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St. Louis Business & Technology News
www.slfp.com/SLFPBIZp.htm "When you think Saint Louis, think Saint Louis Front Page," a weekly publication covering the news and events in the greater St. Louis area. 
St. Louis Front Page P.O. Box 1354 St. Louis, MO 63188 Voice: 314-771-0200 Fax: 314-771-0300 To submit news, contact: editor@slfp.com To advertise, contact: advertising@slfp.com 
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By Bob Moore, SLFP.com ST. LOUIS, (SLFP.com) October 28, 2004 - The Federal Reserve Bank of St. Louis, in cooperation with the Civic Entrepreneurs Organization (CEO) and Southern Illinois University, held its "Through the Eyes of the Next Generation" for St. Louis area educators and students in the Crystal Ballroom at the Renaissance Grand Hotel. The morning session prior to the MarketCast 2005 luncheon and program featured high school students from the Fed Challenge, a monetary policy competition for high schools. Student panelists spoke strongly on the state of the economy a year from now. They presented their predictions on Gross Domestic Product (GDP), Consumer Price Index (CPI), the unemployment rate, the 10-year bond yield, and the Dow Jones Industrial Average. Guest panelists included: Mike Jensen, moderator, former Emmy-winning NBC News chief financial correspondent; Richard K. (Dick) Armey, Ph.D., a senior policy advisor with the national law firm of Piper Rudnick, LLP and former Majority Leader of the U.S. House of Representatives; Kathleen M. Camilli, independent economics and principal of Camilli Economics; Thomas J. Dorsey, president and co-founder of Dorsey, Wright & Associates; and John L. Manley Jr., CFA, a managing director and an equity strategist with Smith Barney's Private Client Group. "Within the context of today's technology, the American worker is clearly overpriced in the world's market."
"I think this is an interesting event," stated Armey. "One of the things I was excited about is the opportunity for these high school students to give their forecasts for the economy to the financial and business community of St. Louis." Armey stated that he was not speaking as an economatrition and couldn't make numerical projections but that he would speak on what he thought would be the performance criteria for the economy in general terms. "I think the government has an enormous affect on the economy, especially with regulation," stated Armey. "For example, Sarbanes-Oxley (Public Company Accounting Reform and Investor Protection Act 2002) has had an enormous impact providing extreme compliance cost to business all over the country. Also a lot of uncertainty and caution within the business for fear of prosecution under the Sarbanes Act. Our tort laws, our labor laws and regulatory influences all impact the performance of the economy." "Our tax laws cause some people to register offshore," continued Armey. "Technology causes other people to make the rational decision to outsource overseas. What becomes rational economic decisions made possible either by technology or necessary by dumb tax laws end up being the object of destain and scorn and reprisal in the legislative process. This is what people in commerce have to take account of when they make projections about the next year's business activity," he observed. Armey spent 18 years in government service, including eight years as Majority Leader. He also served on the Joint Economic Committee and was Chairman of the Select Committee on Homeland Security. Prior to his political life, he taught economics at the university level. "When I was Majority Leader, I thought the role to play was the role of damage control. When we did Sarbanes-Oxley, I knew that there was such a righteous fervor among the politicians that they were going to produce some kind of bill that would show their morale superiority to the market. So my job I felt was to hold this to a minimal amount of encumbrance and red tape and regulation of business activity," stated Armey. "I can now look at that law and say it's not as bad as it would have been if I had not been there," Armey reflected. Expanding his earlier comment on outsourcing, Armey said that in a world of modern technology and communications it is the rational business decision, especially with the extraordinary high labor costs in the United States compared to other nations. Armey commented that he was bothered about criticism towards outsourcing. "The critics of our country who use overseas labor don't stop to realize the number of Toyota and Honda plants in the United State where Japanese companies have outsourced to the United States for quite frankly very attractive and high paying jobs," he said. "We are probably in the whole gammet of International outsourcing between nations clearly a net winner. But we never see that side. It's a fundamental problem in all this discourse on International commerce that you always hear from the losers and you never hear from the winners." In response to a question regarding high labor costs in the United States, Armey said that there used to be a technological shortcoming that didn't allow direct competition between the most expensive laborer oversees. "Within the context of today's technology, the American worker is clearly overpriced in the world's market," he said. "It's very hard to see how you can turn it around because so much of labor costs in the United States is institutionally defined through our unions and then a great deal of it is defined legally through laws on our books," continued Armey. "Nobody really wants to roll that back but in order to be competitive, my guess is that you will have some sort of an International labor pool. The incomes of world workers will tend towards equality with their International wages rising to our level and then a smoothing out of the process." "Then again, you will always have institutional and governmental impediments to any transition in the market place, so you won't get the perfect transition that the models tell you. But you will probably get a sufficient transition that four or five years from now we will have far less interest in the subject of outsourcing," concluded Armey. "We are very serious about preparing our students for a new economic reality."
"It's been traditional for business schools to teach students how to be employees in large businesses," stated Giamartino. "A number of business school have been making shifts so that students begin to think of themselves not only as employees but as employers. We are beginning to look at ways in which we can open students eyes to the opportunities that they have to start their own businesses." "As we look at trends like outsourcing, we are very serious about preparing our students for a new economic reality." He said that students are going to have to learn how to create wealth and not just look for it. "They are going to have to create it with other people, with the development of new products, new services and understand how to grow a company and participate in the economy." "We think there are ways in which students can develop skills that will serve them well over a longer period of time and also contribute to the growth of the economy by generating new businesses and new wealth," he continued. Giamartino noted that student enrollment at SIUE School of Business is at record levels. The school is also encouraging the students to think about being entrepreneurs. "If they're not entrepreneurs themselves, then to understand the risks, the rewards, the benefits of being involved with an entrepreneurial company so they can grow and develop," Giamartino said. "I think this (Next Generation) program today is a good example of how we can begin to prepare young people for participating in the economy in a different way. Young people need to understand the economy and how it works. Our national economy is part of a global economy in a way that it was not fifteen years ago or even twenty-five years ago." "Programs that help young people learn about how the economy works and how companies work are really important steps. They are investments in our future and investments in our own economy," stated Giamartino. Return to St. Louis Front Page  
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