Speakers:
Rafat Ali, Publisher and Editor, paidContent.org
Dean Rotbart, Host, Newsroom Confidential
David Sifry, Founder and CEO, Technorati
Jonathan Weber, Founder and Editor-in-Chief, New West

Moderator:
Tina Sharkey, Senior Vice President Network and Community Programming, AOL

Blogging has gone from 0 to 36 million blogs worldwide in less than a decade. 75,000 new blogs will be created today. 27% of internet users engage in blogs, whether, creating, writing, or reading, every month. At this rate, the blogosphere is doubling every 5 months. Consumers spend 4 hours a week writing their blogs.

Professional blogs are a slightly different animal. Engadget has 17 million page views a month. Citizen journalism isn't just about blogs. Look at YouTube and wikipedia. This is the generation that creates their own content, starting with an away message when they're 14 years-old, to doing blogs.

As news production and consumption undergoes a radical transformation. What is relationship between blogs and media? What will happen to the traditional newsroom?

Dean Robart is the host of Newsroom Confidential, a national radio program focused on journalism and public relations. Dean starts by posing a question to the audience: When was the idea for weblogs first seen in American media? In 1690, the first American newspaper was called Public Occurrences. The fourth page was blank so the reader could add his or her own news items before passing it on. This was the earliest we see the idea of citizens participating in journalism. Thomas Payne passed out brochures when the printing press came around. It empowers citizens. We have always been citizen journalists. The idea that the rise of the Internet and the explosions of the blogosphere is causing decline in newspapers, magazines, and old media circulation is a myth.

Dean did a Factiva search in order to find the first story that mentioned the internet. A September 25, 1989 issue of PC Week says that a Compuserve gateway provides access to internet. In October 1989, the question was, "Will the internet be commercialized?" The first mention of blogs was in May 1999. Dan Gilmore said that slashdot may be a prototype of web communication. However, going further back, the NY Times published a story in 1976 about the American Society of Newspaper Editors, who saw a declining newspaper readership. At that time, the villain was TV.

Based on the history, Dean is skeptical that the two worlds are in competition. Is Craig's List suddenly eating into newspapers classified advertising? No. These declines have been going on for 30 years, long before blogs.

The Moderator redirects: If the industry itself has already been on the decline, what will be the role of the traditional reporter?

According to Dean, the traditional reporter is not going anywhere! 75,000 new blogs a day don't have an established readership nor credibility. If anything, the role/value of traditional reporter will go up. Blogs, like Engadget, are narrow, do well, terrific. However, general news blog will never replace The Wall Street Journal or Financial Times.

Jonathan Weber is the Founder and Editor-in-Chief of New West and was the co-founder and editor-in-chief of The Industry Standard. Jonathan says that people confuse the decline of newspapers and the decline of journalism. Whether or not newspapers are declining, this is the golden age of journalism! Barriers of entry are lowered, which is a good thing. That doesn't have to be associated with a decline in standards. New media and new publishing are a good thing in the world of journalism.

The moderator: We've historically relied on the big guys for impartiality, accuracy, and quality standards. What is the blogosphere equivalent of that?

Rafat Ali is the Founder, Editor and Publisher of paidContent.org. He says that the newspaper business is in trouble. Both the big guys like the New York Times and the citizen journalists need to unlearn what has been institutionalized. We have to learn to do journalism at 1/10 the cost what we were doing before. A good reporter is a good reporter at the end of the day. We haven't been edited. Is that good or bad? We thrive on speed, low cost, continuous evaluation. Journalism has become more of an evolution of a story. There's no such thing as "once it's done, it's done." Journalists need to be able to follow stories as they unfold.

Weber agrees with respect to speed. At the LA Times a story went through five editors before it hit the  printed page. That is a pre-computer work flow. The process of reporting with the internet is much more efficient than it used to be. There's no need for a copy editor when there's spell checking; fact checking is much faster. Large media organizations haven't grappled with productivity yet but they will.

David Sifry, the founder of Technorati, a blog search engine, says that we use the internet in a fundamentally different way than in the 1990s. When we think about the internet itself starting to change, there are several mega trends: Broadband and mobile adoption has seen a proliferation of tools. The way that we use the internet has changed. We used to think of the internet as the world's biggest library. Now the net is a real time, an "always on" media. The internet is a communication forum as well as a reference forum. Search engines are still based on the internet as a library. They do not incorporate the understanding of time.

Journalism has to have the ability to be timely. Economics of traditional media model dictate this. Now, people who clearly do not work under standards of objectivity, but as a group, can help to inform all of our opinions. It's their pictures, their writing - it acts as a supplement to traditional media.

The moderator summarizes that the blogosphere is less about information, and much more about conversation.

David says that the question now is "how do we know who to trust?"

Jonathan turns to the business of blogging. New West was built for $15,000, as opposed to the site for the Industry Standard, which cost more than $1 million. That difference is the important change. The economics of online publishing has changed a lot. The cost base is rapidly descending. The online advertising market has re-emerged. Advertising and marketing dollars follow people, and since more people are in new media, marketing dollars will follow them there.

How do you know what to believe? New West is being built as a branded media property. This is important. They paid attention to branding and design. It feels like professional media vs. a blog. They explicitly set out to combine traditional journalism with next generation journalism. It combines the voice and direct conversation aspect of blogs with real reporting and attention to facts. It is a hybrid model, and Jonathan thinks it will work with traditional advertising dollars.

