Elite Panel Lays Out Road to Economic Recovery

As part of the programming for Reunion Homecoming Weekend, Stanford hosted a roundtable discussion entitled, “The Road Back: From Economic Meltdown to Renewal.” The event featured a stellar panel composed of University President John Hennessy, Economics Professor Caroline Hoxby, Mexican Central Bank Governor Guillermo Ortiz, TransUnion Chairman Penny Pritzker, Graduate School of Business Dean Garth Saloner, and Google chairman and CEO Eric Schmidt. The discussion, moderated by PBS’s Charlie Rose, took place on October 24 in Maples Pavilion and focused on the post-recession challenges facing the United States and the world.

The discussion included several issues that have been the epicenter of recent debate, the most notable of these being President Obama’s stimulus bill. When asked whether she thought the bill would create jobs, Professor Hoxby responded, “We’re not going to see much effect of the stimulus package itself.” Dean Saloner had a similar opinion, stating, “The stimulus money has really so far not had much impact, and we will start to see that impact to a much greater extent next year.” Schmidt, however, applauded the bill’s $60 billion investment in renewable energy, contending that the President’s agenda should not only include creating jobs but should also address America’s infrastructure deficiencies. Similarly, Pritzker lauded the 10% of the stimulus money that went to education.
However, all respondents stated that they supported the Bush administration’s government bailouts to struggling large corporations last year, known as the Troubled Asset Relief Program (TARP). Dean Saloner said that the program succeeded in achieving its goal of increasing liquidity in the credit markets. “We were on the brink of collapse,” he added. “If you don’t fix that, you do go off the precipice.” Professor Hoxby concurred by stating that the TARP money was successful, though she expressed concern that it set a bad precedent and would probably encourage some large firms to act irresponsibly in the future.
The debate then shifted to the enormous amount of debt being accumulated by the federal government. Guillermo Ortiz of the Mexican Central Bank stated that to keep America strong, the biggest challenge will be to address the nation’s deficit. Hoxby described the deficit as “unprecedented” and “unsustainable.” She pointed out that, unlike the large deficit during World War II, which was rapidly solved by simply decreasing military expenditures, most of the government’s current expenditures are mandatory entitlement payments, primarily Medicare, Medicaid, and Social Security.
President Hennessy called upon Congress to reach bipartisan agreements to reduce the mounting debt. In response, Pritzker, who worked for Obama in his presidential campaign, stated, “You see the President very much trying to create bipartisanship.” This remark was met with much skepticism from the audience, and was the only time a significant part of the audience outspokenly disagreed with one of the panelists.

President Hennessy also discussed the role the government should play in private enterprise. He commented that foreign leaders often come up to him and ask what government policy is necessary to replicate Silicon Valley’s success. To this he responds, “Stay in Washington, please!”

Google CEO Schmidt suggested that guaranteeing visas to foreign graduates of elite American universities should be a priority. He joked, “This is a brilliant strategy. Bring the smartest people in the world to Stanford, educate them, and kick them out of the country.” He went so far as to call this “the stupidest policy in all of government.”

Looking forward, several panelists offered their point of view on how to keep America’s economy thriving. Schmidt argued that the U.S. needs to have a prosperous manufacturing sector once again, believing that it should focus on advanced technologies. Dean Saloner explained how at the Stanford Business School, there was a new focus on educating principled leaders who would act responsibly in the future.

The event ended on a positive note, with several panelists declaring they were optimistic about America’s future. Professor Hoxby stated, “I am optimistic because I am an American…I take tremendous hope from the fact that despite the crisis, Americans remain very entrepreneurial, very optimistic for the future, and very interested in getting back on the horse.” Pritzker used a similar patriotic tone: “The reason I am optimistic is because I believe in America,” she stated. “I believe in our innovative capabilities, I believe in our educational institutions, and I believe in our power to evaluate ourselves to see what we’re not doing well.” Guillermo Ortiz concluded by saying, “I’m not an American, but I’m also very optimistic,” and suggested that the U.S. and Mexico should work together more closely to solve the challenges facing the two nations.

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