Life in the Slow Lane

America, the Fat, Dumb, and Happy:

Over the past century, Americans have become accustomed to winning every global battle that mattered: two world wars, the space race, the Cold War, the Internet gold rush. Along the way, Americans have enjoyed unprecedented prosperity and lived lives that were the envy of the rest of the world.

It was nice while it lasted.

Can America Keep Up? Why so many smart folks fear that the United States is falling behind in the race for global economic leadership By Richard J. Newman, U.S. News & World Report, 3/27/06

Two decades go Europeans, Australians, etc. used to tell me the U.S. was complacent. That was nothing compared to now, when the U.S. has pulled over into the slow lane.

It’s not even just non-Americans saying it anymore:

while upstarts in a hurry outhustle Americans in the race for technological, industrial, and entrepreneurial supremacy. "Every one of the early warning signals is trending downward," frets Intel Chairman Craig Barrett. "We’re all fat, dumb, and happy, which is one reason why this is so insidious."

The president goes on about improved education, but he did that while he was governor of Texas, too, and Texas continues to rank near the bottom of U.S. states in education, while Texas politicians call for making students work harder, as if that alone were the problem. Meanwhile, GM and Ford gave away the hybrid car race to Toyota, and are now having to play far-behind catchup.

There are a few bright spots, such as Southwest Airlines and Jetblue making money while most of the old big airlines decline.

But industries where the U.S. used to hold the lead it is losing. New programming languages used to come almost solely from the U.S., but one of the hottest new ones in a while, Ruby, hails from Japan. In telecommunications, Japan, Korea, and even Malaysia are far ahead, along with smaller countries such as Finland and Hong Kong. This telecommunications lag applies to wireless voice, land-based broadband, video over IP, and voice over IP. Back at the ranch, almost everyone I mention this to, in that industry or without, makes kneejerk facile excuses: those countries have higher population densities; they’re more urbanized; etc. The old U.S. can-do attitude does still pop up here and there, such as in some rural wireless initiatives started by entrepeneurs.

Some new applications still come from the U.S., such as Slingbox and MessageLevel, and of course the iPod and iTunes. But as the U.S. fades farther back in the broadband heap, expect more applications to arrive from Japan or Korea.

The quoted article notes that the U.S. spends nearly 15 times as much on defense as does China. Sometimes that has been an innovation advantage; after all, DARPA, the agency that funded the ARPANET that led to the Internet, uses Navy money. But nowadays with so much military money going into actual military operations overseas, rather than into research, development, education, or building or rebuilding infrastructure back home, it’s not clear that it’s an advantage. After all, Japan and Germany spent miniscule amounts on defense in the 50 years since WW II, during which they went from mostly destroyed to among the strongest economies in the world. And during that time they didn’t go out of their way to ignore the rest of the world and to make travel to their countries unpleasant and inconvenient, as the U.S. is now doing. Increased and improved communication with the rest of the world greatly aided Japan and Germany, and is now doing the same for India and even China, kicking and screaming though its vestigial Communist government may be.

It’s all very well to talk about doubling the budget of the National Science Foundation (NSF), but that comes after DARPA has been redirected mostly towards near-term operational issues instead of research, and after the National Institute of Standards and Technology (NIST) has had its main research grant budget zeroed out, not to mention the abolishment of the Office of Technology Assessment (OTA) some years back.

The U.S. federal government is not serious about research. And many U.S. corporations are so focussed on the near-term bottom line that they aren’t serious about research or development, either.

One main source of the wealth of the U.S. has long been its ability to find or invent the next big thing and to do it first. If it loses that initiative, it will fall back its other advantage, namely a continent’s natural resources and one of the largest populations in the world. In other words, it will act more like a third world country. You know, things like mining Alaskan wildlife refuges and stripmining tops off of West Virginia mountains instead of planting renewable ethanol crops and developing more efficient solar cells.

Opportunity beckons right now. With oil prices up and unlikely to go down, with a huge rebuilding opportunity on the Gulf Coast, with a chance to level the playing field in telecommunications by enabling real competition, the U.S. could decide to pull ahead in renewable energy and in telecommunications infrastructure and applications, for which there are huge markets for these two things in China and India.

Or the U.S. could decide to reassemble the Ma Bell monopoly, charge per byte for telecommunications, and start acting like Europe ca. 1990. You remember: the Europe that was stuck on X.25 and OSI while the U.S., Canada, and other countries forged ahead with TCP/IP. And the U.S. could enrench big oil for another decade until China and India implement their own telecommuncations and energy solutions that we’ll then have to buy back from them using greatly inflated dollars. China and India may relish pulling ahead of the U.S., but probably not so much the possibility of losing the U.S. as a market, due to Americans not being able to afford international products. And while the Pax Americana may increasingly look like a paper tiger, will a world with economic superpowers India and China armed to the teeth be safer?

Which course is good risk management for the U.S.? For the world?


PS: Thanks to Gunnar for the pointer.

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