More Economic Land Mines For Obama

Are we gearing up to spend ludicrous amounts of money to keep some zombies walking while risking starving our few healthy business sectors to death? That’s the question raised in this week’s “Newsweek” Magazine—in a column called “Silicon Valley’s Fork in the Road”.
It points out that less than fifty years ago, Detroit automobile makers dominated the world car market. They weren’t called the “Big Three” for nothing. I recall personally that at the same time Kodak film dominated the world’s film market; Japanese workers at Fuji Film called it “Kodak San” as a term of great respect.
American textile workers and shoe manufacturers were also sitting on top of the world. In the 1950s, whoever heard of anyone buying a Japanese or Korean television? Life has changed just a bit.
Textiles are gone; consumer electronics are gone; shoe manufacturing is gone; before we went over to digital, Kodak film was considered greatly inferior to Fuji. In 2009, GM and Chrysler (which is now 40% owned by Italy’s Fiat) and Ford are gasping for breath.
All of these industries sneered at the prospect of foreign rivals ever taking over their place in the American market. Like the sleeping hare, the European, Asian—and watch out for parts of Latin America—tortoises have passed them by.
Huge earth moving machines from Japan; eighteen wheelers from Sweden can be seen all over our construction sites and highways. “Hit by a Mac Truck?” Don’t you mean Volvo? Are these foreign companies just being mean to us? Are they somehow picking on us?
Nope. We just left the door open and they walked in. We stopped innovating, stopped thinking about the rest of the world (or even the American West and East coasts) and left huge sectors of the market to them. They walked in and ate our lunch—which we handed to them.
There’s one area of development and manufacturing in which we, in “Newsweek’s” terms, stand head and shoulders above the rest of the world. But for how long? We’re so used to being dominant in technology (just as we were in autos, TVs and film) that we’ve stopped thinking about it.
That could bite us. Companies like Hewlett Packard are afraid it could be sooner rather than later. What’s wrong with American technology today? Too little money being spent on grants and innovation. That’s too little government money being spent.
Our technology businesses were birthed by government spending. The computer I am writing at owes its entire existence to government spending. Let’s go back to the beginning. The first computer ever was built by the United States Navy to determine the trajectory of naval shells.
That was in 1939, in a depression. By the beginning of the war (long before transistors and other miniature tech devices) the military had developed a 20mm (1-1/2” wide) anti-aircraft shell that packed enough explosive and electronics in it that it could detect a target in near proximity and detonate a few feet away. Churchill, no small devotee of technology himself, expressed astonishment at this feat.
Then came atomic energy: your government dollars at work.
The government brought German rocket and jet plane scientists over after the war to create more new weapons—and the technology that went with them. Out of their work came the space race which was entirely government funded and, out of that, came the entire computer revolution.
Take a lot of brainy Ph.D.s, give them a big (government) budget, new laboratories and time to think—and you’re soon going to lead the world in technology. As we do now.
Over the past few years, says Silicon Valley, we’ve been cutting back on government funding for R&D, for grants to universities and major labs. We are not educating students well enough to create new versions of the gadgets they so love to play with.
As we cut back on government funding, who’s spending money on research in technology? The whole rest of the world, especially China and India. “Newsweek” says a top scientist in China can get a research grant for $100 million. A 28 year old kid (Ph.D.) can land $5 million. An American researcher will sweat to get his hands on fifty thousand.
In many US labs, reports “Newsweek”, the majority of scientists are foreign born. That’s nice as long as the people who come here to get Stanford and MIT degrees STAY here to do their research. But these grads are starting to take their Ph.D.s and go home with them—for better opportunities to do research in their home countries.
We aren’t producing American scientists; we aren’t keeping foreign born scientists. Is this a ticket to a lost industry or what? If we let technology go the way of General Motors or Kodak film, we haven’t just lost a lot of jobs—we’ve lost huge revenues AND everything that gives our military their edge over the rest of the world. That will be a scary movie, indeed.
Spend money to keep GM hobbling along, if you will—but make sure to also spend it in the area where it really, really counts: technology. Keeping the auto industry doddering along is a nice charity—but somebody is going to have to come up with the cash to pay for that charity. That’s been high Tech. Let that go down and both the auto industry and the tech industry will wind up in the same pauper’s grave together.
Then the United States joins Portugal and a few others at the “has-been” table. Believe me, we won’t enjoy the service there. That’s something President Obama needs to give major thought to.