China vs. USA: WWIII Great Innovation Wars - Paul B. Farrell - MarketWatch:
By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (MarketWatch) — The decade 2012-2022 will be WWIII, the Great Innovation Wars, seemingly endless high-stakes battles that will decide who dominates as the 21st century’s global superpower.
Will America remain the leader? Or, as many are predicting, will China’s massive investments in innovation and technology, education and ideas pay off, with China replacing America as the world’s No. 1 superpower by 2022?
U.S. Navy rescues Iranian fishermen
Raw footage of the U.S. Navy's rescue of 13 Iranian seamen being held captive by suspected Somali pirates in the Gulf of Oman.
Yes, the plot thickens, threats increase, the drama intensifies and egos will throw punches in a “tit-for-tat military-technology race” warns the Wall Street Journal. But the long-term stakes are too high. Unintended consequences too dark. New debt too great.
In spite of the brinksmanship and endless short-term Cold War tactics, the WWIII of 2012-2022 will not end in armed conflict but, by necessity, in a détente. Yes. Because at some point reason and sanity must and will prevail as the forces of innovation and technology shift, to focus on solving the real big problems facing mankind: Not the killing of, but the survival of, 10 billion people by 2050, three billion more than today, all demanding a better life in a world of diminishing limited resources.
What will trigger this historic shift? After a decade focused on the shortcomings of America’s leaders in business, banking, politics and our changing cultural mind-set, we have to shift gears because America’s best minds can, must and will shift.
In the future we will focus on innovative solutions, trusting new leaders will emerge with the vision to do what’s necessary by 2022, as President Kennedy challenged us with the mission to put an American on the moon in a decade.
Here are eight reasons we see an exciting new America emerging this decade:
1. We’re not at war with China. Our war is within, for a new American Dream
In a recent issue of Foreign Policy, former national security advisor Zbigniew Brzezinski, wrote “After America: How does the world look in an age of U.S. decline? Dangerously unstable.” Why? Both here and there, many have “concluded that America’s decline and China’s rise were both inevitable.”
Wrong. America is losing this war because our minds are locked on an ancient narrative: That China “has an impressive imperial lineage and a strategic tradition of carefully calibrated patience, both of which have been critical to its overwhelmingly successful, several-thousand-year-long history.” Inevitable? Only if you buy into that old drama. But that means surrendering to a self-fulfilling prophecy, one we create.
No, it is not inevitable. Soon we must and will be forced to wake up by the alternative reality of human survival, a new American Dream.
2. Innovation shifts away from the military in the WWIII decade 2012-2022
“China Challenges U.S Navy in Asian Seas,” is a scary Journal headline. The opening scarier: “The USS Gerald R. Ford was supposed to help secure another half century of American naval supremacy” with “a crew of 4,660 and a formidable arsenal of aircraft and weapons. But an unforeseen problem cropped up between blueprint and expected delivery in 2015: China is building a new class of ballistic missiles designed to arc through the stratosphere and explode onto the deck of a U.S. carrier, killing sailors and crippling its flight deck. … So the U.S. is adjusting its own game plan,” as we continue in this costly “tit-for-tat military-technology race.”
Now imagine this: Just one carrier in the new fleet costs $15 billion which could be invested in commercial innovation, to guarantee survival of a world of 10 billion people. Soon this mind-set must and will shift from macho military gamesmanship to the survival of human civilization.
3. By 2022 China is the innovation leader. Why? They’re long-term thinkers
In a thought-provoking New York Times article NPR’s Adam Davidson warns: a “recent study by the Battelle Memorial Institute, a research firm, predicts that China’s spending will match ours around 2022. In research terms, that is effectively today.”
China spends on “green energy and bio- and nanotechnology, that will most likely become products in the 2020s. And if U.S. government labs, university departments and corporate researchers aren’t already on top of the next generation of breakthroughs,” America will “fall behind in 10 or 20 years when those innovations become marketable products. Our global competitiveness is based on being the origin of the newest, best ideas.”
What happens to the America Dream “if those ideas originate somewhere else? … a global economy in which the U.S. is playing catch-up with China.”
