Bozeman July 2013 1

Global CompetitionJohn Connors

Agenda

• Global Context• America’s Big Challenges• Big Opportunities• Texas vs. California – Two paths and a choice• Montana

Global Context

A Look back

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Growth Rates Matter – A lot!

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American IT = Flat World

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China’s Rise – Factory to the world

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R&D – Race for the Future

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STEM – Asia Serious; U.S. – Needs Immigrants

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Source: International Monetary Fund, United Nations, and World Bank

A World Transformed

1980 1990 2000 20100

2000

4000

6000

8000

10000

12000

14000

16000

Average Values of GDP (PPP)

United States China Japan India Germany Brazil France

Year

GDP

Billi

ons

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Shenzen- 1970 vs. 2012

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1980 vs. 2013 Top Market Cap Companies

1980 $ in BillionsRank Company Name Market Cap

1 IBM $39.6 2 AT&T Technologies $35.7 3 Exxon Mobil $34.9 4 Standard Oil of Indiana $23.4 5 Schlumberger $22.3 6 Shell Oil $18.0 7 Mobil $17.2

8 Standard Oil of California $17.0 9 Atlantic Richfield $15.0 10 General Electric $13.9

2013 $ in BillionsRank Company Name Market Cap

1 IBC Bank China $429.6 2 Exxon Mobil $414.3 3 Apple $400.5 4 Google $305.1 5 Microsoft $298.4 6 Berkshire Hathaway Inc. $288.9 7 Chevron $239.6

8 Royal Dutch Shell $221.0 9 PetroChina $219.5 10 Nestle $217.7

America’s Big Challenges

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Astounding Federal Profligacy

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Federal Spending vs. Median Income

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U.S. Debt Per Person

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Federal Spending as a Household

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Interest on Debt : How Many States Larger?

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Average Interest Rate by Decade – Time Bomb!

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Growth and Energy : 1.0 Correlation

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Energy Reality vs Current Policy

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World’s Highest Corporate Tax Rate

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Regulation Rampage • 2012 Federal Register—the official directory of regulation—78,961 pages ;1986 - 44,812 pages;

1936 - 2,620• Growth in US Economy 1936- 2012 = 12x (inflation adjusted); Federal Register growth 30x• Last time regulation was cut was under Ronald Reagan - number of pages in the Federal

Register fell by 31%. Surprise! Real GDP grew by 30% in that same period. Lasted just eight years.

• Since 1993, 81,883 new rules have been issued. In the past 10 years, the "final rules" issued by our 63 federal departments, agencies and commissions have outnumbered laws passed by Congress 223 to 1.

• Right now there are 4,062 new regulations at various stages of implementation, of which 224 are deemed "economically significant," i.e., their economic impact will exceed $100 million.

• The cost of all this - , $1.8 trillion annually—that's on top of the federal government's $3.5 trillion in outlays, so it is equivalent to an invisible 65% surcharge on your federal taxes, or nearly 12% of GDP

• Costs of regulation for small businesses (those with fewer than 20 employees) are 36% higher per employee than they are for bigger firms

• http://americanactionforum.org/rodeo-database

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Academic Progress Non-Existent

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Labor Productivity Waning

Opportunity Destroyed

Job Growth Way Below Trend

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Competitiveness Steep Decline

Big Opportunities

Waves of Innovation Coming

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USA - Energy Superpower

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Major Energy Cost Advantage Today

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Large Scale Re-Shoring at Hand

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Spending vs. Tax Revenue – Still Time to Stop Permanent Decline

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Growth Only Cure

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Texas vs. California – A Real Live Laboratory

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Capital Flows to Where it is Treated Well

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More Debt = Less Opportunity

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More Wealth Creation

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More Jobs

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Less Misery

Montana

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MT - Decent Position for Breakout

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Gross State Product

1960 1970 1980 1990 2000 2010 2012$0

$10,000,000,000

$20,000,000,000

$30,000,000,000

$40,000,000,000

$50,000,000,000

$60,000,000,000

$70,000,000,000

Montana North Dakota Idaho South Dakota Wyoming

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Top States for Business – What Matters

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Global Reading Performance

Montana

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Global Math Performance

Montana

United States Average

Montana Social Capital

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Thomas Sowell