship than perhaps any two countries in the world. And, nowhere is this more evident than in our bilateral trade relationship and our commitment to growing our respective economies. Because we know, prosperity on both sides of the border is not just good for our respective countries, but good for all economies.

As President Obama’s representative in Canada, I commit to you that the U.S. Mission to Canada will continue to support this investment and interconnected development trend between our countries, and all forms of collaboration from investment cooperation to entrepreneurship and innovation.

However, in spite of the great strides the United States has made since March 2009, we still have work to do. The gap between the rich and poor is still far too wide. Our infrastructure like highways, bridges, and tunnels is in need of major investment. But, because of President Obama’s leadership, the risk to the U.S economy is substantially lower than on that cold, winter, Inauguration Day in January 2009.

What President Obama and his Administration have done in the last seven years took leadership, courage, and decisiveness. And it wasn’t without tremendous risk. And, given the theme of today’s event, I’d like to discuss some of the risks ahead.

One very clear and present danger we face today is climate change. It is no longer the abstract risk of some distant day in the future. We’re past the point where we argue about the science. As citizens of the world we can and must work together to lower Green House Gases (or GHGs). At the end of this month, President Obama, Prime Minister Trudeau, and the heads of state from virtually every country in the world will attend the United Nations Climate Change Conference — COP-21 — in Paris where they will work on a plan to reduce GHGs.

Look around; we already have a record number of significant climate events which have resulted in the need for millions — no billions — of dollars in disaster relief and mitigation. Floods, hurricanes, drought, you name it, are changing our daily lives, impacting governments and corporations and just like we so painfully learned with the financial markets, there really aren’t any borders.

In August, I welcomed a group of students from around the world who had just returned from a two week expedition to the Arctic under a program called Students on Ice. I’ll never forget what one young woman from China told me. She said she had drunk water from a glacier that was melting so fast that it would disappear within her lifetime.

Our economies and infrastructures are so intertwined that we cannot ignore the reality of climate change.

The month of October was the hottest month on record. As climate change continues due to our reliance on carbon intensive fuel, risks will accelerate and could eventually impact our economy and financial markets. President Obama has set aggressive targets of reducing greenhouse gases in the United States by 26-28% by 2025. The President is demonstrating domestic and global leadership in reducing the risks of climate change. Both by directing us to meet high standards of reduction in carbon emissions and by encouraging innovation to develop products and services that have a smaller carbon footprint. So what can we do?

First, we must support our governments’ efforts to limit green house gas growth and support their efforts to galvanize the world to do the same at COP21 in Paris next week. Reaching a new climate change agreement in Paris would be a historic step. It would establish, for the first time, an ambitious, durable climate change regime that applies to all countries, is fair, focuses both on reducing greenhouse gas emissions and building resilience, includes strong accountability measures, and ensures ongoing financial and technical assistance to those in need.

An agreement in Paris would send a powerful signal to financial markets and to our citizens that the leaders of the world are committed to tackling climate change. We have to seize this opportunity. We can finally put ourselves on a path to creating a low-carbon, sustainable, global economy. President Obama is committed to working with other countries to reach this goal — through a deal that works for others and for us. This will require commitment, creativity, and flexibility by all parties. We are going to Paris ready to work with others, like Canada, towards a common ground.

In many ways however, COP 21 will be just the beginning of the continued needed effort to implement the policies necessary at the state, provincial, and federal levels. Vocal support by your corporations and individually is the lifeblood of any successful policy action. Not doing so will lead to greater climate events that will impact our budgets as we repair ongoing damage done to our infrastructure.

So that begs the question. What does that effort look like?

Well, we need to innovate and nobody does innovation better than North Americans. Innovation is the basis of our joint success in the global economy. Cutting use of intensive carbon based fuel is only possible when there are alternatives. Some of these exist and will need to be refined and improved upon.

But how do we drive that innovation? That creativity?

We do it through the economy and frankly, taking on risks to the status quo. The jobs of the future are tied to educational exchange and investment in the next generation.