4. America’s business must shift out of its short-term thinking mind-set
Davidson pinpoints our biggest problem: America’s culture of short-term thinkers. “From a CEO’s perspective, long-term R and D is a lousy investment … projects cost a lot of money and often fail. And even when they work, some other company can come along and copy all the best ideas free.” Quoting a retired DuPont CEO: “It’s tough to get investors to think more than two years ahead, at most.” America the world’s superpower. It’s very simple: “Three months before the Japanese attack on Pearl Harbor, Angus Echols, a member of DuPont’s executive committee, began shaping the chemical giant’s plans for the coming decade.” Much like Kennedy’s decade-long challenge, DuPont was thinking long-term:
Warning: we have no choice. Corporate America must reverse the recent cutbacks in research and match China “tit-for-tat” in the 2012-2022 innovation race.
Here’s Davidson strategy for the new mind-set that must emerge, fast — actually a revival of the earlier way of thinking that made America the world’s superpower. It’s very simple: “Three months before the Japanese attack on Pearl Harbor, Angus Echols, a member of DuPont’s executive committee, began shaping the chemical giant’s plans for the coming decade.” Much like Kennedy’s decade-long challenge, DuPont was thinking long-term:
“The U.S. would soon be at war, he explained in a series of memos and high-level discussions, and the company needed to aid the effort. But it also needed to think far ahead. When the war ended … women would want to buy cheap stockings.” So while DuPont sold “nylon to the U.S. military for parachutes and tires, its research department studied how to make stockings on the cheap.”
Then right after Japan surrendered, DuPont shifted nylon production to ladies’ undergarments. Plus veterans had “solid jobs to return to.” No wonder DuPont “dominated the burgeoning synthetic fiber and plastics business for decades to come.” By thinking long-term.
5. Is America too locked into old ways, unable to change, surrendering?
Forbes publisher Rich Karlgaard recently posed this question in his challenging “Innovation Rules” editorial column: “Is technological progress speeding up or slowing down?” He cited Silicon Valley billionaire Peter Thiel’s negative answer: Holding up his iPhone, Thiel said this is not “a technological breakthrough,” compared to “the Apollo space program.”
Then Karlgaard added: “Tyler Cowen, an economist at George Mason University, agrees. In his book “The Great Stagnation “Cowen says his grandmother saw greater changes. She lived during the birth of airplanes, skyscrapers, suspension bridges, radio and television, antibiotics, atomic bombs and energy, interstate highways, jet travel and a moon landing.”
In contrast, “a child born in 1970, a year after the first moon landing and the Boeing 747’s first flight, has seen the personal computer, biotechnology, cell phones, Web browsers, search engines and nanotechnology. Doesn’t quite stir the soul, does it?”
Wrong, they do stir the next generation. Thiel and Cowen lack vision. Fortunately Karlgaard does see progress in America’s leadership the next decade: “Industrial evolution is accelerating. … genomics and nanotechnology will soon eradicate disease and give all humans the possibility of 120 good years.”
And he envisions much more progress through innovation and technology: “Patience is needed.” Yes patience, trust and a fresh new dose of “positive mental attitude.”
6. By 2022 innovation will shift away from the Pentagon War Machine
The Forbes challenges got me thinking: Is it possible that the core issue underlying all those questions is that innovation itself has natural limits and we’re approaching those limits? Or more likely: Is it possible that commercial innovations are decelerating because military innovations are accelerating? That there is a balance, set point, limit in the “Innovation Equation?” Davidson hints as much in his New York Times column: “When the Idea Machine Stops.”
You may recall that the U.S. spends roughly half our taxes on the Pentagon’s war machine. And like China, North Korea, Iran and other nations, we have not let up on military spending. So while we expect many of America’s new innovations in the military arena near-term, soon we must and will experience a historic shift from military gamesmanship to commercial innovations essential to the survival of civilization.
7. Pentagon’s lobby will lose power to spend half the taxpayers money
Eight years ago the Pentagon predicted that by 2020 “warfare will define human life” as global population pushes relentlessly onward to 10 billion by 2050. This is “the mother of all national security issues.”
“By 2020 there is little doubt that something drastic is happening. As the planet’s carrying capacity shrinks an ancient pattern reemerges: the eruption of desperate, all-out wars over food, water and energy supplies and warfare defining human life.”