Rafat sees three trends: 1) pure aggregation like Technorati, 2) entrepreneurs trying to create citizen journalism sites, and 3) big media companies that are trying to incorporate citizen journalism into their sites like BBC and the New York Times.

There is no business model yet. For entrepreneurs, a lot of it is not driven by 100% commercial gain. Over the last five years, it's not necessarily 100% philanthropic either, but it sits somewhere between commercial gain and charity. Leave some money on the table because much of it truly is driven simply by passion.

David adds that you have to inject some capitalization into it. People are getting book deals, consulting deals, freelancing gigs, and promoting their own businesses. The marketing effect goes above and beyond just google ads.

Jonathan says that New West does a mix of advertising. They have a sales force. There are lots of options, and there will be more. For example, the "blogvertorial" is an advertorial format. The success of adsense and advertising networks depends on the nature of the content. It works better for highly specialized, niche blogs with high value keywords. For most bloggers and  sites, the money on adsense will only come from huge traffic. Otherwise, advertising income is mostly pocket change.

Google ad sense produces much higher relevance than the alternatives, though. Google doesn't reveal how much they pay to the publisher. Some advertising networks pay a much bigger cut than ad sense does. Google takes most of the money. That's great for publishers, but not the answer.

The moderator asks: how do you balance talent?

Jonathan says that at New West, some writers are paid, some are not. They are all on monthly contracts. There is also an "unfiltered" section on the site where anyone can write. The site has a hierarchy of writers. You get what you pay for. Journalism in writing end of it, will be done by people who are paid and have skills. from a content standpoint, paid a lot of attention to recruiting. Young talent that can be effective with some training.

The moderator says that AOL thinks of itself as facilitators. News is top down. but they also program their citizen journalists into the mix. They provide a dashboard of traditional and curated content. That way, you get and give a full wash.

The moderator asks the panel: How do you measure influence in the world of blogs? What will be the metric? Is it CPM (cost per page view), CPC (cost per click), CPA (cost per action), or CPI (cost per influencer)?

David believes that there is interest in the social network effect. It is an epidemiological approach of a contagion. Technorati takes the fundamental brilliance of google and its PageRank, but uses the hyperlink as an implicit vote of attention. Net attention is derived by how many other people are linking to a site. This concept can even apply topically.

Rafat says that over the last year, bloggers are happy that PR people are reaching out to them. Bloggers are usually nice to you if you, PR, reach out to them. Take, for example, Netflix, which has a few fan blogs. The fan blogs tried to reach out to corporate PR guys at Netflix. Blogs are free PR for the company! However, the mistake is that PR folks think they can influence beyond what it is.

Davis is starting to see reactions today. Companies' marketers now recognize the customer's voice.

The moderator calls it the "wisdom of crowds."

Dean, however, doesn't see influence of bloggers as very significant. He doesn't think blogging is journalism.

David responds that not every blog is the New York Times, but some of them are really passionate about topics.

Rafat says that media looks at blogs and mostly sees political blogs.

David says that the blogosphere is yin-yang, with the yang/male part being more topic-oriented. The blogs are covering things that aren't being put out by Scientific American. He's not discounting the need for training or quality. It just means that great editors are now much more important. Editors have to be able to filter out the good stuff.
The Moderator asks the panel what they see in 10 years.

Rafat sees the rise of the journalist as an entrepreneur. Mainstream media journalists will branch out and start their own companies.

Jonathan says that there is no way to see as far as 10 years. However, over the next several years, the problems that the newspaper business is facing will become bigger. Newspapers will decline faster than people think. There will be a shift of the center of gravity, away from traditional newspapers.

David sees the idea of consumer culture becoming an anachronism. The old idea is that producers produce, advertisers advertise, and consumers consume. David finds the idea that consumers are passive as offensive. "Consumers consumer content and crap cash." If we look at the impact of MySpace and MMPORGs, culture will become a participant culture. Top-down mechanisms will start to crumble and things will be networked.

Jonathan doesn't agree with David's prediction that we will become a participant culture. If we take the movie business as an example, people are after quality, and will always want to watch a movie by a quality producer like Steven Spielberg.

 Panelists:
Nathan Nankivell, Senior Researcher, Office of the Special Advisor at Joint Task Force Pacific Headquarters, Canada
Shelly Singhal, Chairman and CEO, SBI Group
Paul Smith, Associate Professor, Asia-Pacific Center for Securities Studies, U.S. Department of Defense
Perry Wong, Senior Research Economist, Milken Institute

Moderator:
Graham Earnshaw, Editor-in-Chief, Xinhua Finance News

China's growth in 2005 was at a whopping 9 percent for the ninth year in a row. But impressive growth also brings impressive environmental problems.

Find out how a Canadian researcher, a CEO, a US Department of Defense and an economist would play the environmental clean-up game in China after the jump.

Moderator Graham Earnshaw sets the stage. China is in a unique position in that they are willing to admit that they have an environmental problem, and are trying to take steps toward fixing it. The Chinese are a shame culture as opposed to guilt culture, so the more we talk about the filthy state of Shanghai, the faster we will see results.

Question from the Moderator for Nathan Nankivell: Where do you think all of this is going?

