Fix The Debt, Now


By Turney Stevens, Dean

The United States owes over $16 trillion dollars.

Even with recent budget cuts, known as sequestration, the nation is going in the hole at a rate of about $1 trillion more each year.

It’s been over three years since the Senate has even approved a budget.

Although the official debt of the country is $16 trillion, the “unfunded” liabilities total more than $50 trillion.

And on and on and on. You’re read about all of this. Most Americans are familiar with the basic facts. The question is what to do about it.

Our guest this week on Conversations with the Dean is Tim Pagliara, co-chairman of Fix The Debt, a Tennessee group seeking to educate the public on the options available to solve this national disgrace. The organization has partnered with the Concord Coalition, a well-known initiative started by former Treasury Secretary Pete Peterson, with similar objectives.

In addition to its initiatives with the general public, the group is traveling to various campuses and engaging students in team exercises in which each team is given the various options available to Congress and the President as they wrestle with the hard choices that must be made. We hosted the group here at Lipscomb and, surprisingly, the choices are not as hard as we are sometimes led to believe. For example, raising the social security payment limit from just over $100,000 to just under $200,000 would instantly wipe out half of the current deficit.

Tim’s day job is Founder and CEO of CapWealth Advisors LLC. He is a graduate of St. Louis University, earning both an undergraduate and law degree from that institution. He has climbed Mount Kilimanjaro not once, but six times and is licensed as a United States Coast Guard 100-ton Master Capitan.

 

Contributions to the Lipscomb Business Blog represent the views of the author and do not necessarily represent the views of Lipscomb University nor the Lipscomb College of Business and its faculty and staff.

Inside Nashville- Marc Driskill

By Randy Goodman

Our guest on Inside Nashville Marc Driskill is Vice President and General Manager of ASCAP’s Nashville office where he oversees the Nashville Membership team.

Driskill began his career at ASCAP in 1998 as Assistant Vice President, working with songwriter and publisher members on creative and business related issues.  After nearly eight years at ASCAP, he took a jump into the music publishing world, heading a publishing company and helping launch a copyright administration division of the company.

Then in 2009, he returned to ASCAP, to focus on supporting the creators of music at every stage of their careers.  He currently serves on the Board of Directors of the Academy of Country Music and the Nashville Chapter of the Independent Music Publishers Association. He is also a member of NARAS and a Leadership Music alumnus.

Driskill earned an accounting degree from Samford University in Birmingham Alabama.  A Nashville native, he currently lives in Franklin Tennessee with his wife and two boys.

 

Contributions to the Lipscomb Business Blog represent the views of the author and do not necessarily represent the views of Lipscomb University nor the Lipscomb College of Business and its faculty and staff.

Second Acts


By Turney Stevens

We’re hearing a lot these days about post-retirement careers. We’re also hearing a lot about later life entrepreneurs.

Carl Haley knows about both.

After he and his colleagues sold AIM Healthcare, Carl found himself with a lot of years still ahead, some cash, and a world of experience. What does one do under those circumstances? Start a new business, of course.

But the business that Carl Haley decided to start is in one of the most unlikely of industry segments: ground transportation. That’s code for taking individuals and groups from point A to point B.  Think Lincoln Town Cars from the airport to a hotel. Think small buses to local and out of town events. Think big buses.

This is neither a new business nor a particularly glamorous one, at least it was not very glamorous until Carl Haley got into it. He recognized several key things as he was contemplating his venture:

·         Music City was about to become Mega City with the opening of the new Music City Center convention space. Thousands descending weekly on the city to attend meetings meant that the space was destined to grow. Carl bet it was going to grow dramatically. And nearly every one of those visitors on expense accounts needed a ride from somewhere to someplace.

·         The ground transportation business was very much unconsolidated. He knew his competitors would be taxi cab drivers, a few one-car chauffeurs, a couple of bus operators. Nobody really operated a big business, at least not in Nashville. Scalability was not only possible, it was just waiting to be done.

·         He knew there was a tremendous opportunity to build a brand. Nobody in Nashville had even come close to doing that in this segment. He also knew no one was harnessing the new power of online scheduling, of social media, of smartphone apps.

