Sunday, April 25, 2004
10:00 am - 1:00 pm
In a preview to the Global Conference, a number of panelists on the event′s health-care sessions — including Nobel Prize winners in medicine and economics, the director of the National Cancer Institute, and others — participated in a private interactive roundtable with invited guests at the Getty Center. They addressed such questions as why, 33 years after our nation declared war on cancer, more than half a million Americans still lose their lives to it every year; how we can deal with the epidemic of obesity and the resulting rise in diabetes and heart disease; what strategies the National Cancer Institute has put in place to achieve its goal of eliminating the burden of cancer by 2015; how informatics, genomics and proteomics can make predictive medicine a reality; how to find more risk capital for drug development; and how we can improve the efficiency of medical research.
Moderators
Michael Milken, Chairman, Milken Institute; Chairman, FasterCures / The Center for Accelerating Medical Solutions; co-Founder, Milken Family Foundation
Speakers
Anna Barker, Deputy Director for Strategic Scientific Initiatives, National Cancer Institute
Gary Becker, Nobel Laureate, Economic Sciences, 1992; Professor, Economics and Sociology, University of Chicago; FasterCures Board Member
Richard Brewer, Managing Partner, Crest Asset Management; FasterCures Board Member
Richard Brewer, Managing Partner, Crest Asset Management; FasterCures Board Member
Arthur Caplan, Director, Center for Bioethics, University of Pennsylvania
Arthur Caplan, Director, Center for Bioethics, University of Pennsylvania
Daniel Goldin, Senior Fellow, The Neurosciences Institute; former Administrator, NASA
Lee Hartwell, Nobel Laureate, Medicine, 2001; President and Director, Fred Hutchinson Cancer Research Center, Seattle
Lee Hartwell, Nobel Laureate, Medicine, 2001; President and Director, Fred Hutchinson Cancer Research Center, Seattle
Carol Kovac, General Manager, Healthcare and Life Sciences, IBM
Carol Kovac, General Manager, Healthcare and Life Sciences, IBM
Rick Lytel, Vice President, Chief Technologist, Physical and Life Sciences; Director, Advanced System Development Center, Sun Microsystems
Shmuel Meitar, Director, Aurec Group; FasterCures Board Member
Shmuel Meitar, Director, Aurec Group; FasterCures Board Member
Richard Merkin, CEO, Heritage Provider Network; FasterCures Board Member
Richard Merkin, CEO, Heritage Provider Network; FasterCures Board Member
Greg Simon, President, FasterCures / The Center for Accelerating Medical Solutions
Greg Simon, President, FasterCures / The Center for Accelerating Medical Solutions
Andrew von Eschenbach, Director, National Cancer Institute
Martin Wygod, Chairman, WebMD
Monday, April 26, 2004
8:00 am - 12:00 pm
This private workshop was organized by the Post Advisory Group.
Speakers
Alex Cook, Managing Director, Offit Hall Capital Management LLC
Alex Cook, Managing Director, Offit Hall Capital Management LLC
Suzanne Murphy, Managing Director, Acorn Partners, LP
Suzanne Murphy, Managing Director, Acorn Partners, LP
Michael Napoli, Jr., Senior Managing Director, Wilshire Associates, Inc.
Michael Napoli, Jr., Senior Managing Director, Wilshire Associates, Inc.
10:00 am
10:30 am - 11:45 am
"You know you have joined the human race when you plant a tree under whose shade you will never sit," Greg Simon, moderator and President of FasterCures said, opening the panel with this Amish quotation.

The People First panel focused on the linkages between scientific discovery, the increasing importance of complex technological infrastructure, interdisciplinary research and individual incentive. Underlying the discussion was an appreciation for improving quality of life. The panel quickly moved to tactical concerns over how to attract and leverage the human capital that underscores the nobler long-term goal of improved care.

A crisis has emerged around the time frame and payoff associated with a career in the field of bio-medical research. David Baltimore remarked, "We are in something of a crisis, a crisis of the training process. If we want someone who is willing to jump from where the problem is to where it is going, they must be independent."

Panelists agreed that the prerequisites for a successful career in bio-medical research involves so many years of training that the student stage of life has become "professionalized," extending into one′s mid-30s. Individuals spend more time building their CVs and lining up benefits than taking risks. According to David Agus, this process has a huge impact on risk-taking and creativity in bio-medical research, since there is "no way to swing to the fences until your thirty-five." Agus went on to compare the lure of near-term paydays in fields like technology with the much longer term paybacks inherent in a career in the bio-medical field.

Panelists debated possible solutions that would preserve the role of individual contribution—which all see as vital to new discovery—while promoting team-based, inter-disciplinary cooperation. At the heart of this debate is how tenure qualifications can coexist with cooperation—cooperation within labs, cooperation between small and large labs, and cooperation between clinicians and academics. Currently, tenure and as a corollary, professional prestige, depend upon publishing. As a result, PhDs are reluctant to take second billing on a team project. In addition, those who touch the patients—the doctors—are removed from those who touch the research. Salary concerns in a field plagued by grant reductions and patient cost cuts are not provided with the economic incentive to intermingle.

If biomedical research is to improve, collaboration must take the form of interdisciplinary cooperation (e.g., between industry and university), project collaboration (e.g., PhDs who sacrifice publication recognition to work on a team), and lab cooperation (e.g., Big Pharma companies with the computational resources working with smaller labs focused on one therapeutic discovery).

Anna Barker believes that a new reward system is required; one that preserves individual contribution that "changes the world," but integrates more of a team-based system. She suggested introducing a reward system for interdisciplinary publications. David Baltimore advocates creating a nontenure track for team players who are compensated with higher pay. He would create a professional track (i.e., capitalistic rewards) and an academic track (i.e., more traditional academic rewards).

Gordon Binder supports a similar solution, mentioning financial support from large pharma companies like Amgen for post-doc fellowships. Ernie Bates pointed out that Johns Hopkins has tried to address the issue by creating joint physician/scientist programs. While students typically opt into basic research or clinical study early on, joint programs like the one at Johns Hopkins provide exposure to both. All panelists agreed that it will be critical to integrate computation and biology, and provide infrastructure for smaller labs to compete with the bigger companies.

The nature of research projects has changed, as the FDA has raised the bar on new drug approvals, the pharma/biotech industry has nearly tripled in size, and technology and computational biology have increased the infrastructure required to churn out new drugs, new regimens and new hope. Cooperation is the key word, yet the old system, which promotes the individual and the big company, remains in place. In the long run, the panelists are hopeful that we will experiment with new incentives and modes of cooperation to lure human capital into the system and provide the most effective results geared toward improving the quality of others lives.

To buy a DVD of this session, go to our DVD order page.

Moderators
Greg Simon, President, FasterCures / The Center for Accelerating Medical Solutions
Speakers
David Agus, Research Director, Louis Warschaw Prostate Cancer Center, Cedars-Sinai Medical Center
David Baltimore, Nobel Laureate, Medicine, 1975; President, California Institute of Technology; FasterCures Board Member
Anna Barker, Deputy Director for Strategic Scientific Initiatives, National Cancer Institute
Ernest Bates, Chairman and CEO, American Shared Hospital Services; FasterCures Board Member; Vice Chairman, Board of Trustees, Johns Hopkins University
Gordon Binder, Managing Director, Coastview Capital; former CEO, Amgen, Inc.
11:15 am - 12:00 pm
12:00 pm - 2:00 pm
Rife with optimism, this year′s Global Overview could best be summarized by Tom Hughes′ opening insight, "What a difference a year can make!" When compared with last spring's economic environment, you might argue that it′s easy to be an optimist—the Dow Jones is up 25 percent and NASDAQ more than 50 percent. So the real question is whether this year′s optimism is justified.

While there were pockets of concern with respect to terrorism, protectionist trade policy, and rising oil prices, all signs were positive for the U.S. economy. What was most promising, however, was the panel′s collective perspective that we are entering a period of "synchronized global expansion." Along with the U.S. recovery, we are witnessing tremendous growth in China, Japan, and India. Countries that have suffered decades of stagnation are beginning to come online, and while the effects of outsourcing may be challenging in the short-term, the U.S. will be better off because of it. China, for example, can finally begin to afford many of the goods it has been exporting to the rest of the world for years. As China grows and prospers, its billion plus consumers will become an enormous market for U.S. goods and services.

In spite of all the optimism for the U.S. and Asia, the panel held a decidedly gloomy economic outlook for Europe. The combination of shifting demographics, complacency, and latent socialist philosophies are leading to what Gary Becker called "Europe′s comfortable decline." Europeans have experienced relatively poor growth and high unemployment for decades and yet, they don′t seem willing to make the difficult institutional changes that might disrupt their own well-being. So while it is often true that a rising tide lifts all boats, it appears that Europe is still at risk of running aground.

Regardless, the underlying theme of the Global Overview was that of optimism—after all, the human spirit is nothing if not resilient. The truth is we have come a long way in the last year. The U.S. is leading the recovery, but this time, we are sharing the economic limelight with Asia. With more than 60 percent of the world′s population, Asia will undoubtedly be a significant driver of growth and prosperity for economies around the globe. Since it′s not completely clear how this will play out, we are wise to heed the words of Rupert Murdoch, "with so many unknowns in the world, we should be humble with our predictions, but not with our hopes."

To buy a DVD of this session, go to our DVD order page.

Moderators
Paul Gigot, Editorial Page Editor, The Wall Street Journal
Speakers
Sharon Allen, Chairman, U.S. Board of Directors, Deloitte
Gary Becker, Nobel Laureate, Economic Sciences, 1992; Professor, Economics and Sociology, University of Chicago; FasterCures Board Member
Thomas Hughes, Global Head Asset Management; Member of Group Executive Committee, Deutsche Bank
Jami Miscik, Deputy Director for Intelligence, Central Intelligence Agency
Rupert Murdoch, Chairman and CEO, News Corporation; Chairman and CEO, Fox Entertainment Group
12:00 pm
2:00 pm

Secretary Thompson′s remarks:

Ladies and gentlemen, the greatest health care system the world has ever known operates right here in America, and the people in this room are a part of it. Our system is great because doctors and nurses, hospitals and clinics, manufacturers and researchers, investors and pharmacists have the freedom to compete to offer the best care.

We have entered a great new era in American medicine. From the moment of conception to the very end of life, we understand more about human health than the medical profession thought possible only a couple of generations ago. Innovative medical technology—particularly new drugs, devices, and biologics—are giving sick people hope and new chances at life.

Think about how we look at HIV and AIDS. This is a great example of how innovative medicine has transformed millions of peoples′ lives. Twenty years ago, an HIV diagnosis was a death sentence. Today, thanks to medical breakthroughs like anti-retroviral drugs, we are able to sustain life and enhance quality of life for those living with HIV and AIDS.

And my Department is doing some remarkable work with these anti-retroviral drugs in Africa. [Thompson discussed his trips to Africa]. We are blessed to live in America.

Still, as we celebrate our system′s successes, we know that we cannot rest on the achievements of even recent yesterdays. We have to look ahead — not only to new technologies and treatments, but also to how we can best foster the innovation and research needed to bring new technologies and treatments forward. And bring them forward quickly, to more people.

I′m here today to share my vision for how we can improve our system, to speed the time it takes to get the latest medical breakthroughs and innovative products from the lab bench to the bedside.

Let′s look at the problem first. And make no mistake—we do have a problem on our hands. The NIH says it takes from 10 to 15 years for new discoveries to be routinely used. Only 1 in 5,000 compounds that enter preclinical testing make it to U.S. patients. On average, it costs a company $802 million to get one new medicine from the laboratory into the hands of patients in the United States. These figures are shocking and unacceptable.

They are unacceptable because they carry real consequences—major drug and biological product submissions have decreased consistently over the last decade, in spite of our scientific advances. Because of the "process," good drugs and devices are being held back from Americans who could benefit from them.

Who knows what medical innovations we are missing out on because they are stuck somewhere in the research or approval pipeline? Or worse, who knows what new products aren′t making into the pipeline in the first place because innovative companies find the entire process too daunting or not worth their efforts?

Take genomics for example. The sequencing of the human genome was a remarkable accomplishment and one of the greatest medical breakthroughs of the past few decades. This breakthrough will allow for treatments that can be individually tailored based on a patient′s genetic makeup. Yet have we delivered on the potential of this achievement? Are we seeing an abundance of new tools for individualized treatment approved by the FDA and improving the lives of American patients? I think we can do more.

America has the greatest scientific minds in the world—we have always been the world leader in driving medical breakthroughs—and it is imperative that we keep it that way. We must not accept our current situation as unchangeable. So what steps can we take to remedy the situation?

First, it begins with research. We need to do a better job of translating research into more FDA-approved products. For me, I′m particularly concerned with research funded by the Federal government at the National Institutes of Health. President Bush has invested heavily in NIH—we just finished doubling its funding. As we increase our expenditures, we want our investment to pay off in more viable products.

NIH has charted a roadmap that lays out a vision for a more efficient and productive system of medical research. It identifies the most compelling opportunities and gaps in biomedical research. By addressing the identified opportunities and gaps, NIH hopes to remove some of the biggest roadblocks that are preventing research findings from producing into tangible benefits for people. I am excited about the work that they will continue to do in the days ahead.

And to complement NIH's work, I support the creation of a national research database. And I know Mike Milken has worked closely with Greg Simon and others to develop a good program—the Patients Helping Doctors program—that will educate patients about the importance of participating in medical research. I applaud these efforts. I think we can all agree that the basic concept of a patient research database or bio-bank is good. Such a database will improve medical research by providing the resources necessary to examine the relationship between genomics, environmental and lifestyle factors, and health.

There are many issues that we must resolve to make this a reality--including resolving proper standards and ensuring patients' rights to privacy and confidentiality. But I am committed to seeing this through. And I appreciate Faster Cures' vision and their work to try to spur consensus on some of these issues.

Next, we have to examine FDA′s approval process. For many years, FDA had a slow, cumbersome approval process. When I took office, I was surprised to see how difficult it was. I resolved to speed it up, and we have done just that. The average review time for an innovative new drug is now only 6 months, and some have been approved even faster.

We have taken several important steps to make this process more efficient. FDA′s user fee programs have helped reduce the time it takes FDA to review and make an approval decision on a product.

Also, we have improved the approval process for combination products, that is, products that are composed of both drugs and devices. One example is a diabetes infusion pump—an incredible device that′s implanted in the body. New devices such as this one are around the corner. With the Centers for Drugs and Devices at FDA working together, we believe this product will be on the market within a year. An even more dramatic breakthrough, an implantable pump with a biosensor that monitors blood glucose to continuously provide the right amount of insulin is also under development. Traditionally, such sophisticated devices invite bureaucratic logjams and difficult regulatory questions, and they get held up.

However, we have opened a new Office of Combination Products to address some of these problems. This office should help ensure the most efficient review of these products, so that new combination technologies are quickly routed through the correct approval process. And from what I hear, this new office is already improving our timeliness and responsiveness. My hope is that we′ll continue to improve in the years ahead.

But we can do more, and there are many other areas where we must pinpoint inefficiencies. To determine our next steps, we launched last month a Critical Path Initiative at FDA, with the goal of prioritizing the most pressing medical product development programs and identifying needed research. This initiative will help us identify the areas along the critical path that provide the greatest opportunity for rapid improvement and public health benefits and allow the FDA and its partners to bring exciting research developments to the patient′s bedside. Only a concerted effort involving other agencies, academia, and industry will succeed in modernizing the drug, device, and biologics development process.

Medicare also affects this whole process. Because seniors use such a high proportion of America′s drugs and devices, and because 41 million seniors use Medicare, Medicare′s policies greatly affect the entire market. In particular, Medicare′s reimbursement policies affect the process.

With the passage of the Medicare Modernization Act, President Bush and the Congress have helped modernize a system that was desperately in need of reform. The new law will save seniors money on prescription drugs, make more preventive benefits available, and give them more choices in care. It will also help speed up payment for new technologies by requiring the Centers for Medicare and Medicaid Services to meet 9-12 month deadlines for national coverage decisions. This will certainly help, but we must do more to ensure that beneficiaries have rapid access to effective new technologies.

So that′s what′s happening at several Federal agencies—at NIH, FDA, and CMS. But this effort will take more than individual agency efforts. It will require coordination across our entire Federal government.

That′s why I′m proud to announce that I will be forming a new task force to determine steps we can take to accelerate medical technology and innovation. This task force will include some of our government′s best scientific minds—Dr. Julie Gerberding, the head of the Centers for Disease Control and Prevention; Dr. Elias Zerhouni, head of the National Institutes of Health; Dr. Mark McClellan, the former head of the Food and Drug Administration who just took over Medicare; and Dr. Les Crawford, the Acting Commissioner of the FDA.

This task force will examine the difficult questions—why does this take so long? And why does it cost so much? How can we make the system more efficient? Where are the flaws in the system that hold us back?

We are also seeking your input on these issues. In the coming weeks, we will post a notice in the Federal Register, soliciting your comments. And I encourage you to take the time to share your experiences and insights. Ultimately, the solution to this problem will depend on many more forces besides the Federal government. In fact, you in the private sector will probably do more to drive this change than we in the government will. But it′s my job as HHS Secretary to push all of you to make this a reality. I take this job seriously, and will not settle for anything less than the best for the American people and their health.

Friends, the bottom line is that when it comes to live-saving technology, drugs, and devices, there′s no time to waste. The time is now. We can do this! We can transform the way drugs and devices make their way into the hands of American patients—from concept to approval to implementation to reimbursement.

Thank you again for your efforts and your contributions to our health care system. And thank you for your commitment to make our system stronger and more efficient.

To buy a DVD of this session, go to our DVD order page.

Speakers
Tommy Thompson, Secretary of Health and Human Services, U.S. Department of Health and Human Services
2:15 pm - 3:40 pm
Market-driven CEOs, leading CMOs, media executives, alternative advertising experts and agency executives discussed the future of the 30-second TV spot. Among the questions they asked are, where are brands placing their marketing bets today and into the coming year? And, most importantly, what is delivering real results?
Speakers
Keith Ferrazzi, CEO, Ya Ya Media
2:15 pm - 3:40 pm
It takes 17 years to develop a cure from idea to market. This session′s panelists advocate utilizing existing technologies and better communication between researchers to reduce this "awful number," as Greg Simon put it.

Recent technological advances can lead to faster cures, according to several panelists. Andrew von Eschenbach, Director of the National Cancer Institute commented, "We are uniquely poised to now capitalize on the progress of the past and accelerate into the future."

von Eschenbach believes that medical advances are found through a combination of financial resources, intellectual capital, and enabling technologies. With the growth in genomics, proteomics, molecular imaging and more, von Eschenbach indicated that the new technologies can greatly contribute to biomedical research. Indeed, most major cancer research institutions are located close to major biotech centers to better allow collaboration.

David Baltimore, President of the California Institute of Technology concurred, pointing out that technology also allows better data processing for biologists. "It′s a new world, a world of collaboration."

However, potential communication problems could slow this collaboration. Simon claimed that the technology and people seem adequate for advances, but cultural and institutional barriers stop information flow between researchers. "We have to infuse the health care system with communication," he explained. Simon also decried the absence of a large depository of biological samples that researchers can draw from. He particularly objected to the pride and secrecy surrounding new discoveries and, more commonly, keeping failures out of publicly available journals.

Part of this communication gap may be due to data management. Michael Milken pointed out that he had to spend very little time assembling datasets when he was studying business as they were already available. Milken suggested that perhaps similar central databases could help medical researchers. Baltimore disagreed, stating that, "The question drives the data;" simply looking for patterns in previously collected data is an unproven method. He also cited possible privacy concerns in making medical histories publicly available.

Taking up this concern, Milken asked the audience who would be willing to have their medical histories posted on the Internet, provided that their identities were hidden; most raised their hands. Simon commented that in more scientific versions of the same poll, 60-70 percent of the people were willing to share their information. Milken believes that perhaps privacy concerns are actually "protecting people that don′t want to be protected."

Lee Hartwell, President and Director of the Fred Hutchinson Cancer Research Center, also believes that better communication is the key. He advocated guidelines for data and consortiums of researchers to ease aggregation of advances. von Eschenbach shared that a recent retreat for cancer center directors produced massive support for more information sharing using specific guidelines.

Milken suggested that patients are an important part of the research process. Hartwell theorized that a website allowing people to share their lifestyle habits on a weekly basis may be a good way to collect data and involve patients. von Eschenbach agreed that patients are an important part of the process, commenting, "Cancer patients are as much a part of the solution as researchers are."

The session panelists seemed to agree that improved technology offered vast opportunities for speeding research, but only if it was utilized to facilitate communication as well as the actual research.

To buy a DVD of this session, go to our DVD order page.

