In this episode of the Arkansas Inc. Podcast, U.S. Congressman French Hill discusses his advocacy for Arkansas in Washington D.C., Arkansas' unique advantages, and why Arkansas is a global fintech leader.

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TRANSCRIPT

Rep. French Hill:               

This is Congressman French Hill and you're listening to the Arkansas Inc. Podcast.

Clark Cogbill:                     

Welcome to the Arkansas Inc. Podcast. This is Clark Cogbill. I serve as director of marketing and communications for the Arkansas Department of Commerce.

Today, I'm thrilled to welcome a truly remarkable guest, Congressman French Hill. A ninth generation Arkansan, Congressman Hill has represented Arkansas's second congressional district in the United States House of Representatives since January 2015. He serves as the vice chairman of the House Financial Services Committee and as chairman of the new subcommittee tasked with overseeing all areas related to digital assets and financial technology. He's also a member of the House Permanent Select Committee on Intelligence and the House Foreign Affairs Committee, and he was elected to the Republican Steering Committee for the 118th Congress.

Prior to his congressional service, Congressman Hill was founder, chairman, and chief executive officer of Delta Trust & Banking Corporation. From 1989 to 1991, he also served as Deputy Assistant Secretary of the Treasury for Corporate Finance. In 1991, President Bush appointed Representative Hill to be Executive Secretary to the President's Economic Policy Council where he coordinated all White House economic policy.

For his leadership and service at the Treasury and the White House, Representative Hill was awarded the Distinguished Service Award by US Secretary of the Treasury, Nicholas Brady in 1993. Prior to his executive branch service, from 1982 until 1984, Representative Hill served on the staff of then US Senator John Tower, as well as on the staff of the US Senate Committee on Banking, Housing, and Urban Affairs.

Throughout his career, Representative Hill has been active in civic affairs. He's a past president of the Rotary Club of Little Rock and served as the 2013 chairman of the Little Rock Regional Chamber of Commerce. He has received numerous awards and recognition for his longtime support of the Boy Scouts of America, the arts and humanities, tourism and historic preservation in Arkansas. He is an avid outdoorsman and he lives in the right state for that. Representative Hill is a magna cum laude graduate in economics from Vanderbilt University. He and his wife, Martha, have a daughter and a son, and the Hill family resides in Little Rock.

Congressman French Hill, welcome to the Arkansas Inc. Podcast.

Rep. French Hill:               

Boy, great to be with you. Thanks for the invitation.

Clark Cogbill:                     

Absolutely. We're thrilled to have you. Congressman, as I mentioned, prior to your service as a member of the US House of Representatives, you had a very successful banking career. You could have stuck with that and served out the rest of your working career as a successful banker. Tell us more about your background and what led you to public service. Getting into public service is not an easy venture, so why do it?

Rep. French Hill:               

Well, I grew up here in Little Rock. I had great role models in my parents who very much believed in I think, civic good and volunteering. My mom was very involved with the Junior League in those days in the 1960s. My dad was very involved in scouting and then went on to be very involved in Master Gardeners and things in the Cooperative Extension Service. So they really believed in every family giving back to the public good.

I also had, across the street, neighbors, Gertie and Dick Butler. Dick was the chairman of Commercial National Bank then, and Gertie was very involved with the First Methodist Church. She did the child development center. She was a very avid Republican. And so in 1968, she was asking me to volunteer for Governor Rockefeller's reelection campaign as a 12-year-old to go do door knocking and door hanging.

So I had these role models growing up here in Little Rock about public service and civic good. And so I think that always attracted me to public service in one form of another. In my brief bio that you outlined, I've done it three times in my career, two years for the Senate, four years for President Bush 41, and now nine and a half years in Congress, each time going back to the private sector, though.

I love entrepreneurship. I love starting businesses. I love being involved in business. I love the definity of business decision-making compared to the public sector where problems are rarely solved and the debates go on forever. But it's been fascinating looking back on it now, to have a career that's essentially about one-third public sector, two-thirds private sector, business, finance, entrepreneurship.

Clark Cogbill:                     

Well, there are some folks who are career public servants or career politicians maybe. How has that private sector background, the banking background, everything else you've done, entrepreneurship, helped you in your role as a United States representative?