Nathan reveals that the water scarcity in China is on par with sub-Saharan conditions. Waste water is as much of a problem as water shortage. 400,000 people die every year from respiratory disease. Pollution is part of it.

Things will get worse before they get better

The more cars there are on the roads, the more pollution. The US has been an example for China in the past. However, we don't live in an environmentally sustainable, so how do we expect China to follow?

There is time for change. China needs dedicated leadership. President Hu Jintao wants sustainable development from this point forward. There were 80,000 protests, many of which were related to environmental issues. Maybe a tariff to raise price of gasoline?

How can we help China and why would we want to? Because there might be a large migration of people when water runs out. The sandstorms in China were felt in Korea and Japan. Destabilization of party is the end result and the impact would be huge with respect to security and violence.

Solutions include small-scale hydroelectric and solar power. China could be the model for revolutionizing green GDP. They just need to find resources.

Example of environmental issue coverage in Chinese media

Perry Wong is an economist with the Milken Institute. Reform has enabled the Chinese government to recognize that people don't want to live in a city like that;one that is so polluted. Government moved large factories to the outskirts of the city. In the past 20 years, big cities reduced CO2 by going to natural gas. That is the benefit of economic openness. However, there is a counter-effect. Hyper-development called for building high rises, bridges, and roadways. China had to buy up steel, aluminum, and cement. This has had a negative impact. The cost of high growth, as the market economy took root in China, enabled villages to operate on their own. They have become market-force driven and can exist as money-making enterprises.

It is true that we do need to create jobs to create wealth in these factories. The pursuit of jobs is the number one issue in China, but it overtook the economic cost, and the now the cost is the environment.

On April 17, the sandstorm hit Beijing, dropping 300,000 tons of yellow dust on China's capital city. This was not due to production. It was due to accumulation of over-farming over the past 30 years. Soil got loose. Wind blows and brings yellow dust. In the 1950s and 1960s, the government tried to build a "green lining" (tree-line) to block off that sand. Back then, it was done well because one command came down from the government and it got done.

Now everything is different.

Perry is optimistic, but concerned. Green technology is promising, but based on experience, i.e. 1955-1975 CO2 emissions - we have to wonder if pollution as a result of high growth is a necessary condition,.

Paul Smith looks at the problem in China from a Defense perspective and says that environmental degradation is the most serious security threat faced by China on two levels.
1) Human security - more people are dying from pollution than from the Jihad
2) State security and stability - environmental degradation threatens the integrity of the Chinese CCP.

Social protests are an indicator of the nascent rise of civil society. There are on average, 20,000 protests per year. The Chinese people are crying out to their government and the international community for justice. There is increased pressure by people to do something about women with stillborn children and developing cancer at young ages. The protests are pathway to a solution. They represent the rise of an environmental movement in china. Nothing will change unless it happens at the grassroots level. The problem is that the national government is more pro-environment than local governments, so protests for action have to be at local level.

Shelly Singhal reminds us that one farmer can feed 300 people today. Change in agriculture leads to fewer people required on farms. Nobody wants pollution, but its a byproduct of transitioning from an agrarian society to an industrial society, and finally to an information society.

The Chinese have destroyed their environment, and are now supporting 21% of world on 7% of water.

Consumers here have to demand accountability from their purchases. Bring justice through lawsuits. Obviously, this implies a solid legal system is in place.

Perry says that Democracy and how we advertise way of life in US is that automobiles are good. Thus, China's response is that it is becoming the #1 auto market. Is this good or bad?

A slide shows that in the US, each household owns 1.78 cars.
In China, each 100 urban households owns 1.36 cars.
If every 10 Chinese urban households owns 1 car, China's emission of CO2 will increase by 79.4 million tons each year.

Paul says that we are at a period in history in which world needs to view China with a Marshall plan. No one will profit from environmental degradation in China. What about exogenous pressures like climate change and sea level rise? To address these issues, we need an environmental Marshall plan.

We do see signs of turnaround, i.e. green elements like the vast amounts of solar energy in countryside.

Perry responds that China has the largest coal deposits after US, but it has overreached its production capacity. The cost of production to maintain Chinese growth is new technology. In this case, since they cannot rely on more oil resources, they will have to go back to the methods of the 1990s that they wanted to abandon or minimize back then.

Nathan believes that putting pressure on lower level groups will cause change. Sacrifice intellectual property rights to let China use clean burning coal technology.

Paul also says that there is a business opportunity. Washington state is ahead of the game, selling products to China to help them in their environmental efforts. The central government pays attention, but local governments are where we need to focus.

Perry believes that the real problem in China is not city or provincial governments. How do you set up a system that is not provincial that imposes on villages, like guangdo? The government has to be willing to enforce rules, which are there.

Shelly tells us that China set up an EPA in 1998 and yet, they didn't pass any laws until 2002. They need better law enforcement.

Question form the moderator: What about the power of the Internet? The Chinese government is good at controlling the Internet.

Graham thinks that the government will put policies in place, not from pressure from below as Cole thinks.
Cole thinks that is naive

Perry says that in the old days, politics was all central. Now, it's local, cut-throat in all cities, townships, etc. Local governments are trying to woo investors to come in. Technology is one way to help. Carbon trading system is another way to help. However, he opposes Cole's idea of Marshall law.

