Last Thursday, the Financial Crisis Inquiry Commission Report was released, and the Drucker Business Forum hosted Joseph P. Quinlan at KPCC for a discussion about his new book The Last Economic Superpower: The Retreat of Globalization, the End of American Dominance, and What We Can Do About It. While the commission report looked backward, the Drucker gathering listened to a renowned market strategist looking forward.
Two Views of Hindsight
Financial Crisis Inquiry Commission’s 10 Major Findings, January 27 on The Huffington Post, stresses the findings that the crisis could have been avoided; and that poor regulation, excessive borrowing, risky investments, lack of transparency, breakdowns in accountability and ethics, poor lending standards, and overheated speculation in derivatives were to blame.
Culprits from Beltway Casting, a January 28 Wall Street Journal editorial, implies that the commission decided on its villains (bankers) before the study commenced, and asks why more blame isn’t assigned to federal policies and the operations of Fannie Mae and Freddie Mac.
For those still interested in deciding for themselves: hearings and testimony on which the final report was based are available online at this link. I saw the Financial Crisis Inquiry Commission Report on a Barnes & Noble table of business titles at The Americana this past weekend. It has larger dimensions than a typical paperback, small type, and small margins that make its 662 pages daunting reading and the entire book a hefty paperweight itself.
Looking Forward
While Quinlan fielded a question about the report (his take was that all actors, from individual loan applicants, to mortgage processors, to Wall Street, regulators, and politicians, could share the blame), his focus was how America could regain its economic footing in the wake of the financial crisis.
The U.S. is still the world leader in intellectual capital, Quinlan observed, and its economy has been kinder to college graduates while offering the world’s best rewards for intellectual innovation and entrepreneurship. At the basic level, he says, the U.S. needs to produce far more math- and science-proficient high school graduates prepared to become technically-skilled workers. The average high school graduation rate in the U.S. is about 70 percent, while in many inner cities it is far lower. In contrast, the graduation rate in Seoul, Korea is 98 percent. Quinlan also observed that the financial crisis has made it even clearer that current investments – in overseas military operations, and domestic health care and social safety nets – are drawing vital resources down and reducing our investment in education.
Quinlan said the U.S. shouldn’t concentrate on physical exports as a measure of economic competitiveness, but should promote overall commercial business overseas. When asked about market-based approaches to developing green and low-carbon energy alternatives, Quinlan answered that we “aren’t there yet” and that government incentives would have to play a role in the transition to sustainable energy technologies. He also offered some interesting suggestions for U.S. – China cooperation in managing the flow of oil from the Middle East.
Those attending heard fascinating insights on the state of the world today, investments in developing countries, and possibilities for regional economic collaboration and growth.