Rep. French Hill:               

Well, in Congress, those of us that have a business background who've actually started businesses, signed the front of paychecks, been regulated before, we've come together. We've started the House Entrepreneurship Caucus, and we have people from Ways and Means, the House Financial Services Committee, Energy and Commerce Committee, the Small Business Committee, all active in that. And what we have in common, whether we're Democrats or Republicans, is that we've actually run businesses.

Well, that gives you a completely different perspective than if you were a state legislator and a lawyer and a long time advocate for a cause. Nothing wrong with that. You can come to Congress as a veteran. You can come to Congress as a former preacher. I think we have 12 or 15 doctors in the House of Representatives now. You bring those life experiences to Congress. That makes the People's House a much, much better place, a robust, more informed place for debate.

So people who've been starting businesses or running businesses are very practical people, right?

Clark Cogbill:                     

Right.

Rep. French Hill:               

We're trying to meet a need of our customers. We're trying to pivot on a day to provide outstanding customer service, recruit and retain key employees to provide that delightful customer service, and look for product or service innovation that's lacking. That's the whole secret to business success.

Well, those traits are helpful in Congress because we're more curious, we're more practical. We want to get to a solution. We're still die-hard whatever. I'm a die-hard free market economics conservative person, but that business experience causes people ... I think our attitude is to work together to find a solution and move on to the next problem. Some people who just have an advocacy background just want to talk the problem. Their reward is arguing about the problem. A business person's point of view is can we find a solution here that's agreeable to a majority and move on to a new challenge?

Clark Cogbill:                     

That's a great perspective and we're glad you have that perspective serving in Congress. As you well know, at the Arkansas Economic Development Commission as a part of the Arkansas Department of Commerce, we work to create strong economic opportunities as our mission statement says, "Making Arkansas the natural choice for success."

And we've seen, as you also know, recent business expansions in your district here in central Arkansas, companies like Trex at the Little Rock Port, Windsor Door in Little Rock, Tractor Supply in Maumelle, and a major expansion by Westrock Coffee in Conway, Dassault Falcon in Little Rock. Those are just some of the recent ones. As a member of Congress, how do you advocate for Arkansas and help create economic opportunities here?

Rep. French Hill:               

A great question, and you mentioned some fantastic nationally recognized names that have chosen to come to Little Rock or expand here in Little Rock. I just was taking a full tour with Will Ford at Westrock last week. I took my colleague from Sacramento, Ami Bera, Democratic Congressman from Sacramento through the Dassault plant last month. And then I didn't get to go to the opening for Tractor Supply, so I went out and met everybody and took a tour of their 1.1 million state-of-the-art space in Maumelle just last week as well.

So it's really exciting for me to see Little Rock recognized for its geographic location, which is exceptional, particularly in shipping and logistics, which is why I think Dollar General, Tractor Supply, Amazon and others have made such enormous investments here.

Advocating for Arkansas, particularly in economic development in Washington has been really rewarding to me and something I have focused on. For example, in the health space here, I'm a strong advocate for UAMS and the Rockefeller Cancer Center receiving National Cancer Institute status, NCI status. And that support is deep in the private sector philanthropy here, the medical sector. Governor Sanders has dedicated $100 million to this important task because it deepens the economic impact of our health corridor here in Little Rock. So that's federal policy touching a local economic goal.

I've worked with Bryan Day, the port director, Jay Cheshire, our local Chamber executive to move the Federal Aviation Administration, FAA, navigation beacon that's out at the port, put there in 1947 or 1948. It's an analog device. It's not a digital device.

Clark Cogbill:                     

A VOR.

Rep. French Hill:               

It's called VOR, yep. It's a VOR cone. It's the navigation beacon. And over the past five or six years we've worked to get that moved across the river to the Protho Junction area. I think that work will be completed this fall. And that allows Bryan Day and Jay Cheshire to market 1,000 new acres for economic development at the port, which is already recognized as a great magnet for business here in our community.

And then I would say general work through the federal government on infrastructure, coaching people on how to use the money they already get from the federal government in a more effective way for economic development, whether it's trail funds or highway funds is a key source of the work that we do.

Clark Cogbill:                     

And from your standpoint, what are some of the biggest economic opportunities that Arkansas has in both the short term and the long term?