As innovation leaders, Canada and the United States understand that investing in disruptive technology takes tremendous risk. Many times, it means that existing approaches are obsolete. Remember your VHS recorder? Microfiche? The typewriter? The list goes on. The point is: companies and industries that don’t evolve…die.

I’ll make a completely linear link here. Just look at the signage for this event. I certainly don’t have to tell you that the way we get news is evolving. Millennials read fewer print newspapers and as a rule don’t follow any single news website. But, they are more informed than ever because they connect to news through social media. A friend posts an interesting article on Facebook which gets read, trends, and leads to a search for more information on the topic. Twitter, LinkedIn, and Canada’s own Hootsuite are how people will be getting their news. And who knows when? But that will change too.

Our two countries exist in a complicated world. A world where technology sets the pace of change. Think about it. Some of the things that seem ordinary to the X, Y, and Millennial generations were the stuff of science fiction as recently as 20 years ago. There are now entire lifetimes captured on digital technology — a possibility that didn’t even exist when my own children were born. I have this watch — I answer my phone, follow my Twitter feed (another thing that didn’t exist), check my email, the weather, figure out where I am when I’m lost — all on this small device around my wrist.

It is truly an amazing innovation.

So yes, with all these technological developments and economic successes, it is easy for us as businesses and governments to rest on our laurels and say “Well, we’ve done our bit. The economy is doing well. Why mess with a formula that works?” But here’s the thing: now, more than ever, we need big, never-been-done-before ideas not just to adapt to a changing reality, but to become the new reality. We need big ideas not just in information technology, but for the broader economy and the environment.

On Wednesday, I visited the offices of Shopify in Ottawa where Harley Finkelstein — one of the co-founders of Shopify — and I talked about entrepreneurship in front of an audience of business students and aspiring entrepreneurs. We discussed disruptive innovation — you know what I mean — the theory of innovation-driven economic growth where often smaller companies with fewer resources essentially use innovation to challenge incumbent, often larger companies — effectively causing disruption in the status quo. Shopify, a Canadian company — started because its founders needed a platform for their online shop, is a perfect example of a disruptor.

I was particularly struck by one young man who asked, “How can we incorporate social entrepreneurship into disruptive innovation?”

He seemed to view social entrepreneurship as a labor of love but one that couldn’t possibly gain any economic traction. And it occurred to me that most of us here, in this room, right now, with our traditional ways of thinking about business, are actually at a watershed moment. Why can’t social entrepreneurship be a viable model? Young people today are definitely thinking in those terms in ways that previous generations did not. But you have to commend this generation, and yes, you can mourn for the way things were when you were young, but this generation has actually internalized their role as stewards of our planet and its resources.

Sure, today’s entrepreneurs want to be profitable because a business can only survive so long without making money, but we should all be like this young man who is thinking of how to do this in a socially responsible manner. He is already questioning the dichotomy between social entrepreneurship and business success. The thing is, just because the two goals previously seemed incongruous, it doesn’t have to be that way. That’s part of the disruptive innovation. Why not make stewardship of our environmental resources an inherent part of business today? It is our fundamental responsibility to future generations to allow the space for socially responsible innovation.

What we all need to remember now is that every day someone new is doing the impossible. The next generation of business will need to build infrastructure that encourages the development of ideas — where success is turning innovation into a bottom line, and disruption is prized above following the status quo. And communities, cities, and businesses, need to be prepared.

I’m from Dayton, Ohio. It is also, famously, the hometown of Wilbur and Orville Wright.

Wilbur and Orville Wright changed our world. They had an idea, an idea that took a lot of time, study, trials, and errors to turn into a reality. BUT, their legacy is more than the airplane. It is also the “Kitty Hawk Moment”.

You see, the Kitty Hawk Moment is that moment when something that previously seemed impossible becomes real.

Imagine standing there at Kitty Hawk, watching man’s tethers to the earth be severed, the rules of gravity effectively broken and an age of human flight begin.