Paul asks, "How do you get multinationals to do something?" You can't put pressure on local Chinese governments as we've done in the US.

Nathan wants to provide expertise, teaching at the party level, and to facilitate cooperation between agencies in China.

Moderator sums up each panelists' recommendations in one sentence.
Paul wants to prosecute US companies that pollute in China. Shelly thinks consumers should spend more in Wal-mart. Nathan thinks we should abandon technology. Perry believes in experts, administrate advice and providing mechanisms to the local governments.

The bottom line is that we have to wait for a generation that is so concerned about their living conditions that they will do something. We have to wait for the generation that is in their 20s and 30s now who are more vocal, which won't be too long, 5-10 years. China has to pay attention to energy consumption. The environmental issue is not a single item with a single solution.

Speakers:
Gary Becker, Nobel Laureate, Economic Sciences, 1992; University Professor of Economics and Sociology, University of Chicago; FasterCures Board Member
Vaclav Klaus, President, Czech Republic
David Rubenstein, Co-Founder and Managing Director, The Carlyle Group

Moderator:
Paul Gigot, Editorial Page Editor, The Wall Street Journal

The world grew last year at pace of 4.8%, the third straight year of a growth rate over 4%; this growth is in spite of rising interest rates, security threats, and extraordinary oil prices. The highest sources of growth have been the US, China, India, Russia (which is a special case because of energy related growth), and Japan. However, Europe's Big Three, France, Germany, and Italy, had anemic growth and high unemployment rates.

Other notable features of global expansion features have been extraordinary US import of capital and goods, which is unusual for a developed economy. Are we in the US living behind our means, or do we have policies that are inviting to foreign investors?

How sustainable is the expansion? What is driving growth? What are the main threats to this expansion?

Everything you ever wanted to know about global economic growth from the perspectives of economics, politics, and finance is right after the jump.

Vaclav Klaus was elected President of the Czech Republic in February 2003. He is an economist, began his career in 1989 as the Finance Minister, and founded the Civic Democratic party. He has been known for saying that Europe doesn't need unification but liberal order. Of this conference, President Klaus says that it reminds him of the "old Communist days when it was not possible to openly discuss problems at home, but people were encouraged to criticize lives of Indian peasants, South African miners, and the miserable living conditions of American working class." This is the net effect of interconnectedness that Klaus considers positive. We should not listen to anti-globalists and understand the importance of freedom and openness of ideas.

In the "New Europe," many of us expected a bright future, the end of existing problems with the end of communism. However, the reality has been different.

Communism has gone, but liberty and openness have not become the guiding principle. There have been new attempts to restrain openness and liberty, which has been seen very clearly in Europe. Political and socioeconomic system is about statism, regulation, and new forms of protectionism.

For example, the EU summit decision guaranteed by the end of  2007 that every school graduate in any EU country will get a job offer within 6 months of graduating. The Presidents words: "Ridiculous!"

In another example, the Euro commissioner recently suggested that the EU create a fund for "victims" of globalization. This is absurd. Klaus suggests that the EU set up a fund for victims of EU protectionism in Africa. (Ha!)

Global warming, environmentalism, terrorism, insufficient use of the Intenet, improper allocation of public funds for education is not the problem. The main problem is in trade of ideas.

David Rubenstein is a private equity investor with $35 billion in investments. He has been a lawyer, a White House aide under Carter, and reads six books a week. During his term as Deputy Domestic Policy Advisor, he tried to fight inflation. (Was he successful? He'll tell you)

David uses a quote: "This has been a golden age for our industry, but nothing continues to be golden forever."

Both the US and global economies has experienced unbelievable growth over the last three years for many reasons. No one could have predicted the robustness of the growth, nor the fact that it has been sustainable.

The US was the principal engine for the global economy, but today, what happens outside US is as important to the global economy as what happens inside the US. The single greatest export from the US is capital. When we export capital, we need to do so in a more friendly, genteel way and be mindful of cultural sensitivity. Additionally, we need to recognize that it is just as important to let foreigners invest in the US.

We have to adapt the way we think about ourselves by letting foreigners invest here. The US lifestyle is the best in the world, but said lifestyle is financed by people overseas.

Gary Becker is a Nobel Laureate in Economics. His thoughts on all things economic and law-related) are on his blog, The Becker-Posner Blog.

There has been great productivity growth in the US economy. The boom in productivity has been the main driver of the US economy, and will continue as long as policies don't get in the way.

What do China and India do? They have done simple things. China liberalized the agricultural sector in 1978, resulting in a boom. India has a democratic regime, but ideologically they are socialist. They enacted simple reform measures like cutting tariffs and cutting quotas. It resulted in modest change, 6-7% growth, and they continuing to experience that. With poorer countries, we know how to grow. Give the private sector the opportunity, a reasonable decent environment, and they will grow.

Economists and central bankers have learned how to keep things stable, i.e. how to keep low inflation, how to maintain an environment such that the private sector can perform efficiently. This has tamed the business cycle. It has not eliminated it but tamed it, nonetheless.

The global economy faces a few obstacles. Oil prices are less a force in affecting GDP, so it's not oil prices. It is not rising interest rates, nor is it low savings. In fact, we take pretty good advantage of low savings.