Rep. French Hill:               

Well, I've always, I've loved my home state. You said I was a ninth generation Arkansan. That's true.

Clark Cogbill:                     

That goes way back.

Rep. French Hill:               

That goes way back. In the 18th century, my first ancestor, relative was the commander at Arkansas Post for the French government in the Louisiana territory. So it goes back a long time. But Arkansas has grown first as a agricultural state, a state with deep connections to our forests, the Mississippi River and the Arkansas River were the mass transit of the day, to the modern world that we see here.

But we have something that everybody in America is craving. We have low power costs relative to a lot of the country. Will Ford referenced that when he was looking at competitiveness issues in the global supply chain for coffee. This is not some fat margin, non-competitive business that the Ford family has entered here with their expansion of Westrock from both in Maumelle and up in Conway.

So low power costs, exceedingly good transportation network, both rail, both major railroads here, river, the two major highway systems and an expanding system with the 49 corridor. But we have good workforce, we have low land costs. We have abundant academic capabilities in both engineering and business, both in Northwest Arkansas and Central Arkansas. Those are our strengths.

I think our weakness are mobilizing that workforce and the fact that we're a small place. That's the work of telling our story and our story is extraordinary. Whether you're talking about the success in the 19th century, the 20th or the 21st, Arkansas produces extraordinary success and hits way above its weight. Sam Walton hits a little above its weight, J.B. Hunt, Tyson, the Stephens family here.

Clark Cogbill:                     

Fortune number one.

Rep. French Hill:               

But look at what we've done in steel. I was the investment advisor to Arkansas Teacher Retirement in crafting the investment banking success story that was creating Big River Steel, which has now done everything they said they would do in terms of the goals they set, the employment they would do, the production they would have, the modern facility they would create, the international reputation they created.

And so I think that story's as big as any other story in the history of business success. And I think that's what's attractive about Arkansas, work ethic, location, abundant resources, affordable for both that worker and that business entrepreneur trying to find a place to initiate their business.

Clark Cogbill:                     

You mentioned some big names like Sam Walton, we have J.B. Hunt, Tyson, all Fortune 500s here and their stories of entrepreneurship. We talked about Westrock Coffee, a story of entrepreneurship from the Ford family, and many other small businesses and entrepreneurs that are really at the heart of the economy. And I know that you've been very involved in entrepreneurship. From your perspective, why are small business owners and entrepreneurs so important to you and to our state?

Rep. French Hill:               

Well, I think the venture ecosystem here, which has been a goal of Arkansas really for five decades now, since really the mid '70s to mid '80s, business leaders in Arkansas said, "Why can't we have a more dynamic economy in technology, in medical innovation, in a business startup rate?" And they were then recognizing the success of Walmart and Tyson 50 years ago, but saying, "Why can't we have more dynamism?"

And I think it takes a cultural change to do that. For example, for years in our state, a economic development theme was Arkansas doesn't boom and doesn't bust. We have a diverse economy was the way it was described. And in peaks of economic growth, maybe we don't hit that peak economic growth rate, but in sharp recessions, 2008, 2009, other instances, we don't have the unemployment that other regions have. True, true enough, true today.

But when I was the Chamber chair in 2013 and very involved in economic development then and now, I still believe that we should have a more dynamic, more flexible, more risky economy because I think it produces faster employment growth. It causes people to be attracted here, to move here to work.

And that was very interesting to me about Will Ford's workforce at Westrock in Conway. A lot of that leadership group has moved to Arkansas, very happily. Tractor Supply told me they'd attracted some of their top talent around the country to come kick off their leadership here, and they're falling in love with Arkansas.

So that magnet is important because you bring in new ideas, new recruits, you see your population growth when you have a more dynamic economy. And that's why things like Startup Junkie and the work that Jeff Amerine has done in Fayetteville, or Jeff Standridge has done down here in Central Arkansas, the Kauffman Foundation creates more dynamism.

How do you do it? You do it by saying, "Actually, money follows good ideas." This was a debate I had for decades with Bill Bowen, a former CEO of First Commercial Corporation, now deceased, the late great Bill Bowen-

Clark Cogbill:                     

I met Bill Bowen.