I spent over 30 years at Goldman Sachs focusing on investing. My big take away from that time was that if we failed to invest in future generations, we did so at our peril. As business leaders, we understand that investing in disruptive technology isn’t easy. Some things may only be a distant dream.

Think about Facebook, arguably one of the biggest game changers of a generation. Not willing to rest on his laurels, in 2013, Facebook founder Mark Zuckerberg launched to provide internet access to the five billion people around the world who are not yet online. What he actually said was, “The knowledge economy is the future. By bringing everyone online, we’ll not only improve billions of lives, but we’ll also improve our own as we benefit from the ideas and productivity they contribute to the world.”

And that’s it, the knowledge economy, innovation — they are key to our success. We need more Kitty Hawk Moments. If we don’t create them others will. We have a window of competitive advantage and I want to see North America be a leader in innovating to save our environment.

At this point, I’d like to say, I have the best job in the world and I love being the United States’ Ambassador to Canada. This really is a magnificent country. The United States is a magnificent country. And ours is a relationship without parallel. Our markets are intertwined; our families, interwoven; and our values, shared. It is far more than an accident of geography that has kept us friends, partners, and allies — In 1947, President Truman said in a speech to Parliament, that “Canada and the United States have reached the point where we no longer think of each other as ‘foreign’ countries. We think of each other as friends, as peaceful and cooperative neighbors on a spacious and fruitful continent.”

However, before I yield the floor to questions, I’d like to draw your attention to one very important leadership role that the United States, Canada, and our allies have taken on at tremendous risk.

I’m talking about the fight against the scourge that is Da’esh.

I’ve just talked about Paris and what will be take place there next week. But, we cannot talk about Paris without recalling the tragic events of 10 days ago. As President Obama said, “This is an attack not just on Paris, it’s an attack not just on the people of France, but this is an attack on all of humanity and the universal values that we share.”

Sadly, what happened in France was not an isolated incident. Just a day before, suicide bombers killed nearly 40 people in Beirut. A bomb brought down a Russian charter jet over Egypt’s Sinai Peninsula on October 31, killing all 224 people aboard. And then, just a week after the horror of Paris, terrorists took 170 people hostage in Mali leaving nearly two dozen dead. And for the last few days, the city of Brussels, Belgium has been paralyzed by the threat of an attack similar to what took place in Paris.

Canada and the United States will not stand for terrorism or violent extremism. We share a commitment to freedom, democracy, and human rights. If there was ever a question that this conflict with Da’esh was a regional conflict — that question has now been dispelled. This has expanded outside of the region — these are attacks on the civilized world. We’ve been saying this from day one — there is not one single way to win this war. It’s going to take a multitude of efforts.

You will note too that I did not use the term ISIL or the Islamic State. Why? Because words matter. The ill-informed, and frankly bigots, exploit this name to link the atrocious actions of this heinous group to the way of life of good and decent practitioners of a venerable religion. Da’esh themselves would like us to use the term Islamic State because it gives them the legitimacy for which they so desperately yearn.

We need to de-couple any links between these mass murderers and religion. I have been deeply saddened by the spewing of vitriolic language and the hateful acts against fellow Americans and Canadians who are simply going about the business of being just that — Americans and Canadians with the same freedom to worship afforded to all our citizens regardless of faith. We dare not forget where such dangerous actions have taken the human race in the past and how many times we have had to say “never again”.

The United States is grateful for the support of Canada in the mission to degrade and defeat Da’esh. Canada’s partnership and support means so much to the United States and coalition partners. So I say thank you.

I know this is a somber topic, but I believe challenging times require honesty and reflection. It has been a difficult few weeks, and a challenging year. But we will not only endure, we will win. Our world will be better for these efforts, and we will do them together.

Those of you who know me well, know that I am an eternal optimist. I see the glass as half full. No, I see the glass as overflowing. The opportunities we have before us far exceed any challenges that we may face.

My main point today was to remind us all of how close to the brink we came in 2008 and to call on you all, North American businesses and governments, to have the courage to evolve, innovate, and lead as we confront the very real threats to our world today.

With that, I would be happy to answer any questions. Thank you.