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How to Renew America’s Economy

March 29, 2012

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This country – and much of the world economy – is in a backwards slide that must be reversed. Many leaders in corporate America today, including me, have ideas on the biggest challenges we face and the best solutions. I shared my own views on this recently with the National Association for Business Economics in Washington, D.C., of which our Chief Economist Gene Huang is president.

To revitalize our economy and build opportunity for current and future generations, we must:

•      Reduce our reliance on imported petroleum;
•      Combat overregulation; and
•      Revitalize business through tax reform, education and training. 

Next year marks the 40th anniversary of the Arab Oil Embargo, yet we haven’t come close to curbing our addiction to foreign energy.  We’re pumping nearly $300 billion a year out of our domestic economy for imported energy sources.  On top of that, we spend more than $70 billion annually on military protection of petroleum supply lines.  It adds up to trillions of dollars in lost purchasing power that could otherwise fuel the American economy. 

As a global airline, FedEx has no choice today but to use imported oil. But we’ve also committed to reducing that dependence through more energy efficient aircraft and building our fleet of all-electric and hybrid-electric trucks. We’re working closely with U.S. manufacturers to drive down cost so your local pizzeria can afford one too.  We also support continued research and development of biofuels. They’re already technically viable in both vehicles and aircraft; now we need to make them cost-competitive.

The next step to revitalize America’s economy is combating overregulation. Often, regulations grow out of abuses, real or perceived.  But some regulations are so complex or outdated that innocent bystanders, especially small- and medium-sized businesses, get hurt.

Study after study quantifies the cost and productivity losses from overregulation.  It doesn’t seem like a coincidence to me that some of the fastest growing sectors of the American economy are the newest and least regulated ones, such as the tech industry.  Could that be, at least in part, because there hasn’t been time to write too many regulations for them? 

I believe that if we stand by and do nothing, over-regulation will only get worse. And the cost will be paid in slower economic growth. 

Finally, we need to revitalize business – large and small – here at home. The first step is reducing the corporate tax rate, currently the highest in the industrialized world. Lowering it will increase incentives for companies to invest and create jobs in the U.S. That also frees up resources for these businesses to invest in research and development, expansion and capital expenditures – all activities that directly stimulate the economy and lead to job creation and stability.

But that job creation benefits no one if we can’t train our people in the skills that are needed. At FedEx, we’ve faced this challenge first hand and work with local community colleges to train aviation technicians and technology specialists. We need more of this type of practical education and skill development offered in America’s community colleges and training institutions, because without it our fellow Americans will be woefully unprepared to take on the well-paying, high-demand jobs in our near future.

It’s time to follow the advice of one of the greatest Americans, General George C. Marshall, who said, “Don’t fight the problem, decide it.”  Let’s all tell our leaders to get back to the business of leading this country, making the hard decisions, not just the popular ones. Let’s stop debating and make some decisions to renew America’s economy.

***Click here to read the full text from the speech***

Also take a look at Mr. Smith’s guest blog at Forbes.


Comments

    Mike Fedele says:

    Very well said. Like most Americans in their 40’s who grew up in small manufacturing towns, to attempt to build an economy based on financial services and government (all funded not by increases in productivity but through rapid and irrational expansion of the money supply and artifically low interest rates by the Federal Reserve) is pure folly.

    Mr. Smith is correct, becoming more efficient in our transportation systems to faciliate global trade which benefits us all is key. The only add is the need for stable monetary policies which reduce risk for global trade. As much as the old “gold” standard is ridiculed by the keynsians, it removed currency risk, reduced the effect of the finanical derivative markets and allowed nations to compete on an even playing field and even reduced wars and conflicts.

    Allowing market forces to downsize the financial and govt sectors which are drowing in debt would be a good first step in growing the private sector the real way..through increases in productivity not money printing.

    Steve Reynolds says:

    Mr. Smith, thank you for taking a strong and decisive stand for the ideals that we, as the American nation, have upheld for over two hundred years. May God Bless that America. It is the only one worth fighting or deciding for. It is an honor to serve under you in this great company.

    Ben says:

    Right on Fred. If more people would listen to you then we would be on our way to fixing things.

    ROBERTA HONSE says:

    Well put. From your mouth to the brains of U.S. voters.

    Dennis says:

    Fred,

    You’ve hit the nail squarely on the head.

    Arguably, on many fronts, our nation is in decline. We are at a critical juncture that requires immediate action, as you have effectively pointed by way of the three key issues raised regarding the economy.

