June 28, 2007
Wake up Call for the US
This blog has written many times about the mess that Sarbanes-Oxley has become and how much "ink" has been used to talk about it. We have repeatedly spoken about "just get on with it" and quit talking about it. While we whine too much about regulation in the US, developing countries are going to eat our lunch.
This interview by the Wharton Fellows with David Marshall, a prominent real estate developer from Philadelphia. Mr. Marshall recently had a chance to visit Shanghai while hosting a session that Wharton (University of Pennsylvania) sponsored in Shanghai.
While his comparisons talk somewhat about Philadelphia, he has some interesting comments about the comparison of Britain during the time of the rise of the US. Additionally, he speaks about the problems in the US of being bogged down in getting small and large projects moving either through stubbornness or lack of knowledge about what is happening in the rest of the world.
An excerpt is here:
"In the last 10 years, not the last 22 years, Shanghai has built 2,000 high-rise buildings between 20 and 108 stories high -- one more spectacular than the next. We stayed on the fifty-ninth floor of the JW Marriott, which was the headquarters for our Wharton Fellows Conference. You can look in four directions as far as the eye can see and you see nothing but spectacular high-rises. At night it looks like Las Vegas: All the buildings are lit up, they look like rocket ships going off. It looks like the Fourth of July. It is absolutely incredible what they have accomplished.
And we, on the other hand, are arguing over Sarbanes-Oxley, stem cell research, an archaic tax code, social security and health care -- and I could go on and on. They're all very important issues, but we are paralyzed by these issues and we are not growing. It is reminiscent to me of what probably took place with Great Britain not watching the United States -- when the United States went flying by Great Britain. [China is] going to go flying by us and we're going to wake up one day and say, "Oh my God, look what we missed." That was my take away from China."
He goes on to make a recommendation for US politicians:
"I think that it should be mandatory for every politician in federal government to go over there and see what's going on. I've talked to a number of them who have not seen it. It is incredible for me to see a country growing as fast as [China] -- which holds, at last count, $1.3 trillion of [U.S.] Treasury bonds -- where we are making decisions on how we're going to relate to them without having been there.
It should be a mission that they all [are required to go on].... It could be done in a few days. I'm interested in having them see the progress that's being made over there. I think that it's very naïve for us to have our congressmen arguing about how we're going to punish China for not letting the Yuan float; and how we're going to punish China for intellectual property rights. When [China is] sitting there with $1.3 trillion of our Treasury bonds, you're not going to punish anybody.
What you've got to do is try and work with them. We had a conversation with a bank, and we asked a question about intellectual property rights. The indication was very clear that they really don't care about intellectual property rights.... Their goals are to get one billion, 300-500 million people educated, clothed, housed and fed. Intellectual property rights are not on their radar screen and [won't] be.
We're trying to play a basketball game with a basketball, and they're trying to play a basketball game with a football. It's a different set of rules. We better realize that it's a different set of rules and that they're not going to play by our set of rules. They're holding a lot of the chips right now and they're holding more and more of the chips every day. "
He does concede that the way China gets things done runs trully rough shod over its people and does not endorse that. An excerpt shows this as well:
" I certainly do not subscribe to us adopting their political system.... We had a guide who took us through the old city of Shanghai. The people who were living in the old city are given two choices when the city wants to build something: one is terrible, and the second choice is worse.
He explained it briefly by saying that if [the city] decides that they want you out of there, your first choice is that they will give you a new home 35 minutes out of down town, because you can't afford anything within the downtown area. You don't want to do that, because you're currently walking to work from your house and you're very happy. Well then, fine -- [the city will] appraise your house, and your house is worth about $700; they'll give you $700, and you'll fend for yourself. "
So we are left with decisions to make. None of us in North America want to adopt the sometimes brutal ways in which China treats people. That is totally against our values. We love democracy.
But there has to be a wake up call.
If you are going to make progress do not make every regulatory process so onerous that nothing gets done. It may give you short term gains, but overall it puts a lethergy into the society and holds it back.
