The Kimchi Matters in the News

The Kimchi Matters, a New Book on Emerging Markets Investing

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[A video of this interview is available in the archives section of the MarketWatch website.]

John Friedman, Host: For CBS “MarketWatch” in New York, I’m Jon Friedman. Today we’re joined by Marvin Zonis, Professor at the University of Chicago, the economics department. Welcome.

Marvin Zonis, Professor, University of Chicago: Pleasure to be here, John.

Friedman: You are causing news today already, before you even got here. You wanted to fire Dick Cheney.

Zonis: Well, I’m not sure I wanted to fire Dick Cheney, but my bet was that if the President of the United States saw his poll numbers sink in the summer of 2004, before the elections, he would replace Vice President Cheney, run with a candidate who would win him more votes, and who would that be? Colin Powell.

Friedman: Do you think that could happen seriously?

Zonis: I do think it could seriously happen. I think Cheney’s very important to the President. I think the President would keep him around the White House. He could become some kind of special adviser for the President. But, if he felt that he needed to boost his poll results, he’d do it.

Friedman: I was always thought that Bill Frisk would be the heir apparent because you have Howard Dean as a doctor. And you have Bill Frisk, a doctor. You could doctor each other out.

[Laughter]

Zonis: It would be good. We’d have MDs everywhere.

Friedman: Now, what can the new vice president idea bring to the table of Colin Powell versus what Cheney’s done so far?

Zonis: Well, what’s interesting about that is, of course, he brings tremendous appeal in the United States of America. He’s the most popular member of the Bush Administration now when you look at public opinion polling. But, the other thing that’s particularly important, to me, is that he brings a worldview which is quite different from that of Vice President Cheney. I just published a new book called “The Kimchi Matters,” and it’s about what businesspeople have to know in order to be successful in a world of globalization. While I think that Colin Powell understands what the world, what we have to do in the United States to be successful in a globalized world, and I would see more multilateral foreign policy, more reference to build multilateral institutions like the UN, and much more success in the Middle East.

Friedman: What’s your view on how Bush has done so far?

Zonis: Well, I think it depends on what scale you are measuring on. Clearly, this massive fiscal stimulus we’ve had, massive budget deficit, pumping money like crazy by the government of the United States of America has been tremendously stimulative of the economy, and remember, huge increases in defense spending, huge increases in other government programs. As someone said recently, this administration is spending money like a drunken sailor. Well, all that stimulates the economy, so in the short term, we had this huge burst of economic growth in the third quarter of the year 2003 at an annualized rate of over eight percent, staggering. Next year, it will probably be five percent for the whole year. The question is what’s that going to do over the long term? Are we going to hit a wall because we’re running unsustainable fiscal deficits? And bet is the answer to that is yes, but it will be great for the election of the president in 2004.

Friedman: Now, Bush himself is a Harvard MBA.

Zonis: Yes.

Friedman: Is he a good businessman in running the country, in your view, combining your book idea with the current administration idea? Is he doing a good job of running the country?

Zonis: Well, he’s doing a great idea to perpetuate himself as the CEO of the country, that’s for sure, by stimulating the economy, and I would expect that if he were reelected in 2004, he would turn this situation around, become more fiscally responsible and not continue to run these deficits because he understands that these are, in the long term, back interests for the United States.

Friedman: You’re not affiliated with any candidate, right?

Zonis: That’s correct.

Friedman: Okay, who on the Democratic side do you think could do the best job for the economy?

Zonis: That’s a very challenging question. You know, it’s interesting because I’ve been listening to the candidates on the Democratic side, trying to answer that question, and my own view is that all of them would not have brought taxes down. None of them would have brought taxes down for the rich disproportionately to the poor, and there would have been a more fiscally responsible government budget. So, my sense is that, in general, economic policy would be sounder under any of the principal Democratic candidates than under President Bush.

Friedman: What’s your favorite one? Name a name here.

Zonis: Well, I like Dean, Kerry and Clark. If we could get their best qualities merged into one, I’d be thrilled.

Friedman: Which businesspeople do you admire, based on what you wrote in your book also? Who are the people you admire in business nowadays?

Zonis: You know, I’m very, very taken by people for various reasons. For example, Sir John Brown, who is the CEO of British Petroleum, has been an absolutely staggeringly successful CEO, in terms of building British Petroleum into one of the world’s largest and most profitable energy companies on the one hand, and on the other hand, being able to make certain commitments to environmental cleanliness and pollution control on the other. This is a guy who lives, eats, breathes and sleeps British Petroleum. That’s his entire he life. He has no family. He’s not married. He does British Petroleum, and he’s done a great job for that company and its shareholders. I think that’s been remarkable. There are other people who you see in this country who I think are pretty impressive leaders. For example, I think Jeff Immelt steps into General Electric, he’s got a tremendous challenge to fill the shoes left by that illustrious and charismatic CEO, and I think, considering the economic downturn that we had in the United States, and the problems that were left at General Electric after the departure of its last CEO, he’s been tremendously successful. So, the good news is that I think there are many admirable CEOs and those are the admirable CEOs who are countering this terrible scandal left by so much of this corruption.

Friedman: One final question for you, Professor. Is the economic recovery real? Is it real? You know, jobs have been controversial. What’s your view on the whole economy?

Zonis: That’s a really important question. Let me put it this way. Not only have we had the stimulus of the fiscal deficit. We had a tremendous stimulus from highly accommodative monetary policy by the Federal Reserve, which is pumping credit in. On the basis of those two massive stimuli, my bet is that we will have considerable economic growth in the year 2004. As I said, about as much as five percent real economic growth, which is stunning, and we will have real job creation because I think we’ve created some self-sustaining momentum, which will drive the economy forward next year.

Friedman: So, you’re bullish?

Zonis: I’m bullish on the American economy and on the stock market.

Friedman: Okay. Great, Mr. Zonis. Thank you for your time. Marvin Zonis of the University of Chicago and a famous author, too, and Dick Cheney’s critic. [Laughter] And, for CBS “MarketWatch” in New York, I’m Jon Friedman.

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