Tuesday, August 15, 2006

Tennesseans Take Center Stage at NCSL

Federal Express founder Fred Smith warned a national gathering of state legislators today that over-regulation of businesses can interfere with economic growth. Smith was one of three members on a panel moderated by Tennessee Commissioner of Economic and Community Development Matt Kisber at this morning's general session of the National Conference of State Legislatures. Congressman John Tanner and former U.S. Ambassador to China Jim Sasser were also on the panel, which responded to questions from Kisber on the subject of "Economic Success in a Competitive World."

Smith, who noted that Federal Express was once a "small business," said that his enterprise could have never worked if not for federal transportation de-regulation that occurred in 1980 and 1993. He contended that "the cost of government regulation is sometimes not what is, but what could have been." While some people have criticized American businesses for sending operations overseas, Smith argued that in many instances over-regulation and high taxes have "driven" some businesses outside the United States.

As an example, Smith mentioned Sarbanes-Oxley, a law passed in response to the failure of Enron. While he acknowledged that changes were needed, Smith said that Sarbanes-Oxley "overreached," with the result that 75% of IPO's are now launched in London, not New York.

Congressman Tanner agreed, saying, to much laughter, that if Sarbanes-Oxley applied to Congress, "I'd be in jail right now."

Smith also argued that global competition is an unavoidable reality in today's world. Whereas previous generations produced goods such as wheat and coal, today's deliverables are frequently high tech products or information, types of goods that are relatively easy to move globally.

While Tanner repeatedly expressed concerns that the federal budget and trade deficits could potentially cripple the American economy, Sasser brought attention to a wide range of issues, including restoring American credibility abroad, rising healthcare costs, and growing "disparities of income." Sasser argued that the federal government needed to address the problem of income disparity, though he never asked for Smith's wallet, and he never offered his own to that cause.

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