Of course the Pentagon brass, military contractors and conservative politicians all have a vested interest in spending roughly half the federal budget to maintain a war machine of new vulnerable aircraft carriers and other weapons outdated on arrival.
But more and more Americans are questioning whether war is the best solution to the world’s real problems. We now see how the Pentagon war machine diverts limited capital and natural resources from innovations essential for survival. This military mind-set is outdated, cannot survive the next generation.
8. America will soon shift innovation strategies to a global survival mode
A couple years ago Bill Gates said if he had “one wish to improve humanity’s lot over the next 50 years” he would pick an “energy miracle,” a magical “new technology that produced energy at half the price of coal with no carbon-dioxide emissions,” said CNN editor Fareed Zakaria in Time. I’d “rather have this wish than a new vaccine or medicine or even choose the next several American presidents.”
We need more leaders like Gates who think long-term. Since 1994 he has invested much of his $26 billion fortune in the “energy” of vaccines and medicines, extending life and stabilizing population growth. Yet, with the world’s population on track to increase from 7 billion to 10 billion by 2050, in one short generation we will be forced to discover bold new (non-military) innovative solutions, new “energies” to guarantee the survival of our planet.
What’s all this mean for investors? Endless bold new non-military innovations!
Forget the military war machine. Yes, forget all the threats, war games, fear mongering, big macho egos and all the special interests that get rich from maintaining a $600 billion war machine.
In fact, it won’t matter who “wins” the WWIII Great Innovation Wars. We can, we must and we will soon wake up and focus on the survival of human civilization, working together — yes, China and America as partners — figuring out how to feed 10 billion people on a planet of limited resources.
Yes, that’s the real WWIII challenge in the 2012-2022 decade. And emerging from these Great Innovation Wars will be exciting new technology investments.
About Paul B. Farrell
Paul Farrell writes the column on behavioral economics. He's the author of nine books on personal finance, economics and psychology, including "The Millionaire Code," "The Winning Portfolio," "The Lazy Person's Guide to Investing." Farrell was an investment banker with Morgan Stanley; executive vice president of the Financial News Network; executive vice president of Mercury Entertainment Corp; and associate editor of the Los Angeles Herald Examiner. He has a Juris Doctor and a Doctorate in Psychology.
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By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (MarketWatch) — The decade 2012-2022 will be WWIII, the Great Innovation Wars, seemingly endless high-stakes battles that will decide who dominates as the 21st century’s global superpower.
Will America remain the leader? Or, as many are predicting, will China’s massive investments in innovation and technology, education and ideas pay off, with China replacing America as the world’s No. 1 superpower by 2022?
U.S. Navy rescues Iranian fishermen
Raw footage of the U.S. Navy's rescue of 13 Iranian seamen being held captive by suspected Somali pirates in the Gulf of Oman.
Yes, the plot thickens, threats increase, the drama intensifies and egos will throw punches in a “tit-for-tat military-technology race” warns the Wall Street Journal. But the long-term stakes are too high. Unintended consequences too dark. New debt too great.
In spite of the brinksmanship and endless short-term Cold War tactics, the WWIII of 2012-2022 will not end in armed conflict but, by necessity, in a détente. Yes. Because at some point reason and sanity must and will prevail as the forces of innovation and technology shift, to focus on solving the real big problems facing mankind: Not the killing of, but the survival of, 10 billion people by 2050, three billion more than today, all demanding a better life in a world of diminishing limited resources.
What will trigger this historic shift? After a decade focused on the shortcomings of America’s leaders in business, banking, politics and our changing cultural mind-set, we have to shift gears because America’s best minds can, must and will shift.
In the future we will focus on innovative solutions, trusting new leaders will emerge with the vision to do what’s necessary by 2022, as President Kennedy challenged us with the mission to put an American on the moon in a decade.
Here are eight reasons we see an exciting new America emerging this decade:
1. We’re not at war with China. Our war is within, for a new American Dream
In a recent issue of Foreign Policy, former national security advisor Zbigniew Brzezinski, wrote “After America: How does the world look in an age of U.S. decline? Dangerously unstable.” Why? Both here and there, many have “concluded that America’s decline and China’s rise were both inevitable.”