Rep. French Hill:                ... partner at the Friday law firm for many years, a tax partner, a tremendous leader in banking between 1960 and 2000. But Bill said, "We need more venture capitalists here." Okay, that's good. But I said, "No, Bill, money follows the good ideas and the innovative spirit, whether it's in technology at UAMS or a specialized technology that's been developed at the University of Arkansas at Little Rock or at Fayetteville, you'll see that money flow." And I still believe that. But both Jeff Standridge, Jeff Amerine, have created venture funds connected to their startup environment in Fayetteville here. Both to my knowledge, those have gone well.

So that's one way is connecting finance to ideas. The other though is these accelerator programs I think we should have more emphasis on and I think should be a priority for every community where you take an existing good business in Conway, it's a mom and pop, the husband and wife own what they think is the world's best pizza store. I mean, wow, it's good pizza. An accelerator says, "We're going to help you design your profitability, your workforce plan. And if you want to open up another location, we're going to help you work through the logistics."                      

That's accelerating an existing business. That's as powerful as any recruiting that Team Arkansas does trying to bring in an employer. I think you've got to do both, more dynamic economy, little riskier profile, create a culture that supports startups and innovation and recruit those big businesses. We need to be doing both.

Clark Cogbill:                     

So when you think about starting a business and you've done that, there's a lot of risk involved and there's a lot of hard work. We talked to Ted Herget on the last episode, who started Gearhead. We talked to Scott Ford. He said, "Starting Westrock was exponentially more difficult than being a CEO of a Fortune 500 company." And we know that and you know entrepreneurship and starting a business is really hard. Why is Arkansas a good place to choose to start your business? What's advantageous about starting and running a business here, a small business?

Rep. French Hill:               

Collaboration. This is a very collaborative environment. The cost of making a mistake is lower here. That ability to have lower-cost space while you're incubating your idea is lower. Your access to capital here and access to angel investors and people who've been there and done that before for mentorship or crafting an advisory board, I think are all abundant. And so it's an ease of effort and a lower cost basis allows you to take that risk more affordably, I would say.

Now, what are the downsides to it? Well, it's not Dallas. It's not a dynamic, enormous metropolitan environment, so there's some gaps. But what I've found about Arkansans, whether you're talking about the former president of the United States, or Sam Walton, or a member of the Ford family, or Warren Stephens, or anyone in this state, you talk about a one degree of separation. Arkansans know everybody worldwide. And if there is a gap in that exciting prospect you have, I bet it can be filled here.

And that's why I'm so excited about the Little Rock Venture Center because I think it's a crossroads of bringing people in, particularly in fintech where you're getting the best ideas from all over the world are filtering through Little Rock. And we've seen some fintech success of companies coming here for an accelerator or incubator experience and then saying, "Yeah, what French Hill just said is right. We're going to make Little Rock our home."

Clark Cogbill:                     

BOND.AI comes to mind. We talked to Uday. It's been a couple of years, but he, I think went through the Fintech Accelerator, which you mentioned, graduated from that program and went back to New York and he said, "The costs were too extreme. It was too variable in those early days of running his business." And he said, "You know what? I've got what I need in Little Rock." He's been here ever since and they're doing well.

Rep. French Hill:               

And I think, look, post-pandemic, I know this is a big conversation in corporate boardrooms and entrepreneurs and all over our society is, what lessons did we learn from the pandemic? And the ability to do distributed work is available now, which I think strengthens business opportunities and startup opportunities for Arkansas. If you're missing that one scientific component in a leadership team here, that person is a Zoom call away. And this is such a delightful, affordable, interesting, sophisticated place to have as a home base that I think that gives us an even more reason to see our growth.

And I think you're witnessing that certainly in Northwest Arkansas, certainly in Faulkner County around Conway and Little Rock. You see it anecdotally, but I think you'll start seeing that in the statistics as a growth corridor for Little Rock because of all the reasons we've talked about today.

Clark Cogbill:                     

So having founded a business and been in the private sector, what advice would you give to entrepreneurs out there listening, somebody who's running a small business or even who has a business idea? What advice would you give?