    It would appear that many of our elected officials are without a sense of urgency, wandering aimlessly without direction or genuine purpose. You on the other hand not only have a sense of purpose but express it in a way that is inspiring. It would have been nice to have seen you deliver this message on Capitol Hill to our leaders in Congress.

    Thank you. All the best.

    Dennis

    Alison says:

    Well said Mr Smith. Now, if we can get the media to broadcast this speech, then more US voters would understand what has happened and the action needed to turn this country around to better the economy.

    Duane Ellis says:

    to the point.

    Tim says:

    I want Fred Smith for U.S. President. Bravo!!

    Jennifer Brositz says:

    After reading this article, if you are not proud to work for FedEx, then you should leave.

    Michael Ondrasik says:

    Amen sir. Common sense applied to real and pressing problems. What a concept. Is anyone listening?

    Xalas says:

    Very constructive & practical.

    Deanna Kaufman says:

    What an outstanding set of remarks, and a well thought-out and articulate plan of attack to get our country back on track. The country needs more thought leaders like Mr. Smith willing to put aside petty politics and commit to real change for a positive future. Thank you Mr. Smith, please keep spreading your message of what apparently is not too common sense!

    Joe Trulik says:

    Way to go Mr. Smith. It would be nice to ‘go to Washington’ with such practical ideas, but sadly the state of politics today just does not seem to allow ‘what’s right’ to happen. Thanks for being a knowledgeable, no nonsense and meaningful voice…and a continued positive reflection of the company you have built and the employees who are part of it.

    Morey Habibishad says:

    I love the quote at the end. Right on Fred!

    Christian Schmidt says:

    Right on Fred spot on my friend. If more CEO’s would just listen to you more people would like the place they work at like we do. Not to mention our contry would be better for it.

    Robyne Ingram says:

    I’m a proud FedEx team member. Very well said and the powers that be, regardless of party, should stop talking about each other and listen to Mr. Smith and to the people.

    John Evans says:

    Well said Mr. Smith. In addition, I think the country needs to redirect its attention to those states that are lagging behind in their own discipline of over spending. It is amazing how many states are on the verge of bankruptcy, yet the public officials continue to spend without regard to their own fiscal plans. Where is the discipline?

    John Andrew says:

    I agree wholeheartedly! Thank you for being a public spokesman for common sense! Please continue to spread this message. Thank you!

    Brandon Ray says:

    I am very proud to know our leader understands every letter in LDRSHIP. He is 100% correct about what our economy needs. I only know of ONE person “running” that agrees with what Mr. Smith is saying. Thank you for having the courage to say what NEEDS to be said.

    Susan says:

    Mr. Smith has been, and continues to be a visionary! I am proud to work for FedEx!!! Mr. Smith’s comments are practical, applicable and non-partisan! We need more leaders like him in poicy-making rolls.

    Dan says:

    Some, but not all, of the points make good economic sense. For instance, when America had a much higher corporate tax rate real wages increased and the average corporate executive compensation was only 10 times that of the front line employee. Over the last 20-30 years the opposite has occurred because most, if not all, of the GDP growth has been funnelled to the top 1% leaving the greatest consumers, the middle class, with less discretionary income to drive ecomnomic growth.

    Basically, what America needs is significant tax cuts for the middle class but the legislative branch of our government, whether Repulican, Democratic or Independent is lead by a bunch of self-serving millionaires, so that day will never come.

    Troy Eads says:

    Well said Mr. Smith. I am involved in politics locally and I am very proud to work for a great leader such as Mr. Smith. At FedEx, I have learned a lot about building great business relationships and making sound decisions. Fred Smith should run for President for his non-partisan way of thinking is what this country needs and deserves.

    Tyrone Swift Sr. says:

    I truly enjoy listening to, and reading the various interviews/articles with our boss Mr. Fred Smith addressing issues concerning our economy and corporate America. I’m very thankful to have employment with FedEx Express {27 years}, and to be a part of such a great company.

    Michael Koo says:

    Great insight to streamline the supply chain & add value to the business that will make a better world for all. Thanks, Fred!

    James Alvarez says:

    Excellent well stated points! I have run across a couple of articles on the internet that state that the US has for the first time in a while become a net oil exporter. May sound confusing but one article suggest that the majority of the crude oil here in the US is heavier than the crude oil from the North Sea or the Middle East. Most of the refineries on the east coast are set up for this lighter imported crude and some have been closed down as a result of reduced imports. Is refining capacity on the east coast an issue? Is it more profitable for oil companies to export refined oil from the Texas/Gulf coast area as opposed to transporting it to the east coast? I am hoping someone can shed some light on this.

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