Hundt Reed
-
Upload
carl-ford -
Category
Technology
-
view
470 -
download
0
description
Transcript of Hundt Reed
![Page 1: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/1.jpg)
The Coming Global Triumph of Communications and the Threat to American Standards of Living
VON.x Conference and Expo- Industry Perspective Panel March 18- 2008
Reed Hundt
![Page 2: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/2.jpg)
2
![Page 3: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/3.jpg)
3
U.S. HOUSEHOLD WEALTH DECLINES$ Billions
Source: Financial Times.com, March 6, 2007
3Q 07
57,718
4Q 07
-1%
58,251
![Page 4: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/4.jpg)
4
China – The world’s manufacturer
•Largest exporter of apparel
•In 2006 China will manufacture 400 million mobile handsets (more than 60% increase from 2005)
•China is the Number 1 producer of pork
•Global center of consumer electronics and telecom equipment
•China is producing three times as much
as it did 10 years ago; losing manufac-turing jobs as it increases manufacturing productivity
![Page 5: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/5.jpg)
5
China the technology innovator
Source: Morgan Stanley Research
•Mobile Internet (China Mobile, Tom Online, Super Girl)
•Online gaming (Netease)
•Comprehensive messaging (Tencent)
•Clicks plus bricks (Ctrip)
•Bridging old media and new media (Hunan Satellite TV)
•3G (TD-SCDMA) (Datang, ZTE, TD Tech, Putian)
•IPTV (UTStarcom, ZTE)
•PC monitor manufacturing (TPV)
![Page 6: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/6.jpg)
6
China the information society
Source: CNNIC; World Bank; Morgan Stanley Research
•No. 1 in mobile users
•No. 1 in Internet users under the age of 30 (70% of Chinese Internet users under the age of 30)
•Urban areas have 5x more Internet users than rural areas
•60% of them are the only children of family
•30% of Chinese Internet users have college degrees
![Page 7: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/7.jpg)
7
China the consumer market
Source: CNNIC; Morgan Stanley Research
•Internet users
•Broadband users
•Mobile users
•Mobile services
•Online gaming
•Online brand advertising
111m
64.3 m
393 m
$963 m
$570 m
$281 m
Size
18
50
17
24
46
28
Annual growthPercent
![Page 8: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/8.jpg)
8
But China doesn’t compete with USA and Chinese don’t directly compete with Americans
•Firms compete against firms
•Firm success determines employee success
•Investors can invest in winning firms
•Employees can work only in firms that hire in their country
•Americans will earn more only if their employers pay them more And only winning firms pay more
![Page 9: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/9.jpg)
•Will obtain economies of scale in China
•Compete vigorously in Chinese growth markets to become strong
•And challenge American firms for global leadership
•China is more important as a source of firm rivalry than worker competition
Chinese firms . . .
![Page 10: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/10.jpg)
10
Advantages for Chinese firms
•High skills
•Low wages
•Favorable currency for export
•Access to savings
•Huge foreign investment
•Vigorous local competition
•Ineffective regulation
•Few barriers to starting firms
•Wide open markets
•No litigation
•Little taxation
•Culture of entrepreneurship
![Page 11: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/11.jpg)
11
Advantages for American firms
•Easy access to rich American consumers
•Easy access to cheap capital
•Reliable infrastructure
•Reliable rule of law
•Most productive employees in world (most capital employee)
•Most entrepreneurial culture in world, other than China
![Page 12: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/12.jpg)
12
Disadvantages for American firms
•High labor costs (especially benefits)
•High energy costs
•Mature domestic market (tired marketers?)