Rep. French Hill:               

Well, the secret to entrepreneurship is finding a gap, a failure. You're exploiting the fact that a competitor is doing it poorly or you could do it better, where you have ultimately the better mousetrap. And if you have that, again, I believe sincerely in collaboration, that there are people that maybe sit in front of a screen or in a laboratory or in their garage and all by themselves create success. That's true, and certainly maybe that noticing of that gap or the desire for a better mousetrap, but Little Rock is a place, and Arkansas generally is a place for collaboration.

And so my best advice to someone with an entrepreneurial idea is write it up, do a SWOT analysis of you around that idea and share it with people you think that would be great mentors to help shape that idea, to get it ready for how should it be brought to market? Is it a company or is it a bolt-on activity for an existing company? Is it something you're going to raise a lot of capital around or is it an idea that can be generated to scale with very minimal capital? All of these things are important.

We've got talented people in our Venture Center, in the Startup Junkie community, in our academic institutions, at our small business investment centers, all that can help provide that structure. Be brave, flesh out your idea and share it and see what kind of response you get.

Clark Cogbill:                     

Good advice. You talked about the Venture Center and I want to talk a little bit about fintech. Arkansas and particularly Little Rock has become a bit of a hub for fintech globally through the FIS Fintech Accelerator and other programs run through the Venture Center. We have in Little Rock and Central Arkansas and Arkansas as a whole, a very strong banking sector. I think we punch way above our weight in the financial sector.

I was telling you before we started recording, I listened to an interview you did with Forbes about cryptocurrency, and I know you go very deep on this topic and you serve as chairman of the House Financial Services Committee, the subcommittee tasked with overseeing all areas related to digital assets and financial technology. Why is fintech, which stands for financial technology, so important and why do you think Arkansas has become such a hub for the fintech industry?

Rep. French Hill:               

I think Arkansas at its roots, had a deep interest in financial technology for many, many years. And that's not the only thing. You could make the same case about logistics, wood products, agriculture, retailing. But there was a real impetus in the 1960s here with Walter Smiley and the founding of Systematics and Stephens' engagement in that business as well, and then the Stephens family themselves building an enormously successful financial services company headquartered right here in Little Rock. All that requires technology, infrastructure to reach scale. Technology's at the heart.

Look, that was Sam Walton's secret sauce was inventory control. That was all about technology. USA Drug that was well known here, USA Drug's warehousing situation that allowed them to build an enormous drug chain and drug wholesale operation in Pine Bluff here, all based on their proprietary technology approach. So we've had a technology base here. James Hendren, Arkansas Systems, a company you don't hear much about, did payment work for central banks and banks all over the world headquartered over near Baptist Hospital. So we've had that infrastructure here.

Fintech's critical now because we're moving from a paper-based analog society, we have been really since the 1960s, to a fully digital experience through images, through decision-making and much of that moving straight on to mobile and off a desktop. How do you do that accurately? And so fintech is now critical.

It's not a buzzword. It is actually a daily activity on behalf of consumers and business on making sure that financial transactions, which are the heart of the global business enterprise, are done accurately, they're done legitimately, they're done without fraud, they're done without cyber risk, they're done in a private way. Fintech touches every aspect of that.

And in tokenized payments, digital assets, a tokenized payment on a blockchain, that is the next level of expanding to essentially what we call Web3, which is taking that transition of the internet more deeply embedded into this, as I say, fully digital financial technology orientation.

Clark Cogbill:                     

I want to talk just a little bit more about cryptocurrency, and I know you go very deep on this topic and we're not going to get too deep for our listeners, but it's in the news, people hear about Bitcoin. I think just my own personal opinion is I think people in general, most people don't quite know what to think about it unless you're in the business or you're in fintech or in the financial world or have exposure to it.

So what would you say to the business community or even consumers listening? How should we think about cryptocurrency? There's obviously been some scary stuff in the news, but it's here to stay I think. So what would you say? How should we think about cryptocurrency in our society?

Rep. French Hill:               

Well, this is exactly where I think the tail wags the dog or you're not seeing the forest for the trees. And you've done it in the intro because you said, "Let's talk about cryptocurrency." Cryptocurrency is the tail to a very large dog or the tree for a very large complex ecosystem forest. But that's the buzzword that people say, let's talk about Bitcoin or let's talk about cryptocurrency. Let me put that a little in perspective.