With this knowledge in hand, he put together a business plan and, at a point in life when most of his peers were driving out to the Golf Club of Tennessee for an afternoon on the links, he founded Grand Avenue Transportation.

Haley is President and CEO of Grand Avenue, founded in 2009. He is a graduate of George Mason University with a degree in information services. He and his wife, Connie, reside in Franklin with two dogs, two peacocks and “several horses.”

Our guest this week on Conversations with the Dean is Carl Haley.

 

Contributions to the Lipscomb Business Blog represent the views of the author and do not necessarily represent the views of Lipscomb University nor the Lipscomb College of Business and its faculty and staff.

Inside Nashville-Tim Dubois

By Randy Goodman

Our guest on Inside Nashville has one of the most diverse and respected resumes you’re likely to ever come across.

He is a Songwriter, a professor of management at Vanderbilt’s Owen School, a record producer, a member of the Federal Reserve Board, a successful record company President, an artist manager, the head of ASCAP, and maybe you’ve heard in recent days about the new affordable housing project for starving artists called Ryman Lofts…his idea….but don’t be fooled into thinking that his breadth of experience means he’s a mile wide and an inch deep.

As a songwriter he’s written 5 #1 hits 2 of which were nominated for Grammy awards…and it was this understanding of the craft that led to his tenure as the head of ASCAP, Nashville in recent years.

As a producer he helped create over 20 #1 singles and more than a dozen gold and platinum albums.

As a record executive he was tapped in 1989 by the legendary Clive Davis to open Arista Nashville and went on to sign Alan Jackson (his first signing), Brooks and Dunn, Blackhawk, Pam Tillis, Diamond Rio (who’s lead singer Marty Rowe is an alum of Lispcomb) and Brad Paisley. In just 4 years this roster would sell in excess of 75 million albums.

I could go on and on but better we hear from the man direct…

It is my distinct pleasure to welcome to Inside Nashville, Tim Dubois.

 

You can view by segments:

Tim Dubois- Segment 1

Tim Dubois- Segment 2

Tim Dubois- Segment 3

 

About Inside Nashville


INSIDE NASHVILLE is a joint production of the College of Business and the Department of Communication & Journalism at Lipscomb University in Nashville, TN.  The show consists of interviews with those involved with business of music business in “Music City USA.”  The show is hosted by Randy Goodman.

Lipscomb at Davos

Lipscomb at Davos

By Barry Stowe

(Dean’s Note: Barry Stowe, Lipscomb Alumnus and CEO of Prudential Corporation Asia, is attending the World Economic Forum’s invitation-only annual meeting at Davos, Switzerland this week. This is the final dispatch from Davos.  We trust you have enjoyed this unique opportunity to engage with Lipscomb through a world forum.)

A parting note from Davos…as I sit in the lounge at the Zurich airport I reflect back on a great week and find myself encouraged by the mood of almost everyone I met.  Compared to six months ago when investors were counseling an exit from equities in favor of cash, there is more optimism…or at least less pessimism. So what has changed? I think the concern over the “fiscal cliff” was a weight on the minds of many, but we survived it for now. The political stalemate in America is an issue of grave concern globally because, the rise of China notwithstanding, what happens in America drives the world. And there has been concern about China’s ability to continue to grow its economy fast enough to avoid rising unemployment…and the potential for social unrest…which leads some to worry about a “hard landing” in China that would impact all of Asia.  But these worries also seem to be abating.

Many global leaders seem to have concluded that the proper balance between driving economic growth and increased regulations designed to ensure that growth is resilient has been lost…that efforts to avoid a future crisis are serving more than anything to keep us mired in the current economic slump. In Davos there was much more consensus around the need to restrike that balance…and soon.  Many of the public sessions were focused on this topic and there will have been hundreds of private conversations had in an attempt to find a way forward.  One gets the sense that progress was made.

Davos matters because of these conversations that can only happen there, far from the stifling effect of bureaucrats, the pull of politics and the glare of the media. Consider this:

When the Berlin Wall was crumbling and the Eastern Bloc countries were freeing themselves from Soviet dominance, the first discussions on German reunification between Berlin and Bonn were held at Davos.

South African President F W deKlerk first approached Nelson Mandela to discuss the prospect of ending apartheid and holding free, universal elections… in January 1992 at Davos.