Wrong. America is losing this war because our minds are locked on an ancient narrative: That China “has an impressive imperial lineage and a strategic tradition of carefully calibrated patience, both of which have been critical to its overwhelmingly successful, several-thousand-year-long history.” Inevitable? Only if you buy into that old drama. But that means surrendering to a self-fulfilling prophecy, one we create.
No, it is not inevitable. Soon we must and will be forced to wake up by the alternative reality of human survival, a new American Dream.
2. Innovation shifts away from the military in the WWIII decade 2012-2022
“China Challenges U.S Navy in Asian Seas,” is a scary Journal headline. The opening scarier: “The USS Gerald R. Ford was supposed to help secure another half century of American naval supremacy” with “a crew of 4,660 and a formidable arsenal of aircraft and weapons. But an unforeseen problem cropped up between blueprint and expected delivery in 2015: China is building a new class of ballistic missiles designed to arc through the stratosphere and explode onto the deck of a U.S. carrier, killing sailors and crippling its flight deck. … So the U.S. is adjusting its own game plan,” as we continue in this costly “tit-for-tat military-technology race.”
Now imagine this: Just one carrier in the new fleet costs $15 billion which could be invested in commercial innovation, to guarantee survival of a world of 10 billion people. Soon this mind-set must and will shift from macho military gamesmanship to the survival of human civilization.
3. By 2022 China is the innovation leader. Why? They’re long-term thinkers
In a thought-provoking New York Times article NPR’s Adam Davidson warns: a “recent study by the Battelle Memorial Institute, a research firm, predicts that China’s spending will match ours around 2022. In research terms, that is effectively today.”
China spends on “green energy and bio- and nanotechnology, that will most likely become products in the 2020s. And if U.S. government labs, university departments and corporate researchers aren’t already on top of the next generation of breakthroughs,” America will “fall behind in 10 or 20 years when those innovations become marketable products. Our global competitiveness is based on being the origin of the newest, best ideas.”
What happens to the America Dream “if those ideas originate somewhere else? … a global economy in which the U.S. is playing catch-up with China.”
4. America’s business must shift out of its short-term thinking mind-set
Davidson pinpoints our biggest problem: America’s culture of short-term thinkers. “From a CEO’s perspective, long-term R and D is a lousy investment … projects cost a lot of money and often fail. And even when they work, some other company can come along and copy all the best ideas free.” Quoting a retired DuPont CEO: “It’s tough to get investors to think more than two years ahead, at most.” America the world’s superpower. It’s very simple: “Three months before the Japanese attack on Pearl Harbor, Angus Echols, a member of DuPont’s executive committee, began shaping the chemical giant’s plans for the coming decade.” Much like Kennedy’s decade-long challenge, DuPont was thinking long-term:
Warning: we have no choice. Corporate America must reverse the recent cutbacks in research and match China “tit-for-tat” in the 2012-2022 innovation race.
Here’s Davidson strategy for the new mind-set that must emerge, fast — actually a revival of the earlier way of thinking that made America the world’s superpower. It’s very simple: “Three months before the Japanese attack on Pearl Harbor, Angus Echols, a member of DuPont’s executive committee, began shaping the chemical giant’s plans for the coming decade.” Much like Kennedy’s decade-long challenge, DuPont was thinking long-term:
“The U.S. would soon be at war, he explained in a series of memos and high-level discussions, and the company needed to aid the effort. But it also needed to think far ahead. When the war ended … women would want to buy cheap stockings.” So while DuPont sold “nylon to the U.S. military for parachutes and tires, its research department studied how to make stockings on the cheap.”
Then right after Japan surrendered, DuPont shifted nylon production to ladies’ undergarments. Plus veterans had “solid jobs to return to.” No wonder DuPont “dominated the burgeoning synthetic fiber and plastics business for decades to come.” By thinking long-term.
5. Is America too locked into old ways, unable to change, surrendering?
Forbes publisher Rich Karlgaard recently posed this question in his challenging “Innovation Rules” editorial column: “Is technological progress speeding up or slowing down?” He cited Silicon Valley billionaire Peter Thiel’s negative answer: Holding up his iPhone, Thiel said this is not “a technological breakthrough,” compared to “the Apollo space program.”