Moderators
Michael Milken, Chairman, Milken Institute; Chairman, FasterCures / The Center for Accelerating Medical Solutions; co-Founder, Milken Family Foundation
Speakers
David Baltimore, Nobel Laureate, Medicine, 1975; President, California Institute of Technology; FasterCures Board Member
Lee Hartwell, Nobel Laureate, Medicine, 2001; President and Director, Fred Hutchinson Cancer Research Center, Seattle
Greg Simon, President, FasterCures / The Center for Accelerating Medical Solutions
Andrew von Eschenbach, Director, National Cancer Institute
3:50 pm - 5:15 pm
Future improvements in the American health care system should come from systemic reforms rather than from increased spending. Better connections between patients and doctors, and between medical records and researchers will lead to higher quality and more effective health care system. Andrew von Eshenbach stated that his goal was to "eliminate the suffering and death" associated with cancer by the year 2015. For this optimistic goal to be achieved, several changes to the existing health care system need to be made.

One crucial aspect of the system that needs to be addressed is the availability of patient records to researchers. Currently, too much time and resources are allocated towards filling out medical documents. The health care industry can improve its efficiency by storing medical records on digital databases and by making these files accessible to doctors and researchers around the country. Yet making medical records more available to researchers faces many obstacle such cultural reluctance, financial costs, and technological retraining.

Greg Simon stated that in addition to having birth and death certificates, people should have life certificates that record their medical histories. Insurance companies have already shown that this is possible by keeping track of all financial information at all points within the health care system. This information helps insurance companies improve efficiency. There is no reason that similar efficiencies cannot be achieved by sharing and organizing medical information digitally for medical research, he argued. In short, more information allows for better research and treatment.

Sharing data can improve efficiency while existing technologies and new medicines need to be integrated into the health care system at a faster pace. Doctors need to take advantage of the technological improvements and retrain themselves to use these improvements effectively. Continuing education and finding new capital required to update their practices are issues that need to be addressed.

Gordon Binder pointed out that it is difficult to make doctors change their methods without providing data supporting reasons for that change. This is where the digitalized medical documents become useful.

Binder described America′s goal for healthcare as "The James Brown Effect." Everybody just wants to feel good and in order for this to be achieved the health care system needs to work on prevention, detection, and treatment. Sharing of digital medical files and the greater use of existing technologies into medical practices will help achieve this goal.

To buy a DVD of this session, go to our DVD order page.

Moderators
Richard Merkin, CEO, Heritage Provider Network; FasterCures Board Member
Speakers
Gordon Binder, Managing Director, Coastview Capital; former CEO, Amgen, Inc.
Greg Simon, President, FasterCures / The Center for Accelerating Medical Solutions
Andrew von Eschenbach, Director, National Cancer Institute
Roberta Williams, Professor and Chair, Department of Pediatrics, Keck School of Medicine, University of Southern California
3:50 pm - 5:15 pm
"How do we create jobs?" was the opening question that Jim Canfield, moderator and Chief Learning Officer of TEC, posed as the critical issue to the panel.

The Small Business and Job Creation session was designed to examine how employment and globalization are impacting, and being shaped by, small businesses in the U.S. The session also dealt with examples of how employment and globalization interact with each other to generate more productive jobs in the country.

Daniel Barnett, chief operating officer of TEC International, emphasized the role of small- and medium-sized companies in driving the U.S. economy. He noted that 50 percent of private workforce, 75 percent of new jobs, and 80 percent of GNP come from small- and medium-sized businesses. He also pointed out that 62 percent of them are planning to increase net employment in the following years. Thereafter, he claimed that outsourcing abroad was not an issue of small- and medium-sized companies.

Nonetheless, panelists agreed that globalization influenced U.S. employment and would continue to impact it. As Mexico, with its cheap labor and manufacturing concentration, challenged the U.S. 10-15 years ago, so today China has become a tough manufacturing exporting competitor.

Herbert Meyer, President of Storm King Press, warned that 300,000,000 farm workers would flow to manufacturing factories in China over the next 20 years. We will find lower-priced merchandise than "made in U.S.A." if other conditions remain the same, TEC Chair Brant Houston added.

The impact of globalization is not limited to manufacturing goods, but also influences services as well. Many highly educated workers outside the U.S. are paid less than those employed in the U.S., Meyer said. They can provide the same services at lower cost, e.g. medical treatment and clinical diagnoses.

"Foreign medical doctors may offer cheaper medical care (than domestic ones)." Canfield said.

Some panelists claimed that there were also positive aspects of globalization on job creation here in the U.S. Foreign companies have created numerous jobs here and foreign agricultural products imported, generated new employment domestically.

Panelists discussed what types of jobs should be created and what we should do to spawn such jobs in the country. Barnett quoted a research finding that hiring and retaining the talent was the second most important concern of business operation. Panelists agreed that it was inevitably imperative to train workers, re-train them, and finally put them into lifetime training systems. But, they also acknowledged that Americans did not go into job training or retraining programs and this was why it was hard to find a qualified labor force today.

"American workers have been spoiled for the last few decades," Herbert Meyer remarked. "They need to be destroyed to be built again."

"How does employment develop the economy?" Jim Canfield, the moderator, challenged the panelists.

Brant Houston, TEC Chair, claimed entrepreneurs inspire the economy saying, "(Only) entrepreneurs react to opportunities."

Barnett agreed with him, saying, "Large companies can′t create jobs in the future, and instead entrepreneurship and innovativeness are where market should go."

Meanwhile, Meyer angled his point of view toward the employer-employee relationship. He predicted that employers and employees would be "independent contractors."

"This is one of the fundamentals of restructuring in our economy," he added, therefore "companies should be as flexible as possible for globalization."

Karen Caplan, CEO of FRIEDA′S Inc., used Wal-Mart as its model noting that Wal-Mart effectively utilized part-timers, flexible work hours and employment structure. U.C. San Diego professor Curtis Cook opposed the idea because temporary or flexible type of employment was seen only among unskilled and semi-skilled workers, not among highly skilled or management level.

Other panelists added their opinions on employer-employee relationship. Barnett stressed the role of leadership to fully engage employees in the company′s goal, regardless of whether they were full-time, part-time, or temporary workers.

Houston said, "Their relationship should be built on mutual trust to maintain their common goal."

To buy a DVD of this session, go to our DVD order page.

Moderators
Jim Canfield, Chief Learning Officer, TEC International
Speakers
Daniel Barnett, Chief Operating Officer, TEC International
Karen Caplan, President and CEO, FRIEDA'S, Inc.
Curtis Cook, Dean and Professor of Management, School of Business Administration, University of San Diego
Brant Houston, TEC Chair, Mandeville, Louisiana
Herbert Meyer, President, Storm King Press
3:50 pm - 5:15 pm
In this roundtable discussion, moderator Harold Goldstein led an interactive Q&A session on common impressions of China. Among the questions asked: Do we need to deepen our understanding of China? Can we believe the data that is available on China? Does the country practice free trade? Are human rights issues in China being overplayed or underplayed? Are perceptions of investment risk in China reliable?
Moderators
Harold Goldstein, Managing Director, Xinhua Finance
Speakers
Dan Chung, President, Chief Investment Officer, Director of Research, and Portfolio Manager, Fred Alger Management, Inc.
Thomas Farb, Managing Director, New America Partners
Rob Koepp, Research Fellow, Milken Institute
Nan Nan Xu, President, Rock-Asia Capital Group
3:50 pm - 5:15 pm
Los Angeles has been trying to define its role in an ever-changing global economy. This roundtable talk focused on the challenges currently facing the second-largest city in the U.S. as it fights with other cities and countries for jobs and investments, and what actions can be taken to keep Los Angeles competitive.

To buy a DVD of this session, go to our DVD order page.

Moderators
Kevin Klowden, Research Economist, Milken Institute
Speakers
Maria Contreras-Sweet, President and Co-Founder, FORTIUS Holdings, LLC
George Kieffer, Partner, Manatt Phelps Phillips; Chairman, Los Angeles Area Chamber of Commerce
Dominic Ng, Chairman, President and CEO, East West Bank
3:50 pm - 5:15 pm
Businesses in emerging domestic markets face capital gaps that constrain their ability to grow, create jobs and generate wealth. Much of this gap can be explained by the lack of reliable information on these markets. This roundtable discussion focused on innovative approaches to collecting and analyzing data, and innovative instruments to finance growth.
Speakers
Frank Altman, President, Community Reinvestment Fund, Inc.
Wayne Marsden, Senior Advisor, Wall Street Without Walls
John Nelson, Co-Director, Wall Street Without Walls
Glenn Yago, Director, Capital Studies, Milken Institute
Betsy Zeidman, Director, Milken Institute Center for Emerging Domestic Markets
5:15 pm - 6:15 pm
5:15 pm - 6:15 pm
6:15 pm - 9:00 pm
Technological advances may change human culture and perception as much as our culture has affected technological change according to Monday evening′s distinguished panel.

Mike Milken, moderator, opened with a look at the distant and recent past—a time of rapidly accelerating, almost violent, scientific and technological advance. We as a culture seem constantly on the verge of another breakthrough, an additional discovery, the next Eureka, but accompanying such rapid developments come serious and very real philosophical questions—are we, as a race, ready for such advances? How will society both react to and treat machines that possess what we now consider uniquely human characteristics, while we extend and expand our lives with increased incorporation of technologies into our lives?

While science fiction often raises questions of technological possibilities, Sherry Turkle of the Massachusetts Institute of Technology suggested that it does not deal with how their existence influences how we define ourselves.

The panel discussed how technological development seems to be converging humanity and machines. As processing power increases and tasks that were once thought to be uniquely human are accomplished by technology, and as technologies (e.g. genetic medicines, advanced artificial limbs, biological software, etc.) are increasingly used to shore up the perceived weaknesses of humanity, basic ethical and philosophical questions regarding the nature of humanity arise.

Lee Hartwell challenged us to imagine that we could visit the future. What points in time would we visit and how long would we stay? He suggested moving into the future over short time increments and staying just long enough to understand the changes. This would enable us to adjust to new technologies.

Along those lines, Danny Hillis suggested a relativity of "authenticity." Arthur Caplan agreed, arguing that if a culture is aware of the incremental steps of technological progress, the technology itself is afforded a higher level of acceptance among society. For instance, our cultures may not have experienced technology shock with the emergence of test-tube babies and cloning, rendering those issues less controversial, had the public been prepared. Caplan also suggested that human nature is malleable such that what is "natural" is the outcome of that to which we choose to adapt.

Areas of expertise within the panel varied considerably and the discussion nicely highlighted these strengths. There was some disagreement as to the benefits and consequences of rapidly accelerating rates of discovery, but there was general consensus that an oft-overlooked and important question in addition to what technologies do for us is what emerging technologies will do to us.

To buy a DVD of this session, go to our DVD order page.

Moderators
Michael Milken, Chairman, Milken Institute; Chairman, FasterCures / The Center for Accelerating Medical Solutions; co-Founder, Milken Family Foundation
Speakers
Arthur Caplan, Director, Center for Bioethics, University of Pennsylvania
Steven Chu, Nobel Laureate, Physics, 1997; Chair, Department of Physics, Stanford University; Theodore and Frances Geballe Professor of Physics and Applied Physics, Stanford University
Charles Elachi, Director, Jet Propulsion Laboratory
Lee Hartwell, Nobel Laureate, Medicine, 2001; President and Director, Fred Hutchinson Cancer Research Center, Seattle
Danny Hillis, Co-Chairman and Chief Technology Officer, Applied Minds, Inc.
Sherry Turkle, Abby Rockefeller Mauz Professor of the Social Studies of Science and Technology in the Program in Science, Technology, and Society at MIT; Founder and Director of the MIT Initiative on Technology and Self
Tuesday, April 27, 2004
6:30 am - 9:00 am
6:45 am - 7:45 am
Information management is one of today′s critical issues, the panelists stated. We are overwhelmed with masses of information. And, given Moore′s law, data density will double approximately every 18 months. This panel addressed many crucial questions related to increasing access and usage of this information.

Medical researchers studying the human genome today are looking, in particular, for aberrations and what we can do to fix those aberrations. To find faster solutions, the information captured must be shared. This means that companies must work together as an "ecosystem" to address this. One way to facilitate this sharing is the creation of software that provides data coherence for research. The panelists agreed that there is great value in linking biased and clinical data for people in the medical profession to use, and we must move toward devoting time and resources in this area.

How do we integrate all our new access to data? A focal point of this discussion was that information is not necessarily getting to patients. Determining what information is most pertinent to the patient in an effort to move toward personalizing medical needs, was also addressed. It was agreed, however, that patients need the type of information that prepares them as consumers, so that they are able to make decisions relevant to their individual medical needs. This creates an environment in which consumers feel that they are a part of the process.

One area of focus was prevention and early detection of terminal illnesses. It was noted that 90 percent of early stage cancers can be accurately detected. Some of the problems raised were people not knowing what to look for and that databases themselves must be improved and more transparent to eliminate informational opacity. Panelists suggested that researchers and IT companies work together to provide access to information to doctors and patients alike.

Another solution proffered to achieve connectivity was to create an open environment, something that has been done very successfully via the Internet. Industry can play a key role by setting technology standards that are not over-complicated and thus limit access to information. There are further challenges in the consistency and accuracy of record keeping. It was also suggested that "continuity of care record" standards be set so that patients are able to better track their own history. This might assist in surveillance and help researchers. Informative diagnostics could help identify diseases, progression and response treatment.

As we move toward understanding the human genome, we learn more about the progression and prevention of disease. As science progresses, an increasing amount of information becomes accessible to us and can thus better assist us in understanding how we can work toward curing disease.

To buy a DVD of this session, go to our DVD order page.

Moderators
Anna Barker, Deputy Director for Strategic Scientific Initiatives, National Cancer Institute
Speakers
James Heath, Professor of Chemistry, California Institute of Technology
Rick Lytel, Vice President, Chief Technologist, Physical and Life Sciences; Director, Advanced System Development Center, Sun Microsystems
Philip Marshall, Vice President, Product Strategy, WebMD Health
Michael Svinte, Vice President, Worldwide Marketing and Business Development, IBM Life Sciences
6:45 am - 7:45 am
6:45 am - 7:45 am
One year after the invasion of Iraq, the war on terrorism continues. "Violence in the Middle East is a norm, not an exception, but it′s no longer exportable outside of Iraq," said Bill Bennett, chairman of Americans for Victory over Terrorism and the host of the Morning in America radio show.

Bennett used the latest information from Amman, Jordan about uncovering an Al-Qaeda plot to attack the U.S. Embassy to confirm this statement. The Jordanian intelligence prevented potential casualties in the range of 60,000—80,000 people that might have been hurt as a result of the planned gas and bomb attack. The plot was hatched by J. Youssi on the orders of Al-Qaeda′s master-mind Zakariya, reportedly hiding in Iraq, who just took credit for the Saturday explosion in Basra.

The war continues in the open in Najaf and Falooja, Iraq as well as behind the scenes in many locations worldwide. U.S. intelligence has prevented internal attacks on the Swiss Tower in Chicago and the Library Tower in Los Angeles, and detained several potential Islamic terrorists crossing the border from Mexico. Bill Bennett stood strongly for continuing the offensive on terrorism and the terrorists, and advocated an increase in troops, which now stand at 136,000 versus 500,000 during the Gulf war, to prove that the U.S is not the "paper tiger," or "weak horse" that Bin Laden believes it to be. He disagrees with the argument that "a military solution is never a solution," and supports America′s leading position in this war in the light of the lack of power to act on the part of the UN.

The rightfulness of the U.S. fight for the cause of democracy is confirmed not only by improved Bush′s ratings coming up in spite of a bad month, but also by support of such countries as Libya. Since the beginning of the last century, the number of the democratic political systems in the world has increased from a dozen to more than a hundred, including Japan and India. In Bennett′s opinion, Iraq can follow this path, and a three-state federation of Kurds-Sunni-Shi′a might be a solution. However, we need to strengthen our media exposure, especially in "Eurabia," to counter-balance the massive coverage by Al-Jazeera and spread the democratic message across the world.

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Speakers
William Bennett, Former U.S. Secretary of Education; Co-Director, Empower America; Chairman, K12
7:50 am - 9:30 am
This panel focused on what needs to be done to eliminate cancer as a cause of death by the year 2015. The panel included Andrew von Eschenbach, Director of the National Cancer Institute, whose ambitious strategy for achieving this goal is to prevent cancer before it starts, identify cancers at their earliest, most treatable stages, innovative treatment interventions, and new scientific discoveries.

To buy a DVD of this session, go to our DVD order page.

Moderators
Leslie Michelson, President and CEO, Prostate Cancer Foundation
Leslie Michelson, President and CEO, Prostate Cancer Foundation
Speakers
Anna Barker, Deputy Director for Strategic Scientific Initiatives, National Cancer Institute
Richard Brewer, Managing Partner, Crest Asset Management; FasterCures Board Member
Nancy Brinker, Founder, Susan G. Komen Breast Cancer Foundation; former U.S. Ambassador to Hungary; FasterCures Board Member
Nancy Brinker, Founder, Susan G. Komen Breast Cancer Foundation; former U.S. Ambassador to Hungary; FasterCures Board Member
Charles Sawyers, Investigator of the Howard Hughes Medical Institute; Professor of Medicine, University of California, Los Angeles; Director, Prostate Cancer Program Area, UCLA Jonsson Comprehensive Cancer Center
Andrew von Eschenbach, Director, National Cancer Institute
Andrew von Eschenbach, Director, National Cancer Institute
George Wilding, Head, Medical Oncology Section, Department of Medicine, University of Wisconsin, Madison
7:50 am - 9:30 am
One of the most consistent complaints against globalization is that it destroys employment growth because Americans have to compete against lower paid workers in poor countries. Opening the panel on "The Great Job Debate," moderator Lawrence Kudlow called for a focus on free trade by addressing the benefits of international trade and addressing the protectionism point of view of Senator John Kerry.

"We often forget that free trade is a big prosperity booster," Kudlow said. He suggested that international trade allow nations to produce certain goods cheaper and benefit from that comparative advantage.

Ross DeVol outlined the strong productivity growth over the past 10 years from an economic perspective by referring to data on percent change of historical productivity. Free trade directs resources to sectors where worker productivity and returns on investment are higher, while cutting jobs in less productive sectors.

Terry Semel, Chairman and CEO of Yahoo! Inc. responded to the question of whether he employs oversees, and how he feels about it with the following overview of his company, "We are a global company and in need of a highly educated and skilled workforce ... We need information technology related employees who are able to replace the diminishing baby boom generation." To underscore the importance of more educated employees in the U.S. Semel emphasized the need for increased efforts by the U.S. local and national government to fill the shortage so that American companies don′t lose their competitive edge. "Education begins with kindergarten. Our children need to be trained properly ... If you don′t have the skilled workforce in the U.S., you look for opportunities to hire employees from outside the U.S."

Charles McMillion, President and Chief Economist of MBG Information Services further discussed the most current U.S. trade balance in advanced tech goods, addressing the more than $25 billion deficit in 2003. "In the last half of 2003 our deficit in manufacturing trade was larger than our surplus in professional services...We have maintained a surplus in professional services but the outlook is not optimistic...The cause of the U.S. deficit in trade for advanced technology products can be seen in China."

There are other theories. Kudlow cited benefits deriving from trade with China, emphasizing export gains that stem from China′s huge export market. The reality is also that many of the skilled workers from China are staying in the U.S., argued Semel by concentrating again on his argument that the U.S. government needs to establish a better educational system.

Recent data displayed by Clarence Schmitz, Chairman and CEO of Outsource Partners International, Inc. confirmed that the ratio is 1.8 Indian workers per one American worker.

To provide a more optimistic view, Kudlow highlighted the most current job growth - more than 300,000 new U.S. jobs in March - as an encouraging sign. The latest survey data indicate that the U.S. economy has been growing strongly in the last quarter, with a growth rate of 2 percent.

While acknowledging that the overall outlook is improving, DeVol also stressed that the U.S. economy can benefit from its strength that it is largely entrepreneur driven, resulting in the creation of "meaningful job growth." He further reviewed the forecast that GDP is expected to grow by 6 percent in the first quarter of 2004. While outsourcing work oversees — offshoring — is a reality of the 21st century on the one hand, it has also come under criticism on the other hand. In order to lower costs, many companies are shipping jobs in software development and call centers to their Indian subsidiaries. DeVol indicated that outsourcing of jobs is challenging, but he strongly advocated the establishment of a middle class in China and India. He encouraged the Chinese and Indian governments to increase the human capital of their population so that the U.S. economy is able to benefit from their large export markets.

McMillion further addressed the explosion of U.S. federal debt, pointing out the gross federal debt of over $7 trillion in 2004 and the failure of the U.S. economy to create more jobs so far. "This year with the tax cuts and historically low interest rates," argued McMillion, "we are seeing job growth as well."

Focusing again on outsourcing, Schmitz expressed the anxiety of Americans who fear that their jobs will be eliminated. Fears that trade and outsourcing will lead to a situation that American workers cannot successfully compete against lower paid workers was highlighted by McMillion who pointed out that growth of real compensation per hour in the U.S. has slowed sharply since the 1970s.

In contrast, DeVol focused more on the fact that many Americans have seen an increase in wealth over the past years through the accumulation of home equity as their largest asset.

Another topic that deserved attention among the panel members was the economic path and outlook of Europe. While agreeing on the fact that Europe faces difficulties in economic growth stemming from taxation problems and union issues, most of the panel members pointed out that West Europe is outsourcing to East Europe because of the East European labor cost structure.

In sum, the balance of arguments remained strongly in favor of free trade with international trade allowing Americans to create more wealth with a skilled workforce and technology by encouraging competition and specialization.

To buy a DVD of this session, go to our DVD order page.

Moderators
Lawrence Kudlow, CEO, Kudlow & Company; Co-host, "Kudlow & Cramer," CNBC
Speakers
Ross DeVol, Director, Regional Economics, Milken Institute
Charles McMillion, President and Chief Economist, MBG Information Services
Clarence Schmitz, Chairman and CEO, Outsource Partners International, Inc.
Terry Semel, Chairman and CEO, Yahoo! Inc.
9:40 am - 11:00 am
China is a complex paradox that is both misunderstood and the most important rising global power. This position was put forth as the introduction for the session by moderator John Holden. Some important initial facts presented to support this include a growth rate of more than 7 percent in GDP over the last 10 years to $1.4 trillion in 2003, surpassing the level of $1000 GDP per capita last year, and a balanced trade account. The overall theme was the need for multinationals to not only have a Chinese strategy, but to rethink their strategies as ongoing change in China occurs. Participants noted that the call for Chinese strategies was no longer being driven by middle management, but rather by boards and CEOs.

China is a "disruptive economy" stated Howard Chou. Not necessarily a negative implication, he implied that China is having profound effects on trade and capital flows, which is affecting the global economy. He noted several trends that are impacting corporate strategy including China replacing the U.S. as the largest recipient of FDI, China becoming a driver for the global economy as both producer and consumer, and a rise in the service sector, particularly financial services, insurance, and investment banking.

Also of note was the trend to use the engineering expertise within China to set up R&D operations as well as manufacturing while maintaining management and administrative functions in the U.S. Chinese companies, fueled by an active IPO market—20 plus on the NASDAQ this year alone—will continue to play a bigger role in the global market. Chou recommended a corporate strategy that includes acquisition of Chinese assets and revenue as soon as possible through M&A′s.

Yibo Shao stated that he "views China a must have, from a strategy viewpoint." Two topics Shao and other panelists focused on were the "hope and hunger" issue and freedom and human rights. The Chinese people have hope from the ongoing transformation, which has lead to unbridled optimism and a willingness to spend. This optimism is being carefully measured by the Chinese government, as any policy change that challenges the populous′ rising expectations could adversely affect civil peace.

The Chinese were noted for wanting more transformation and in the process wanting to get a piece of the prosperity including private property. The concept of private property is new to the culture as private property rights were just added to the Chinese constitution. Also of note was the fact that 80 percent of all Chinese stock market volume was held by individuals willing to take risk, though they may not understand it completely. Learning to exercise their new-found freedom socially and career wise is something the Chinese people are grappling with.

Shao noted three points of importance to developing strategies—progress is real and irreversible, China is not all that different than dealing with other developed countries, and there will be setbacks, both economic and social. Aspects of these social setbacks, include the concept that freedom has a price, corporate corruption, and that money is not that important.

A "willingness and desire to become part of the global economy" by businesses and the government was raised by Fredy Bush. Ongoing initiatives to increase transparency and corporate governance have been reflected by Chinese companies′ management′s willingness to work with Xinhua Financial Network′s rating service. The panelists observed an overall trend to adopting international standards. The government used to be the greatest risk to business, but was now not considered a major risk factor to conducting business in China.

James McCaughan emphasized finding balance in the Chinese economy. As China′s economy matures, bringing fixed investment, savings rate, export, and private wealth numbers as a percentage of GDP in line with other stable mature economies is considered necessary. The quick transition to a market economy without a capital safety net has led to a high, unsustainable savings rate. McCaughan stated "the key to sustainable growth is a balanced economy." Another issue of concern was the need to create jobs—24 million a year. Without sustained job growth, civil unrest is highly likely.

The panelists mentioned various times that Western media had wrongly portrayed China in various aspects. The amount of nonperforming loans, although a large percentage of bank assets, is not a cause for panic as the Chinese government was continuing to support them. With patience, the rule of law would continue to develop as would the potential for gains from investment in China. Shao remarked that China continued to change from "rule by law" to "rule of law."

Other areas of concern to the panelists include U.S.-China trade relations, Taiwan-China relations, and urban versus rural population issues. Revaluation of the Yuan (RMB) was considered of low importance with little benefit today. Overall the panelists showed guarded optimism about China.

To buy a DVD of this session, go to our DVD order page.

Moderators
John Holden, President, The National Committee on U.S.-China Relations
Speakers
Fredy Bush, CEO, Xinhua Financial Network
Howard Chao, Partner & Head of Asia Practice, O'Melveny & Myers LLP
James McCaughan, CEO, Principal Global Investors, LLC
Yibo Shao, Founder and CEO, Eachnet.com
9:40 am - 11:00 am
The biotechnology industry stands on the brink of significant change. In the upcoming years, experts recognize the potential for a dynamic restructuring of the industry as demands change. Many anticipate that major players will shift investment emphases from large firms to smaller firms as the demands of this industry evolve away from cure-all toward personalized drugs.

Personalized drugs are drugs aimed at relieving specific ailments like skin cancer rather than cancer more generally. The panelists point out that with the demand for increasingly specific drugs each drug addresses a smaller and smaller market. The new direction of demand for personalized drugs ushers in a new market structure.

According to G. Steven Burrill, this scenario finds large pharmaceutical and biotechnology companies addressing the needs of a global market. In this way, the large pharmaceutical companies remain key in this industry. However, the upcoming years promise to shift some of the emphasis toward smaller companies better suited to addressing the demand for personalized drugs of this industry.

The refocus on smaller companies is not the only change that confronts the industry. Richard Brewer expects to see diagnostic companies take a more prominent role. While technology promises to make diagnostic companies more appealing, Jay Moorin pointed out that such technology breakthroughs may not occur in the near future.

Generally, the panelists agreed that the speed and effectiveness of bringing drugs to the market increases as time moves on. Richard Brewer and Jay Moorin both agreed that through effective operation of the systems in place, drugs may reach the market sooner and more cost-effectively than often occurs at present. The costs of researching, developing and marketing drugs may diminish with the increasing efficiency in the market.

The discussion on investment in biotechnology concluded on a generally optimistic tone. As groups other than the national, state and local government invest in the industry, there may be sufficient capital to propel both the basic science, and marketing and distribution of drugs.

To buy a DVD of this session, go to our DVD order page.

Moderators
G. Steven Burrill, CEO, Burrill & Company
Speakers
Anna Barker, Deputy Director for Strategic Scientific Initiatives, National Cancer Institute
Richard Brewer, Managing Partner, Crest Asset Management; FasterCures Board Member
Lee Cole, CEO, Bioaccelerate, Inc.
Jay Moorin, Partner, ProQuest Investments
C.L. Max Nikias, Dean, School of Engineering, University of Southern California
9:40 am - 11:00 am
"Europe: What Path Will it Take?" analyzed the benefits of European enlargement such as reunification of European countries and stability, while providing insight on the difficult issues that accompany enlargement like agriculture, health care issues and financial transfers.

After successfully growing from six to 15 members, the European Union is accepting 10 more countries—Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic and Slovenia—to join the EU on May 1, 2004. Enlargement is seen as a historic opportunity by the panel members to correct history and unite Europe peacefully.

The introductory statement of Erhard Busek, former Vice Chancellor of Austria and current Special Coordinator of the Stability Pact for South Eastern Europe outlined the fact that the European Enlargement is intended to extend the type of peace, stability and prosperity enjoyed in the west to the east, and erase the east-west division left by the Cold War. Enlargement will consolidate the economic and political transition that has taken place in Central and Eastern Europe since 1989. Focusing on the debate of the establishment of a European Constitution, Busek acknowledged, "The European Union is a global payer but not a global player...The British government needs to learn to become European."

Reflecting the economic diversity to some extent, Hynek Kmonicek, Ambassador and permanent representative of the Czech Republic to the United States, suggested that the 10 acceding countries are facing lower economic output than the EU15. GDP per capita is much lower than the EU in the 10 acceding countries.

What other countries can apply for membership? How far can the EU expand in the east and in the south? What should be its future geographical limits?

"The east border," said Kmonicek, "is a question of Russia′s identity." Pointing out that his country was occupied by Russia for more than 40 years, he commented that the Czech Republic has become an expert on Russia.

During a discussion on the possible membership of Turkey, Kmonicek commented on the large share of Turkey′s Moslem population and addressed socio-cultural differences. The European Union has not defined its limits in geographical terms, but every country that wants to become a must meet specific economic and political conditions, such as democracy, the rule of law and respect for human rights. Busek added, "We are prepared for Turkey if you take Mexico as the 51st state."

What are the values that characterize the Europeans? "We feel that Europe is a civilization project. There is a European feeling in the population ... We used to say Keep America in, Russia out and Germany down,′" said Kmonicek.

Kmonicek also focused on the European-American relationship, arguing that "it is not profitable when Europe and America disagree."

Francois Loos, French Minister for Foreign Trade analyzed the current relationship of the EU15 with Turkey with respect to its future membership. "Turkey is already Europe. We are in custom union for years. We don′t need Turkey to become a member of the European Union to have economic advantages."

When asked about protectionism, Loos argued that from an economic point of view, enlargement will increase the single market. The enlarged EU will continue to be committed to the sustainable development of developing countries, to ensure continuity in cross-border relations and to enable those countries to benefit from the enlargement. Pointing to the U.S., Loos made clear, "we consider that a global market should not be disturbed by marketing loans."

Questions from the audience centered on health care issues. One panel participant stressed that the mortality rates in Hungary are much higher than in the U.S. with people dying 10 years earlier than in the U.S. Busek confirmed that health care issues remained the responsibility of member states. According to Kmonicek, the Czech Republic needs less health care and needs to downsize hospitals.

Another question focused on the structural changes that need to take place in Poland and Hungary with agriculture representing a large share of GDP growth. According to Busek, "those countries need financial aid to move into different sectors in the economy, such as tourism."

Another question dealt with environmental regulations and problems in the EU. While recognizing that most of the acceding countries needed funds from the west and more than 10 years to improve these environmental issues, Loos stressed that the EU is acknowledging the Kyoto Protocol and would like to see the U.S. participating in this protocol, as well.

In sum, the panel members agreed that the enlargement of the EU will lead to prosperity and stability, but it may also create new instabilities and political strains. The panel members identified the countries of the West Balkan region, including the states of ex-Yugoslavia, as potential countries for membership.

To buy a DVD of this session, go to our DVD order page.

Moderators
John Andrews, West Coast Editor and Bureau Chief, The Economist
Speakers
Erhard Busek, Former Vice Chancellor of Austria, current Special Coordinator of the Stability Pact for South Eastern Europe
Hynek Kmonicek, Ambassador, Permanent Representative of the Czech Republic to the United Nations
Francois Loos, Minister for Foreign Trade, France
9:40 am - 11:00 am
Dennis Kneale, Managing Editor of Forbes Magazine, led a lively discussion about issues related to current outsourcing trends and their relative impact on the U.S. and global economies. Central to the discussion was how U.S. companies benefit, what the perceived and real impact is on U.S. job creation going forward and how technology and market forces will take advantage of this new worldwide dynamic.
Speakers
James Flanigan, Senior Economics Editor, The Los Angeles Times
Dennis Kneale, Managing Editor, Forbes magazine
Dan Vetras, President and CEO, Talisma Corp.
9:40 am - 11:00 am
This panel addressed the present educational challenges throughout our K-12 system. While many improvements must be made, there have been some positives in areas of racial segregation, special education and bilingual education. The negatives, however, are plentiful, and if no action is taken, they can have huge consequences on our children and their future.

According to Lowell Milken, chairman of the Milken Family Foundation, graduation rates have been decreasing dramatically over time. The readiness rate, which measures the percentage of college students who are actually prepared to take on standard coursework, has dropped to 32 percent. Concerns about students graduating with basic skills have been a major concern. Milken points out that the California state university system threw out 11 percent of students as a result of not meeting basic skill requirements. In another grueling illustration, he states that "the longer students are in school, the dumber they get." He explained that as students continue in the education process, other nations do relatively better in terms of student performance.

One key issue leading to poor educational performance is the quality and quantity of instructors. Milken explained that there are not enough teachers for the subject matter required. In addition, the number of teachers with bachelor′s and master′s degrees has declined considerably. "In order to be successful in the 21st century, you need to be proficient," he added.

Furthermore, 60 percent of Blacks and 56 percent of Hispanics in the 4th grade are unable to read compared to 25 percent of Whites. At the same time, 38 percent of Hispanics are below the basic math level (i.e fractions) at the 4th grade level. Meanwhile, R&D expenditures in the corporate world range anywhere from 5 to 25 percent but only .03 percent in education. Clearly, there is a problem here.

Milken questioned whether we can buy our way to success in improving education. "Are families and friends responsible or is inequality the problem?" he asks.

In responding to Milken′s comments, William Bennett, former secretary of education, stated that "reform is possible but hard." Bennett stressed that we must focus on two issues: competition and accountability.

Bennett believes that we must introduce competition in order to see improvements in our K-12 system. He points to states like Arizona and Wisconsin that have already seen improvements by bringing in various forms of competition such as charter schools. Some of this is already taking place in higher education (i.e. online learning, technical schools, etc.) He also emphasized that "the system does not reward success." He believes that excellent teachers should be rewarded accordingly, while reminding the audience that these are those who "cheat" the system, and doing little more than expected.

Bennett also stressed that the home prepares the child in early childhood, and emphasized that "parents make a difference," while stating that he believes that schools can change children′s lives.

In their concluding remarks, Milken noted that when there is some form of medical malpractice, government shuts it down in 15 minutes, but when there is malpractice in education, the response is "more money."

To buy a DVD of this session, go to our DVD order page.

Speakers
William Bennett, Former U.S. Secretary of Education; Co-Director, Empower America; Chairman, K12
Lowell Milken, Chairman, Milken Family Foundation
11:10 am - 12:30 pm
When conditions are favorable in the stock market it is easy to overlook problems in corporate governance. It is when things are not going well that scrutiny is intensified and questions are asked. One question that got the corporate world′s attention is the recent activism by shareholders. In the last year shareholders have placed more accountability on directors and managers by organizing and voicing their opinions on issues ranging from executive compensation to mergers.

Some proponents of increased shareholder activism pointed out that this pressures directors and managers to improve their performance and better link the direction of companies to the people who supply their capital. Stanley Gold stated that shareholder involvement was a necessary action in a democratic market to insure that directors maintained a level of competency and independence.

"When you ask for capital you need to listen to the provider of that capital′s opinion," asserted Gold after being asked why shareholders should be allowed to dictate the direction of the corporation they invest in.

Critics of increased shareholder activism pointed to a number of potential drawbacks. Stephen Bollenbach expressed his concern over politics interfering with business decisions. Bollenbach believes the restructuring of the corporate environment and the increased power granted to shareholders needs to "slow down." He is worried that shareholders will pander to special interests and make business decisions based on politics rather than economics.

Thomas Cole talked about how increased exposure would drive people away from becoming director. More focus on avoiding government watchdogs will decrease the productivity of directors.

A major issue in corporate governance addressed by the panelists was how a higher level of competency and independence could be achieved by corporate directors. Gold proposed that directors be forced to pass a standardized exam, after explaining his previous experience with directors who would not be able to pass an introductory accounting class. Cole believed that this would be difficult to administer due to the diversity of board members and the specialization of their fields. The entire panel agreed that some form of continued education should be required for board members as a way to keep them updated on the latest changes in the corporate business world.

One thing for certain was that shareholders have increased their involvement in the corporations that they in invest in and have begun to take a more active role than in the past. Whether this will lead to improvements or hindrances in corporate governance is uncertain. Gold argued that managers and directors are "the last bastion of elitism in America" and that increased shareholder participation is a step in the right direction towards solving this problem. Bollenbach however sees this new empowerment as "very scary" and is worried about the penetration of politics into corporate decisions.

To buy a DVD of this session, go to our DVD order page.

Moderators
Betsy Zeidman, Director, Milken Institute Center for Emerging Domestic Markets
Speakers
Stephen Bollenbach, President and CEO, Hilton Hotels Corporation
Thomas Cole, Partner; Chairman, Executive Committee, Sidley Austin Brown & Wood, LLP
Jack Ehnes, CEO, California State Teachers' Retirement System
Stanley Gold, President and CEO, Shamrock Holdings, Inc. and Shamrock Capital Advisors, Inc.
11:10 am - 12:30 pm
This roundtable session addressed the status of opportunities for investment in the Balkans with emphasis upon Serbia. Participants discussed, among other topics, the political climate, the state of privatization and the opportunities that now exist for investors.
Speakers
Danko Djunic, Chairman, Deloitte, Serbia and Montenegro; President, AmCham Serbia and Montenegro
Nebojsa Vujovic, Former Yugoslavian Ambassador to the United States, Advisor to the President, Hemofarm, U.S.
11:10 am - 12:30 pm
Is a patient′s health and well being the responsibility of doctors or patients? If indeed ultimate responsibility for health and well being lies with the patient, how do we empower patients to take an active role in their health care and treatment? In today′s world of medicine and treatment, we are all potentially patients. The true question is whether we are dependent upon ourselves or entirely dependent upon the doctors and healthcare systems of which we are a part?

It is essential that patients become empowered and understand that they hold the key to their health and well being. Greg Simon, President of FasterCures explained, "The worst thing we can do is make a patient feel as if they are a spectator in their health."

FasterCures is among a variety of organizations that are advocating for increased education and empowerment of patients, to help patients realize that they are valuable, not vulnerable during their diagnosis and treatment of not only terminal and serious diseases, but general health care and wellness. Medical research and treatment has grown greatly over the past years, yet many patients still do not fully understand the role they can play in their own care, the resources that area available to them, or the impact that their knowledge and connective partnership with their physician can have in finding and implementing a successful treatment plan.

The panel unanimously agreed that empowered and informed patients have the power to dictate their ultimate destiny and well being when they take their health into their own hands.

Shmuel Meitar, Director of the Aurec Group, FastCures Board Member and a cancer survivor himself spoke to his own experiences while fighting cancer, "I realized I had to take control of my own destiny. Eleven year later, I probably saved my life more than twice. For me, I am number one. For doctors, many times you are one of hundreds or thousands."

If a sense of awareness can be fostered, patients are more apt to utilize the resources they have available to them, and through this process to engage and benefit from current data, turning numbers and identifiers into information that can be used to develop both preventive and treatment methods. Whereas in the past, patients have not have had access to computers and the Internet, today patients can access a wealth of information from organizations such as WebMD Health and others, taking an active role in their health and gaining the information necessary to make informed decisions about their health and treatment.

While the barriers to care are generally lower than they were years ago, there are still barriers to be overcome. Technology has benefited medical research, but there are still advancements and developments to be made. It was suggested that the efficacy of the system must be reformed. David Agus explained that 87 percent of FDA-approved drugs are used "off label," that is, used for purposes other than originally intended and for which they received FDA approval. In the past, the FDA would focus on drug safety, not necessarily on efficacy. Now, with technology in place, it is necessary to utilize the resources and data that are available to focus not only on safety, but especially on efficacy. Patients play an essential and integral role in this research by participating in clinical trials. Yet, of those diagnosed with cancer every year, only 4 percent actually enroll.

Panelists stressed the importance of clinical trials for both patients and medical research, but emphasized that patients must be their own advocates. As Nancy Brinker explained, too often doctors do not have the time, money, or resources to take an active role in clinical trials that could not only save a patient′s life but also further research and development. Additionally, she spoke to the relationship between doctors and clinical trials, saying, "It is almost like an ethnic war. Scientists don′t like clinicians, clinicians don′t like scientists. But, fortunately the two are melding more everyday."

While the panelists agreed that doctors have a responsibility to inform patients of these options, they also agreed that too often they may not have the most recent knowledge or resources at their fingertips and that this is where patients can take an active role in their wellness.

The essential resources are in place. Patients increasingly have access to educational resources, and technology continues to benefit research and analysis. To move forward, it is essential that there be a successful partnership between patients and physicians, and an increased and active awareness and advocacy for the patient, by the patient.

To buy a DVD of this session, go to our DVD order page.

Moderators
Greg Simon, President, FasterCures / The Center for Accelerating Medical Solutions
Speakers
David Agus, Research Director, Louis Warschaw Prostate Cancer Center, Cedars-Sinai Medical Center
Nancy Brinker, Founder, Susan G. Komen Breast Cancer Foundation; former U.S. Ambassador to Hungary; FasterCures Board Member
Philip Marshall, Vice President, Product Strategy, WebMD Health
Shmuel Meitar, Director, Aurec Group; FasterCures Board Member
11:10 am - 12:30 pm
China faces many obstacles to sustainable future growth. Chief among these are implementing banking reforms, developing capital markets, and finding the politically acceptable balance between job growth and profit growth.

Banking reform needs to move forward so that China can transition away from its reliance on credit from China′s banks towards credit from more transparent and liquid capital markets. But according to Zachary Karabell, China′s banking system "is like an old bridge" — it won′t work to tear down the old bridge and then build a new bridge because this would cause severe disruptions. Therefore, China needs to build a new bridge reinforced with foreign capital markets before it can tear down its existing banking system. These capital markets need to be built concurrently with the reforms of China′s banks. This should help alleviate the massive number of nonperforming loans, unofficially estimated to be within the range of 25-50 percent of all loans. This large ratio of nonperforming loans means that China cannot afford to float its currency until banks are reformed and become more transparent.

Donald Tang said that "If China floats today, banks will collapse." Yet if the reforms can continue successfully, then these nonperforming loans may not be a problem as capital markets take on a larger role in providing the credit that domestic firms need for growth.

The second major challenge China faces is the pressure to deliver rapid job growth while simultaneously turning revenues into profits. Unemployment, particularly in rural China, is a "huge problem" according to Perry Wong. He estimates that the unofficial level of unemployment is between 32-34 percent. Wong says that with state firms laying off many workers and the private business growth only contributing a relatively small amount of job growth, the "banker has to work as a politician" to deliver job growth — rather than profit growth.

Chinese bankers must also deal with the widening income gap between rural and urban residents. Somehow, banks must find a way to balance these political and regional tensions with enough financial urgency to provide fast growth for a rapidly aging population.

Despite these challenges, the panelists seemed optimistic about the growth prospects for China. Perhaps this is because China needs rapid growth to sustain development. "If China has 4 percent growth, they′re cooked," Tang said. For him, the success of China "hinges on banking reform." Such growth does not mean that the economy will be without setbacks.

Karabell warned that the idea that China′s growth will be without hiccups struck him as "odd." Nevertheless, rising consumption and purchasing power should make long run growth in China sustainable.

If these banking reforms can be achieved, then China may be on the brink of a long and rapid period of industrialization. In fact, Shelly Singhal compares the "China of today with the U.S. period of industrialization from 1945-60." The difference is that this period of industrialization will be compressed because much of the technology is already available. He generally recommends investing in the same sectors that boomed during America′s transition to manufacturing, that is, autos, oil, and steel. On the other hand, Singhal hinted that some Chinese companies seemed overvalued. Some of the same 1999 "excesses" in American technology stocks seem to exist in Asia.

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Moderators
James Barth, Senior Fellow, Milken Institute; Lowder Eminent Scholar in Finance, Auburn University
Speakers
Zachary Karabell, Senior VP, Senior Economic Analyst, Co-Portfolio Manager, Fred Alger Management, Inc.
Shelly Singhal, Managing Director, SBI-USA
Donald Tang, Senior Managing Director, Bear, Stearns & Co. Inc.
Perry Wong, Senior Research Economist, Milken Institute
11:10 am - 12:30 pm
The panel concerned with America′s military might brought together three panelists with very distinct backgrounds. William Perry was the 19th Secretary of Defense under Bill Clinton; Alvin Toffler is an author and futurist; and Albert Myers is Corporate Vice President at Northrop Grumman Corporation. The panel tackled issues ranging from the changing paradigm in international geopolitics, the role of high technology and its place in the evolution of America′s military forces.

Moderator Jon Kutler, founder and CEO of Jefferies Quarterdeck, set the stage by illustrating the changes brought about by the collapse of the Berlin Wall. He further illustrated the impact of the attacks of September 11 on New York and Washington D.C. and its meaning as yet another inflection point in American military and foreign relations.

Alvin Toffler referred to the thesis of his book, The Third Wave. Toffler described global change as a function of three general waves: (1) human transformation from hunting and gathering to agriculture, (2) the industrial revolution, and (3) the current reinvention of civilization.

This third wave, Toffler argued, is an agglomeration of constant and simultaneous change in economic theory and practice, technology, religion and freedom. Such components of change, Toffler says, are not necessarily embraced by the world at large, and in some instances, are met with violent hostility. Conflict comes as a result of change. The third wave is about a change in the power structure of the planet in which the United States has risen to the top due to its collective propensity to accept and embrace change. This change′ was further examined by William Perry.

Perry took the audience through a journey of military history dating back to the initiation of the Manhattan Project—a project that, according to Perry and contrary to popular belief, had no bearing on the outcome of World War II. World War II, Perry argued, was a war won on the back of industrial might. The United States, upon the end of World War II, shifted its industrial production away from the military war machine, whereas the Soviet Union stepped up its production of military machinery and equipment. Such a policy by the Soviets resulted in a three-to-one advantage in their favor against the United States. As a result, the United States decided to level the playing field not by reconvening pre-WWII production quotas, but by employing what became known as the "offset strategy." Offset strategy was a tactical framework whereupon America′s military efforts consisted of high tech-centered precision weapons. The Stealth Project is a result of such planning.

Perry went on to argue that present-day military capabilities are a response to the Cold War paradigm. Desert Storm, Perry says, was the first opportunity we had to test and deploy the technologies developed during the Cold War. They are a response to threats brought about by nation states, not those brought about by the mobile enemies that we face today. Our military capabilities were not, and thus are not, created to battle nonconventional tactics such as attacks on civilian or infrastructural targets at home or abroad that are masterminded in the shades of population centers that are often sympathetic to their ideological cause.

Toffler implicitly agreed by stating that today′s and tomorrow′s enemies will not be nation states the likes of the former Soviet Union, but rather mobile entities within states such as Al Qaida that have both the capability to strike abroad as well as inside our borders.

Albert Myers shifted the discussion from national and international implications of the Cold War to those faced by companies in the defense industry. Myers stated that the end of the Cold War forced the defense industry to become more cost effective and to switch its business model from one of inherent predictability to one whose market for its goods became unpredictable overnight. With this fundamental shift taking place, Northrop-Grumman strengthened its position in reconnaissance, surveillance, and centric network warfare. This transformation, not only for Northrop-Grumman but for the industry as a whole, is at its earliest stages of development.

The panel discussion concluded with a dialog between the moderator and the panelists. Topics discussed included potential future American targets, the efficiency of networks and systems, and the pros and cons of hierarchal agencies such as the State Department and Department of Defense.

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Moderators
Jon Kutler, Founder, Chairman and CEO, Jefferies Quarterdeck, a division of Jefferies & Company, Inc.; Chairman, Quarterdeck Equity Partners, Inc.
Speakers
Albert Myers, Corporate Vice President, Strategy and Technology, Northrop Grumman Corporation
William Perry, 19th U.S. Secretary of Defense; Professor, Stanford University
Alvin Toffler, Author, Futurist
12:30 pm - 2:15 pm
The panel discussion with Nobel Laureates in science and medicine covered a variety of topics. Gerald Edelman began with a discussion on the human brain and how it works. It is an extraordinary object, he said, which is very much unlike a computer. In fact, it has numerous capabilities that have many variations from individual to individual. In particular, human consciousness is a subject of great complexity which he described as a "jungle full of quarks and jaguars," referring to the book by Murray Gell-Mann.

Michael Milken then opened a discussion of scientific advancements and quality of life. The world has very recently seen an extension of life expectancy in all countries. In the last decade, the U.S. went from a life expectancy of 55 years to 77 years. This, he explained, is due in a large part to a decrease in disease. In 1900, diseases such as tuberculosis and polio caused more than half the deaths. Today, infectious diseases have fallen to a great degree. However, 95 percent of the people affected are from developing countries. Thus, we have an opportunity to treat disease with public health measures, particularly prevention.

HIV continues to be of great concern worldwide. The U.S. has pursued an ABC policy —abstinence until marriage first, being faithful to your partner second, and condoms third. The AIDS rate has decreased in recent years in the U.S., and current policy focuses on abstinence until marriage. However, there problems abound in developing countries where 30 percent of couples are infected with HIV. Steven Chu emphasized the importance of condom education in order to counter existing religious and cultural barriers.

Murray Gell-Mann stated that science today is under attack by politicians and post-modern philosophers. However, science is self-correcting because it appeals to nature through self-observation. The panelists then discussed what is successful in breeding innovation. The government should tolerate recommendations and reports by scientists. The most successful scientific institutions are those that are small, freely funded, and somewhat diverse, but not too diverse. The Rockefeller Institute and Cal-Tech have done much innovative research, largely due to their lack of bureaucracy, thus there must be efforts toward creation of these "scientific monasteries" in order to balance out large universities.

Steven Chu then focused on the difficulty of foreign students in obtaining their post-secondary degrees in the U.S. after the advent of September 11. While we have an obligation to prevent further acts of terrorism, limiting the people who can come here to study serves to decrease our available human capital and decreases some of our best investors. Today, medical research must focus on the basic fundamentals. Efficiency is not necessarily the best way to achieve the best and most innovative research. Universities are seeing this and are veering toward a "nothing off the table" attitude.

Michael Milken then introduced power and energy as another crucial concern today. Power sources that were previously deemed inefficient and too expensive are now being developed and widely used. An example of this is wind-power. Water will become an issue with the expected huge population explosion. Projections of the future estimate that 3 billion people will live in "water-stressed" regions, and water tables are continuing to drop. A critical problem will be how to get clean water to poor people in distressed regions.

The panelists closed by discussing the state of the world. Population growth largely leveled off in developed countries, while it continues to plague developing countries. In particular, Chu stated that the education of women did a lot to help stem population rather than having a "mob of uneducated children."

The panelists concluded by stating that science and humanities are not divorced and that humans are not machines — our values matter. As we progress into the future, we develop increasingly new concepts of what it is to be human. Gell-Mann closed by stating that there is no "theory of everything."

To buy a DVD of this session, go to our DVD order page.

Moderators
Michael Milken, Chairman, Milken Institute; Chairman, FasterCures / The Center for Accelerating Medical Solutions; co-Founder, Milken Family Foundation
Speakers
Steven Chu, Nobel Laureate, Physics, 1997; Chair, Department of Physics, Stanford University; Theodore and Frances Geballe Professor of Physics and Applied Physics, Stanford University
Gerald Edelman, Nobel Laureate, Medicine, 1972; Director, Neurosciences Institute; Chairman, Department of Neurobiology, Scripps Research Institute
Murray Gell-Mann, Nobel Laureate, Physics, 1969; Distinguished Fellow, Santa Fe Institute
2:30 pm - 3:45 pm
Leo Grohowski opened the session with a brief overview of the past year′s salient events in global capital markets. He noted the synchronized recovery of the world′s leading economies and the simultaneous rally in global asset markets. He posed two key questions to the panelists: How sustainable is the rally in equity markets around the world and where should investors put their money?

Larry Hatheway noted the recovery in corporate profits and remarked that it was, in fact, difficult to find any asset class that performed poorly over the past twelve months. Still, in his view, bonds appeared quite expensive and equities were not cheap either. Indeed, investors were likely to face a more challenging investment climate in the medium term compared to the past year.

Lawrence Kudlow was more bullish, for equities in any case, predicting that the U.S. economy and stock market was soon to be "off to the races." The best way, he suggested of exploiting this coming boom was to invest in U.S. common stocks. The U.S. capital markets have benefited from a decrease in taxation on capital formation, he argued, and the tax cuts of President Bush which cut the tax on capital by around 45 percent, have been "just what the doctor ordered for the health of the market." However, he offered a caution about potential political risk in the U.S. market, "if Mr Kerry wins" he argued, "he will adopt anti-investor policies and raise taxes across the board."

Dennis Schwartz offered the audience advice from the perspective of a fiduciary who acted primarily as a risk rather than a returns manager. Asset allocations should be tailored to one′s institutional or individual risk preferences and should not be changed save for changes in these preferences.

Next to speak was David Eisenberg who supported Hatheway′s comments on earnings. A full 100 percent of the stock price rally was accounted for by the global recovery in corporate earnings. While not downplaying the human cost of terrorism, he noted that capital markets around the world are remarkably resilient to the efforts of terrorists with a notable example being the Israeli equity market.

The conversation turned to discussion of investors′ search for returns and how, for many market participants, it had resulted in an increased use of alternative assets — most notably hedge funds. The panelists expressed some concern about the growth of hedge funds. Schwartz expressed alarm that seemingly fewer and fewer good managers were available and there were no barriers to entry for potential managers. An additional concern about these funds was raised by Hatheway who noted the lack of adequate transparency and believed that some of them might encounter problems of illiquidity.

The panelists then turned to the question of the value of foreign securities as diversifiers of a chiefly U.S. portfolio. To illustrate the point, Grohowski showed the changing correlation between U.S. and some selected foreign equities. While UK stocks showed generally high and positive correlations, Japanese equities′ correlation changed dramatically over time. Kudlow preferred to stick to U.S. firms′ stocks and bonds where U.S. investors would encounter fewer problems of transparency. He argued that to the extent that U.S. firms were active players in foreign markets — including the booming economies of China and India, one can enjoy the upside of global growth without the downside of the lack of transparency.

Hatheway noted in a related point that the past year has seen the dramatic recovery of the Nikkei and that while it may not necessarily be a diversifier, there were remarkable returns to be had in a stock market that could very well double in the medium term.

The return of the Japanese market and the Japanese economy to health after a lost decade was remarked upon further by Kudlow who suggested that the decline of Japan in the 1990s was a powerful argument against the old Japanese approach of heavy government involvement in the economy. Its troubles, he suggested further, had had the useful impact of additionally discrediting those popular and academic commentators who had used that country′s success as an argument for anti-capitalist policies.

The panel was brought to a close with a discussion of the outlook for currencies. Hatheway suggested that the U.S. dollar was fundamentally overvalued, although this did not necessarily suggest fundamental weaknesses in the U.S economy. The present value of the dollar, he argued was largely the result of public capital flows rather than profit-seeking investors.

The opposite view was taken by Kudlow. He contended that the dollar was, in fact, undervalued and would appreciate against the euro in the medium term. He ended his remarks, and the panel with the contentious opinion that there were too many currencies in a world that required only three: the dollar, the euro and the yen.

To buy a DVD of this session, go to our DVD order page.

Moderators
Leo Grohowski, Managing Director and Chief Investment Officer, Deutsche Asset Management
Speakers
David Eisenberg, President, Brockhouse & Cooper International, Inc.
Larry Hatheway, Managing Director and Head of Global Asset Allocation, UBS Investment Bank
Lawrence Kudlow, CEO, Kudlow & Company; Co-host, "Kudlow & Cramer," CNBC
Dennis Schwartz, Vice President, Pension Fund & Investments, Deere & Company
2:30 pm - 3:45 pm
Since the 1970s, South Korea has experienced exceptional economic growth making it a model for successful development. The statistics best articulate the enormity of this growth. The GDP per capita rose from about $260 in 1970 to about $17,000 today and the GDP annual growth rate fluctuated around 10 percent until recent years. The story of Korea′s economic transformation raises many questions, but most fundamentally, it raises the question of how. The panelists posit explanations for what policies, what conditions, and what environment fostered South Korea′s rapid economic development.

The South Korean minister of trade, Doo-Yun Hwang attributes Korea′s impressive performance to investments in human capital, "outward looking strategies" and "government led economics." Investment in human capital played out in the promotion of education of Koreans both domestically and abroad. In addition to investments in schools domestically and labor-intensive industries, the government generally encouraged citizens to acquire Western degrees or adopt the business techniques and strategies of Western firms. This approach to education ties in to Korea′s outward looking strategy. In addition to embracing Western ideas, by rejecting import-substitution strategies and refusing temptations to close off the economy, the country established a strong export-driven relationship with the global community. Finally, Korea′s development strategy included an elevated level of government involvement in the private market as compared with the Korean government′s role today. Hwang stresses that the government stepped in to allocate scarce resources, effectively monitoring development and guarding against reckless use of assets.

The 1997 financial crisis checked the momentum Korea had been building since the 1980s. This event, while a clear a disappointment to Korea-style development enthusiasts carried with it a silver lining. The 1997 crisis pressured Korea to reform. Banking sector reform coupled with a dismantling of the "chaebols" allowed for quick recovery from the crisis and set the stage for a healthier future economy. Among Korea′s reforms was the encouragement of foreign participation in nearly all sectors of the economy, most notably in the banking industry.

Public concern about the repercussions of Korea′s open arms policy to the international community during this time did not deter policy makers from making tough decisions. Hwang explained, "as an economist, I know that nothing is free," conceding that reforms may have caused considerable grief domestically. However, as he later said, while reform may be painful to certain groups, the overall economic improvement may justify the reform. This crisis also prompted a movement towards privatization that continues today.

Byoung-Joo Kim, Chief Executive Partner of Kim, Lee & Partners explained that in contrast to many other Asian countries, the Korean government stepped back from the private sphere. He stressed, "Those days were over a long time ago."

Globalization emerged as one of Korea′s primary goals in past policy as well as in current policy. The country, now in the process of negotiating a free trade agreement with Japan for the year 2005, hopes to extend such an agreement to China. Optimistically, Doo-Yun Hwang proposes that Korea will strive to create a free trade agreement that includes all of eastern Asia. It appears that promoting an open economy remains a key objective in the nation′s economic strategy.

Tensions with North Korea emerged as the greatest political threat to South Korea′s economic stability. Many hope that North Korea will cooperate in the six-party talks with countries such as the United States and South Korea to diffuse the nuclear threat. While South Korea is technically at war with North Korea, Hwang explained that his country intends to "keep a dialogue for peaceful resolution of issues" open with North Korea. While hopes now revolve around reconciliation, Hwang expects one day to see a unification of the peninsula under one government. Certainly, South Korea as an economy proves that the difficult can be made into a reality. Perhaps this spirit will transfer into the political realm as well.

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Moderators
Dennis Kneale, Managing Editor, Forbes magazine
Speakers
M. Keith Duckworth, Executive Vice President, Administrative Services, Hyundai Motor America
Doo-yun Hwang, Minister for Trade, Republic of Korea
Byoung-Joo Kim, Chief Executive Partner, Kim, Lee & Partners
2:30 pm - 3:45 pm
Panelists discussed how to avoid becoming blind to needed changes and to think outside the box by building change and fluid thinking into the organization.

"The number one obstacle you have to overcome is success, and the arrogance that goes along with success," Alfred West, Jr. declared. Many of the great corporate downfalls of recent years, such as Enron, came from this success-driven arrogance, he opined.

Colin Crook noted that with age and experience comes a certain reluctance to try new things; assumptions become solidified.

Referring to the need to examine assumptions, Jami Miscik stated that "To think outside the box, you need to know where the box is." To that end, she started a program of inviting nonstandard contributors such as science fiction writers, screenwriters, and others, to review intelligence data and come up with possible scenarios. Eighty percent of the results were fairly standard ideas that her analysts had considered, 10 percent were completely wild, but the other 10 percent were new, valid scenarios. In addition, she has her most talented analysts sit around and discuss possibilities with as few restraints as possible.

The panelists agreed that changes must be an essential part of an organization. Orin Smith commented, "If you don′t change in very short order, you′re dead." He emphasized that what you do today will not be good enough tomorrow.

At SEI, West has all of the desks in the organization on rollers, able to be broken off and moved to other areas and other groups at will. He believes that this physical flexibility translates to mental flexibility. West stated that you must work through the culture of the organization to promote change in order to include everyone.

"Embrace the maverick," Miscik advised. She also warned the audience that a single spate of change is not enough; an organization will always have to change again.

Yoram Wind, who moderated the program, continually challenged the panelists to consider ways that they force themselves and their organizations to break through their mental models. In a closing remark, he commented, "What we see is what we think and what we think is what we see."

To buy a DVD of this session, go to our DVD order page.

Moderators
Yoram (Jerry) Wind, The Lauder Professor of Marketing; Director, SEI Center for Advanced Studies in Management; Academic Director, The Wharton Fellows Program
Speakers
Colin Crook, Senior Advisor, Wharton Fellows; Former CTO, Citigroup
Jami Miscik, Deputy Director for Intelligence, Central Intelligence Agency
Eyal Ofer, Chairman and CEO, Carlyle M.G. Limited, United Kingdom
Orin Smith, President and CEO, Starbucks Corporation
Alfred West Jr., Chairman and CEO, SEI Investments Company
2:30 pm - 3:45 pm
While medical research in life sciences related to life threatening diseases such as AIDS and cancer is advancing at a rapid speed, it comes at a high price. "The good old days when it didn′t cost that much and didn′t take this long are gone," said Howard Asher of Sun Microsystems. The cost of taking a drug from discovery to patient jumped from $8 million in 1969 and $800 million today. It also takes longer, up to 15 years, to achieve this result, partially due to increased bureaucratic obstacles and approvals. The role of technology in this process is two-fold: while dramatically increasing the efficiency of research, it also contributes to the increase in costs. The growing amount of "data" needs to be converted into "information," and then transformed into "knowledge," the most complicated part of the process.

Medical product liability is another major contributor to increased costs. However, technology can help solve this problem by providing highly customized, genome-based diagnoses and the ultimate medical solution: R in power of 6, that is, the right cure for the patient, provided at the right time at the right intervals, that would produce a predictable outcome and that can be monitored in real time. In turn, such solutions will cost even more.

To address this issue, the companies have been engaging in merger activities to leverage economies of scale and share knowledge, the component becoming more and more expensive. Today there are only 28 life science companies worldwide. Andrew von Eschenbach, Director of the National Cancer Institute (NCI) explained the importance of knowledge sharing for achieving the goal of eliminating cancer related deaths by 2015. He believes that managing the Institute as a business would not limit scientists′ creativity as suggested by some. On the contrary, it would enable them to direct the creative process toward specific measurable targets, such as the mortality rate from cancer.

von Eschenbach realizes that managing a 4000 person-Institute under that new framework would require a cultural change, but believes it is possible given the right incentives. In his view, the main motivation for scientists is not financial remuneration or fringe benefits but the ability to "change the world for the better," which should be achieved by removing the bureaucratic and other administrative obstacles.

Seth Berkley, Founder of the International AIDS Vaccine Initiative, stressed the importance of the people′s voice in this process. By drawing public attention to these important matters through activities targeted at increasing awareness and understanding of AIDS and related diseases, organizations like Berkley′s help motivate scientists and obtain government funding for medical research.

To buy a DVD of this session, go to our DVD order page.

Moderators
Richard Brewer, Managing Partner, Crest Asset Management; FasterCures Board Member
Speakers
Howard Asher, Group Director, Global Life Sciences, Sun Microsystems, Inc.
Seth Berkley, President, CEO and Founder, International AIDS Vaccine Initiative
Andrew von Eschenbach, Director, National Cancer Institute
Roberta Williams, Professor and Chair, Department of Pediatrics, Keck School of Medicine, University of Southern California
2:30 pm - 3:45 pm
Between 1997 and 2002, the number of women-owned businesses in the U.S. grew by 11 percent, more than one-and-a-half times the average rate. This panel focused on ways that women in business are changing the economic landscape, the challenges - new and old - they are confronting, and ways they are overcoming these challenges.
Moderators
Viola Canales, Vice President, Emerging Markets, TEC International, Inc.
Speakers
Lisa Conte, CEO, PS Pharmaceuticals, Inc.
Maureen Costello, President, United Pacific Pet
Jody Miller, Venture Partner, Maveron
Martha Montoya, Founder and President, Los Kitos; Board Member, Latino Business Association
Sandra Sutton, District Director, Santa Ana Office of the U.S. Small Business Administration (SBA)
3:55 pm - 5:15 pm
Mike Milken kicked the panel off with a couple of interesting facts. One in every 80 men weighs more than 300 pounds, while heart disease and cancer are among the top two leading causes of death in United States.

Milken then turned the floor over to four leading experts in diverse areas of nutrition. Among them, Susan Trimbo of GNC, talked a little about how the nutrition store contributes to the health of American consumers. The nutrition store offers a variety of products such as vitamins, supplements and provides information on how to manage their health better, thus simplifying the process of going to a dietician. In addition, GNC carries an array of weight loss products and multi-vitamins that can help reduce the costs of health care. These old-fashioned methods are not only effective, but are also inexpensive, according to Trimbo.

Dean Ornish believes that making simple life changes such as quitting smoking and exercise are extremely crucial in impacting the health of individuals. According to Ornish, $40 billion last year was spent on angiograms. He believes, and his research supports the position, that an abundant amount health related costs due to surgery can be saved simply by diet and lifestyle changes. He also emphasized that these changes need to be properly reimbursed as further incentive. "While good medicine is important, it′s not sufficient," he adds.

In addressing the growing epidemic of obesity, Milken pointed out that obesity now affects an individual′s health more than smoking and drinking.

David Heber noted that in 2001 there was only one state, Colorado, without a high prevalence of obesity. He suggested that we need education on resistance in addition to aerobics. Heber also stressed the important dynamics of understanding and differentiating between good carbs and bad carbs. For example, he mentioned that many of the low carb foods we consume actually contain more fat.

Francine Kaufman addressed the issue of who is suffering most from undernourishment. She has seen kids within the LA Unified district being served the unhealthiest types of foods. In addition, she cited the lack of exercise among kids today, noting that under the current No Child Left Behind program, schools are focusing more on academics and less on nutrition, while cutting time out of recess and other extra curricular activities. She mentioned that kids who are subsidized for food are not subsidized for fruit and vegetables. "Kids did not even know what fruits and vegetables were" she said after visiting schools in southeast Los Angeles. Furthermore, this is having a huge impact on the Hispanic and Black population who comprise a majority of students in the LA Unified district.

Heber restated that we must take better care of our children otherwise there is great potential for them to die from diabetes II by the time they reach 40 years of age.

Ornish went on to question the process of school financing and believes that parents should be given more choices regarding where to send their children. He went on to say that in some schools the food is so bad that by sending your child to prison, you may actually see their health improve dramatically.

Kaufman forecast that eventually, one in every three children will die of diabetes, while for the Hispanic population, one in every two will die of the disease. Heber added however, that a healthy diet will delay that onset and expand one′s life expectancy.

Milken concluded the panel by emphasizing some of the good news. With countries now subsidizing this issue and science capable of identifying the facts with the latest technology, we are certainly one step in the right direction. He concluded the panel by saying that "the beauty in all of this is that it does not require that we invent or create anything."

To buy a DVD of this session, go to our DVD order page.

Moderators
Michael Milken, Chairman, Milken Institute; Chairman, FasterCures / The Center for Accelerating Medical Solutions; co-Founder, Milken Family Foundation
Speakers
David Heber, Director, University of California, Los Angeles Center for Human Nutrition
Francine Kaufman, Head, Endocrinology/Metabolism, Childrens Hospital Los Angeles
Dean Ornish, Founder and President, Preventive Medicine Research Institute; Clinical Professor of Medicine, University of California, San Francisco
Susan Trimbo, Senior Vice President of Scientific Affairs, GNC
3:55 pm - 5:15 pm
Imagine for a moment that you are traveling on Jet Blue Airways, watching the latest episode of CBS′s "Everybody Loves Raymond" on your personal in-flight television service provided by Direct TV and that Raymond and his family are sipping cappuccinos at their local Starbucks while engaged in a deep discussion about the new LeapFrog educational toys. Scenarios like this were considered by the distinguished panelists who discussed the overlap of business and the film, music, fashion and lifestyle industries and the importance of connecting the touch points of each in driving the value creation of brands.

Do companies chase cultural trends or do they create them? The panel concluded that they do both. Orin Smith spoke of how his company set out to create a cultural social experience in their coffee houses. His comments were echoed by David Neeleman, who said that his company sought to change the culture of traveling and bring humanity back to air travel. However, Thomas Kalinske contended that his company was addressing a demand in the culture to better educate children. The picture is less clear for media companies themselves. Panelist Leslie Moonves noted that "CBS reflects the culture and is the culture."

At the heart of this discussion was the ability for a company to build a brand that works well in today′s culture. Within the convergence of media, entertainment, technology and globalization, it is increasingly important for a company to build a brand that is strong enough to transcend these elements. To accomplish this, Starbucks seeks to create an environment within their coffee houses that is a congregating point for its customers. Jet Blue seeks to create an overall experience so their customers perceive great value at a reasonable price. LeapFrog adapts the educational styles of a culture to operate on its technological platform. CBS and Direct TV seek to be the delivery device to an ever-diverse and changing culture.

Perhaps the most popular form of cross pollination in the converging world is the use of product placement. Not only has product placement given companies a new venue to market their products, but a new means to reinforce brand image, while benefiting the medium through which they are placed. Furthermore, branding is strengthened by the mere exposure of their products in different venues. Starbucks does not pay for celebrity endorsements, however they benefit every time a celebrity is photographed strolling down the street with a Grande Latte in hand.

The panel agreed that the fusion of media and pop culture creates extraordinary opportunities. The continued advancements in technology combined with globalization should provide companies with plenty of culture for which to contend.

To buy a DVD of this session, go to our DVD order page.

Moderators
David Schulte, Vice Chairman, American Vantage Media
Speakers
Chase Carey, President and CEO, DIRECTV
Thomas Kalinske, CEO, LeapFrog Enterprises, Inc.
Leslie Moonves, Chairman and Chief Executive Officer, CBS
David Neeleman, Founder, Chairman and CEO, JetBlue Airways
Orin Smith, President and CEO, Starbucks Corporation
3:55 pm - 5:15 pm
Moderator Myra Strober opened the session by complimenting the panel members for implementing innovative programs that support the well being of working families. Strober gave an overview of the problems, issues and the needs of working families. "Balancing career and family has become more difficult during the last 20 years. Two-earner couples are working longer hours. Parents have become more child-centered."

What forces underlay the changes that occurred in the workforce over the past 20 years? Strober reviewed the solutions to date that have not worked well, such as part-time work, "Mommy tracks" and sequencing. "Very often, part-time jobs are very costly solutions and many times those jobs don′t provide access to training or health care benefits."

Strober outlined the solutions and tools needed to face the challenges of the American workplace: "Get rid of the choice rhetoric; think of children as a public good and be willing to experiment." Strober believes that the American workforce is in need of five key institutional changes in order to support employees and achieve the goal of balancing work with family life. For instance, federal vouchers for child care conditioned on family income is one of the suggested institutional changes, which Strober estimated to cost over $26 billion.

Donna Klein called for a continued focus on working family′s issues and remarked on the importance of the mission of "Corporate Voices for Working Families." Corporate Voices was created in 2001 and intended to establish a unified corporate voice by bringing leading companies together to forge a deeper understanding of working family issues. Starting out with 12 companies to work on solutions that improve the lives of all working families, Corporate Voices consists today of 43 companies that include 4 million working families. Klein suggested that the U.S. does not have a national policy on supporting American working families. The goal of Corporate Voices and its partner companies is to "Bridge public, private and nonprofit sectors on working family policies. There is increased need for the involvement of federal government."

Thomas "Tripp" Welch, III outlined the Mayo Clinic′s enormous efforts to find workforce strategies and provide families with economic support. He noted that among the Fortune 100 companies, the Mayo Clinic was named number 35. Building greater commitment to develop specific programs — the Mayo Clinic implemented 60 programs — can be seen as one of the reasons for this accomplishment. The "Sick Child Care Program," the "Bus Program" and the "Child Care Subsidy Program" established to help employees fund quality child care while they are waiting to receive state/county child-care assistance, are just a few of the remarkable programs that the Mayo Clinic set in place.

Debbie Cohen also focused on the challenges working families face. Whether developing specific programs for Time Warner′s workforce — consisting of over 90,000 employees - or offering flexible working hours, Cohen′s strategy is to support working families by implementing flexible working models and a wide array of programs, such as "Work Life Effectiveness" that help employees balance work and family, as well as keep employees fully committed and engaged in their occupations. Looking at the life cycle component and change in demographic patterns as well as technological improvements in the workforce, Cohen always asked herself, "what does our future workforce need to have?"

Cathleen Benko, challenged by her own family issues — an ill husband, two teenagers and parents who need her support — is committed to policy initiatives that focus on balancing work lives of Deloitte′s employees with their child care giving responsibilities.

One interesting observation from the audience noted that on the one hand, Germany is investing in working family support strategies implemented by the German government, while on the other hand, Germany found that the fertility rate of women as a determinant of labor force did not increase over the past years.

The panel members agreed that the American workforce has gone through many changes over the past two decades and examining the needs of working families with the perception of children as a public good is crucial in today′s economy.

To buy a DVD of this session, go to our DVD order page.

Moderators
Myra Strober, Professor, School of Education, Stanford University
Speakers
Cathleen Benko, National Leader of the High Technology Industry Sector, Deloitte Consulting, LLP
Debbie Cohen, Director, Work/Life Effectiveness, Time Warner Inc.
Donna Klein, President and CEO, Corporate Voices for Working Families
Thomas "Tripp" Welch, III, Human Resource Section Head, Mayo Clinic
3:55 pm - 5:15 pm
Given that the list of global risks is virtually unlimited, this panel suggested that investors focus on the more realistic threats to the world economy. The panel identified three chief global risks: China′s over-heated economy, inflation and terrorism.

Joel Kurtzman was most concerned about China′s rapid growth. He believes that its growth will continue to expose its financial problems and lack of infrastructure, and is concerned about investors′ lack of legal recourse in China. If China′s overheated economy hit a hard landing in its growth slowdown, then the effects on the market would be severe. Comparatively, Kurtzman asserted, the Enron scandal and other financial disasters had a much larger negative impact on the markets than terrorism. Therefore, he concluded that financial disasters pose a larger economic threat than a terrorist attack.

David Gordon disagreed, arguing that terrorism constitutes our number one threat. He noted that rising Muslim anger, not only in the Middle East but also in Europe, might lead to future terrorist attacks. Terrorism and uncertainty were already driving higher oil prices that could pose a negative supply shock to the economy. Finally, Gordon expressed concern that the U.S.′s deteriorating relations globally would make the fight against terrorism and the war against Iraq even greater challenges.

In contrast with these external global risks, Robert von Rekowsky, a Fidelity Investment′s emerging markets portfolio manager, worried about high U.S. inflation. The rise in inflation was partially explained by China′s overheated economy and the falling dollar. Asia′s intervention in the currency market has propped up the dollar to keep Asian currencies supportive of their countries′ exports, yet their ability or willingness to continue to maintain a strong dollar seemed questionable. Thus, further declines in the dollar could drive up the cost of imports, leading to further inflation ahead. Essentially, von Rekowsky expressed concern that if interest rates did not rise quickly, cheap credit would lead to inflation and an excessive buildup of leveraged debt and investment.

All three of these global risks are real and could inflict painful consequences on the global economy. Investors may have become risk-adverse but they have not yet given up hopes of high returns, posing a problem of investor expectations. High returns only come with high risks, the panelists reiterated; awareness and recognition of these global risks should help investors form more realistic expectations about their investments.

To buy a DVD of this session, go to our DVD order page.

Moderators
Ian Bremmer, President, Eurasia Group Ltd.
Speakers
David Gordon, Director of the Office of Transnational Issues, Central Intelligence Agency
Joel Kurtzman, Partner, Global Thought Leadership and Innovation, PricewaterhouseCoopers and Principal, Kurtzman Group
James Moffett, Chairman, Freeport-McMoRan Copper & Gold Inc.; President-Commissioner, principal mining unit, PT Freeport Indonesia; Co-Chairman of the Board, McMoRan Exploration Co.
Robert von Rekowsky, Portfolio Manager – Emerging Markets, Fidelity Investments
Glenn Yago, Director, Capital Studies, Milken Institute
5:15 pm - 6:15 pm
5:15 pm - 6:15 pm
6:30 pm - 9:00 pm
In a country deeply divided over the economy, Iraq, healthcare and education, moderator Bob Schieffer, host of CBS′s "Face the Nation," asked each panelist what tactics they thought would lead to a victory in the upcoming presidential elections. The discussion was lively and animated throughout the evening as the panel was properly divided by opinions on both ends of the political spectrum.

Howard Dean stated that Democrats should remain true to their party′s ideals and use the shortcomings of this Republican Administration to "motivate the [Democratic party] base to go to the polls for you." Dean shared his displeasure over Democrats moving too far to the center′ in order to capture what are essentially swing votes, which, in his opinion, are no more than 7 percent of voters and thus an insignificant amount.

Republican strategist Ralph Reed disagreed with Dean and mentioned that the upcoming presidential election is predicted to be so close that the swing vote will make the difference on who becomes President of the United States.

Bill Richardson stated that the winner will be the one to put forth the more positive agenda; one that focuses not on problems, but creative solutions to the employment slump, the situation in Iraq, and the present state of health care and education.

Paul Gigot opined that the country is polarized due to a combination of the election result of 2000 and a deepening cultural divide across the country.

On the issue of outsourcing, Dean asked, "When is outsourcing fair?" The answer, he feels, is when it is a practice embraced in order to ultimately serve Americans. Another problem for American firms, Dean says, is the regrettable fact that international labor rights are not in place, thus leaving American firms at a competitive disadvantage in a global scale.

Reed took this opportunity to bring the audience′s attention to the fact that America is a net importer of labor. He asked the audience to think about the effects firms such as Toyota and Sony have on America′s labor markets. Reed further said that we as Americans have not done enough to prevent outsourcing. America does not have the hard (brick and mortar) and soft (affordable insurance and lower labor costs) infrastructure to prevent companies from considering international options, Reed believes.

Bill Richardson shared his displeasure with the current state of trade agreements. He argued for enforceable side agreements beneficial to both sides of the border.

Comments about Iraq were quite possibly the surprise dynamic of the evening. While Howard Dean expressed his outrage over the misrepresentation of facts by the Bush White House with regard to WMDs, chemical warfare, and Iraqi connections to Al Qaida, he did agree that now that we are there, we need to win the conflict and support our troops with the resources necessary.

Reed and Gigot both shared the sentiment that the war needs to be won decisively. "This is a moment of testing and a moment of challenge," said Reed. A point of disagreement between Dean and Gigot/Reed was on the issue of security. Dean does not believe that we are safer since the invasion of Iraq, while Gigot and Reed feel that we are. While Dean and Reed exchanged disagreements, Richardson called for U.S. involvement in the international community and called on the UN to play a strong role in resolving the Iraq conflict.

The panel concluded with a discussion on health care. Gigot mentioned that Republicans know nothing about health care but that, notwithstanding that, the answer to the health care problem should be consumer-driven. Dean quickly jumped in, countering that market approaches to health care do not work. He further said that consumers of health care are as much to blame as are the usual suspects. Dean closed by stating that if elected, John Kerry would not set his health care agenda upon the same threshold as the Clinton administration did. The health care debate then turned its attention to the recently enacted health care bill. A proponent of the bill, Reed feels that although it is not perfect, that the bill is a good one. Everyone on Medicare now is required to take a physical where early diagnosis and preventive practices can help mitigate the costs of treatments down the line. Richardson closed by stating that although the bill has positive clauses, it cost $27 billion over the estimate, Medicaid remains out of control, and the federal government′s message to states needing help with regard to health care is that each state is on its own.

To buy a DVD of this session, go to our DVD order page.

Moderators
Bob Schieffer, Chief Washington Correspondent, and anchor Face the Nation, CBS News
Speakers
Howard Dean, Former Democratic Presidential Candidate; former Governor of Vermont; Founder, Democracy for America
Paul Gigot, Editorial Page Editor, The Wall Street Journal
Ralph Reed, President, Century Strategies; former Executive Director, Christian Coalition
Bill Richardson, Governor, New Mexico; former U.S. Secretary of Energy and U.S. Ambassador to the United Nations
Wednesday, April 28, 2004
6:30 am - 9:00 am
6:30 am - 7:30 am
6:45 am - 7:30 am
6:45 am - 7:45 am
6:45 am - 7:30 am
No Child Left Behind was designed to respond to decades of increased spending on education with no improvement in student learning by holding schools legally accountable for their performance. Lewis Solmon presented arguments in favor of the No Child Left Behind. Solmon claimed that NCLB is necessary because it bars states from shirking their responsibilities. In the past states were allowed to teach as they wanted to, with the result that today, two-thirds of fourth graders in the United States cannot read at grade level — 88 percent of African-American and 85 percent of Hispanic-American children are not proficient in reading.

Many states measure educational outcomes on gains rather than against absolute achievement levels. NCLB mandates proficiency in reading and math for all children within twelve years. The law also requires progress for all racial subgroups, English language learners, and special education students in each school. Furthermore, NCLB states that 95 percent of each subgroup must take an annual assessment examination.

These stipulations differ from previous state practices of averaging student achievements when measuring school performance, which did not hold schools accountable for the education of all of their students.

In the past, all states took Federal funds, but few states complied with Federal standards on teacher and curriculum quality. Under NCLB law, states no longer receive Federal funds if they fail to meet student proficiency standards in reading and math. Parents of students in schools that repeatedly fail to meet proficiency standards and do not take measures to improve will be given the freedom to move their children to different schools.

Speakers
Lewis Solmon, Executive Vice President, Education; Director, Teacher Advancement Program, Milken Family Foundation
7:30 am - 8:50 am
The economy does appear to be on a winning streak. This was the overall consensus of a distinguished panel of government and corporate leaders moderated by Steve Forbes. "Appear," however, is the key word. The stock market is doing well, GDP growth over the last two quarters is the most rapid of the past two decades, and the nominal unemployment rate of 5.7 percent is the lowest in the past 30 years. In stark juxtaposition to this are the specters of the trade and budget deficits, outsourcing, and the lagging rate of job creation. The economy is a tremendously complex engine and generally accepted indicators are highly nuanced and, in some cases, outright misleading.

The panel carefully examined the so-called "millennial bull" in the context of the previous 200 years to try to determine a best model for predicting the way ahead. Susanne Nora Johnson tried to specifically determine whether what we are witnessing is a bounce in "bear repair" or a truly sustainable bull. The biggest indicators of sustainability are an appetite for risk and consumer confidence, not the corporate profits currently driving the indicators. The underlying causes have also been blurred by the effects of 9/11 and the war in Iraq. Therefore, we can expect "schizophrenic" behavior from investors in 2004 as they weigh the fears of inflation against the search for yield. Hopefully, this high volatility and sensitivity to leading indicators will not presage the performance of the critical third year of a recovery (2005) where true sustainability will become most evident.

Short term response to an economic recession can be crafted from a number of fiscal and monetary tools available to the government. Gregory Mankiw pointed out that the current administration′s response to the recession was "textbook."

Barry Sterlicht noted that the government had done all that it could do: cut taxes, increase defense spending, lower rates and let the dollar correct against foreign currencies. He called this the "steroid phase" of the recovery. He observed that the recovery was boosted by America′s "celebration of life," i.e., increased spending following the 9/11 attacks. But in particular, the Fed′s decision to lower rates saved Starwood $300 million in interest expenses, which they quickly plowed into capital investments for future growth. "God bless Alan Greenspan," Sterlicht said.

Once the economy has turned up, the transition to long-term sustainability is characterized by spending restraint, something that won′t be seen until after the three-year critical window following any recession. The main concerns now are inflation and the volatility driven by speculation, what Nora Johnson called "the search for alpha." Inflation, however, does not have a magic indicator. In fact, Mankiw said some inflation is normal and to be expected. Furthermore, he is optimistic that the current GDP growth, driven by productivity and realized as increased corporate profits, will translate shortly into rises in real wages as companies gain confidence and start hiring again.

As the discussion turned to jobs, it was not a surprise when Forbes goaded Mankiw, saying, "Greg, give us the truth about outsourcing." Mankiw′s controversial response to the question (at least controversial to all but economists) in the past few months did not change much here. Our economy is subject to global competition and, because prosperity is not zero sum, we must refrain from isolationism and focus instead on creating new jobs and the educational infrastructure that will blunt the pain felt by families, and hurriedly retrain them for new opportunities in the United States.

Two major factors must be tackled now to ensure long-term growth of the economy: tort reform and health care. Beth Robinson showed startling statistics that excess health care costs, i.e., the amount costs exceed the number of people on the rolls of Medicare, can result in a situation where healthcare entitlements will consume 20 percent of GDP by the year 2060 instead of the expected 2.5 percent. Steve Forbes pointed out that our "what′s my liability" culture, from coaching a little league game to disciplining students, is essentially driving these costs.

Other than research and development, rising insurance premiums related to torts are passed onto the consumers at large, ultimately through higher taxes. Some states have reformed laws to cap awards, but long-term, sustainable growth requires more sweeping fixes to the overall system to ensure that our bright economic future is realized.

To buy a DVD of this session, go to our DVD order page.

Moderators
Steve Forbes, President and CEO, Forbes; Editor-in-Chief, Forbes magazine
Speakers
N. Gregory Mankiw, Chairman, White House Council of Economic Advisers
Suzanne Nora Johnson, Director, Investment Research Division, Goldman Sachs
Elizabeth Robinson, Deputy Director, Congressional Budget Office
Barry Sternlicht, Chairman and CEO, Starwood Hotels & Resorts Worldwide, Inc.; President and CEO, Starwood Capital Group
7:30 am - 8:50 am
"Today′s education faces irrelevance unless we bridge the gap between how students live and how they learn," was moderator Terry Crane's opening statement. The panel unanimously agreed that the new skills required to succeed in the 21st century are different. Allegedly technology was the key to prepare students for the challenges of the new century. Since the early 1990s, more than $90 billion have been invested in technology for schools and education, and every year $5-$6 billion is spent to further upgrade schools. What has been accomplished so far?

Douglas Otto, speaking from his experience as school superintendent, confirmed that he sees many instances in which technology is leveraged in meaningful ways to support the curriculum.

Gary Bitter, a professor in educational technology, spoke about examples of a digital curriculum fostering the learning environment. He cited teacher—parent communication as a rapidly growing area benefiting from the use of technology. He mentioned another area, however, that needs more attention: professional development into which roughly 25 percent of all federal funding goes, but still does not see a lot of entrepreneurial activity and corporate attention. This could be an exciting field for growth for new technology entrants.

Charles Garten, with his practical understanding of implementing new technologies in schools, agreed wholeheartedly: while buying lots of new computers is "a sexy thing to do," it is equally important to focus on the professional development of the educators to make sure the technology is used effectively and in meaningful ways. He also cautioned against exuberant enthusiasm about the pervasive use of technology in the classroom, if about 30 percent of student′s homes don′t have access to the Internet. "It is not the digital divide anymore; it′s an educational divide."

A more cautious picture about the past achievements of technology in the classroom was painted by Todd Oppenheimer, author of The Flickering Mind. According to him, there have been many promises over the last decades about how technology will revolutionize the classroom environment and learning experience for students, but few of those promises have delivered tangible results. While he is a proponent of technology where it makes sense, he points out that there are areas in which technology might actually inhibit creativity and the development of people skills. "Keep it out of the arts and sciences. Kids should get their fingers wet." Rather, he advocates spending money on science equipment instead.

Crane refocused the panel toward the outlook for the future: "What′s the new wave?" Douglas mentioned the success of virtual classrooms in certain subjects and sees growth potential in that field. He points out, however, that it is at times hard for users to figure out which of the many new upstart vendors are legitimate and of high-quality.

The panel agreed that virtual classes might be helpful for some children, but are not necessarily the most appropriate learning tool for every teacher and student. Another new technology on the horizon could be handheld wireless devices for the classroom. They are much cheaper than laptops and also have lower cost of total ownership, a key metric for assessing long-term affordability. Also, online testing and reporting tools are expected to grow significantly. According to Bitter, it is not only important to introduce new learning tools, but also to make sure that the child has access to it.

To buy a DVD of this session, go to our DVD order page.

Moderators
Therese “Terry” Crane, Senior Educator Advisor, Infotech Strategies; Chairman, Nobel Learning Communities, Inc.
Therese “Terry” Crane, Senior Educator Advisor, Infotech Strategies; Chairman, Nobel Learning Communities, Inc.
Speakers
Gary Bitter, Professor, Educational Technology, Executive Director, Technology Based Learning & Research, Arizona State University
Gary Bitter, Professor, Educational Technology, Executive Director, Technology Based Learning & Research, Arizona State University
Charles Garten, Executive Director, Education Technology and Information, Poway Unified School District
Todd Oppenheimer, Author, The Flickering Mind
Todd Oppenheimer, Author, The Flickering Mind
Douglas Otto, Superintendent of Schools, Plano (TX) Independent School District
Douglas Otto, Superintendent of Schools, Plano (TX) Independent School District
9:00 am - 10:15 am
Michael Milken started this panel off with some interesting factoids regarding the evolution of human capital. Today, 77 percent of the balance sheet consists of human capital. In 2000, 85 percent of the labor force consisted of high-skilled labor compared to only 40 percent, 50 years ago. With an increase in human capital, we will see a "revolution in the next generation for lifelong education."

Gary Becker explained rates of return on post-secondary education and discussed how countries like China, India, and Mexico have benefited the most, especially with the rapid growth of the Internet. He believes that increasing human capital trends have been a global phenomenon, not just unique to the U.S. Over time, however, Becker believes that human capital will become "obsolete," particularly with the advancement of newer technology. In keeping up with these technologies and with the rest of the world, he feels that we must continually invest in lifelong education.

Andrew Rosenfield, founder and chairman of Unext, stated that although "knowledge has advanced, education hasn′t." The need for education-driven technology is what is necessary to support lifelong education. Rosenfield believes that we cannot rely on old-fashioned methods of learning, and instead should utilize the Internet for online learning. "With the Internet, education can be more powerful," says Rosenfield. With places like Ellis College providing online degrees, students get the opportunity to "learn by doing," expand their skill sets and make themselves marketable in the 21st century.

Allan Todd, CEO of Knowledge Planet, discussed the ways in which corporate training has led to a more productive workforce. With companies interested in launching new products at a more rapid pace, resorting to e-learning as a form of corporate training has become a more common trend. Corporate training may also lead to increases in revenues and better customer satisfaction. "Since the cost of retention is so expensive, it is almost a no-brainer to invest in online education," adds Todd.

Phillip Marshall shared his thoughts about how WebMD has positively impacted the lives of Americans. While providing continuing education to American doctors, doctors in 39 states are required to take fully accredited online courses in order to keep their license in the state. According to Marshall, 75 percent of physicians said that what they learn on WebMD would have a direct impact on their patients.

Robert Quigley talked about how AOL and the Internet have educated users on health care issues and have given people access to knowledge that can help them control their lives. AOL "buddy-lists" have allowed access and dialogue between patients and doctors, Quigley said. "With the need for change growing dramatically, the Internet is able to segment and develop things quickly," he added. Providing online education and degree status to individuals was another point that he focused on.

As the panelists concluded their opening remarks, Becker posed some important questions to the panel. Since younger and older people learn in different ways, how well do newer technologies cater to varying age demographics? How well can older students adapt to online education? And, with regard to online learning, what are the returns on investment from a global perspective?

Rosenfield responded by saying that the Ellis College online program offered working environments for all ages. The rates of return from the program were great, too. "The value of online degrees is the same, if not better than terrestrial learning," Rosenfield added. He believes that we measure learning by what you can do, not by "sitting in a seminar." When asked what happens when a student gets stuck or has questions, Rosenfield says that during the online program, students have a mentor available at all a times to guide them through the process. In addition, they are provided with the opportunity to communicate with their colleagues online and establish a community type setting.

Becker said that when asked by his students which classes to take, he tells them to base their decision on the teacher. He believes that a teacher can make a course sound and look interesting, thereby attracting more students into the classroom.

Milken concluded that with e-learning, teachers actually have the opportunity to expand their talent and expertise on a global level, thus benefiting people beyond the classroom. He believes that online learning provides a breakthrough for the disabled who would otherwise have to attend a campus physically. "The best teachers can reach far more people," he added.

To buy a DVD of this session, go to our DVD order page.

Moderators
Michael Milken, Chairman, Milken Institute; Chairman, FasterCures / The Center for Accelerating Medical Solutions; co-Founder, Milken Family Foundation
Andrew Rosenfield, Founder, Chairman of the Board, UNext, Inc.
Speakers
Gary Becker, Nobel Laureate, Economic Sciences, 1992; Professor, Economics and Sociology, University of Chicago; FasterCures Board Member
Gary Becker, Nobel Laureate, Economic Sciences, 1992; Professor, Economics and Sociology, University of Chicago; FasterCures Board Member
Philip Marshall, Vice President, Product Strategy, WebMD Health
Robert Quigley, Executive Vice President, Sales and Marketing, UNext Inc
Andrew Rosenfield, Founder, Chairman of the Board, UNext, Inc.
Alan Todd, Chairman and CEO, KnowledgePlanet
9:00 am - 10:15 am
This panel strove to provide greater clarification of the alternative investments and hedge fund industry, as well as to discuss current and future trends, issues and concerns.

The hedge fund industry grew significantly over the past 13 years. In 1990, assets in hedge funds were approximately $39 billion spread across 530 funds. In 2003, the industry grew to assets of $817 billion, now spread across 5,065 funds. The largest portion of the industry is made up of small managers.

The concept of a hedge fund is hard to define and often misunderstood, said panelists. In general, there are four classifications of hedge fund investment strategies: credit-based strategies, equity-based strategies, event-driven strategies and global-macro strategies.

Craig Russell defined the hedge fund industry as being about "unconstrained investing." Right now, around 95 percent of the investments remain in long-only strategies that are linked to benchmarks. Hedge fund strategies work to decouple invested assets from underlying benchmarks with active management techniques.

While the hedge funds industry is often criticized for seeking speculative returns, the panel explained that hedge funds historically have been used by the high net worth investment marketplace, where the primary objective was preservation of capital. Hedge funds employed unconstrained active management strategies that were used to take away volatility, helping investors "stay rich, not get rich." The wealth preservation objectives of hedge funds remain the same today.

Funds that have "blown-up" over the past years are really on the tails of the distribution. In general, the majority of the industry has enjoyed higher returns at lower volatility, though in general, hedge funds do not do as well as long-only strategies in up markets, but tend to preserve wealth in down markets. Another key benefit is that hedge funds give the investor the opportunity to access return in so many different ways — far more numerous than those offered in a traditional investment portfolio.

Alpha, defined as the excess return above market risk, is a controversial topic for the hedge fund industry. There are criticisms that "alpha is a zero sum game." In other words, where some investors are winners, someone must be losing on the other side. At the same time, a counter argument to this point is that often the "losers" in this game do not identify themselves as losers.

Simon Irish went further to explain that alpha would indeed be a zero sum game if there were only a few types of investment options. In contrast, hedge funds help provide mobility in the markets across a varying amount of asset classes. Hedge funds earn alpha, but through an honest method of economic means.

Management and incentive fees are another controversial topic in terms of whether or not they are generally too high. Justin Dew opined that fees are not too high. When viewing fees in relation to risk and return, one can assess that managers are fairly compensated. Russell went on to support this point by emphasizing the need to compare absolute fees to those assessed by traditional long-equity mutual funds. More traditional funds may charge smaller percentage fees, but the asset size of funds is so much greater that effectively the total payout is comparable. Hedge fund managers are, in a sense, punished by scale where a smaller amount of assets must be spread across a smaller number of actively managed investment products.

Patrick Mitchell stressed the importance of not analyzing what the investor is paying in fees on a micro level, but rather viewing the total investment in terms of net return. It is important to look at what was invested, in comparison to what you now have in your pocket. In the industry, there needs to be better information on net return versus absolute return. He felt that this would be a better approach to evaluating hedge fund performance. The investor must decide whether they are an absolute or relative return investor, and then assess total investment performance, including the management fee, accordingly.

Volatility, risks and returns are complex topics in the hedge fund industry. The best benchmark for the industry is the fund of funds industry. Volatility has been compressed slightly over the past couple of years. Hedge funds generally tend to be positively correlated to the equity markets, and slightly negatively correlated to fixed income.

Transparency of managers is a major issue in the industry. There are challenges for managers who want transparency in relation to what underlying hedge fund managers are doing in their portfolios. This is of increasing importance to managers acting as a fiduciary on behalf of their clients; they must know where the exposure lies.

Liquidity was another hot topic. Liquidity can be broken down into two categories: liquidity of the asset class itself, and liquidity of the interest on the investment. Investable index investments help tackle this issue, but then alpha is turned into beta. Managers should be clear on liquidity terms with clients. As Irish put it, "...if you give someone three-year money, they are going to use it."

This increases the importance of really understanding the liquidity issues in underlying investments. Funds such as distressed debt funds will offer compelling returns, but can create challenges for investors given that they require longer investment commitments. In the end, liquidity of the hedge fund must closely match the investor′s objectives.

Liquidity is also the reason that the hedge fund industry will benefit from the influx of institutional investors, who have the capability to invest for the long term. These investors will benefit over others given that they can ride out volatility and benefit from greater opportunities.

Though there is no more risk of fraud in the hedge fund industry than any other industry, and the scale of impact tends to be much smaller, panelists noted that hedge funds get a lot of press in the event of fraudulent acts given the generally high profile of the investors. Not meeting stated objectives, especially with institutional clients, such as pension funds, poses another major risk in hedge fund investing.

In the face of these risks, there are great benefits to diversification, which the panelists discussed at length. Managers who are less sure of an asset class, with 2-3 percent invested in the strategy, should consider a fund of funds investment. Managers more sure of an asset class with a 5-7 percent allocation strategy should consider recruiting a fund of funds series of managers in house. In general, higher returns come with more concentrated portfolios (diversified across less than around 18 managers.) Diversification can be across managers, and also across strategies. Key benefits from diversification come from the fact that returns are cyclical. For this reason, diversification can be critical.

Where is the industry going? All panelists agreed that there is a lot of opportunity. As there are more entrants, there will be a greater need for transparency of managers. There is certainly a "brain drain" of managers from the long-only world on Wall Street into hedge funds, given the higher compensation and greater opportunities. There is also an issue of supply versus demand. There is greater demand for hedge fund capacity, but less of a supply of truly high quality managers. This may create "bumps in the road" in the short term. Also emerging is increased SEC regulation and investment manager registration which panelists felt is a good thing for the hedge fund industry. In general, registered investment advisor (RIA) returns tend to be on par with non-RIA returns. Increased regulation, they said, will help legitimize the industry.

But it is important to note that the industry is dynamic, not static. It runs on the inefficiencies in the market. However, as the number of managers increases and the industry grows, returns may come closer to parity with long-equity returns. There will be increases in funds of funds with different performance expectations.

To buy a DVD of this session, go to our DVD order page.

Moderators
Peter Early, Chief Investment Officer, Big Sky Capital
Speakers
Justin Dew, Director, Portfolio Services Group, Standard & Poor's Portfolio Service
Simon Irish, New Manager Initiatives Team, Man Investments
Patrick Mitchell, Managing Director, Post Advisory Group, LLC; former Chief Investment Officer, California State Teachers' Retirement System (CalSTRS)
Joseph Nicholas, Chairman and CEO, HFR Asset Management, LLC
Craig Russell, Managing Director, Deutsche Bank Absolute Return Strategies
9:00 am - 10:15 am
The real estate industry has gone through immense change over the last 10 years moving from a commodity to more of a balance sheet item. Steven Green set this theme when he stated "[real estate is] treated more as a finance instrument than piece of dirt." Other causes of this transformation to the industry highlighted by the panel include the fact it is cheaper to buy a home than rent now, and the increase in real estate liquidity.

Global political events, such as the potential capture of Osama bin Laden, proved an area of disagreement among the panelists. Steven Green believed that events like Sadam Hussein′s capture did have an effect on the real estate market while Sam Zell countered with the point that real estate was local in nature and job/economic growth was more important. Zell supported his point concerning the local cycle′s effect on real estate by stating "[we′re] almost done with the technological deadbeats," referring to the cycle that occurred in the commercial real estate market caused by the dot.com bubble.

The panel agreed the value of the dollar does affect the real estate market, but the international commercial real estate market is still worse than the U.S. market, so international investors are still acquiring U.S. properties. Zell emphasized the weaknesses in Europe and strength of the U.S. market when he noted, "Europe is going to become Disneyland; the only reason Europe is going to exist is to eat, sleep and visit castles."

The real opportunity in real estate, as noted by the panelists, is debt and the use of real estate as a financial instrument. The real estate market had become very efficient and therefore the economic gains to come from real estate were from the flow of funds around transactions. Tighter spreads and better liquidity have limited profits but disruptions in efficiency were noted by Barry Sternlicht as the time for profits, when the risks and opportunities are recognized. He also illustrated that debt was mispriced and an opportunity for profit as banks have drifted away from real estate lending. Green indicated the ability for profits in real estate transactions when he said "owners don′t know real estate, they know balance sheets."

The panelists all agreed that interest rates would be increasing in the next year, minimally before the November presidential elections, but they also emphasized that inflation is of a major concern. Homeowners would be hurt by rising interest rates and inflation as many families live on the margin of their income. Also of note was the fact that 42 percent of CPI is rent which means the CPI may be understated and that more inflation has occurred than has been reported.

"Every American sees the gas pump" noted Steven Green and this shows inflation. The panel indicated that when American′s see inflation they buy houses. Scott Syphax observed that "in macro, we can no longer afford the lifestyle we are used to," referring to the fact that American′s were financing the equity away in their houses to support their lifestyles.

The panelists concluded by recommending Washington, D.C., Florida, and California as good locations for real estate investment. The overall consensus for the future of real estate was positive.

To buy a DVD of this session, go to our DVD order page.

Moderators
Lewis Feldman, Managing Partner, Pillsbury Winthrop, LLP
Speakers
Steven Green, 12th US Ambassador to the Republic of Singapore; Managing Director, Greenstreet Partners
Barry Sternlicht, Chairman and CEO, Starwood Hotels & Resorts Worldwide, Inc.; President and CEO, Starwood Capital Group
Scott Syphax, President and CEO, Nehemiah Corporation
Sam Zell, Chairman, Equity Group Investments, LLC
9:00 am - 10:15 am
A long technological boom is just beginning, according to panelists. Some of the simple forms of technology are already transforming everyday social life such as email, the Internet, and wireless communication. Although technological progress is inevitable, the role of the U.S. as a leader is not. To maintain leadership, the U.S. must focus on education and making technology simple and reliable for the everyday consumer.

Technological progress should benefit everyone because of what Marc Benioff calls "the fundamental law of the industry," that being that things become lower cost and easier to use. This means that several promising new technologies on the horizon will soon become available. For example, the rapidly falling cost of RFID chips means that Wal-Mart and other major retailers will soon be able to add these chips to virtually all merchandise to keep track of inventory wirelessly and with much greater speed and precision. Thus, technology should bring higher profits to firms and lower-cost goods and services to consumers. Everybody benefits, he said.

With changes like these and the increased complexity of technology, consumers will demand technology that is as simple, ideally, as the old push-button TVs, and that works. Fortunately, the free market is well-equipped to respond to demands for simplicity.

However, consumers will pay a premium for this simplicity, argued Craig McCaw. Apple′s Ipod is a perfect example of consumers′ willingness to pay more for something that′s reliable and easy to use.

Jonathan Miller agreed, adding, "All the consumer wants is for it just to work." Therefore, he argued that technology devices "should always have no instruction manual." If it still has a manual, then the technology is not integrated enough.

Although the panelists were optimistic about the growth prospects and increased simplicity for future technological innovation, some feared that competition from China might eventually to threaten U.S. dominance in the market for high-tech goods and services. The primary challenge to the U.S. is investing sufficient resources into education. China is already producing more PhDs than the U.S. Additionally, China has lower wages, fast innovation, and rapid capital accumulation. All of these characteristics should enable China to climb the technological ladder quickly. If competition erodes U.S. industries′ present comparative advantage in the mid-to-lower rungs of the technological ladder, then the U.S. will lose jobs. These potential job losses could grow into a huge social problem in the future if the U.S. fails to invest enough resources in education, they concluded.

Although technology will mostly be a blessing to society, the explosive pace of change will continue to be disruptive. Firms will rise and fall, consumers will change their behaviors, and countries will gain and lose their competitiveness in response to these changes. Overall though, their assessment of the outcome of this technological boom was positive.

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Moderators
Paul Deninger, Chairman, Broadview, a Jefferies company
Speakers
Marc Benioff, Chairman and CEO, salesforce.com
Dwight Decker, Chairman, Conexant Systems, Inc.
Craig McCaw, Chairman, CEO and President, Eagle River
Jonathan Miller, Chairman and CEO, America Online, Inc.
Joe Schoendorf, Venture Partner, Accel Partners
Danny Shader, CEO, Good Technology, Inc.
9:00 am - 10:15 am
This panel discussion explored how the growing population of English Language Learners has shifted classroom priorities. ESL and at-risk students who lag behind their peers in language acquisition and reading require new classroom solutions to achieve early literacy and future academic success. This discussion examined how delivering differentiated instruction, effective classroom management and specialized classroom curriculum can meet the special needs of these students.
Moderators
Robert Lally, President, LeapFrog SchoolHouse
Speakers
Alan Bersin, Superintendent of Public Education, San Diego City Schools
Rita Caldera, Director, Los Angeles Unified School District, Language Acquisition Branch
Carlos Garcia, Superintendent, Clark County School District, Nevada
Robert Lally, President, LeapFrog SchoolHouse
Ron Unz, Chairman, English for the Children
10:25 am - 11:45 am
Audience fragmentation, morality and piracy topped the agenda for the lively and spirited discussion of media and entertainment industry leaders. The group delved into many of the issues, opportunities and challenges that face the industry and addressed some of its greatest concerns.

With the Nielson group reporting a drop-off in viewership of 18—34 year olds and increased competition from new forms of entertainment, it might be assumed that traditional broadcast television networks might be facing eminent doom. Not so, said the panel. Peter Chernin noted that "it′s a little simplistic to write off network television" and Summer Redstone concurred saying that "the only way of reaching all of the people in the nation is through network television."

Although there has been a steady decline in the ratings for the networks, much of that erosion is being captured by affiliated cable channels. Likewise, as movie theater attendance is stagnant, revenues from DVD/home video sales continue to drive motion picture revenues higher. Additionally, media companies are becoming more diversified in areas such as video games to further capture the fragmenting audience.

Contending with the current election year political backlash of decency and community standards, the panel took the issue of morality in the media seriously but tried to keep the issue in perspective. "There′s a lot of overreaction going on" said Chernin. Special interests groups are using technology to magnify their opinions and are clearly not a representation of the average viewer. As for the role of the FCC and the need for further regulations, Sumner Redstone said that "there is a great danger when the government interferes with anything regarding the 1st amendment." To illustrate that the free market was the best regulator for media content, Redstone also noted that "the consumer is king" and "as long as (the media) appeals to the consumer, our companies will be successful."

As for the issue of piracy, the panel acknowledged the potential threat of Internet piracy but was quick to note that the music industry (the one industry most hurt by illegal downloading) was largely at fault for the losses they endured. "Piracy" according to Chernin, "exists where consumers feel that the goods are too expensive and not conveniently available." For years, if consumers wanted to download music they had to do so illegally, as no legal option existed. With that in mind, the panel illustrated how movies, video games and other forms of entertainment are now and would continue to be available in a number of different ways and at different price points to combat the threat to Internet piracy.

Overall the panel was quite optimistic on the future of media and entertainment and looked for the opportunities to greatly rise above the challenges. Robert Kotick concluded the panel by noting his company′s intention to grow organically and not acquire any of his fellow panelist′s companies...yet.

To buy a DVD of this session, go to our DVD order page.

Moderators
Roy Furman, Vice Chairman, Jefferies & Company
Speakers
Peter Chernin, President and Chief Operating Officer, News Corporation; Chairman and CEO, Fox Group
Robert Kotick, Chairman and CEO, Activision, Inc.
Michael Lynton, Chairman and CEO, Sony Pictures Entertainment
Sumner Redstone, Chairman and CEO, Viacom
10:25 am - 11:45 am
Market gains, real estate appreciation, currency fluctuations and the globalized economy all raise the question of how to protect your capital in the global economy.

Moderator Lawrence Kudlow started off the discussion by informing the panel of current market conditions and asking where the market and economy are going in general. All panelists cited interest rates as a key indicator of how the market would do.

Steve Shapiro stated that the single biggest risk to the high yield bond market is "increased interest rates." Much of the concern was highlighted by banks′ exposure to increased interest rates.

Myron Scholes pointed out that, "The banking sector is prone to losing earnings and capital if the interest rate curve should flatten." The exposure is to bank mortgage portfolios because of the tendency to borrow short and lend long. There was a consensus among the panel that rising interest rates were not a question of if, but when. Myron Scholes commented that some believe interest rates would rise in 2005 while others believed it would happen in July 2004. Kudlow closed the dialogue by chiming in that he would raise rates today.

Kudlow then shifted the discussion to what each panelist thought was a smart place to be investing and protecting capital in today′s economic environment. Scott Klein said, "High Yield investments will perform well as a fixed income product."

Shapiro noted that even though his expertise is in high-yield debt issues, his company found that "media stocks are interesting in the U.S. including Viacom and Liberty."

Frank Husic could not nail down any one particular investment that he considered a "save all." However he did allude that he always looks for opportunity using price and earning ratios.

Always letting his political views known, Kudlow asked how the panel felt about the upcoming presidential election and its affect on the market in general. He also cited that two-thirds of voters own stocks. Shapiro and Klein said that the presidential election would not affect their respective companies because they choose investments based on, "bottom-up fundamentals" of a security, not on political dynamics. Husic did add, "Change is negative," referring to the presidential election. He clarified that the uncertainty of change makes markets shaky, not necessarily who it changed to.

To buy a DVD of this session, go to our DVD order page.

Moderators
Lawrence Kudlow, CEO, Kudlow & Company; Co-host, "Kudlow & Cramer," CNBC
Speakers
Frank Husic, Chief Investment Officer and Managing Partner, Husic Capital Management
Scott Klein, Managing Director, Post Advisory Group, LLC
Myron Scholes, Nobel Laureate, Economic Sciences, 1997; Managing Partner, Oak Hill Capital Management
Steve Shapiro, Founding Partner, Senior Portfolio Manager/Research Analyst, GoldenTree Asset Management, LP
10:25 am - 11:45 am
Is Japan poised to awaken from its economic slumber of the last decade? The answer is decidedly mixed, but there is increasing reason to hope that the Japanese economy will begin a long awaited rebound. The key question posed by Tomoo Nishikawa posed the seminal question of the discussion: "Will I be able to write a book in 10 years titled Japan as Number One?′"

The panelists agreed that shifts in Japan′s political structure will re-awaken the entrepreneurial spirit of the country. The political change is being brought about by Japanese Prime Minister Junichiro Koizumi. Koizumi has implemented a series of political reforms aimed at reducing the strength of key special interest groups like agricultural, postal workers and the construction industry. All panelists agreed with Koizumi′s changes, but Nishikawa was not sure whether the Prime Minister, a third generation politician, had the political will to make all of the required changes. While Koizumi′s reforms are not yet complete, Ellis Krauss said, "The glass is half full and half empty."

These political changes are resulting in changing laws, regulatory environments and social norms. For example, the businesses can now seek a letter ruling from regulatory bodies explaining specific legal questions thereby relieving businesses of potential liability under ambiguous laws. The Japanese Diet also strengthened patent laws.

These changes have had a direct impact on the business environment in Japan. Unionism has decreased steadily since 1974. Kappei Morishita said that in some cases, Japanese banks are being more aggressive than American banks in lending money to entertainment properties.

Naoki Tanaka pointed out that Japanese entrepreneurs are increasing research and developing spending to take advantage of increased patent protection.

These changes are prompting some significant changes in the type of businesses that Japan thrives on. Historically, Japan was a manufacturing economy. However, much of that manufacturing is now outsourced to China. In its stead, Japan is steadily developing its intellectual property based businesses. For example, Japan is a dominant player in Anime, an animated television format, and video games. Total Japanese cultural exports have grown 300 percent in the last 10 years.

Panelists also focused on the role of China in Japan′s economic development. Journalists have focused on China′s impressive growth. However, as Krauss pointed out, two-thirds of Asia′s total economic output is from Japan. Even if China continues its extraordinary growth, Japan will still remain a powerful force.

Regardless, as Krauss said, while businessman and politicians continue to focus on China, Japan looks poised to break free from a decade of economic stagnation; Americans "ignore Japan only at their own risk."

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Moderators
Rob Koepp, Research Fellow, Milken Institute
Speakers
Ellis Krauss, Professor of Japanese Politics and Policymaking, University of California, San Diego
Kappei Morishita, General Manager, Vivendi Universal Liaison Office of Matsushita Electric (Panasonic)
Tomoo Nishikawa, Managing Partner, Nishikawa & Partners in association with Sidley Austin Brown & Wood
Naoki Tanaka, President, The 21st Century Public Policy Institute
10:25 am - 11:45 am
Carlos Garcia opened up his comments by stating that there is "No such thing as the good old days" concerning public education in America. More kids are currently being educated than ever before and getting into college is becoming increasingly competitive. The public school system has been one of the primary sources of investment in human capital for the United States. There is a consensus that this investment in America′s children is of the utmost importance for the future of our country. Unfortunately, the American public school system faces several challenges.

One pressing issue facing schools currently is that the most inexperienced teachers are concentrated in the worst performing schools. The turnover rate at these schools is very high and the majority of teachers do not last more than five years. It is unreasonable, as Allen Bersin pointed out, to "Ask our newbies to tackle the most difficult jobs."

Another issue is addressing and increasing accountability of teachers, principals and superintendents. One way of achieving this is through increased testing that does not affect customer service. These tests should place a minimal amount of strain on teachers and students, but provide a standard for schools to strive for. It can no longer be acceptable for students to reach high school without the ability to read and write. The function of increased testing is to catch these failings early on and address them while they are still fixable. Testing will also help teachers and schools as a whole, cater to the specific needs of their students.

Everyone on the panel agreed that increased early education would and has shown enormous returns. Setting up quality educational preschool and kindergartens will have a tremendous effect on decreasing the achievement gap America has with other developed countries. Policy makers need to ensure that a substantial and efficient amount of funds are directed towards pre-school and kindergarten because these are the years that produce the highest rates of return.

Teachers also need to be held to a higher standard. Credential programs need to continue to be improved upon in order to ensure that schools are receiving the highest caliber of teachers possible. Feedback and testing results need to be utilized by teachers as a means of pointing out weakness and strengths in their teaching methods.

Another consensus was that not all the blame could be placed on the teachers and the system. Parents and communities need to become involved in a very serious way with their children′s education, panelists said. Schools that are successful have shown a high parent participation rate. Currently, restrictions from teachers unions limit the amount of parent involvement in schools. The panelists agreed that these limitations had to be lifted in order for parent involvement to increase.

The challenges that face America′s public school system cannot be solved by one overarching solution. There must be a consolidated effort by teachers, parents, administrators, and policy makers in order to fully eliminate the achievement gap.

To buy a DVD of this session, go to our DVD order page.

Moderators
Barry Munitz, President and CEO, The J. Paul Getty Trust
Speakers
Alan Bersin, Superintendent of Public Education, San Diego City Schools
Carlos Garcia, Superintendent, Clark County School District, Nevada
David W. Gordon, Superintendent, Elk Grove Unified School District
Richard Riordan, Secretary of Education, State of California; Former Mayor, City of Los Angeles
Roy Romer, Superintendent, Los Angeles Unified School District
11:45 am - 1:45 pm
The panel discussion with Nobel Laureates in Economics is always a highlight of the Milken Global Conference. This year′s event proved no different as four Nobel laureates—Gary Becker (1992), Daniel Kahneman (2002), Myron Scholes (1997), and A. Michael Spence (2001)—tackled a range of subjects ranging from lifestyles and education to developing countries and balance trade, with Michael Milken as moderator.

Myron Scholes started the session off by defending his famous Black-Scholes model for valuing options. A previous session in the day had panelists disputing the value of the model. Scholes insisted options should be expensed at the time of granting and that companies can′t "give something with no way to value." The recognition of the nature of the contract between the company and employee basically sets a 90-day renewable exercise period that allows valuation of essentially undated options. The affect of expensing options will be better structured incentive systems. Scholes also noted that Japan and Europe already expense options.

The increasing level of obesity in America led Michael Milken to pose the question of whether it is rational or irrational behavior that Americans eat as much as they do.

"Once the food is in front of us, we really don′t have control," observed Daniel Kahneman. Satiety is not immediate, he added, so we do not get the message that we are full until sometime after we have finished what is on the plate.

Gary Becker outlined three causes of obesity including the decreased cost of junk food, the sedentary nature of teenagers, and medical progress in resolving problems such as high cholesterol and other conditions.

Michael Spence expanded on this last cause by referring to "moral hazard," the phenomenon of people engaging in higher-risk behavior when there is some form of insurance to protect them. Kahneman concurred stating, "When fear is reduced, then the incidence increases."

Education was a hotly debated topic as the panelists disagreed as to a cause for the difficulties with the K-12 environment. Some panelists blamed lack of competition while others blamed issues of fund distribution that lacked a good system of evaluation and peer review, or "meritocracy" as Spence put it. Higher education benefited from both competition and efficient disbursement of funds, which has created the best system in the world. Becker noted that the monopoly of teachers unions limited the ability to effectively evaluate teachers while Kahneman reflected on the low status of teachers in the U.S.

The challenge of the division between developing and developed countries was addressed by the panel with Michael Spence stating that the developed world is "preoccupied with terrorism." All the panelists agreed poverty was the most important problem facing the world and that it was the responsibility of economists to find solutions for it. Becker illustrated that aid generally was not a successful solution to helping countries, but internal reform was the solution as proved by the recent self-sustained growth of China and India that occurred after reforms, in contrast to the lack of reforms in Pakistan and its difficulties. Scholes encouraged reduced role of governments, saying, "less government, less corruption."

Michael Milken posed the issue of balance of trade and the trade deficit noting that 80-90 percent of the world′s value is from human capital. The panelists all agreed that restrictions on human capital movement were more important than the trade deficit, noting that the U.S. was built on immigration. Becker outlined several issues with regard human capital including that the level for legal immigration is too tight and a more discriminating policy for immigration is needed. The delays for foreign students trying to get access to the U.S. was discouraging, therefore leading some to students to go to schools in Europe.

"Preaching doesn′t help much [to change behavior]" was the comment from Kahneman regarding the current behavior for oil consumption and conservation. All panelists agreed price can change behavior. Spence outlined how oil and gas should reflect the price of externalities such as global warming and security. Price could also encourage diversification of energy sources and use of alternative energy sources. It was noted that patriotic and emotional appeals don′t work and the fear of running out was not a real reason for conservation.

The session concluded with each panelist listing a country or region in which they were interested: Michael Spence, Argentina; Myron Scholes, China and Japan; Daniel Kahneman, Western Europe; and Gary Becker, the Muslim countries of the Middle East and Africa.

To buy a DVD of this session, go to our DVD order page.

Moderators
Michael Milken, Chairman, Milken Institute; Chairman, FasterCures / The Center for Accelerating Medical Solutions; co-Founder, Milken Family Foundation
Speakers
Gary Becker, Nobel Laureate, Economic Sciences, 1992; Professor, Economics and Sociology, University of Chicago; FasterCures Board Member
Daniel Kahneman, Nobel Laureate, Economics, 2002; Eugene Higgins Professor of Psychology, Princeton University, and Professor of Public Affairs, Woodrow Wilson School
Myron Scholes, Nobel Laureate, Economic Sciences, 1997; Managing Partner, Oak Hill Capital Management
A. Michael Spence, Nobel Laureate, Economics, 2001; Philip H. Knight Professor, Emeritus, and former Dean of the Graduate School of Business, Stanford University
2:00 pm - 3:15 pm
"Financial innovations aren′t easy," stated Milken Institute Chairman Michael Milken, but persistence in designing, patenting, and securitizing these instruments could offer substantial benefits to society by increasing the number of risks that can be insured against. Financial innovations help realize gains in two key areas: first, by lowering costs and volatility; and second, by finding new solutions to meet the changing needs of the world. Great opportunities lie ahead in the evolution of financial instruments because the process of evolution has only just begun.

Milken identified investment in education and human capital as a huge and important opportunity for future financial innovations. Current financing looks at the balance sheet and requires an understanding of credit, but Milken argues that this leads to "financing the past — not the future." He said balance sheets are "wrong" because they don′t account for largest and most important asset: human capital. Milken wants to see new financing for learning and human capital to provide encouragement for further education. Simply issuing credit cards to college students is not enough.

New financial innovations can also be used to solve environmental problems. Richard Sandor, CEO of the Chicago Climate Exchange, said, "We need to find market-based incentives to take care of the world."

Carbon trading permits are an example of financial instruments that have been shown to work. Anybody who reduces carbon emissions could sell the unused permit to someone else. As long as the marginal cost of reduction is less than the permit price, emissions reductions serve as a potential source of profits. This case proves that financial innovations can solve environmental programs such as carbon emissions at lower cost than command-and-control environmental policies. To make these marketable permits effective, transaction costs must be kept low and property rights must be clearly defined. Thus, the success of any new exchange hinges largely on the security of patents for the exchange′s underlying financial instruments.

Financial innovations can alleviate social problems such as housing and insurance costs, but also face challenges. Derivatives and other new financial instruments have historically enabled sub-prime borrowers to gain access to the mortgage market so that they can afford homes. Yet current policies are making it difficult to lend to people with high credit risk because the new legislation, which effectively declares sub-prime borrowers a bad credit risk.

Lewis Ranieri, Chairman of Hyperion Partners, worried that re-regulation of innovative financial instruments will make it make it uneconomical for banks do business with the poor. Consumers with better credit will get better price on credit, and those with worse credit will get higher prices as a result of this re-regulation. Therefore, government subsidies for housing will go to those who need it least and as the re-regulation "alienates" those people who the regulations were initially supposed to protect. These sub-prime borrowers make up a huge portion of the market, so Lewis called for lenders and policies to look beyond risk and profit to include social concerns. Risk aversion should not be used as an excuse to shut sub-prime borrowers entirely out of the housing market because such inequality would be bad for society. It does not make sense to subsidize credit for the people who need it least and restrict it for those who need it most.

