Interview with FedEx Chairman, President & CEO Interview
LARRY KUDLOW, CNBC ANCHOR: All right, you`ve heard me a million times talk about the global economic boom, the greatest story never told. Well, my next guest thinks that global access is a huge part of that. Earlier today, he released a study called the Power of Access.Welcome back to Fred Smith, chairman, president and CEO of FedEx. Fred, it`s great to see you again. Now, this is a very interesting study. I went through a lot of it that I had. Define for us access. I think of it as connectivity particularly on-line connectivity in the great information, computer and Internet age, is that right?
FRED SMITH, CHAIRMAN, PRESIDENT CEO, FEDED: Well, I think that`s as good a way to describe it as anything, Larry. This study was commissioned by FedEx because amidst all of the naysayers of trade deficits and fiscal deficits and the dot-com melt down and so forth, we were seeing at FedEx a continued growth in international movements and trade. And so, we wanted to know as a Buffalo Springfield song said, you know, something`s happening here. So we commissioned SRI, the great prestigious research house, to take a look at this. And what access really is, is a combination of improved and low cost telecommunications; the Internet, which allows people to trade with one another in a low cost, standardized, visual way; increasingly faster and low cost transportation; and removal of regulatory and trade barriers. And that is what is creating this economic prosperity over these last several years.
KUDLOW: This sounds fairly consistent with the excellent book by New York Times columnist, Tom Friedman, The World is Flat. It also sounds consistent with what defense analyst, Thomas Barnett, has said about connectivity. It`s very important. Let me ask you, Fred. Let`s take Iran, OK, big problem. Let`s see if we go to the other side of the world, North Korea, big problem. Now these guys are basically disconnected. They don`t seem to be on-line to anybody. Is that consistent with the thinking in this survey?
SMITH: Well, what the study does is it ranks individual countries by their access coefficient, if you will: how free the society is, how much connectivity they have with telecommunications, information, trade and so forth. And the correlation is almost 100 percent. Repressive, unconnected, as you would say, countries simply have a lower standard of living and a much lower growth rate than those countries, even underdeveloped countries, who have permitted much broader access.
KUDLOW: So it`s possible then one could say or hope, hypothetically, that if we could get some economic investment and trade connectivity, let`s say with Iran, OK. Distant hope that that might be, it could conceivably a diplomatic tool as well as an economic growth tool and a positive for the rest of the world?
SMITH: Well, I think it`s a big positive. In our lifetime, of course, we`ve watched a country like China go from being a completely insular society with over half of the people completely impoverished to one of the most phenomenal success stories, economically, in the history of the world. And it`s dragged hundreds of millions of people out of poverty. Now I don`t think the people in North Korea or the people in Iran are any different than Chinese people or Americans or anyone else. They want a better standard of life. And the best way to get it is open markets, free trade, and lots of access to communications, and ideas, and information.
KUDLOW: Well, Amen to all of that. I guess my biggest disappointment was I noticed France, I couldn`t help but notice this — you knew this comment was coming. France rated 10th, United States 12th, Japan, 19th. I always thought France was kind of access to Karl Marx and big government state planning.
SMITH: Well, you know we know France very well. We have a very large hub there. France is actually a country, despite all of the issues about agriculture and sometimes the foreign policy disagreements they`ve had with