The primary obstacle to growth is geopolitical and potential government policies. The real risk is that governments try to do too much , tries to do things it is not capable of doing, like promising employment (as President Klaus mentioned about the EU earlier).

We saw this problem in Japan in the 1990s. Japan implemented counterproductive policies to bring the country out of protracted economic stagnation. We need to avoid this mistake by keeping governments from messing up too much with their policies.

Question from the moderator: What about inflation?

Gary says that we have seen a rise in relative prices of commodities. That doesn't mean the price level will move in the same direction. Inflation is determined by monetary policy. Shifting relative prices is very separate from inflation.

David also doesn't see inflation as a major problem.

Question from the moderator: How do you assess the performance of the new Chairman of the Fed so far?

David states that we won't know if the Chairman is up to the job until he is faced with a crisis, the way Greenspan was faced with Stock Market crash of 1987. Only when we see how the Chairman handles a crisis will be able to make a proper assessment of his performance.

Gary agrees, but he also mentions that the EU central bank has been doing well from the point of inflation. If the central bank's policies depend on who the Chairman is, we'd be in trouble (not that Greenspan nor the new Chairman is "trouble"). However, the Central Bank is dependent on the tools that are available to the central banker. The tools matter, not the person.

President Klaus appreciates the personal achievement of Greenspan. A new Chairman will bring a shift in thinking, regardless of who the individual is. The EU problem in different. The US started its currency area in 1778 with the dollar. Europe introduced the euro only seven years ago, and it is far from being an optimum currency area. It was premature to introduce a single currency in EU and the countries are paying a heavy price for unifying its currency so soon. Price is visible in the very slow rate of growth in the EU currency area.

David sees central bankers as less important because markets are almost driving the bankers than vice versa. The markets have faster information. The bankers don't have as much influence on interest rates anymore. The market does.

Question from the moderator about President Klaus's pessimism about growth. Could a flat tax be a solution?

President Klaus is in favor of a flat tax as a partial solution to problem.

Gary also supports flat tax, but says we also have to consider what comes with the flat tax, like exemptions. A flat tax will not be the magic wand to solve the problems.

According to David, the 15% capital gains tax is essentially a back door flat tax. A flat tax has enormous impact on the economy and deserves credit. It the capital gains tax is not extended, it will have a dramatic effect on the stock market and the investment environment. Our society has been helped by a shift to the idea that we are all investors, i.e. in 401(k), etc. Our parents didn't have a lot of excess capital, but we do. We just need to learn what to do with it. Invest it.

Gary also reminds us that every flat tax is not really a flat tax. Low tax rates are also important.

A question from the moderator: In 2008 the capital gains rate is supposed to expire. If that extension does not occur, will there be tangible damage right away?

David thinks that certainly, the expiration wouldn't be helpful. Why did stock market go down 508 points in one day? Because there was a discussion about tax cuts. The link between tax rates and the stock market is very direct. The stock market will go down dramatically if the President doesn't support the extension, or if Congress doesn't extend it. History suggests that the President will lose 28 seats in the house. If that happens, the house will be under the Democrats' control, who will use the Capital Gains Tax issue as a negotiating tool against Republicans who want the extension for the tax to go through.

A question from the Moderator: Are we seeing backlash against globalization? Or is it a temporary hiccup? How worried are you?

President Klaus definitely sees it as a problem.

Question from the Moderator: Strong presidential leadership is what drives trade liberalization. However, Bush's approval rating is in the low 30s. How worried are you?

Gary is worried. Since the mid-1950s, the world has seen an enormous decline in tariffs, quotas, etc. What we see now are pin pricks on a huge development. Could they snowball into a major reaction? It is possible. But with the forces that have led to globalization and free trade, we won't have a major world crisis like the Great Depression. We need to focus on trade in goods and people. We now have discussions in the US about illegal and legal immigration. We have been too restrictive on the import of highly skilled workers.

President Klaus sees that it is non-tariff barriers that have been growing.

David thinks people think globalization is Americanization, and we need to get away from that idea.

Question from the moderator regarding China. David has over $1 billion invested in China. What are you investing in?
David's investments are in life insurance in China, since only 8% have life insurance. Also, he has money in heavy industrial manufacturing. However, business in China takes time. If you're going to go to China, you have to physically be there, work with local partners and employees, and help China. You have to re-assure the Chinese that you're not just helping yourself and plan to export profits back out.

Chinese banking, like any emerging market has problems in banking system. It is very attractive to put capital into China, provided you have patience.

(Joel Kurtzman (l) and Thomas Wilson)

The Next Katrina: Who Will Pay?

Speaker:
Thomas Wilson, President and COO, Allstate Corp. and Allstate Insurance Co.

Moderator:
Joel Kurtzman, Senior Fellow, Milken Institute; Senior Advisor, Knowledge Universe

One of the most interesting discussions that comes up in regards to natural disasters--and who pays for the recovery and clean-up of such events--is the role media plays in covering disasters such as Katrina. Wilson is very critical of the media, noting that while the television shows are all ready to show an anchor standing near swaying palm trees, what kind of programming are they doing to actually instruct viewers before an event? For instance, what aren't they doing stories on flood insurance, or the risks of flooding?

It's likely that Hurricane Katrina, which was estimated to cost about $200 billion, according to Wilson, provided a ratings boost. But are media being irresponsible in their lack of coverage of natural disasters? 