People who've been speculating, trading cryptocurrencies in their Robin Hood account or on a online exchange platform, some of which regulated in the US, some not, are speculating in a meme type coin. There are thousands of these coins and they have billions of dollars attached to them. If people want to learn more about it, I think Forbes does the best general readership coverage of that. You can go to forbes.com and look at their digital assets, blockchain, cryptocurrency topic.

So these are like penny stocks that will never go anywhere, is the way I look at that. They don't really have any potential intrinsic value. I'm not saying some do or don't, I'm just saying as a general category. But a lot of people are engaged in it. What you're missing is the underlying technology is a blockchain.

Bitcoin traded in ETP form, an exchange traded product form, or in the cash market. You can buy Bitcoin. People buy Bitcoin because they think it is a store of value for the future. It has a defined quantity, and when it hits that quantity, that's all the Bitcoin that will exist in the world. So some people believe that then it has some sort of store of value technique.

It's really not used very reliably as a payment mechanism like quick payments. Why? Because one, it changes in valuation. The payment process on that blockchain is very slow. Some people say that to process a Bitcoin payment, your coffee is cold by the time it's processed. That's sort of an online joke. But it is a blockchain that people can write other applications on and use Bitcoin as a payment mechanism. All right? Ethereum, same way. Ethereum is now in process of being put in an exchange traded product format. People write code for an Ethereum blockchain, and that's where I want to stop and talk about the big picture, writing an application on a blockchain.

A blockchain is an operating system like iOS on your Apple phone, DOS on your old 1990s PC, Mac and the operating system on a Mac versus DOS on a PC. These are operating systems, people write applications for them, right? Microsoft writes applications, other people, spreadsheet applications. The applications on your smartphone, those are written on that operating system. A blockchain is an operating system. That's where the innovation takes place. That's the forest.

I was in Saudi Arabia a few weeks ago, and Saudi Aramco, the biggest state-owned national oil company of Saudi Arabia, one of the biggest in the world, has put all of its accounts receivable and accounts payable on the blockchain. They cut their accounts receivable days outstanding from 40 to 15 because they've put their supply chain on a blockchain. And on a blockchain, I can program a payment and I can program that payment by contractual terms, time of day. And so you have a smart contract application on a blockchain in a accounts payable, accounts receivables, and I think that's where the future is.

Now, on a blockchain, you can make that payment by just a wire transfer, I guess you can make the payment an ACH transfer, but you could also make that payment in a tokenized form. Hence, I could take a payment in Bitcoin if I wanted to, but I think the future will be dollar-backed stable coins regulated by the United States. We've written the bill to have a dollar-backed stable coin. It's not a government entity, issued by the private sector. Banks could issue them, non-banks could issue them under certain circumstances. That could be the payment source for that.

So Saudi Arabia in my example, they would make the payment in US dollars using a US dollar stable coin. And so that's a tokenized payment, I think, that will bring payments to life on that blockchain rail. Natural evolution from a promise to pay, banker's acceptance many, many decades ago to a check, to a debit card, to a credit card, to a wire transfer, an ACH. A blockchain offers you a way to program that payment and have a digital payment.

Clark Cogbill:                     

Thank you for explaining that. With any new revolutionary technology, there's always some fear and lack of understanding. So thank you for going through that. I heard a Walmart executive talk about using blockchain to look at a package of produce and immediately figure out where it originated.

Rep. French Hill:               

Correct.

Clark Cogbill:                     

And before they were using blockchain, he challenged his team to go figure it out and it took them a week. With blockchain, they could instantly trace it back.

Rep. French Hill:               

Yeah, you have the infinite ability to put every people process, every supply chain process point on the blockchain and then connect it to a yes-no situation. Did it meet the standard? Did it not meet the standard? Where is it located? It's a smart contract aspect of tracking inventory.

You can see this in the future for title insurance, for all property and property titles. You could take that entire territorial forward history of each property sale in Pulaski County and put it on a blockchain. You would obviously make the abstract process simpler, digitized, and then it would lower any kind of a title insurance premium by virtue of the fact that the risk is down. It's immutable once it is put in that blockchain context.

California has put their gold star digital driver's license into a blockchain format on a smartphone. You don't show the driver's license, it shows you the characteristics of the driver's license. So if I'm being carded in a liquor store, I can wave over the point of sale device, my driver's license, and it will say, yes, this person's over 21 years old, for example.

