Economic uncertainty is among the anxieties facing Americans in the wake of the September 11 terrorist attacks. A panel of business leaders and scholars met at the University of Minnesota's Carlson School of Management Thursday night, to share views on the economic implications of last week's events.
Almost 200 business leaders discussed the current economic uncertainty at a forum at the U of M's Carlson School of Management. (Photo courtesy of the Carlson School of Management)
For the economists, executives, bankers, and professors gathered at the Carlson School, the preceeding days had offered much to be shocked and frightened about. But perhaps the most disconcerting thought was the one that was brought into the open at the start of the forum by former Vice President Walter Mondale, who spoke of the fear that terrorist acts like the attack on New York's World Trade Center could be repeated.
"For that moment, our nation - the most powerful on earth - was helpless to protect itself from this horror. We all know this can happen again. It could be different terrorists, it can be different targets, it can be different and far more dangerous weapons," Mondale said.
The financial stakes in the country's new war on terrorism are huge, and no one is better-equipped than an airline executive to make that point. David Banmiller, the President and CEO of Sun Country Airlines, told the forum that travel and tourism is the world's biggest industry.
"This industry will lose - because of this incident, we currently estimate - $20 billion. We're going to furlough at least 100,000 people that we know of. That doesn't count the ripple effect throughout the economy domestically," said Banmiller. "Because the airline industry - the tentacles are beyond just the airlines themselves and Boeing and suppliers and fuel suppliers. Hundreds of thousands of manufacturers, many of whom have thin margins, are now going to be faced with furloughs, as well."
In spite of the financial storm brewing, long-term forecasts issued by economists are not entirely gloomy. Sung Won Sohn, chief economist at Wells Fargo, described best-case and worst-case economic scenarios, and said at the moment they seem equally likely to occur. But no matter how events play out, Sohn says the national economy enters this situation with a strong foundation - a better one than at the start of the Persian Gulf War in 1990.
"We have a stronger banking system and deregulated financial markets. We have a more flexible labor situation. The government has a surplus instead of large deficits. We've got information technology which is giving us more information. Finally, Fed Chairman Greenspan has and will continue to cut interest rates. Congress has authorized $40 billion in aid, and I think that simply is a down payment toward more spending. The point is that we are setting the stage for more economic growth, hopefully in 2002," Sohn said.
While economic effects of the terrorist attacks are already being felt in the form of lost profits and jobs, some of the political implications will evolve more slowly. Robert Kudrle, a political science professor at the U of M's Humphrey Institute of Public Affairs, recalled a recent quote in which a sociologist asserted that freedom-loving Americans would never tolerate the kind of ID stops, blockaded roads, and security checkpoints many Europeans endure.
"Actually, I'm not sure he's right about that. I suspect the national mood right now probably would, in many places in the country, go along with that," said Kudrle. "I'm not sure it's a good idea. In fact, I'm pretty sure it isn't a good idea. But there's going to be a margin there of increased concern about security, and probably giving the nod to the government in favor of security over liberty that I think we're all going to have to keep an eye on."
Panelists at the forum listened to a live broadcast of President Bush's speech before Congress and acclaimed it afterwards. Economist Paul Anton, who was in the World Trade Center when the hijacked jets struck the towers, commented on the President's remark that eventually life will almost get back to normal.
"We as a society - not just the economy, but society more broadly - can continue to go forward and function with this over our heads, as long as we're taking the steps we can take. And I have a lot more confidence that those steps are going to be taken here domestically after tonight," said Anton.
The forum was organized by the Minnestoa Business Partnership, as well as the University of Minnesota's Carlson School and Humphrey Institute.