What goes on in Sun Valley stays in Sun Valley. Those are the ground rules and I may be one of the few attendees of this the best organized and most rewarding business conference to respect the wishes of our hosts. However without revealing the "who said what " I set forth below my very personal views on some of the most urgent issues facing us today prompted by presentations at this year’s conference .
1. Energy. Perhaps the greatest of the interlinking challenges that confront us – part economic part environmental and and part geopolitical. At an earlier Sun Valley conference Tom Friedman posited the theorem that the democratic tendencies of any oil producing nation are inversely proportional to the price of oil. Since Tom has repeated this view elsewhere I will raise the cone of silence sufficiently to agree with him.
While the efforts of the present US government to promote the development of alternative energy have been lacking (some would say totally absent) I am heartened to see the level of venture activity focused on alternative energy. From revisiting the basic technology employed to generate nuclear power (a Gates/Myrvold venture) to novel ways to "grow" petroleum in the lab the incredible innovative spirit of entrepreneurs around the world is visible in the search to create new alternatives. The only sure thing is that there is no obvious solution today and that we will be surprised by where it eventually comes from. In this the future of energy will obey the traditional rules of technology development: We always over-estimate what technology can deliver in the short term and under-estimate what can be done over 10+ years.
2. Israeli-Palestinian Peace. The key to long term stability in the entire region and in my view the only way to ultimately support moderate Arab allies in the fight against Jihadist extremism. The failure to achieve the goal that Sadat and Rabin were tantalizingly close to realizing still prevents a lasting security for Israel Lebanon and their neighbors and lately has provided the cover for Iran to extend its influence through Syria Hamas and Hezbollah. The high price of oil only compounds the difficulty of achieving a lasting peace.
3. The US Economy. Beyond the cyclical issues bedeviling the US economy there are a set of long-term fundamental issues which must be confronted to give our children the chance to enjoy a standard of living at least equal to our own. Most fundamental of all Americans consume far more international goods than we export to our trading partners. Each day the US trade deficit expands by about $2 billion which really means that we are signing a $2 billion daily IOU to keep consuming at the level to which we are accustomed. Although the size of the US economy is vast eventually this sort of deficit spending will bankrupt any household. While US exports have benefited from a cheaper dollar and are expanding nicely $140 dollar oil imports have undermined this structural readjustment. This is another reason we need to solve the energy issue.
4 . Deleveraging Wall Street. This Olympic year the Chinese are likely to surpass the US in gold medals. However the "Dream Team" of Bernanke Geitner and Paulson deserve great credit for their work to date in avoiding a very hard landing for the global economy. We are by no means out of the woods yet but the weekend Bear Stearns was rescued by a joint Fed/JP Morgan bailout the world came within hours of a very ugly meltdown of the highly interlinked global financial system. The somewhat inevitable support of Fannie Mae and Freddie Mac continues this stewardship. The very tricky maneuver the Dream Team is trying to pull off is to permit Wall Street to massively deleverage while avoiding the twin evils of high inflation and recession.
5 . Trade. There are nasty protectionist winds blowing across what used to be know as the world’s trade routes (anyone remember the "trade winds"?). While protectionism always seems to appeal to the local politician and anti-globalization zealot it is the surest route to world impovrishment. Smith and Ricardo got it right over 200 years ago; what is needed is a social safety net to protect the individual losers in the globalization process not a luddite ban on international trade itself. See blog entry: London Chamber of Commerce – International Trade Dinner: Free Trade The Environment ad Social Welfare (Feb. 2007).
6 . Multilateralism. The US has pursued a unilateralist approach to world affairs over the past seven years (if one ignores the strong-arming of super ally and "lapdog" the United Kingdom which all but cost Tony Blair his position). Our current challenges are too large to "go it alone" and the loudest voices are coming from the over-stretched US military which is valiantly trying to prosecute too many wars at the same time.
7. Healthcare /Social Security. If the explosion of the housing bubble/credit crisis does not get your attention just wait until the US finally starts grappling with the huge looming cost of the still porous safety net. It cannot be beyond the wit of the nation that put a man on the moon to provide basic healthcare for all its citizens and a secure retirement. It does no good to point fingers at individual beneficiaries of the current insolvent system – a comprehensive restructuring of the way healthcare is delivered and financed is needed.
8. Immigration. Senator McCain was vilified within his own party for suggesting that all was not perfect with current Republican policy towards immigration. We should all celebrate the role of immigrants in building the American dream and be grateful that so many people the world over still seek our shores. Not only do immigrants add to the economic might of the US but those that choose to return to their countries of origin spread the word that we are not the "Great Satan" we may appear if aerial bombardment is one‘s first encounter with the US.
This is not an exhaustive list. There are many important issues that I have left off but I want my next president to address at least these. Perhaps it is my Thomson Reuters commitment to independence and freedom from bias but I am truly beyond ideology – I just want my next president to be competent.
Well said… I couldn’t agree with you more. What strikes me as one of the most important issues is this and summed up nicely “It cannot be beyond the wit of the nation that put a man on the moon to provide basic healthcare for all its citizens and a secure retirement.”
Dear Mr. Glocer Apropos to Matt’s reiteration of your comment I would contend that it is perhaps easier to tackle the problem of putting man on the moon than tackling the healthcare problem. Putting a man on the moon may have had many logistical problems in addition to thorny technical issues but in achieving that goal the participants did not have conflicting selfish objectives. I am sure scientists and technologists argued and differed on technical issues but none had selfish economic reasons to advance their objective. In contrast the healthcare problem is an economic problem where the multiple stakeholder do have conflicting selfish economic objectives. Setting up an egalitarian system would necessarily mean diminishing the economic benefit to some stakeholders such as the insurance companies. The answer to the healthcare problem may yet be technological after all. Incentive schemes from the theory of mechanism design – a branch of game theory – may provide some answers but as with many an unweildy social problem calibrating such a mechanism to be fully egalitarian may still be quite tricky.
The Israeli-Palestinian Peace issue is a red herring. No US president will ever be able to control the outcome of these ongoing attrocities (by both sides). This spread way geographical devides or religious variences. Best for Obama / McCain to focus on those things that they can impact like healthcare and the Global economy.