Bill Gates first met with the WHO at Davos, and was inspired to create history’s greatest philanthropic foundation, focused on improving the lives of children.

I am encouraged by the optimistic tone at Davos because it is unshakeable optimism that drives people to solve the seemingly insoluble.

We often recall the public writings of Thomas Jefferson…”When in the course of human events”…”we hold these truths to be self-evident”…and so on. But my favorite bit of writing by Jefferson was written very late in his life, at a time when his personal affairs were in disarray and America was on a political and social course which was in most every respect inconsistent with his world view. In a letter to his old friend John Adams, Jefferson wrote:

“I believe in the dreams of the future more than the history of the past.”

 

Lipscomb at Davos

Lipscomb at Davos

By Barry Stowe

(Dean’s Note: Barry Stowe, Lipscomb Alumnus and CEO of Prudential Corporation Asia, is attending the World Economic Forum’s invitation-only annual meeting at Davos, Switzerland this week. He is filing daily dispatches.)

I suspect that not many of you are planning to retire on your Social Security income alone…while there is virtual certainty that you will receive your benefits, the amount you receive won’t be adequate to support you in reasonable comfort. There are other countries, most notably in Europe, that provide their citizens with much higher levels of benefits, amounts that are adequate to support a modest,  middle-class lifestyle. This sounds great until you realize that these programs face solvency issues that even  confiscatory tax rates can’t solve (The French are now able to demonstrate their patriotism by paying taxes of close to 75% of income).  So governments all over the world are trying to figure out how to create retirement income schemes that are both adequate and sustainable. No one has solved it…at least not yet.

The World Economic Forum is in the midst of the debate on this issue, and a policy group organized by WEF (of which Prudential is a member) has been working on solutions based  upon the World Bank’s  ”Four Pillars” approach…that is to say the four essential elements of successful retirement provision. These are:

1.  Public retirement programs (think US Social Security) that provide for basic needs. These are contributory (you have to pay in order to participate) and are typically funded on a pay-as-you-go basis (there is no “trust fund”…current contributors fund current beneficiaries).

2.  Private, employer-based retirement plans that can be either voluntary or mandatory (required by law) and either defined benefit (a traditional pension that pays a percentage of working income in retirement) or defined contribution (such as a 401K where your employer pays a percentage of your income into a fund).  These can include contributions from employees as well as employers.

3.  Individual savings…very simple but very important.

4.  Longer working lives…for instance, changing retirement age from 65 to 67…and allowing retired individuals to continue to work part-time without forfeiting retirement benefits.

On Friday morning I helped lead a discussion on this extremely important topic. The timing could not be better. In most countries around the world populations are aging and the resulting stress on social protection systems is growing with each passing month.  The situation in America is very difficult. Historically, Americans retired around age 65 with their home paid for, a pension, Social Security and enough money in the bank for the occasional luxury. With life expectancies meaning that most people only lived for five to seven years in retirement, the economics worked. Today, most Americans pass age 65 with a home that is mortgaged, savings equal to less than two years of working income and a 401K that isn’t large enough to provide a stable income for more than a few years. This is exacerbated by ever-longer life expectancies…a healthy 65 year old faces the realistic prospect of a 20 to 25 year retirement. These economics do not work.

Our discussion this morning focused on how the private sector can help solve the issue of retirement, and specifically how we can design the “employer” pension plan of the future. Here’s what we can up with…I wonder if you will like it:

FINANCIAL LITERACY…key to solving problems is understanding them. It is important that Banks, Insurance Companies, Financial Planners, whoever you use to craft your own plans, help you understand the gravity of the issue and the fact that individuals MUST save significantly more than they have been over the past generation.

PORTABLE PERSONAL PENSIONS…people change jobs much more frequently today than they did in the past, so it would be helpful to have a single, portable pension that travels with them through their career. This would eliminate the situation where individuals have multiple, small accounts and would eliminate the loss of benefits when individuals leave a job before they “vest”.

Employees would be required by law to contribute 10% of their income to their pension every year…employers would be required to at least match that 10%. This seems like a loss of choice for freedom loving Americans…but in an environment where people clearly have lost the discipline to save, it may well be the only sensible solution.  I fear the alternative to this would ultimately be additional government provision to those who failed to save. I personally would rather give up some freedom rather than pay the additional taxes required those who didn’t have the good sense to prepare for their retirement.

“DRAW DOWN”…After you’ve spent a lifetime accumulating assets you need to figure out how you’re going to live on them in retirement. It is sensible for some portion of one’s savings to be “annuitized”…a lump sum paid in return for a guaranteed income for life. Some countries require this (or provide major tax incentive to do so). This is what that old-fashioned Defined Benefit pensions did for your parents, and you can do it yourself. Annuities provides a level of certainty that there will always be an adequate level of income…even if you live significantly longer than you expect. And chances are, you will live longer than you expect.

The seed of the broad solution to the retirement problem is in the Four Pillars above…not some of them but the combination of ALL of them. Key to this will be more savings by individuals…enabled by government policy (why is there a maximum on IRA contributions?)…but ultimately emphasizing the individual’s responsibility to provide for himself. Just like our parents did.

Lipscomb at Davos

Lipscomb at Davos

By Barry Stowe

(Dean’s Note: Barry Stowe, Lipscomb Alumnus and CEO of Prudential Corporation Asia, is attending the World Economic Forum’s invitation-only annual meeting at Davos, Switzerland this week. He is filing daily dispatches.)

One of the most interesting sessions of the week took place Thursday afternoon and focused on World Development needs and priorities.  The panel leading the discussion has an enormous amount of intellectual bandwidth, and no small amount of “star power”.  Included were Former Microsoft CEO Bill Gates, Secretary-General to the United Nations Ban Ki-moon, British Prime Minister David Cameron and Queen Rania Al Abdullah of Jordan among others. Gates said that much progress has been made in the reduction of global child mortality and that further improvement should be expected.  “We’ve improved the human condition faster than ever before,” he said, referring to the impact of the United Nations’ Millennium Development Goals (MDGs) and specifically MDG number four, which addresses child mortality.  “In 1990, 12 million children died every year. By 2015, it will be below 6 million.”

Queen Rania is focused on equality of education…ensuring that children around the world have access to quality education and that girls have the same access as boy (still a problem in many parts of the world today). A great quote regarding the need to improve the skills of teachers:  “Good teachers teach,” Queen Rania said. “But great teachers transform.”

As we move through the week at Davos, I am reflecting on the extraordinary discussions that take place and how interesting it is to be a part of it. One thing that makes the interactions here so unique is the “principals only” dimension of the events. Tight security ensures no one is able to “gate crash”. The technology employed to create this environment is impressive, and it all revolves around one’s “badge”.  Davos Lesson #1:  Not All Badges Are Created Equal.  Follow this link for an entertaining tutorial on the hierarchy of badges at Davos:

http://www.theatlanticwire.com/global/2012/01/visual-guide-many-different-davos-badges/47579/

As noted in an earlier post, there are lots of parties at Davos, but Thursday night is definitely the main event. Like everything else here the parties are by invitation only and, once again, the badge is important…you need it for admission to the parties. There’s a theory that work gets done in meetings but deals get done over drinks, so the parties are an interesting element of the experience here. And they’re fun. My schedule was busy:  we started at the Bank of America/Merrill Lynch party hosted by Brian Moynihan, then we moved on to The Duke of York’s party for British executives (I qualify as an executive of a British company). Next was PwC’s party where Michael Phelps spoke (inspirational guy, I must say) and then it was on to the party hosted jointly by CNBC and the Financial Times. My last stop was everyone’s favorite party, the one hosted by the partners of McKinsey and Company.  And I am pleased to report that the partners still have their “Motown/Funkadelic” thing going on…the great band from Detroit was back again this year and they were better than ever.

 

Lipscomb at Davos

Lipscomb at Davos

By Barry Stowe

(Dean’s Note: Barry Stowe, Lipscomb Alumnus and CEO of Prudential Corporation Asia, is attending the World Economic Forum’s invitation-only annual meeting at Davos, Switzerland this week. He is filing daily dispatches.)