•Vs fast growing foreign markets
•Increasing barriers to entry in existing markets
•Need to be overseas to compete there
Result: American firms seek growth overseas
![Page 13: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/13.jpg)
13
If firms don’t invest in America, they may invest in job creation in other countries
Source: New York Times
“In the United States, nonresidential fixed investment as a percentage of GDP fell to 11.56% in 2005 from 12.55% in 2000”
Text Text Text
![Page 14: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/14.jpg)
14
• For 50 years, Americans have made 20% of the world’s goods
• While numbering only 5% of the world’s workforce
![Page 15: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/15.jpg)
15
As a result, as the world economy grew
•Americans created and captured more wealth
•Employees make more money only if their firms win in domestic and global competition
•You can’t earn a rising income at a falling firm
![Page 16: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/16.jpg)
16
0
5,000
10,000
15,000
20,000
25,000
30,000
1,500 1,600 1,700 1,800 1,900 2,000
China
United States
1990 international dollars
Source: Maddison (2001)
American per capita GDP has soared for nearly 200 years
![Page 17: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/17.jpg)
17
Qianlong Emperor, 1793
"We have never valued ingenious articles, nor do we have the slightest need of your country's manufactures."
![Page 18: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/18.jpg)
18
There are three keys to success
1.Invest more behind the 5%
2.Win in foreign markets to increase the 20%
3.Create new markets at home and abroad to increase the 20%
![Page 19: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/19.jpg)
19
Americans should want
1. Investment in firms creating new markets (Google)
2. Investment in firms entering old markets (SpectrumCo)
3. Investment by existing firms fending off rivals (Telcos in fiber)
4. Winning American firms attacking foreign markets
These are the ways money produces high wage jobs for Americans
![Page 20: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/20.jpg)
•Open markets, new markets, new technology
•Antitrust, finance, research, and development
•A new economic strategy for the nation: don’t pick winning firms, do open new markets
•Hope for big winners in new markets and old markets
The right response to China is more firm creation in America: here’s how
![Page 21: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/21.jpg)
21
Source: U.S. Census Bureau
Employment size Employment
Employer firms covered in Statistics of U.S. Business2,500 employees or more
Firms
5,657,774
3,634
115,061,184
43,877,243
Employers (firms with payroll) – 5,541,918
![Page 22: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/22.jpg)
22
The big winners have to come from creative destruction . . .
•Invested capital has to be replaced rapidly
•New investments must be made in old and new markets
•Incumbents have to fall to rivals
•New firms have to win big
•Only to face new rivals themselves
•All markets have to be easy to enter and hard to hold forever
![Page 23: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/23.jpg)
23
Source: Peter Drucker
“Innovation in Schumpeter’s famous phrase is also ‘creative destruction’. It makes obsolete yesterday’s capital equipment and capital investment.”
![Page 24: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/24.jpg)
24
A big American advantage
Of 6 million firms, 10% die and 10% are born every year
![Page 25: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/25.jpg)
25
In the 90s, births > deaths by 1-2% . . .
![Page 26: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/26.jpg)
26
. . . and not surprisingly
Before the Golden 90s and the Distraught 00s,the death rate exceeded the birth rate
![Page 27: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/27.jpg)
27
The hotbed of firm creation has been the Internet markets . . . which show:
•An open architecture of law
•An open technology of networking
•Entrepreneurial leaders from outside the system
![Page 28: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/28.jpg)
28
A Different way
•Encourage high risk, high reward (make the equity premium the byword of policy)
•Redistribute opportunity not wealth
•Open markets to rivals but don’t pick winners
•Make competition hard and investment easy
•Focus on Micro as well as Macro
•Respond to China at home more than in Beijing
•The best defense is a good offense
![Page 29: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/29.jpg)
29
Not just firms but individuals have to be more entrepreneurial
•About 40% of American households do not have enough savings to survive at the poverty level for more than 3 months if they lose their work
•Half of Californians cannot afford post high school education
•For half the nation, risks outweigh rewards
![Page 30: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/30.jpg)
30
Source: The New York Times
Goal: achieve the employer-to-employer mobility rates and income levels of Silicon Valley: both about 40% higher than the U.S. average
![Page 31: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/31.jpg)
31
The American Dream
•Democracy and entrepreneurship
•Individual freedom and collective progress
![Page 32: Hundt Reed](https://reader034.fdocuments.us/reader034/viewer/2022051413/5541f9955503464e1d8b45b8/html5/thumbnails/32.jpg)
32
China’s growth suggests that the whole world can live the American Dream