It is not Sarbanes-Oxley that is a problem for US business, it is the danger of thinking you are entitled to success because you had it in the past. You must be better today than you were yesterday to compete successfully. Further, you must learn what is going on in the rest of the world. It will wake you up when you see how smart and hard working other countries are.
This interview by the Wharton Fellows with David Marshall, a prominent real estate developer from Philadelphia. Mr. Marshall recently had a chance to visit Shanghai while hosting a session that Wharton (University of Pennsylvania) sponsored in Shanghai.
While his comparisons talk somewhat about Philadelphia, he has some interesting comments about the comparison of Britain during the time of the rise of the US. Additionally, he speaks about the problems in the US of being bogged down in getting small and large projects moving either through stubbornness or lack of knowledge about what is happening in the rest of the world.
An excerpt is here:
"In the last 10 years, not the last 22 years, Shanghai has built 2,000 high-rise buildings between 20 and 108 stories high -- one more spectacular than the next. We stayed on the fifty-ninth floor of the JW Marriott, which was the headquarters for our Wharton Fellows Conference. You can look in four directions as far as the eye can see and you see nothing but spectacular high-rises. At night it looks like Las Vegas: All the buildings are lit up, they look like rocket ships going off. It looks like the Fourth of July. It is absolutely incredible what they have accomplished.
And we, on the other hand, are arguing over Sarbanes-Oxley, stem cell research, an archaic tax code, social security and health care -- and I could go on and on. They're all very important issues, but we are paralyzed by these issues and we are not growing. It is reminiscent to me of what probably took place with Great Britain not watching the United States -- when the United States went flying by Great Britain. [China is] going to go flying by us and we're going to wake up one day and say, "Oh my God, look what we missed." That was my take away from China."
He goes on to make a recommendation for US politicians:
"I think that it should be mandatory for every politician in federal government to go over there and see what's going on. I've talked to a number of them who have not seen it. It is incredible for me to see a country growing as fast as [China] -- which holds, at last count, $1.3 trillion of [U.S.] Treasury bonds -- where we are making decisions on how we're going to relate to them without having been there.
It should be a mission that they all [are required to go on].... It could be done in a few days. I'm interested in having them see the progress that's being made over there. I think that it's very naïve for us to have our congressmen arguing about how we're going to punish China for not letting the Yuan float; and how we're going to punish China for intellectual property rights. When [China is] sitting there with $1.3 trillion of our Treasury bonds, you're not going to punish anybody.
What you've got to do is try and work with them. We had a conversation with a bank, and we asked a question about intellectual property rights. The indication was very clear that they really don't care about intellectual property rights.... Their goals are to get one billion, 300-500 million people educated, clothed, housed and fed. Intellectual property rights are not on their radar screen and [won't] be.
We're trying to play a basketball game with a basketball, and they're trying to play a basketball game with a football. It's a different set of rules. We better realize that it's a different set of rules and that they're not going to play by our set of rules. They're holding a lot of the chips right now and they're holding more and more of the chips every day. "
He does concede that the way China gets things done runs trully rough shod over its people and does not endorse that. An excerpt shows this as well:
" I certainly do not subscribe to us adopting their political system.... We had a guide who took us through the old city of Shanghai. The people who were living in the old city are given two choices when the city wants to build something: one is terrible, and the second choice is worse.
He explained it briefly by saying that if [the city] decides that they want you out of there, your first choice is that they will give you a new home 35 minutes out of down town, because you can't afford anything within the downtown area. You don't want to do that, because you're currently walking to work from your house and you're very happy. Well then, fine -- [the city will] appraise your house, and your house is worth about $700; they'll give you $700, and you'll fend for yourself. "
So we are left with decisions to make. None of us in North America want to adopt the sometimes brutal ways in which China treats people. That is totally against our values. We love democracy.
But there has to be a wake up call.
If you are going to make progress do not make every regulatory process so onerous that nothing gets done. It may give you short term gains, but overall it puts a lethergy into the society and holds it back.
It is not Sarbanes-Oxley that is a problem for US business, it is the danger of thinking you are entitled to success because you had it in the past. You must be better today than you were yesterday to compete successfully. Further, you must learn what is going on in the rest of the world. It will wake you up when you see how smart and hard working other countries are.