So it's just a smarter use of technology and I think blockchain has got promises in behind the scenes as well as in direct consumer approach, both. I think you're going to see that be a revolutionary operating system adaptation across the board, particularly where there are what we say in economics, high agency costs.

If you have high agency costs, you want to shrink those. So an over-the-counter bond trade can have high agency costs because it's paper-based, it's not electronic. Or sending a remittance of a citizen here in the United States to a relative in Mexico through Western Union has high agency costs. I have to get in my car, I have to go to Western Union, I have to take dollars and turn them into electronic money. I have to send that to Mexico. I have to pay a foreign exchange fee to change it into Mexican pesos, and then they have to open it and get that cash out in Mexico. So there's a 7 or 8% embedded cost in there. Blockchain can lower that.

Clark Cogbill:                     

Well, it really is exciting to see all the business innovation and the really interesting fintech applications and ideas and businesses that come through the accelerator that are leveraging technologies like blockchain. Shift gears a little bit. Congressman, you sit on the House Foreign Affairs Committee and played an important role in the USMCA negotiations. Can you please talk just a little bit about the importance of international trade to Arkansas and how Arkansas can work to increase our share of exports?

Rep. French Hill:               

Well, Arkansas is very dependent on foreign trade. I think all of our citizens need to understand that, and we've talked a little bit today. Dassault makes green airplanes in France and ships them to the United States of America to Little Rock Arkansas to be completed to be sold on the global market. Our rice is exported all around the world as America's largest rice-producing state. Westrock Coffee in Conway, Arkansas sources the highest quality coffee from around the world, brings it to Maumelle and Conway and turns it into consumer products for people all over this country.

So trade's endemic, but our two biggest trading partners in America and our two biggest trading partners right here in Arkansas are Canada and Mexico. And so we want to make sure that we have outstanding relations there and that we have ease of entry from those two countries for our products and services.

The United States, Mexico, Canada trade agreement, USMCA, was negotiated during the Trump administration. It replaced NAFTA, the North American Free Trade Agreement negotiated back during my day on the Bush 41 White House staff and subsequently President Clinton's White House staff in the early '90s. It is a better agreement. It corrects some of the things that over the past 30 years that we wish we had gotten done in NAFTA that we didn't. It's better for Mexico and the US and Canada, better for American workers. It modernizes it because it includes technology now and intellectual property protections and characteristics that didn't exist back in 1990.

So it's important for our citizens to know that America is at the center of the world economy, and to do that, we have to be a leader. And having a successful USMCA is critical to that because our largest trading partners are Mexico and Canada, and we need to continue to have good relations with both countries.

Clark Cogbill:                     

What do you see on the horizon in Congress, legislation, or initiatives that could affect economic development both in Arkansas and nationally?

Rep. French Hill:               

Well, Congress faces a real storm when they come into session after the presidential election. So the new Congress in January will face a really dire situation. Not only are we facing global challenges militarily like we haven't faced in decades led by Iran and China and Russia, but we are faced with an unsustainable federal spending problem, $2 trillion deficit, spending more on interest at the federal government level than we do on defense now this year. And we have expiring tax cuts next year that are key to small business, to small business innovation, to workforce development, to capital investment.

So Congress has got to grapple with this spending issue with a new president, try to get it down, try to manage it, try to restructure it, and at the same time, assess the Tax Cuts and Jobs Act incentives to business for economic growth and how those will go forward after 2025.

Personally, I think it's important that we protect investment. Investment is the centerpiece of more jobs, higher wage growth, and faster growth in the United States. So I would say the expensing issue, the corporate tax rate, the personal income tax rate, how capital is treated. We are in the middle of a political season right now and we have one of the presidential candidates wants to raise the personal rate back up to 39%, propose a capital gains tax rate in something around 44%. I think those are very terrible ideas that would impact both Arkansas and US investment prospects.

Clark Cogbill:                     

Congressman, you travel all over the nation and across the world. You have this broad perspective on local, state, national economies and the global economy. Given that perspective, what do you see as being Arkansas's unique economic advantages that you just don't often find in other places?