Davos is a small town, so during WEF it can get a little crowded.  On Wednesday evening I was headed to a reception at the invitation of Michael Andrew, Global Chairman of KPMG. As I was making my way through the corridors of the Steinberger Belvedere Hotel it seemed to be a bit slower than usual, and then I realized there was an elderly gentleman ahead of me who, though moving diligently down the same path, was doing so at a much slower pace.  As I was already a little late I tried, as discreetly as possible, to pass him. Then I recognized his face, and I immediately slowed my pace to match his. “Secretary Kissinger”, I said, “I’m looking forward to your session tomorrow morning” We exchanged a few pleasantries and moved on. People have different views of Kissinger. But when you consider that our generation and those to come live in a world materially influenced by the rise of Asia, led by China, it is difficult to deny that Richard Nixon, and Henry Kissinger, opened the door to the future in 1972.

Kissinger’s session this morning did not disappoint.  He spoke about a wide range of topics including Syria specifically and the Middle East more broadly.  He emphasized the difficulty in trying to keep peace in a region where political boundaries were “artificially created” by Europeans at the end of the First World War.  The lesson here is that people who have never chosen to live together shouldn’t be expected to react well when they’re forced to do so.

Kissinger went on to predict a long-term rivalry between the United States and China:  ”They will interact with each other everywhere … These countries will conduct an increasing rivalry.”  He clearly is in favor of a united Europe: “the ideal of Europe must be continued even if the ideal solutions don’t exist”, and he made it clear that he’d prefer someone other than Barack Obama as President of the United States.

Before the Kissinger session I participated in a discussion focused on “Building a Stable and Resilient Global Financial System”.  It was a rather technical discussion that was enlivened by an array of interesting people with strong points of view of the topic and a serious stake in the outcome: former Treasury Secretary Larry Summers from Harvard,  Nouriel Roubini from NYU, Finance Ministers from Panama, Colombia, South Africa and the Central Bankers from Korea and Israel, to name a few.  Setting aside the more technical bits, what was interesting were the fundamentally different views on “too big to fail”. There are essentially two camps: One view is that financial institutions that are too big to fail are dangerous, so regulations should be put in place to ensure that no such institution is allowed to grow to a scale where it represents a systemic risk.  The other view is that firms that are too big to fail must be governed to such a high standard that they don’t fail, thereby mitigating the system risk that large institutions represent. Bankers tend to fall into the latter camp and regulators into the former. There are noted academics on both sides of the issue.  Opinion in Davos trends strongly towards less but higher quality regulation…including much stronger measures of financial strength and  increased accountability for those that get it completely wrong, be they executive, regulators or rating agencies.

Tomorrow: an update on which development needs world leaders should be focused on, how retirement can be made more financially secure, and the “heirarchy” of Davos…or, why my badge is better than your badge.

Lipscomb at Davos

 

Lipscomb at Davos

By Barry Stowe

(Dean’s Note: Barry Stowe, Lipscomb Alumnus and CEO of Prudential Corporation Asia, is attending the World Economic Forum’s invitation-only annual meeting at Davos, Switzerland this week. He is filing daily dispatches.)

When Turney Stevens asked me to provide some daily insight into what goes on at Davos, I was slightly reticent…only because there is so much going on that it is difficult to decide which things might be most interesting.  Well, one thing is for sure:  Jamie Dimon is interesting.

I spent about 75 minutes this morning in a session moderated by Maria Bartiromo, a portion of which was aired live on CNBC. The session focused on how Financial Services must play its inevitably leading role in economic recovery while managing risks in an appropriate way. The “hot” topic turned out to be the definition of “appropriate”.  Mr. Dimon (aka Everyone’s Favorite Banker) offered a passionate and logical defense of Financial Services, refuted with unassailable evidence a number of criticisms of the banking industry, including its scale, and emphasized the social utility of banking services…an important story that gets lost in the noise. Lest you draw the wrong conclusion, Mr. Dimon is a strong proponent of improved regulatory oversight. But what is clear…and this is me talking rather than Mr. Dimon…is that much of the regulatory change since 2008 has not been well-reasoned, will not be useful and may ultimately propel us into the next crisis rather than prevent it.  More proof that the intersection of Politics and Reason is difficult to find on any map.