It's true that networks love natural disasters. (Plus, the terminology used by the news is always fascinating. Writers for news programs always use dramatic words like "pummel" or "ravaged." Really, it's just Mother Nature doing her thing, without any intention of ravaging).

But would anyone watch shows that talked about natural disasters before they happened? It's unlikely, given our bury-our-head-in-the-sand mentality.

Besides adding more news programming, Wilson would also like to see some other things changed, for instance, he would like to see stronger homes being built. When it comes to disasters, obviously there is an element of having to be responsible for oneself. An audience member brings this up, noting that perhaps we shouldn't let people build homes in areas known for mudslides, for instance. The audience member has a point, since obviously it costs manpower and money to come help homeowners when their Malibu mansion slides down the hill. Wilson's response: "People should be able to build where they want to, as long as they understand the risks."

Panel: Internet from 10 Feet Away

Speakers:

Mark Burnett, President and Founder, Mark Burnett Productions Inc.

Blair Westlake, Corporate Vice President, Media, Content and Partner Strategy Group, Microsoft Corp.

Kevin Conroy, Executive Vice President and COO, AOL Media Networks
Kevin Corbett, Vice President, Digital Home Group, and General Manager, Content Services Group, Intel Corp.

Moderator:
Ken Rutkowski, Host, President, KenRadio Broadcasting

With all these Internet heavyweights on stage, who would have thought that television producer Mark Burnett would steal this panel on the web? Burnett is funny, first off, and has a kind of outsider view of the Internet which makes his observations all the more insightful.

He kicks off with some interesting comments about how the Internet has taken television's market share. As he explains, "primetime" is now 9-5 because everyone is at work, surfing the Internet during the day.  He's right--everyone is on the Internet all day long, and as, he notes, they're ordering clothes and planning their vacations during their work hour. As he notes, he doesn't care where his content appears. It can appear on an Internet screen, or a Blackberry, or television; he's just in the business of creating content. As he notes, now is the best time ever for those who want to create original content, simply because there's so many outlets.

We've heard this mantra--content is king--before, and once again, everyone is talking about content. For his part, Conroy notes that he is seeing more and more short-form content, as oppose to long-form content. But he doesn't totally agree with Burnett's theory about everyone watching content on the Internet during work. As Conroy notes, is anyone watching a great 22-minute Japanese movie? He has a point. Conroy also notes that online content used to be far more promotional, but now it is comprised of good, original content.

Burnett has the floor again, and this time, he's tying the Internet into television. He brings up the point that it's very hard to actually determine television show ratings, noting that it's easy to pinpoint how many cds are sold or movie tickets are purchased. But once the Internet and television are morphed into one thing, the television rating system will be exact, he says.

Meanwhile, Conroy makes the point that the entire entertainment industry is becoming more on-demand, while Westlake follows up on that topic, noting that the way that his teenage children watch television is far different than the way that people watched television in previous decades.  This surprises me, as I am under the assumption that kids watch less television, that today kids come home and turn on their computers, rather than their tvs.

And surprise--Burnett has the floor again--and is making the audience laugh. This time, he's talking about how pirating isn't such a big deal. Well, that's a generalization on my part, but he notes that he sees his television shows ending up on the Internet, but that he's not that concerned. And he points to the other panelists, saying that "none of us are missing a meal" due to pirating. This gets a laugh, but I am guessing the other panelists don't entirely agree with him.

One of the panelists here at Milken is New York Times economics writer Louis Uchitelle, who has new book  "The Disposable American." Uchitelle was the lead reporter for the Times series "The Downsizing of America," which won a George Polk Award in 1996.

After his panel, he heads to the AOL tent to sign books. But there hasn't been enough publicity (in my opinion) for his book signing, so there are few readers milling around his table. While he waits for people to come along, Uchitelle is game to give me an interview. Extremely personable, he's able to easily explain complex issues.  Without a broad business background, I'm always happy when there's a strong human interest element to a business story.

Originally this was supposed to be a Q & A. But since I don't have a tape recorder, I just will condense what he said for fear of misquoting his words.

In any case, his book is along the lines of Barbara Ehrenreich's book "Nickel and Dimed: On (Not) Getting By in America."  He looks at the effects that layoffs have in America, both from an economic and psychological point of view. He interviewed about 12 people, while a total of eight people appear in the book. What kind of work did these people do? They are workers like airline mechanics, as well as managers at companies like Proctor & Gamble. These are middle-class workers, not the kind of people Ehrenreich profiled in her book. I ask him why he focused on the white-collar element, and am surprised when he tells me that the majority of people in the U.S. that are laid off are white-collar workers, rather than blue-collar workers. 

So what happens to workers when they are laid off from work? "They withdraw from society and they blame themselves," he says. At first, this seems simplistic. Of course people get depressed when they get laid off and of course, this will have repercussions on their families. But, as Uchitelle explains, people who've been laid off become more self-absorbed and ultimately don't contribute to society.

As Uchitelle noted during the panel, U.S. companies instinctually lay off workers, rather than explore other ways of cutting costs. But there are companies that he admires. He lists off three: Southwest Airlines, Harley Davidson, and Haas Tools. He explains a bit about each company, and what they do to support their workers. For example, Harley Davidson works hard to keep relations with its union running smoothly.

