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Spengler

National Security and Economic Growth: A New Plan

November 2nd, 2013 - 4:08 pm

I’ve already heard some complaints from free-market friends who worry that our proposals sound too much like industrial policy. But we explicitly reject industrial policy: governments should pick winners or fund businesses. But governments should fund basic research in defense, and let entrepreneurs bet on the civilian spinoffs. That’s what the Reagan Administration did. As a young consultant to the National Security Council, I executed a study at the behest of Dr. Norman A. Bailey on the economic impact of the Strategic Defense Initiative. Reagan well understood the link between defense technology and growth as well as the entrepreneurial transmission mechanism. In a Feb. 19, 1985 speech presenting National Technology Awards, Reagan stated:

Our administration has made a firm commitment to technological progress. Both of them are probably true, but one we view as nothing less than a commitment to human creativity and imagination. While we’re cutting back, wherever possible, unnecessary government spending, we’re continuing our strong commitment to basic research and development.

We have cut personal income tax rates; we plan to cut them again. This could spur savings, and higher savings could, in turn, boost the capital formation so important in funding new high-technology ventures. And we’ve rolled back needless government regulations to help provide the freedom needed by those at the frontiers of technology to experiment with new hypotheses and techniques.

In space, we’re opening the way to private enterprise; the space shuttle program is already working closely with private industry. And in 1985NASA is scheduled to deploy eight commercial communications satellites. Space technology will continue to grow even more rapidly as we pursue our plans to launch a permanently manned space station — and to do so within a decade.

In defense, we’re putting technology at the service of a decade’s old dream: the elimination of nuclear weapons. Our Strategic Defense Initiativerepresents, perhaps, the most dramatic and wide-reaching research effort to explore the means for making nuclear weapons obsolete.

Let me make one thing plain: The Strategic Defense Initiative is not a bargaining chip. It’s an historic effort on behalf of our national defense and peace throughout the world, and we intend to see it through.

The story of American technology is long and proud. It might be said to have begun with a blacksmith at his bellows, hammering out fine tools, and the Yankee craftsman using simple wood planes, saws, and mallets to fashion the fastest sailing ships on the ocean. And then came the railroad men, driving spikes across our country.

And today the story continues with the workers who built the computer in a child’s room; the engineers who designed the communications satellite that silently rotates with the Earth, shining in the sunlight against the blackness of space; and the men and women of skill and determination who helped to put American footprints on the Moon.

I support Republicans who want to restrain the federal budget. I had a lot of sympathy for Sen. Ted Cruz and his colleagues when they threw themselves in front of the train in an attempt to delay Obamacare. Austerity is not a governing platform for any party, however. The plain fact is that if we can’t get the U.S. economy out of its “new normal” doldrums with economic growth languishing in the 1%-2% range, and we can’t raise the labor force participation rate from the alarming 63% level to which it has sunk under Obama, we can’t fix the budget problems. Our economy won’t be able to bear the retirement and medical costs of the next thirty years without unacceptable pain.

Dr. