Not sweating the Fed
Outsourcing and energy, not interest rates, dominate discussion about the economy at Fortune's Brainstorm conference.
ASPEN, Colo. (CNNMoney.com) -- Forget about the Fed. Attendees at Brainstorm had longer-term economic concerns.
Although the Federal Reserve raised the target on a key short-term interest rate for a 17th consecutive time Thursday, economists at Brainstorm, a conference sponsored by FORTUNE Magazine and the Aspen Institute, were not discussing the rate outlook, inflation, or other factors that have recently roiled the markets.
Instead, the issues of outsourcing, technology and energy dominated two panel discussions about the global economy on Wednesday.
Alan Blinder, a professor of economics at Princeton University and former vice chairman of the Federal Reserve, said the biggest threat to U.S competitiveness in the global economy is the continued shift of jobs overseas.
"The potential shift is massive, dwarfing anything we've seen in the past couple of years," he said. Blinder estimated that between 28 million and 42 million jobs in the U.S. are "potentially offshorable" and warned that it may not just be manufacturing and call center jobs that are at risk.
He said that any services job that doesn't require a large degree of personal service could wind up being lost to competitors and he thinks that a lot of white-collar workers are not prepared for this.
"To put it crudely, a lot of people like us are not used to the idea of competing with people in India, the Philippines and China for jobs," he said.
Blinder said that the labor force needs to be educated and that workers need to focus more on jobs that are "personally delivered." However, he said that it's not simply about skill and education; he cited both surgery and child care as examples of jobs that were probably too "personal" to be outsourced.
Waking up to playing catch-up
Speaking on the same panel, Thomas Hazlett, a professor of law and economics at George Mason University, stressed how important it was for the U.S. to catch up to Europe and Asia in certain aspects of technology, most notably wireless telecommunications.
He said that while many other nations already offer the next generation of wireless voice and data services through so-called 3G networks, the U.S. remains stuck trying to figure out how to allocate the proper amount of bandwidth to carriers.
"The U.S. has sat idly by while 3G licenses were being issued around the world," Hazlett said.
Hazlett said that consolidation among carriers in the U.S., such as Cingular Wireless' purchase of AT&T Wireless in 2004 and last year's merger of Sprint (Charts) and Nextel have been the only way for wireless companies to be able to upgrade their networks since they have to "make do with less spectrum."
Gary Flake, a technical fellow with Microsoft (Charts), echoed concerns about investing in new technology. During a question and answer session, he said it was "shameful" that the U.S. lagged other areas of the world.
Flake added that another area of technology that the U.S. must do a better job of supporting is the burgeoning field of alternative energy.
"We should have a man on the moon type mission for new energy sources," he said.
And the discussion of biofuels like ethanol, as well as solar power and wind turbines were a big part of another panel Wednesday.
Lester Brown, president of the Earth Policy Institute, an organization focused on an "environmentally sustainable economy," said during a panel on the risks of global consumption of oil and other natural resources that it's becoming obvious that there needs to be an alternative source of energy besides oil.
"We are an oil-based civilization. Oil is a depletable resource and it is being depleted," he said, adding that the drain on the world's oil supply will only worsen as China becomes more of an economic power.
Brown said that companies need to look more seriously at so-called cellulosic ethanol, which is made from inedible parts of plants, as well as solar and wind power. He said that one way to possibly spur investment in alternative energy would be to change the tax system, i.e. raising energy taxes while lowering income taxes.
It's debatable how well that would go over in Washington. But William McDonough, a well-known architect who runs his own design firm, said it would be economically short-sighted to maintain the status quo with regards to energy. He pointed out that the construction of solar receptors and wind turbines would be good for the economy since it would add jobs.
Nonetheless, as daunting as many of these economic challenges may be, it was refreshing to hear more talk about longer-term problems and not a myopic focus on when the Fed is going to pause.
FORTUNE Magazine is owned by Time Warner, which also owns CNNMoney.com. The reporter of this story owns shares of Time Warner through his company's 401(k) plan.
Related: Complete coverage of Brainstorm
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