By the way…Mr. Dimon spoke directly to the trading losses suffered at JPMorgan Chase last year. He acknowledged the “stupidity” of what happened, but again drew a distinction that you wouldn’t generally hear emphasized in the media: “Not a single customer lost a penny…the mistake was stupid but not venal…my shareholders suffered but my customers didn’t.” And even after writing down the $6 billion loss, JPMorgan Chase was likely the most profitable bank in 2012.

I also participated in a discussion titled “Leading through Adversity”. In my view the two standout contributors to this discussion were Mike Duke, CEO of Walmart and Harvard Business School Economist Clayton Christensen.  Much of this discussion was around the idea of “Disruptive Innovation”. If you Google it you’ll find that Wikipedia defines this as “An innovation that creates a new market by applying a different set of values, which ultimately (and unexpectedly) overtakes an existing market, such as the introduction in 1908 of the lower priced Ford Model T”.  (I wonder if the people at Webster’s Dictionary consider Google to be Disruptive Innovation?)

While many business people wouldn’t think they’d embrace anything “disruptive”, Mike Duke and Walmart seem to love it. He talked about Walmart’s “Innovation Loop”, which holds that innovation leads to efficiency…which leads to lower prices….which leads to more customers…which leads to efficiency…which leads to lower prices…you get the point.  The moral is that leaders who embrace innovation will make “Edsels” occasionally, but they will also create Model Ts… and change the world.

 

Contributions to the Lipscomb Business Blog represent the views of the author and do not necessarily represent the views of Lipscomb University nor the Lipscomb College of Business and its faculty and staff.

Lipscomb at Davos – A Day At Davos

A DAY AT DAVOS

 

By Barry Stowe

 

(Dean’s Note: Barry Stowe, Lipscomb Alumnus and CEO of Prudential Corporation Asia, is attending the World Economic Forum’s invitation-only annual meeting at Davos, Switzerland this week. He is filing daily dispatches.)

I thought it might be helpful to give you some insight into what my Davos schedule looks like. Here are some highlights of the sessions I’m invited to…most of these last about 90 minutes and will have from 25 to 50 people in attendance:

 

Wednesday, Jan 23

“The Global Financial Context”

Discussion of the limits of monetary policy, options for the Eurozone, etc.

Discussion led by Maria Bartiromo (CNBC) with Jamie Dimon (CEO of JPMorganChase), Axel Weber (CEO of UBS, Swiss Bank), Tidjane Thiam (Chief Executive of Prudential plc)

“A Discussion with Larry Summers”

Discussion of the future of the American Public Sector

Larry Summers, former Secretary of the Treasury and former President of Harvard, leads the discussion group

 

Thursday, Jan 24

“State of the World: A Strategic Assessment”

WEF Chairman Klaus Schwab leads a discussion with Henry Kissinger

“An Idea with Joseph Stiglitz”

Joseph Stiglitz, Nobel Prize winning American economist, discusses the price of inequalities for economies and societies

 

“The Global Development Outlook”

Discussion of what development goals world leaders should works towards

Thomas Friedman (NY Times best-selling author) moderates a discussion with Ban Ki Moon (United Nations Secretary General), David Cameron (Prime Minister of the United Kingdom), Bill Gates (Microsoft Founder), and Queen Rania of Jordan

 

Friday, Jan 25

“Social Protection Systems”

Discussion of how societies can provide social safety nets that are adequate and sustainable.

I am a discussion leader for this session with the Finance Ministers of Chile and Peru as well as Kevin Hogan, Global CEO of Zurich Life and Senator Rob Portman of Indiana.

 

Saturday, Jan 26

“Professors and Pundits”

Discussion of what 2013 holds in store

Tom Keene of Bloomberg TV moderates a discussion with Fareed Zakaria, Kishore Mahbubani (the Singaporean economist I alluded to in my remarks last fall at Lipscomb) and Nouriel Roubini, professor at NYU’s Stern School of Business.

 

I also have a series of 1:1 meetings schedules, but these highlights hopefully set some context. I look forward to filing additional reports to share with my friends at Lipscomb more of this important event. Prudential Corporation Asia is proud to be a Global Strategic Partner of the World Economic Forum and to be invited to participate in this annual meeting of thought leaders from throughout the world.

 

Contributions to the Lipscomb Business Blog represent the views of the author and do not necessarily represent the views of Lipscomb University nor the Lipscomb College of Business and its faculty and staff.

 

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