SCDigest Editorial Staff
SCDigest Says: |
The Wall Street Journal article said Smith “views the heroes of the U.S. economy as the companies that actually produce real goods and services. He sees the Wall Street collapse as an inevitable byproduct of investment bankers building multitrillion dollar debt pyramid structures.
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In an recent interview with the Wall Street Journal, legendary Federal Express founder and CEO Fred Smith covered similar ground to the ideas offered by SCDigest editor Dan Gilmore in his recent column Back to the Product Economy?
In the interview, Smith crisply summarized how things have become so out of whack in the financial sector versus the rest of the product economy that has to play by traditional rules.
"Rather than in our business, where you have to have a dollar of equity for 10 cents or 15 cents of debt, it's exactly the opposite in the financial sector where you have one dollar of equity for 10, 25, 50 times risk," Smith said.
Smith said a key part of the problem is that US tax and other policies are unfair to asset-heavy businesses, such as manufacturers and the service providers like FedEx, with its fleet of 300 planes and thousands of trucks.
“The United States has a completely uncompetitive tax structure in general and it has a particularly onerous tax structure for firms that are asset-intensive,” Smith said. “If you run an industrial company like FedEx, which employs 290,000 folks, most of whom are blue-collar people, the way we have to run this business is to equip those workers with billions of dollars of assets that allow them to pick up and deliver millions of things around the world."
Smith also cited, as did Gilmore, that the potential for vast salaries and bonuses in the financial sector siphoned off too much of America’s top talent in recent years, especially those coming out of college.
“Not too many young people coming out of school are studying to be production managers at General Motors, Smith said, adding that most of FedEx's first-line managers come not from the top flight universities, but out of community colleges and the military.
"The top talent has wanted to go to Wall Street," he said.
(Manufacturing Article - Continued Below) |