Entrepreneurism & Free Trade as the Future

A second major focus of the 2008 National Summit on American Competiveness was in the area of entrepreneurism and also free trade. Here are my notes from those sessions.

Jim Phillips, managing partner of Pinnacle Investments started off the session with, “More will be invented in the next 20 years than in the entire history of mankind. History shows that when there are problems, it is an incredible time to be starting new, innovative businesses.”

Steven Chen, an IL native who attended the University of Illinois but headed out to the Bay Area upon graduation to work for Pay Pal before starting YouTube commented on the different perspectives of the Midwest, “Back here I was looked down upon as an engineer, whereas I was looked upon as an Olympian in Silicon Valley. There is more of an openness there. We figured that all we needed were some servers and our credit cards to become operational when we started YouTube.”

Phillips chimed in, “Over 50 to 60% of the engineers are coming from overseas to go to our colleges and then when they finish we ask them to leave. Can you imagine what would have happened if we had our current strategy on immigration when Albert Einstein was trying to come here?”

John Koten who heads up Fast Company magazine had an interesting observation about immigrants, “Immigration is an entrepreneurial act. All of us in this country came from that entrepreneurial stock. We need to hang onto that spirit. All you have to do is look at the statistics on immigrants starting many more businesses than native born Americans.

Former Governor John Engler led the discussion on free trade, “We are going through the worst attack upon free trade since the 1930s. All of the data on trade is very, very positive even if the emotionalism of our current politics is against it.”

Bob Lane, head of John Deere, commented of the impact of free trade upon his American workers, “One-third of our U. S. production is exported. One-fourth of all U. S. ag production is exported. We’ve seen a fabulous humanitarian example of what can happen with free trade. When ¼ of the world is living on less than $2/day, raising someone from an income of $1 to $2, they are going to eat much better. They aren’t real interested in self actualization. We’ve got 2 billion people moving into the middle class on the world stage and huge opportunities as Americans to gain from that movement.

Jim Owens, CEO of Caterpillar echoed Lane’s comments, adding, “We are doing 70% of our business overseas today and it is growing at 20%/year. NAFTA has resulted in all three countries (USA, Mexico and Canada) increasing their GDPs and their wages when compared to the decade before passage of NAFTA. If we are going to have leading companies twenty years from now, we need to be competitive and to be able to compete.”

Later Owens pointed out that, “During the 70s and 80s Brazil, India and the Soviet bloc were all protectionists. Yet not one global business came out from those countries during those years. They opened up in the early 90s and now you have numerous examples in each of those countries of world class companies that are competing very effectively on the world stage.”

Mathew Slaughter, International Economist at Dartmouth College, pointed out, “A generation ago the U. S. was in the middle of the pack as to tax rates. Today, we are one of the highest in the world and we have one of the most complicated tax systems out there. It does a disservice to our workers when we have a system that is too complicated and expensive.”

Entrepreneurism. Free Trade. One is being elevated today in our society while the other is under a strong emotional attack. From every data study that I’ve seen, they should both be being elevated and revered.