Paul Gigot of the WSJ moderates a panel on the future of the world economy.

First to speak: Václav Klaus, the Czech president. He was reluctant to accept the invitation to talk about topics as indefinable as the global economy because it is a distraction from the real problems and from actually doing anything. He focuses on Europe. It is an tightly interconnected world, he says. Some in Europe have proposed establishing a fund to compensate the “victims of globalization,” by which they mean Europeans. Instead, they should create a fund for the African victims of European protectionism. The real problems, he says, are in the realm of ideas, e.g., government intervention, paternalistic income redistribution, political correctness, those who think they’re better than us and would regulate us…

David Rubinstein, a co-founder of the Carlyle Group (see this), speaks. He begins by trashing the Carter administration, in which he served. [I’d take Carter-style incompetence over Bush’s any day.] He says the US used to be the economic driver. Now what happens outside the US is more important to our economy than what happens inside. We have to change if we’re going to join a vibrant global economy. We need to encourage investing overseas and let non-US investments here. If we don’t change, we’ll become second class citizens.

Nobelist Gary Becker (blog). Factors that have driven this amazing global economy: 1. Remarkable productivity growth, particularly in the US. Productivity determines whether people are better off. It will continue unless policies intrude. (Gigot nods vigorously.) 2. Developing economies (China, India) where governments have gotten out of the way.

Risks: Not oil prices or inflation rates. Not low savings. The danger is geo-political and government involvement. The risk is that the governments will try to do things they can’t really do, such as provide full employment. Overall, he says, the economies look good.

Gigot: We have a world of liquidity. [Is that like Water World?] It hasn’t been this liquid since inflation was high. Should we be worried?

Becker: Relative prices change, but that doesn’t mean the price level will rise. Inflation is mainly determined by monetary policy, and central banks are providing stability.

Rubinstein: Fuel prices went up faster during the oil shock of the ’70s. We’re better at managing the change now.

Gigot: We have a new Fed chairman. How’s he doing so far?

Rubinstein: Until there’s a crisis, we won’t know if he’s up to the job.

Becker: I agree. But it doesn’t all rest on the individual. The tools are in place…

Klaus: I share the optimism. I wrote my doctoral dissertation 40 yrs ago on “The Problem of Inflation in the Capitalist Countries,” so I know something about inflation. (Laughter).

Rubinstein: Central bankers aren’t as important as they were 50 yrs ago. Markets drive them. (Klaus rocks his head in considered disagreement.)

Gigot: Mr. President, you’re pessimistic about Europe. Eastern Europe has been adopting the flat tax…

Klaus: The longer term statistics show that EU growth rates have been going down decade by decade, from 5% in the 1950s to less than 1% now. As far as the flat tax, I campaigned for it 10 yrs ago but didn’t win. It’s on the ballot in 5 wks. I’m in favor of it, but I don’t think it’s a panacea.

Rubinstein: The 15% capital gains tax hasn’t been given the credit it deserves. And, everyone is an investor now. [Well, except the huge number of people who are in debt.]

Becker: Flat taxes aren’t flat; the poor don’t pay anything. What you really want is a low tax rate; it doesn’t have to be flat.

Gigot: If Congress doesn’t extend the capital gains rate, will the damage be immediate?

Rubinstein: It won’t help.

Becker: Barriers will continue to fall.

Klaus: Tariffs will continue to come down, but non-tariff barriers will continue to be erected.

Gigot: The Carlyle Group invests in China. What’s up there?

Rubinstein: We’ve invested in life insurance there; only 8% of the China have life insurance. We’re buying the Catepillar of China. Each deal took about 3 yrs. I kept going to what were billed as closing dinners. If you think you’re going to make a quick dollar in a year or two, that’s not the place for you. You have to make it clear that you’re going to help China, and not just help yourself. They don’t see Western capital as essential to their economy, although they’re glad to have it. [Tags: milken economics]

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[milken] Turning education into a global mill

I’m at a session called “Changing Post-Secondary Education to Meet the Needs of a Global Economy” with Greg Cappelli of Credit Suisse, Edward Guiliano, Pres of the NY Institute of Tech; Ted Sanders, chairman of the Cardean Learning Group; moderated by Ted Mitchell, CEO of New Schools Venture Fund. (As Liz points out, the room is full of people in black suits…including her!)

Overall: The panel said stuff everyone in the room already knows: Americans don’t know nuthin’ about them furren countries. And China is so cool! Sorry, but I don’t know anything about this topic and I still didn’t learn anything.

Greg talks about education in China. China’s GDP is growing rapidly, he says. Over 10% of total world foreign direct investment goes into China and Hong Kong. Plus, he points out that there are a heck of a lot of Chinese folks. (I missed the actual number.) They’re spending a lot on education. The population is enthusiastic because getting a degree vastly increases one’s income.