A handful of fans come up to get their books signed, while one of Uchitelle's colleagues, a reporter from BusinessWeek, comes by to say hello. Then he has to go pack. I ask him what surprised him most about writing the book. He says that despite the fact that he would repeatedly tell workers that economic issues were behind their layoffs, workers would still blame themselves. I wonder why people can't see the larger issues. Why do they feel like failures? Much of it likely has to do with our faith in the American dream.

Moderator: Howard Soule, Senior Fellow, Milken Instiute, Managing Director of Knowledge Universe Health and Wellness, LLC

Panelists:
Caldwell Esselstyn Jr., Preventive Cardiology Consultant, Department of General Surgery, Cleveland Clinic
Francine Kaufman, Professor of Pediatrics, Keck School of Medicine, University of Southern California; Head of the Center for Diabetes, Endocrinology and Metabolism, Childrens Hospital Los Angeles
Samuel Klein, William H. Danforth Professor of Medicine; Director, Center for Human Nutrition, Washington University School of Medicine
Dean Ornish, Founder and President, Preventive Medicine Research Institute; Clinical Professor of Medicine, University of California, San Francisco
Harold Schmitz, Chief Science Officer, Mars Inc.

If you read nothing else on this post, this is the one sentence takeaway: No matter what you think now, you are too fat and you already have heart disease, so you better start eating plants. And chocolate.

Francine Kaufman's thoughts: There is a need for a change starting with families and schools, particularly with respect to obesity. By the 21st century one in three children will suffer from diabetes. The real key will be in educating children about their own health, and in improving school nutrition.

My takeaway from Dr. Kaufman: Take the Wonder White away from kids.

Samuel Klein's thoughts: In a study of rats and worms calorie restriction resulted in a 30% longer life.

Another study looked at thickness in the wall of the carotid artery in middle-aged adults. Those who were put on calorie-restricted diets showed marked improvement.

What does this all mean? That there are potential benefits to getting below the normal weight in the US, because there are beneficial effects in the reduction of overall body fat.

However, it is not as simple as reducing body fat.  Liposuction is the most prevalent cosmetic surgery in the United States with 440,000 procedures performed per year. 250,000 of them are in Los Angeles alone.

They took two samples of women, one group who were diabetic and the other group who had normal glucose metabolism, and removed 22 pounds of body fat. There was a dramatic effect on their appearance, but little to no effect on the risk factors for heart disease. If these women had reduced their body fat by changing their diets and maintaining a proper energy balance, they would have been healthier.

There is even concern that what is considered a "normal" weight is actually still too heavy, and that the "optimal weight" is ever lower.

My takeaway from Dr. Klein: Save your $10,000 for liposuction, read French Women Don't Get Fat, and eat healthier.

Caldwell Esselstyn's thoughts: Large random trials have shown that a plant-based diet could reverse cardiovascular disease. In fact, coronary artery disease need not ever exist.

In Norway, deaths from heart attack and stroke plummeted between the years of 1940 and 1945. What caused this? When the Axis powers of Germany overran Holland and Belgium and occupied Norway, they took away the Norwegian lifestyle that included cows, goats, and chicken. Norwegians were forced, for that time, to subsist on whole grains and legumes. However, by 1945, dairy products and animal products were restored to Norway. It is not surprising that high levels of coronary disease were restored as well.

Dr. Esselstyn shows a slide of the bivalve artery on which there is a small bubble on the left side. This bubble of plaque is encroaching on 30% of the diameter of the artery. If this person, to whom the artery belongs, continues to eat the "toxic" American diet, the plaque bubble will rupture, leading to a lethal cascade of events. Platelets are activated, and a self-propagating thrombus ensues. The artery becomes completely blocked. That's a heart attack, folks.

If you can make the bubble of plaque rupture-proof, then you make yourself heart attack proof.

Another example comes from a 44-year-old surgeon with a cholesterol of 156 and no family history of diabetes. In 1996, he felt chest pain. Cardiology couldn't find anything wrong with him. Two weeks later, the surgeon had a heart attack.

The results from the catheter lab showed a tiny narrowed artery that was too long for a stent. The surgeon was insistent on "fixing" it and went on a plant-based diet. The surgeon's cholesterol level from 156 to 89. His "bad" LDLs went from 98 to 38. Dr. Esselstyn's slide showed the results of the angiogram and showed complete restoration.

Basically, anyone over the age of 20 who is currently enjoying a "toxic" American diet already has heart disease. The only answer to heart disease, obesity, hypertension, diabetes, and other common Western cancers is a plant-based diet.

My takeaway from Dr. Esselstyn: My heart is already screwed.

Dr. Dean Ornish, Harold Schmitz

Dr. Dean Ornish's thoughts: Dr. Ornish has done 30 years of research. A series of studies initially focused on cardiovascular disease shows that over time, the disease can get better, and more quickly than people originally thought. Even things like the progression of prostate cancer can be reversed.

There is a lot of talk about "evidence-based care," but the reality is that we live in an era of "reimbursement-based care. In essence, healthcare is all about the Benjamins.

Take cardiology as an example of what's going on in healthcare. We spend $100 billion for bypass surgeries, angio, and stents, but a meta-analysis has shown that these procedures do not, in the end, prolong life.