Then Karlgaard added: “Tyler Cowen, an economist at George Mason University, agrees. In his book “The Great Stagnation “Cowen says his grandmother saw greater changes. She lived during the birth of airplanes, skyscrapers, suspension bridges, radio and television, antibiotics, atomic bombs and energy, interstate highways, jet travel and a moon landing.”
In contrast, “a child born in 1970, a year after the first moon landing and the Boeing 747’s first flight, has seen the personal computer, biotechnology, cell phones, Web browsers, search engines and nanotechnology. Doesn’t quite stir the soul, does it?”
Wrong, they do stir the next generation. Thiel and Cowen lack vision. Fortunately Karlgaard does see progress in America’s leadership the next decade: “Industrial evolution is accelerating. … genomics and nanotechnology will soon eradicate disease and give all humans the possibility of 120 good years.”
And he envisions much more progress through innovation and technology: “Patience is needed.” Yes patience, trust and a fresh new dose of “positive mental attitude.”
6. By 2022 innovation will shift away from the Pentagon War Machine
The Forbes challenges got me thinking: Is it possible that the core issue underlying all those questions is that innovation itself has natural limits and we’re approaching those limits? Or more likely: Is it possible that commercial innovations are decelerating because military innovations are accelerating? That there is a balance, set point, limit in the “Innovation Equation?” Davidson hints as much in his New York Times column: “When the Idea Machine Stops.”
You may recall that the U.S. spends roughly half our taxes on the Pentagon’s war machine. And like China, North Korea, Iran and other nations, we have not let up on military spending. So while we expect many of America’s new innovations in the military arena near-term, soon we must and will experience a historic shift from military gamesmanship to commercial innovations essential to the survival of civilization.
7. Pentagon’s lobby will lose power to spend half the taxpayers money
Eight years ago the Pentagon predicted that by 2020 “warfare will define human life” as global population pushes relentlessly onward to 10 billion by 2050. This is “the mother of all national security issues.”
“By 2020 there is little doubt that something drastic is happening. As the planet’s carrying capacity shrinks an ancient pattern reemerges: the eruption of desperate, all-out wars over food, water and energy supplies and warfare defining human life.”
Of course the Pentagon brass, military contractors and conservative politicians all have a vested interest in spending roughly half the federal budget to maintain a war machine of new vulnerable aircraft carriers and other weapons outdated on arrival.
But more and more Americans are questioning whether war is the best solution to the world’s real problems. We now see how the Pentagon war machine diverts limited capital and natural resources from innovations essential for survival. This military mind-set is outdated, cannot survive the next generation.
8. America will soon shift innovation strategies to a global survival mode
A couple years ago Bill Gates said if he had “one wish to improve humanity’s lot over the next 50 years” he would pick an “energy miracle,” a magical “new technology that produced energy at half the price of coal with no carbon-dioxide emissions,” said CNN editor Fareed Zakaria in Time. I’d “rather have this wish than a new vaccine or medicine or even choose the next several American presidents.”
We need more leaders like Gates who think long-term. Since 1994 he has invested much of his $26 billion fortune in the “energy” of vaccines and medicines, extending life and stabilizing population growth. Yet, with the world’s population on track to increase from 7 billion to 10 billion by 2050, in one short generation we will be forced to discover bold new (non-military) innovative solutions, new “energies” to guarantee the survival of our planet.
What’s all this mean for investors? Endless bold new non-military innovations!
Forget the military war machine. Yes, forget all the threats, war games, fear mongering, big macho egos and all the special interests that get rich from maintaining a $600 billion war machine.
In fact, it won’t matter who “wins” the WWIII Great Innovation Wars. We can, we must and we will soon wake up and focus on the survival of human civilization, working together — yes, China and America as partners — figuring out how to feed 10 billion people on a planet of limited resources.
Yes, that’s the real WWIII challenge in the 2012-2022 decade. And emerging from these Great Innovation Wars will be exciting new technology investments.
About Paul B. Farrell
Paul Farrell writes the column on behavioral economics. He's the author of nine books on personal finance, economics and psychology, including "The Millionaire Code," "The Winning Portfolio," "The Lazy Person's Guide to Investing." Farrell was an investment banker with Morgan Stanley; executive vice president of the Financial News Network; executive vice president of Mercury Entertainment Corp; and associate editor of the Los Angeles Herald Examiner. He has a Juris Doctor and a Doctorate in Psychology.
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