Ted says that the demand of higher eductiona will exceed capacity in many countries as well as in some states in the USA. People studying outside their country will go from 1.2M now to 7+M in 2025. So, the biggest opportunities in higher ed will take place outside the US.

Edward presents a list of dismal statistics about how stupid Americans are about the rest of the world. China is becoming the largest English-speaking nation in the world, and it’s doing it through policy. We need to be teaching our kids a second language when they’re young. We should be enticing more international students here.

Ted: The educational innovators will not be found at the Harvards and Sanfords. It won’t be at the public universities because they won’t spend tax dollars. We need to think global but serve local populations. We need consortia.

[First The World is Flat reference at 32 minutes in.]

Ted: “There are 10,000 Chinese students studying in British Columbia because they can’t get into the US.” [Maybe they landed there and had the good sense not to leave.]

Q: Where will the next generation of faculty come from?
A: (Ted) They won’t be Americans. We graduated 50,000 engineers last year while China graduated 300,000 engineers.

Q: What’s in place to help people get jobs, etc. People are still using resumes.
A: Nothing in K-12.

[Liz tells me I may have misidentified the speakers. Sorry.] [Tags: milken education]

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BTW, we’ve set up a tiny IRC chat so we can pretend to be taking notes when in fact we’re making fun of people: irc.freenode.net #milken. Um, I mean we’re using it to share ideas and communicate with one another. (There are only three of us at the conference using it.) [Tags: milken irc]

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I’m on a panel at the Milken conference today. Apparently, it’s like the West Coast Davos. All I know is that the conference stipulates that I have to be dressed in business attire. Not even “business casual.” Ok, I’ll put on my sports coat and tie, but they can’t make me wear clean underwear. Oh yeah, stickin’ it to The Man!

The panel is called “Blogs, Wikis, MMORPGs, and YASNS: Shaking Up Traditional Education.” I am in awe of my panel mates.

Because it’s an actual panel, not a sequence of PowerPoint decks, no one knows where the conversation will turn. But here are some of the things I might end up saying:

What are our students learning from the success of Wikipedia? We hope they’re learning that they can’t be passive recipients of knowledge. But they’re also learning that authority doesn’t come only through chains of credentials; that we can get on the same page about what we know; that knowing involves be willing to back away from your beliefs at times; that knowledge is a social product, or at least heavily socially contextualized; that the willingness to admit fallibility is a greater indicator of truth than speaking in a confident tone of voice; that knowledge lives in conversation, not in the heads of experts; that certain people who do not need to be named are just impossible.

Knowing has been primarily a way of seeing the simplicity behind the world’s apparent complexity. But now as a culture we’re busy complexifying everything we can. E.g., blogs take a simple idea and turn it over and over in their hands, poking at it, trying it this way and that, connecting it to that other thing over there.

I don’t know what will happen to the basic structure of education, the course, but topics have exploded. This makes it harder than ever for us to listen to educators tell us what’s important for us to know…but we need to listen.

Textbooks are and always have been boring and self-satisfied. The basic problem is structural: They exist between covers. I don’t know what to do about this, but someone will figure it out.

The endless decentralized distraction that is the Internet certainly raises questions about our ability to hold our culture together (and if that is even a good thing), but we should at the very least rejoice that we are learning what education has always tried to teach us: The world is endlessly interesting. [Tags: education milken wikipedia]

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Liz Lawley did some excellent live blogging of a conference on women’s participation in computing, put on by the National Science Foundation’s Information Technology Workforce. Her coverage begins here. [Tags: liz_lawley gender itwf itwf06]

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Eric Norlin is offering an early bird discount for people going to the Syndicate show… [Tags: syndicate eric_norlin]

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Reed Hundt is a former FCC Commissioner. He gives a good presentation that I did not take notes on. Here’s how it ended:

We ought to invest in building a public thoroughfare of access. That thoroughfare should get faster and faster — symmetric. If it costs $1K per household to get fiber to the home, that’s a tenth of the cost the anti-missile shield that doesn’t work. The total cost would be about $20B-25B. (This is the amount it would cost to deploy minus what people would be willing to pay.)

The thoroughfare gets us to the public space of the Web. In this public space democracy in the US will be defined. It is in that space that we will learn how to debate issues and form groups. We won’t agree, but we’ll learn to talk with another.

Q: You’re a socialist.
A: Nope. I don’t the government to own it. I want it to write a check. Frankly, if Warren Buffet wanted to write it, I’d be happy. My point is how small that check would be.

Q: (Dave Hughes) There was a school library fund of $2B (E-Rate). It wasn’t well spent
A: There’s never been a perfect government rule. The big story is that a country were able to create $4B spent every year on Internet acccess in classrooms, which is why 75% of all kids 6-20 have learned about the Internet at school. That is almost half again the penetration in that group outside of school.

Q: It’s not just telephone companies. Media companies are also part of this equation.
A: If it were up to me, I’d say let’s have an auction. Whoever comes forward locally and offers to be the lowest-cost provider of the 100Mb thoroughfare would win.

Q: You’re for telecom subsidies. From our perspective, the subsidy process is subject to gaming by large companies. Smaller operators can’t play that game. It’s a disincentive for innovation.
A: There’s pork and there are good public services. The last several Congresses should make us wary. A modest public expenditure could create a very large public property.

[Tags: f2c reed_hundt]

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David Isenberg interviews Raymond Gifford of the Progress and Freedom Foundation, a libertarian or possibly conservative think tank. (Common Cause says its sponsors are the incumbents.)

David asks him if beyond supporting market efficiency, does he see the Net in terms of empowerment of the disempowered, everyone having a voice, etc. How do these democratic ideals come into his thinking?

Ray: You and I both distrust the ability of regulators, especially the FCC, to do anything right. The FCC tends to behave lawlessly, not to constrain monopoly power, it tends to serve the constituencies that plead before it, and it misses the ideal of being an agency full of experts. First we should try the idea that markets will get us more and better democratic institutions than regulators will. What can we do to get more competition, he asks. Let’s do spectrum reform. Let’s get more broadband pipe. [How long do we have to continue trying the duopoly? Can we set a date for withdrawal? Shouldn’t we have an exit strategy?]

Competition doesn’t come to all places at the same time. [This seems to be an argument against requiring providers to build out into poor areas as well as rich.]

Gigi Sohn, president of Public Knowledge, says she agrees with Ray that government intervention ought to be limited. The government almost always acts to seal the incumbents’ power. She is disappointed however that the PFF didn’t come out against interventions such as the Broadcast Flag and the copyright totalitarianism. “We part ways at what the regulatory standard should be.” She thinks the government ought to establish a non-discrimination standard (= Net neutrality).

David: Surely you don’t support the Broadcast Flag, Ray.

Ray: I thought it had no legal standing. [But PFF supported it anyway.]

Gigi: As the president of Slingbox says, nothing is more discouraging to investors than putting on the page of your prospectus that your business requires government approval.

Ray: The state can outlaw burglary tools. [We ought to outlaw getaway cars.] If I’m a content provider with a legitimate concern that my content is going to be pirated, what would you have me do?

Gigi: I think I’m more of a libertarian than you are. We’re willing to let content providers restrict access and see what the market does. (Gigi recommends a Cato Institute paper.) [Tags: f2c raymond_gifford gigi_sohn drm digital_rights]

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Ron Sege, Jim Baller and Esme Vos and James Salter talk about muni wifi.

Jim says the public now is “getting it” and asking hard questions. Jim puts it in terms of public safety, cultural enrichment, homeland security, economic development…etc. Things are going pretty well, he thinks, although much needs to be done. Fewer states are passing anti-muni-wifi laws, for example. One bad trend: Municipal governments ask for wifi for free.

Esme sees a huge explosion in the number of muni networks being built, by cities and by counties. Given cities’ budgetary problems, they try to set up wireless networks for municipal uses as well as for public access. “This is nothing more than the next IT upgrade.” In Europe, providers have been forced to open their network to competitors on a non-discriminatory basis; that’s the model that lots of cities are trying to replicate. “Cities say they have no money but the next day they can find $70M for a Nascar museum. People should be hard on their municipal officials and ask them what their priorities are. All I want is for people to have as much choice as possible.” Inside the bellhead companies are webhead factions, she says. “Largely it’s a generational change.”

James Salter believes that broadband is the most important economic, educational and social enabler of this century. Fiber is the best way to get it but the incumbents will not deliver it. Municipalities may be the broadband savior. His company (Atlantic Engineering Group) has done 50+ municipal fiber projects. We need private-public competition, just as we have in schools, garbage, health care, etc. He puts up some amazing quotes from the incumbents saying stupid things about bandwidth. He says the average marketshare of the 53 sites he’s done is 50-60%. People flock to them because the service is better. “I’m a rightwing Republican and I want to keep the government out of everything but we’re out of options.”

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Ed Felton of freedom-to-tinker.com reminds us that we make progress by tinkering. DRM is thus a major threat to innovation.

“Trusted computing” won’t shut down the Net entirely he says, but it’s very bad. In particular, remote attestation means that a remote app can tell exactly what apps you’re running and decide not to let you interact with it. Currently http does say which browser you’re using, but you can lie about it. Not with remote attestation, which also says what your computer’s configuration is. For example, if the Web site doesn’t like the VOIP software you have running, it could refuse to talk with you.

The IRC recommends this video for a humorous look at trusted computing. [Tags: f2c ed_felton drm digital_rights]

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