Economic News with a Positive Spin!
October 15th, 2007
BILL ON MARKETING
The opening address by Fareed Zakaria at this year’s PCBC show were provocative. Following are some highlights of his talk, which I have tried to faithfully report. Fareed is the editor of Newsweek International, host of the PBS show “Foreign Exchange,” and a panelist on “This Week with George Stephanopoulos” on ABC.
Some Highlights:
* From the year 2000 to 2005, the World economy grew at the fastest rate in four decades, 3.2% GDP. This is the highest growth spurt in recorded history
* With all the world’s political turmoil, the global economy is still doing well. Late 19th Century and 1950’s & 60’s are good historical examples of much world conflict but strong economic growth (e.g. Japan grew at the rate of 9% a year for 24 straight years during the 1950’s and 60’s).
* What we are going through is the single largest expansion of the global economy in history. 1 ½ to 2 billion people are coming ‘online.’
* The collapse of the Soviet Union discredited the notion of socialism and central planning, so now everyone is playing the same game. Capitalism rules.
* Even Bill Clinton got it, i.e. that a more planned economy in the U.S. would not work, so he let the economy alone and let it grow, steering a middle course during his two terms.
* Britain was actually in receivership in 1979. Margaret Thatcher launched her reforms, and Britain is now one of the fastest growing economies in Europe, and, indeed, the world. This came after 70 years of economic decline.
* Latin countries are now going to Goldman Sachs and Morgan Stanley and asking what they need to do to attract foreign investment, because that’s the only way they will achieve growth. This is all being done quietly, behind their rhetoric.
* In 1994, there was a study that showed about one-third of the world had double-digit inflation. Today, the answer is a total of 12 countries. That is from 45 countries to 12 countries. China and India are growing faster than any other large country. Zacharia’s law of mathematics: Any number, no matter how small, when multiplied by 2.3 billion people, becomes a very large number.
* Wal-Mart’s success? They have 6,000 foreign suppliers, and 80% of them are in China. By outsourcing to China, retail prices end up being 70% or more less than many of their competitors.
* Outsourcing to China for manufactured goods and to India for services in helping to keep inflation down. These countries keep forcing prices down, down, down.
* The price of oil has quadrupled, and this has had virtually no effect on the global economy, contrary to much political talk to the contrary.
* We have syncretistic global growth, almost for the first time. These includes 14 countries in Africa which grew over 4% last year, and other growth countries include Brazil, Germany, Japan, India, China, Turkey, the United States and more. These growth numbers are rarely reported in the media. ‘Growth’ is hard to televise.
* Middle East: 16% of the world’s construction cranes between Dubai and Abbu Dhabi, Egypt and Saudi Arabia’s stock markets at all-time highs. This is while there is 50% unemployment in Iraq!
* The U.S. and Europe are not the biggest problem when addressing global warming. For example, between now and 2012, China and India are building 650 coal-fired plants. The combined co2 emissions from these 650 plants is five times the savings of the Kyoto Accords, if agreed upon and implemented.
* The U.S. is now going through its fifth quarter of 2.0% growth, the lowest in some years. But, our slower growth has not had much of an effect on the rest of the world. This is new. The world is now not U.S. dependent. 50% of the global growth last year came from emerging nations. There is domestic demand in India, China and other rapidly emerging nations.
* Can U.S. compete effectively in the global market? In 2007, China and India will graduate about 900,000 engineers. There will be more people graduating in the U.S. with a degree in Sports Exercise Therapy than in Electrical Engineering.
* John Adams said that he became a politician so his son could become an engineer and his grandson a poet. It could be that in the U.S., we are rapidly moving into the ‘poet’ era, which is both good as well as bad.
* Our top students in our universities, however, are always among the very best in the world. 18 of the top 20 universities in the world are American. Last year, every Nobel prize in science went to an American. The ability to invent the future remains distinctly an American advantage.
* Lou Dobbs and other commentators have it wrong when they speak of the horrors of foreign workers in the U.S. In the past 20 years, the U.S. has grown faster than any other industrialized country in the world.
* World economic product. In 1980, the U.S. produced 20% of the world’s good. Today that number is 29%, which is extraordinary.
* Immigrants have kept the U.S. hungry and energized. The U.S. takes in more immigrants each year than the rest of the world combined. This has strengthened the U.S. beyond measure, and is a core, competitive advantage and strength.
* The U.S. is the only economy that will not experience a decline in our work force over the next 30 years, because of immigration.
* The U.S. is not going to succeed because of government programs. This has historically not been a core, competitive edge. It will succeed because it is a vast, deep, complex and adaptive economy that will respond to challenges in innovative and energetic ways. “Everyone in the world has the web, but the iPod was invented in America.”
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