When financial innovations threaten companies that rely on the existing financial order, or perhaps the financial system itself, the ensuing regulation can potentially hinder the development of these new financial innovations. One case is the criticism of derivatives. Sandor argued that this criticism of derivatives has been undue: they have been effective tool in allocating risk cost-effectively to help make the most recent recession mild and brief. Yet insurance companies feel threatened by derivatives because they can allocate risk more cost-effectively. Perhaps, Warren Buffet′s stake in one of the largest insurance companies explains why he called derivatives "time bombs."

Ranieri disagreed claiming that highly engineered financial instruments are the "nuclear waste" of the financial industry. He pointed out that many of these financial innovations are extremely new to the market and have not yet been tested under periods of serious cyclical distress. The economy will have to wait and see whether the current visible benefits of these instruments outweigh the potential future costs.

To buy a DVD of this session, go to our DVD order page.

Moderators
Glenn Yago, Director, Capital Studies, Milken Institute
Speakers
Michael Milken, Chairman, Milken Institute; Chairman, FasterCures / The Center for Accelerating Medical Solutions; co-Founder, Milken Family Foundation
Mark Opel, Principal, American Capital
Lewis Ranieri, Chairman, Hyperion Partners
Richard Sandor, Chairman and CEO, Chicago Climate Exchange, Inc.; Senior Fellow, Milken Institute
Glenn Stewart, Managing Director and Head of Loan Syndicate, Banc of America Securities LLC
2:00 pm - 3:15 pm
The focus of this panel moderated by Betsy Zeidman of the Milken Institute was whether emerging domestic markets (EDMs) are new sources of prosperity. EDMs are defined as people, places or businesses that have difficulties in accessing capital and include ethnic-owned businesses, women-owned businesses, and companies serving low-income or ethnic consumers. One segment of this market, the ethnic consumer market, is the 6th largest economy in the world. The question the panel sought to answer was why this huge market experiences difficulties obtaining capital, and how best to facilitate capital flows into this market.

Daniel Villanueva commented specifically on the Latino market noting that many new entrants into the Latino Market lack capital. The various panelists discussed strategies their companies employ to move funds into these markets. Carlton Jenkins of Yucaipa pointed out that the rate of returns is not the only issue that matters; the impact of investment on the quality of life of the community and job creation are also very important. His company helps investors invest in these markets, and by doing so, investors not only obtain great returns, the emerging markets also have access to capital.

Richard Roberts and Real Desrochers stressed that there are tremendous opportunities in EDMs. This view was endorsed by Sarah Bernstein who noted that there are great potential benefits and returns to be had if investors enter early and work diligently. However, it is very important that portfolios invested in these markets are well allocated, which requires that fund managers have a good understanding of the emerging domestic markets′ needs.

The discussion was concluded with a positive outlook for these emerging domestic markets. The panelists believed that there are great opportunities for EDMs, especially in the southwestern part of the U.S. Meanwhile, they emphasized that portfolio selection and the role of emerging market managers are very important to realize the great returns.

To buy a DVD of this session, go to our DVD order page.

Moderators
Betsy Zeidman, Director, Milken Institute Center for Emerging Domestic Markets
Betsy Zeidman, Director, Milken Institute Center for Emerging Domestic Markets
Betsy Zeidman, Director, Milken Institute Center for Emerging Domestic Markets
Speakers
Sarah Bernstein, Principal, Pension Consulting Alliance, Inc.
Sarah Bernstein, Principal, Pension Consulting Alliance, Inc.
Real Desrochers, Director of Alternative Investments, California State Teachers' Retirement System (CalSTRS)
Real Desrochers, Director of Alternative Investments, California State Teachers' Retirement System (CalSTRS)
Real Desrochers, Director of Alternative Investments, California State Teachers' Retirement System (CalSTRS)
Carlton Jenkins, Partner, Yucaipa Corporate Initiatives Fund
Carlton Jenkins, Partner, Yucaipa Corporate Initiatives Fund
Carlton Jenkins, Partner, Yucaipa Corporate Initiatives Fund
Richard Roberts, Managing Director, Urban Investment Group, Goldman Sachs
Richard Roberts, Managing Director, Urban Investment Group, Goldman Sachs
Richard Roberts, Managing Director, Urban Investment Group, Goldman Sachs
Daniel Villanueva, Jr., Managing Partner, Fontis Capital
2:00 pm - 3:15 pm
Richard Jacobs opened this panel with a short overview of the Russian economy and its post crisis performance. The Russian economy, he noted, was wholly different from the pre-crisis economy of 19 years ago. The ruble has since stabilized against the dollar, the economy had returned to growth, and official reserves have risen impressively. Having painted this fairly positive picture, Jacobs turned to panelist, H. Howard Cooper.

Cooper, Founder and Chairman of Teton Petroleum, the only U.S. public company with all of its assets and operations in Russia, began by providing a short introduction to his company. Operating in the heart of the Tyumen "oil patch," it runs a number of wells in three oil fields on which it has 25 year renewable leases. He moved on to contend the country′s 1998 default and currency devaluation served to force Russian entrepreneurs and Russian firms to stop relying on politically motivated foreign capital and instead "stand on their own." The result was not a disaster, but rather the first real growth since 1916. When Russians took over control of their firms after foreign investors abandoned them, the result was that they ran them like businesses for the first time, and growth and productivity rose.

Russia′s economy has benefited, Cooper noted, from rising oil prices and Putin′s tax reforms and was on the way to creating a middle class. Unlike many other oil rich countries where capital flight is occurring, Russians were returning to the country; and bringing their money back with them. Key to Russia′s success was its well educated people and its high degree of stability, especially compared with oil producers in Asia, the Middle East and South America.

Next, Ruben Vardanian gave an overview of the opportunities and challenges facing Russia and Russian businesses, including the positive and negative features of its economic landscape. The Putin presidency brought significant stability to a country that was stifled by the uncertainty of the Yeltsin era, he said. However, Putin now faces a number of choices. According to Vardanian, he could become a strong anti-reform leader that is, an "Ivan the Terrible" negative reform leader, a redistributionist Robin Hood, or a Julius Caesar, i.e., a strong reform-minded leader. He noted Russia was at an important cross-roads. While Russian businesses were hamstrung to some extent by a shortage of capital, relying heavily on retained earnings, the main problem was the continued existence of a Soviet-era socialist mindset and this would take time to change.

Vardanian was followed by Michael Intriligator. On the upside, Intriligator noted that while the Russian economy was growing strongly and its equity market was booming, on the downside, there remains substantial economic inequality among Russia′s regions. While the oil-rich region of Tyumen and the regions of St. Petersburg and Moscow City are relatively wealthy, much of the remainder of the country remains marred by low levels of growth and income. What Russia needs, he argued, was more structural reform to allow the flourishing of a market economy and the growth of a human-capital intensive export sector. The Russian economy requires stronger economic infrastructure and institutions such as banks, a reasonably efficient legal system and an accounting system. It also needs competition, he said. Basic economics, Intriligator argued, teaches us that competition is needed for a free market system to work. Russia, he believes, with its current success, is able to make these necessary reforms.

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Moderators
Richard Jacobs, Founder, RDJ Strategic Advisors
Speakers
H. Howard Cooper, Chairman and Founder, Teton Petroleum Company
Michael Intriligator, Senior Fellow, Milken Institute; Professor of Economics, Political Science and Policy Studies, University of California, Los Angeles
Ruben Vardanian, President and CEO, Troika Dialog
2:00 pm - 3:15 pm
With so much volatility in its past, no one wants to be the first to assert firm predictions about the economic future of Latin America. Recent trends have indicated positive growth and progress in the region, but as Abe Lowenthal explained "...it is hard to separate the froth from the lager." It is easy to be ambivalent about Latin America′s future. There has been tremendous progress in some ways and decline in others. What is for certain is that significant institutional reform must take place in order for the region to truly grow.

When looking at Latin America versus other economies, there has been, on average, lower and more volatile growth than other major world regions since 1980. The good news is that in 2004 for the first time in a long time, all major Latin American economies are showing GDP growth, among other economic factors. In Argentina, a nation hard hit by economic crisis, the intended policies of the Kirchner administration have brought about a trend of GDP growth (8.7 percent last year) increased private deposits, the creation of two million jobs, large exports of intermediate goods, and a fiscal surplus a the central bank. The question remains as to whether this growth is here to stay.

However, in the words of Liliana Rojas-Juarez, the future of Latin America is "...indeed predictable." There is a continuous boom bust cycle that has been consistent over past years. While the region is experiencing a boom now, the move to a bust will be prevented only when governments stop borrowing more during "the good times." They should use positive economic performance times as an opportunity to create insurance policies and reduce debt, borrowing only in their own currencies. Some countries, such as Chile, are doing just that in the current positive GDP growth trend.

One of the most pressing issues for the region is social and economic inequality, which is a greater issue in Latin America than it is in any of the other developing world countries and developed Asia. This makes it difficult for countries to implement fiscal policy and provide public goods. The result is a return to favor for more populist government regimes, restricting the progress of democracy in the region. Mexico provides a great example of this, where the true effectiveness of the current democratic government is limited by a continuously divided congress.

Additionally, Latin America is losing its technological and economic advantages to Asian countries. Exports tend to be much less value-added goods, which along with the existence of natural resources, reduces the incentive for education and technological progress. Technology in terms of personal computer use lags behind developed Asia.

In terms of economic reform, Chile scores the highest in categories such as privatization, deregulation, basic needs, infrastructure, etc., with Mexico and Brazil following, the lowest being Venezuela. Argentina is doing everything it could possibly do to move out of crisis. Still, the region carries moderate to high country risk. For instance, three of the largest commercial banks hold 50 percent of all assets. This is troubling as Latin America does not have a capital market system. Most debt is government debt, and little financing is available to the private sector. Without financing available to firms, progress is inordinately difficult.

Continued growth is indeed possible in Latin America, but major structural reform in the region is required for it to get ahead. In some ways, Latin America is more prosperous than other developing countries, but it is losing this advantage, along with technological advantages to Asian nations. The worst income distribution and social issues plague that region′s nations, preventing true political and economic progress. While growth is positive over recent months, Latin America "obscures more than it reveals." Thus, it is hard to accurately predict where the region will go.

Moderators
Hilton Root, Senior Fellow, Milken Institute; Freeman Fellow and Professor of Economics, Pitzer College
Speakers
José Octavio Bordón, Ambassador of the Argentine Republic to the U.S.
Denise Dresser, Professor of Political Science, Instituto Tecnolgico Autnomo de Mxico
Abraham Lowenthal, President, Pacific Council on International Policy
Liliana Rojas-Suarez, Senior Fellow, Center for Global Development
2:00 pm - 3:15 pm
As the market finds new ways to distribute products and content to consumers, it is getting more difficult to protect the intellectual property (IP) of content providers. Illegal piracy of IP costs the U.S. economy nearly one-quarter of a trillion dollars per year. Illegal DVD creation is a $1 billion industry and the music industry is in critical condition due to illegal downloading. The question facing business and industry today is how to protect their IP while embracing new technology and not alienating their customers.

The first line of defense in protecting IP is through policing and prosecution. This has recently been seen in the music industry where thousands of subpoenas were issued to illegal music downloads. Jeff Shell opined that the "Music industry would have disappeared had it not taken legal action."

Another way of protecting IP is to create new technologies to halt illegal piracy. Morgan Chu illustrated this point by noting that "Unless there are barriers that make replicating inconvenient, people will continue to do it."

Yair Landau agreed, stating that "Movies and games have been sheltered thus far because of the high bandwidth required to download them."

Robert Kotick believes that his industry should embrace technologies such as blue ray′ lasers that would increase megabytes and make it even more difficult to download.

The second line of defense is to get ahead of the ball and feed consumer demand as a way to deter them from seeking illegal content. Thus, companies must find a way for their customers to fairly use IP. The panel agreed that seeking free market incentives to curb illegal IP piracy would be the best solution in the long run. Chu offered that "The smartest approach is to make it easier for the customer" to access legal IP. His point was echoed by Landau who noted that today "There is no major studio that does not offer their content online."

All of the panelists agree that the issue is not easily solved. As the digital revolution continues, protecting IP will become more difficult, but the opportunities created by advances in technology certainly outweigh their negative effects. The key is to find the best way to serve the consumer while rewarding those who create IP and protect their creations from piracy.

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Moderators
Dennis Kneale, Managing Editor, Forbes magazine
Speakers
Morgan Chu, Partner, Irell & Manella, LLP
Robert Kotick, Chairman and CEO, Activision, Inc.
Yair Landau, Vice Chairman, Sony Pictures Entertainment; President, Sony Pictures Digital
Jeff Shell, CEO, Gemstar/TV Guide
2:00 pm - 3:15 pm
This roundtable discussion looked at how choice and competition can improve our schools.
Moderators
Lewis Solmon, Executive Vice President, Education; Director, Teacher Advancement Program, Milken Family Foundation
Speakers
Russlynn Ali, Director, The Education Trust - West
Jim Konantz, Head of School, California Virtual Academy
Caprice Young, President and CEO, California Charter Schools Association
Joseph Zeronian, Director, School Business Management Certificate Program, University of Southern California
2:00 pm - 5:00 pm
Moderators
Robert Lally, President, LeapFrog SchoolHouse
Speakers
Christopher Bower, CEO and Founder, Pacific Corporate Group
Alex Cook, Managing Director, Offit Hall Capital Management LLC
Peter Early, Chief Investment Officer, Big Sky Capital
Steven Ezzes, Managing Director, K2 Advisors, LLC
James McCaughan, CEO, Principal Global Investors, LLC
Patrick Mitchell, Managing Director, Post Advisory Group, LLC; former Chief Investment Officer, California State Teachers' Retirement System (CalSTRS)
Suzanne Murphy, Managing Director, Acorn Partners, LP
Michael Napoli, Jr., Senior Managing Director, Wilshire Associates, Inc.
Lawrence Post, Chairman and Chief Investment Officer, Post Advisory Group, LLC
Lorraine Spurge, Managing Director, Post Advisory Group, LLC
Ron Unz, Chairman, English for the Children
Glenn Yago, Director, Capital Studies, Milken Institute
3:30 pm - 4:30 pm
Panelists focused on California, which leads the nation in air and water quality standards, zero emission vehicles and other environmental initiatives. They asked such questions as: Does California residents' demand for more sustainable energy sources and transportation signal an enormous opportunity or another crisis waiting to happen? Is there a knowledge pool waiting to be tapped that will mean an explosion of investment and jobs or does the gathering mass of media attention mean another bubble waiting to burst? What role will technology play? What are the priorities for energy in the public and private sectors? Does the international landscape help or hurt? And what reforms are needed in our energy regulatatory structure to help push these alternative energy sources forward?

Moderators
Lee Bailey, Partner, Rustic Canyon Partners; former White House Director for International Science and Technology Commercialization Programs
Speakers
William Anderson, CEO, Co-Founder Catalytic Solutions, Inc.
Charles Cicchetti, co-founding member, Pacific Economics Group; Jeffrey J. Miller Professor of Government, Business, and the Economy, University of Southern California
Laura Doll, CEO, California Power Authority
Howard Golub, Partner, Nixon Peabody LLP
3:30 pm - 4:30 pm
Some studies say that children do better in school, are more likely to stay in school, and tend to have a steady job when they get older if they attended preschool. Most of this research, however, has focused on poor children. This panel asked such questions as: Should the federal government, which now pays for such program as Head Start, invest more in preschool education, or is this an area best left to states, which have become much more active in financing programs for preschoolers? And how much investment is enough for early childhood education?
Moderators
Robert Lally, President, LeapFrog SchoolHouse
Speakers
W. Steven Barnett, Director, National Institute for Early Education Research
Craig Ramey, Director, Center for Health and Education, Georgetown University
Nancy Riordan, Co-Chair, First 5 LA
Dennis Vicars, Regional Director of the North Valley; Policy Liaison, Professional Association for Childhood Education Alternative Payment Program
3:30 pm - 4:30 pm
The NBA players and hip-hop artists addressed business opportunities in inner-city communities, and the general divide between businesses and the communities they aim to serve.

The panel shared that doing business in inner cities is not as simple as renting property and opening shop in the neighborhood but rather, doing business in the inner-city successfully remains a function of trust and closeness. In other words, said Norm Nixon, you have to have a direct link to the community; it must trust you in order to embrace your presence.

The notion of territory is very much alive in inner cities. Such cultural lynchpins may be opportunities or deterrents, depending upon which side of the divide a potential business stands. Doing business in the inner-city remains a grassroots endeavor, panelists said. You must find the delicate balance of making your idea a valuable proposition to yourself, the local political contingent, and the community itself. If the community perceives a business to be one that is taking money out of the community, it will not do well.

The panel went on to discuss the necessity of ambassadors′ to the inner-city. Many athletes are forming consortiums that enable them to brainstorm business propositions amongst themselves even while they are still playing, said Charles Smith. Smith, a former NBA player and now an active member of the business community, described many of the opportunities available to players and entertainers that are interested in developing business careers after their playing days are behind them. Nixon, who became an agent and negotiated contracts for players, concurred.

Chivon Dean shared her knowledge about the power and value of music to corporate America. Dean described the influence that the brief mention of a particular brand name in a hip-hop song has on sales for that company. "DMX says Versace in a rap song and the clothes fly off the shelves," said Dean. There is a real opportunity for partnership there if both sides are willing to be open about it, said Dean.

Theo Ratliff, a current NBA player, shared his thoughts about the importance of athletes becoming active participants in their communities. Ratliff acknowledged that at 31, he is a veteran of the league and thus thankful that organizations pioneered by former players like Nixon and Smith are available to guide retiring athletes into active participation in business.

To buy a DVD of this session, go to our DVD order page.

Moderators
Reuben McDaniel, III, President and CEO, Jackson Securities
Speakers
Chivon Dean, President / CEO, Ruff Ryders Records
Norman Nixon, former member, Los Angeles Lakers; President, Nixon and Associates
Theo Ratliff, Member, Portland Trailblazers
Charles D. Smith Jr., Former member, New York Knicks
3:35 pm - 5:30 pm
Israel′s economic and political problems collide forcefully with the very constant reality of terrorism. Boaz Ganor explained that the threat Israel faces is unique in both its variety and its quantity. Yet, he stresses that Palestinian terrorism is and has been avoidable if interested parties employed proper strategies.

According to Uzi Arad, successful terrorism results from the coordination of motivation and operational capabilities. Over the years, Israel failed to reduce motivation and inhibit operational capabilities by following a policy of "strategic pragmatism," he said. "Strategic pragmatism" surfaces in Israel′s willingness to retrench from territories to buy peace and time. But, by making such territorial concessions to militant groups, Israel may have effectively fanned the fire. This is the possibility Boaz Ganor speaks to when he accuses Arafat of refusing to diffuse the terrorist network in Israel for lack of incentive. He implies that in order to effectively combat terrorism, Israel must reverse the incentives now in play.

Geography also arises to hinder Israel. Israel′s geographical orientation not only makes this country accessible to its enemies but, also, it impedes economic growth. "It is good to be in the Holy Land, but the neighborhood is very bad," quipped Arad. Among Israel′s neighbors there is not a single democratic regime, economic backwardness, nuclear proliferation and population growth. Such regional tendencies conflict with the nation′s political and economic objectives. For this reason, Israel finds itself in the precarious position of economically guiding a region hostile to economic reform.

Yet, terrorism and geography do not comprise the entirety of Israel′s difficulties, nor is it fair to locate the source of the nation′s shortcomings in these two realities. Recent years have seen a shift in Israel′s economy from growth to degeneration, from high levels of equality to increasing inequality, from impressive figures on unemployment to 11 percent unemployment.

Politically, Uriel Reichman emphasized that the nation lacks strong leadership to address all of the issues mentioned above. The average government last only 22 months of the four year term. As the situation stands today, fewer than 70 percent of the decisions made by the Israeli government are actually carried out. Reichman argues that Israel can and should immediately address these issues.

Internal reform can do much to reverse the nation′s economic slump and political deficiencies. To restore economic growth, Israel should pursue a curriculum of fiscal consolidation, investment in infrastructure, educational system reform and labor market reform, according to Rafi Melnick.

The panel generally boasts of the quality of the country′s human resources. Without a doubt, Israel′s future lies in its people to recreate economic growth, abate regional tensions and secure internal peace.

To buy a DVD of this session, go to our DVD order page.

Moderators
Glenn Yago, Director, Capital Studies, Milken Institute
Speakers
Uzi Arad, Director, Institute of Policy and Strategy (IPS) and Professor of Government at the Lauder School of Government, Policy and Diplomacy, The Interdisciplinary Center, Herzliya
Boaz Ganor, Executive Director, International Policy Institute for Counter-Terrorism, The Interdisciplinary Center, Herzliya
Rafi Melnick, Professor, Arison School of Business, The Interdisciplinary Center, Herzliya
Uriel Reichman, President and Chairman of the Higher Academic Committee, The Interdisciplinary Center, Herzliya