Rep. French Hill:               

Well, first you have to start with the United States. We have the dollar as our currency. We have the rule of law here. We have a court system. We have a commercial system. We have a government that's biased toward business innovation, research and development, supporting workforce. We have a flexible workforce. I can't tell you when I travel around the world how that doesn't exist. We have generally a corruption-light environment compared to other countries where they just wantonly steal from each other and from their central government.

So let's start with the US by saying we have the best economic system, court system, judicial process to adjudicate commercial claims. So we have an environment that foreign companies want to come here. They want to build things here. They want to employ people here. They want to sell products here. And so we need to count our blessings that we have that. As Mike Huckabee always said, "I'd rather live in a country that people want to break into than rather one people want to break out of."

Clark Cogbill:                     

It's a great point.

Rep. French Hill:               

It's a good one. So Arkansas, as I say at the top of the show, we have features and benefits that other people wish they had, affordable land, abundant water, low power rates, a government focused on improving K-12 education and local and state government really geared toward having a college-bound experience or a skilled trade experience. Every governor has not solved that issue yet about workforce, and we have a long way to go, but we are taking the steps necessary.

And what I hope you'll see is that because people recognize Arkansas geographically, intellectually, reputationally, affordability wise, that we become a magnet for that startup entrepreneur or that corporation that wants to say, "Hey, we're going to put our next expansion facility in Arkansas." That's what we've got to work toward and take every working day to try to make that situation the best it can be.

Clark Cogbill:                     

If a company executive were to ask you, from some other state or country, and maybe they have, "Why Arkansas?" how would you respond?

Rep. French Hill:               

I'd say location, people, opportunity. We are the natural state today, but we have been and continue to be the land of opportunity and we welcome all comers. Look at the investment by people from outside the United States in Arkansas. They love it when they come here, whether they're making car parts in Heber Springs or Falcon jets here in Little Rock. I think people who come here know it's a great place to live and work.

Clark Cogbill:                     

Okay. Just a few final fun questions. I know you enjoy your time outdoors. What's your favorite outdoor activity in Arkansas if you've you got a free day?

Rep. French Hill:               

If I've got a free day, and it's not August, I like to find myself out on one of our extraordinary hiking trails in the Ouachita Mountains or the Ozark Mountains. I also love floating our streams. I grew up as a paddler and so spent many, many happy days with my dad and his friends as a little boy on the Big Piney, on the Mulberry, on the Illinois Bayou, up on the Buffalo River. So I love that paddling and hiking experience in the state.

Clark Cogbill:                     

Okay. If you could go to one restaurant today anywhere in Arkansas, where would you go?

Rep. French Hill:               

It depends on what meal.

Clark Cogbill:                     

Okay, dinner.

Rep. French Hill:               

Dinner, I'd probably take folks from outside the state who love politics, I might take them to Doe's, Cypress Social, Petit & Keet. We've got so many fantastic restaurants here in Central Arkansas, but a lot of people who love politics want to get into the lore at Doe's and find out what's happening there. I keep telling them it's a Greenville, Mississippi restaurant, but it's got a cache here because of politics.

Clark Cogbill:                     

And when you walk out at Doe's, you think about it for the rest of the day because you smell like Doe's.

Rep. French Hill:               

Exactly. I always invite people, if they're headed to a meeting, to bring a change of clothes.

Clark Cogbill:                     

Well, Congressman, your time is valuable, and you spent a lot of time with us today. I want to thank you for visiting with me today on the Arkansas Inc. Podcast. And also just want to say thanks for representing Arkansas in the United States House of Representatives.

Rep. French Hill:               

Well, it's a real pleasure to represent Central Arkansas in the house. This is my home, and it's something I love very, very much. And so to brag about Arkansas and all the great work we do here in Central Arkansas on the House floor, around the world, or right here at home is something that's my honor. So great to be with you. Thanks.

Clark Cogbill:                     

Thank you so much. Well, you've been listening to the Arkansas Inc. Podcast. This is Clark Cogbill, director of marketing and communications for the Arkansas Department of Commerce. You could subscribe to the Arkansas Inc. Podcast on Apple Podcasts, Spotify and other podcast apps. For more information about the Arkansas Economic Development Commission and to sign up for our monthly newsletter, visit arkansasedc.com, and connect with us on LinkedIn, Facebook, X, and YouTube. Thanks for listening.