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AT Kearney & DuPont on government’s role in markets

Friday 19 November, 2010

The Chicago Council on Global Affairs put on this event EXPANDED GOVERNMENT ROLE IN MARKETS which featured Erik Peterson of A.T. Kearney & James Romine of DuPont.  Peterson took the lead indicating the potential for paralysis in Washington as a result of the recent elections over whether states or markets should determine economic outcomes.  Economies swing in cycles & the developing economies of the world have grown through a belief in open markets.  The question now is “Where are we in the economic cycle?”  A private sector failure led to the financial crisis, so regulation is the natural outgrowth of that.  Peterson sees 7 key issues over the next 5 years:

  1. exit from recession threatened by unemployment
  2. rise of developing economies (6.4% growth) in production & consumption (vs. 2.2% growth for mature economies)
  3. rise of state enterprises (4 of Forbes Top 25)
  4. demographic changes-slowing rate of growth (in Japan & Russia) & aging, creating workforce decompression (China will have more people aged 60+ than the whole US population by 2050)
  5. resource crunch like the 2008 food riots
  6. role of international organizations need to be transformed
  7. changes in debt/leverage forecasted by Deutsche Bank to grow from 135% to 155% by 2030

We’re at an inflection point where business can no longer continue as usual.  We need more discipline in business & government.

Romine described how DuPont’s history is intertwined with government & suggested C’s reflect it’s relationship with business:

  • complex-with 90K governmental units & 40K NGO’s, who is accountable & liable for value/supply chains?
  • consumers-are defacto regulators
  • collisions-as a result of regulations, e.g., there is little harmonization with Europe
  • challenge-to create sustainable growth & enable a 9B world population live well in 2050
  • collaboration-required for better regulation
  • creativity-is both a threat & opportunity

panel Q&A

  • Government has a role to play, but in the US has played too small a role.  The private sector is more agile & reacts more quickly to change.  Walmart is a regulator by what they allow to be put on their shelves.
  • A systemic crunch for commodity resources creates a long term challenge.  Energy demands are unsustainable.
  • Our public debate is uninformed, so we need to get beyond parochialism & partisanship, & rebuild trust.

open Q&A

  • It’s remarkable & questionable how fair it is that so much money was spent in this last campaign season as a result of the lack of limits on campaign spending
  • Because consumer groups are now just a tweet away, government needs to write good rules to respond to consumer needs
  • Getting out of the recession & better government-government cooperation are the most important changes required by 2015.
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