And yet, why are insurance companies, Medicare, etc. paying for healthcare that is not effective?

Virtually all heart disease can be prevented by putting into practice things we already know: changing lifestyle.

To prove hi point, Dr. Ornish called upon a Mutual of Omaha demo in which the company saved $30,000 per patient in the first year by simply helping people change their diets.

The country needs to change the way people view healthcare. Starbucks spends more for its employees' healthcare  than it does on coffee beans. Change reimbursements, medical practice, and education so that the focus is on eating healthier. Motivate people to make and maintain diet and lifestyle changes. Medicare will pay for programs that do this because it's right and will make difference.

We need to work with food companies like Pespico, McDonalds, ConAgra, DelMonte, and Safeway into becoming behavioral modification businesses.

For example, Dr. Ornish helped to introduce an edamame salad in a fast food chain that has 16 types of lettuce, mandarin oranges and almonds. The McDonald's apple and walnut salad was a huge success and now makes McDonald's the biggest purchaser of apples. Half of profit growth for Pepsico was from healthier foods. So the changes are taking place.

People may ask, "Will eating healthfully really make me live long? or will my life just seem long because I'm eating healthy." There is freedom to choose from a spectrum of choices.

My takeaway from Dr. Ornish: My insurance company should pay for all of my groceries and restaurant checks.

Harold Schmitz's thoughts: Nutrition presents a confusing situation for consumers. A slide shows 2004 AHA data on the costs of cardiovascular disease. The US spends almost as much on cardiovascular disease as it does on Defense. As Dr. Esselstyn stated, most people already have some form of cardiovascular disease. However, it is difficult to underestimate the importance of bloodflow.

One of the things that Mars is focusing on is chocolate (obviously). A slide of data from Harvard Medical School shows the range of components that can be present in chocolate. Because chocolate is made from cocoa, and cocoa is a tree fruit, it contains phytochemicals and flavonols, which are what make plant-based diets so important in health.

One way to show the effect of chocolate on cardiovascular health is to look at its effect on blood flow in the extremities (fingers). This is relevant to diabetics because diabetes is a vascular disease and people can die from failures of bloodflow. The slide shows that 60 minutes after cocoa consumption, there is increased  bloodflow in finger.

A Type 2 diabetic has extremely poor bloodflow, but five days after consumption of cocoa, essentially bloodflow in the extremities is normal.

Chocolate has positive effects not only on cardiovascular health, but on cognitive impairment.

Not only is controlling calories important, but we also have to think about the quality of calories we ingest, i.e. making the calories that we do ingest extremely valuable.

These data pose an important question: Can there be such a thing as prescription strength chocolate?

The answer is "yes," but we also need to address a few issues before answering the question. Good research has to be done to find out what beneficial compounds are in cocoa. Additionally,  what are the mechanisms of these compounds' bioactivity? Getting the science right is the key point.

Harold ended the panel with two provocative statements:
Science: Nutrition science does not fully embrace the fundamentals of pharmaceutical industry. They could benefit from embracing the chemistry of foods to know how to construct foods and how to effectively deliver them

Economics: Part of the problem is that we ought to ask why isn't this scientific study done? Because the business sector does not reward nutrition science the way it rewards the pipeline in the biomedical industry.

My takeaway from Harold: Chocolate might save my life.

Panel: Real Estate: Has the Boom Busted?

Speakers:
Stuart Miller, President and CEO, Lennar Corp.
David Simon, CEO, Simon Property Group Inc.
Barry Sternlicht, Chairman and CEO, Starwood Capital Group
Sam Zell, Chairman, Equity Group Investments LLC

Moderator:
Lewis Feldman, Chairman, Los Angeles office, Goodwin Procter LLP

Everyone wants to know what's going on with the real estate market, and Milken trots out the leading experts in the field to talk about just that subject. First off, some of the panelists just weigh in on whether or not there is a bubble. For the most part, they seem to agree that the market goes up and down, but there really isn't a bubble. Sternlicht is the only one who seems to believe that there is a bubble, and in fact, at one point he compares the current real estate industry to the bubble of the late 1990-early 2000 Internet industry. For my point of view, the bubble talk is a bad sign. People were talking about the bubble a year ago, if not earlier, so isn't there anything else to focus on?

Apparently not. He's not a bubble believer, but Zell does believe that some markets are oversaturated with supply, specifically pointing to Southern Florida, Las Vegas, and San DIego.

Another thing that worries Simon: he says his company has the highest yield on new construction. Meanwhile, he is asked about the growing number of online sites that sell the same things that are sold in his malls---is he concerned about the Internet taking a piece of his market share? Not particularly, he says, noting that 40-50 percent of the stores in his malls sell apparel, which he believes is better shopped for in malls, rather than online.

But for the most part, all the panelists are refreshingly honest. Sternlicht says he was certain we were headed for a recession, but that it hasn't happened yet. He also believes that foreign investment into America will reach a new peak, as the Latin Americans, Germans, Australians, and others purchase property in the U.S.

The panels gets a bit more interesting with the focus on investing. For his part, Simon is a bit more cautious and pessimestic than I thought he would be. He says he's a bit concerned about the whole hedge fund sector's interest in the real estate investment market, but Zell argues the hedge fund guys are really just make up a narrow part of the overall investor market. Who is right? I have no idea.