Innovation Key to Long-Term Health of American Economy, Verizon Chairman Says
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CHICAGO - Speaking today at the Executives' Club of Chicago, Verizon Chairman and CEO Ivan Seidenberg told business leaders that innovation is the key to the long-term health of the American economy. He told the business leaders this must become a strategic priority of the nation's economic policy.
"Innovation is at the heart of any strategy for growth in a transforming economy," Seidenberg said. "Innovation creates wealth, jobs and value. Innovation provides the sustainable competitive edge to individual workers and entire industries that is required in a global economy."
Seidenberg said that the nation's strong financial foundation should be equally relevant to whichever presidential candidate wins the November election.
He discussed three planks on which an innovation-centered platform should be built:
- Win the global competition for capital.
- Replenish the nation's intellectual capital by reforming our schools.
- Reform the nation's health care system.
"Capital is the catalyst for innovation. Capital transforms ideas into technology; turns technology into inventions; and turns inventions into new products, markets, jobs and opportunities throughout the economy," said Seidenberg. "Capital is also governed by an overriding imperative -- it flows to where the ideas are best -- and the constraints are least."
The United States has historically been the leading destination for global investment capital, earning that distinction in large part to its market-oriented economy and culture that embraces entrepreneurial risk-taking, he said. The nation's edge, however, is being challenged by China, South Korea and other fast-growing nations.
To keep capital flowing into - not out of - the American economy, public policies need to be established that allow for the returns on capital to create and attract investment. Changes to the overly complicated tax code and regulatory system are required so that America will continue to be an attractive place to invest, said Seidenberg. He cited the need for greater simplicity and clarity in the U.S. tax code.
"From a business perspective we need some bold new thinking to assure our tax policies are fair, strike the right balance among our citizens, and help win the competition to keep more capital here," Seidenberg said.
Verizon is transforming the telecommunications landscape by deploying innovative broadband technologies like fiber to the premises, which brings fiber-optic connections directly into customers' homes and businesses; Evolution-Data Optimized (EV-DO), the first-ever deployment of wireless broadband services; and residential voice-over-Internet protocol (VoIP) broadband phone service. The company invests $12 billion to $13 billion annually in network technology, more than any other company in the nation.
"Verizon's future depends on our continued ability to make big investments in growth markets," said Seidenberg. "For us to do that, we need public policies that allow us to earn a return for the risk we take. And that means clear and consistent rules that expedite the development of next-generation services and products."
Quality Education Paramount to Nation's Success
Innovation cannot exist without a constantly replenished talent pool of entrepreneurs, managers and engaged employees, said Seidenberg.
"The farm system for talent is our nation's primary and secondary schools. We must make sure today's students are obtaining an education that is equal to the demands of an innovation-centered economy," he said.
An innovative agenda for education must be anchored on three key areas: literacy; training in the scientific and technical fields; and an educational infrastructure and culture that fit with the new, more dynamic world of work.
"Literacy is the fundamental building block for communications, and schools must be held accountable for ensuring that the next generation of workers will have the tools needed to participate in the information economy," Seidenberg said. "Information technology can be part of the solution by extending scarce educational resources to anyone with a computer and a broadband connection."
Health Care Reform Necessary
The nation's current health care coverage system is unsustainable and must be adjusted in order for America to grow faster and compete in the world.
"Unfunded liabilities in the government's major part of the health care system -- Medicare -- alone come to nine times the national debt," said Seidenberg.
Verizon, he said, spends more than $3 billion annually on health care for more than 800,000 employees, retirees and family members - costs that could more than double in the next decade.
"The heavy weight of health care costs put American companies at a competitive disadvantage in attracting capital investment," he said.
Health care policy reform, said Seidenberg, should focus on three key areas:
- Patch the holes in coverage that leave millions of Americans without insurance. Efficient, market-based reforms that enable individuals of all income levels to own their own health coverage, rather than relying on a massive, hidden system of subsidies and cost-shifting, are needed.
- Change the system, which ties health care coverage to a person's job. A few decades ago, when people stayed with the same company throughout their working career, it made sense to use employers as the means to deliver health care coverage. With today's more mobile work force, corporations like Verizon should not be in the health management business and people shouldn't lose their coverage when they switch jobs.
- Increase the efficiency of the system through the use of information technology. Telemedicine and electronic patient records can both lower costs and increase access to scarce medical resources.
"In this increasingly competitive world, the best government policies are those that reduce the costs that the government imposes on the economy. Reduce those costs, wherever you find them, and the American spirit of innovation and enterprise will take care of the rest," said Seidenberg.
A Dow 30 company, Verizon Communications (NYSE:VZ) is one of the world's leading providers of communications services, with approximately $68 billion in annual revenues. Verizon companies are the largest providers of wireline and wireless communications in the United States. Verizon is also the largest directory publisher in the world, as measured by directory titles and circulation. Verizon's international presence includes wireline and wireless communications operations and investments, primarily in the Americas and Europe. For more information, visit www.verizon.com.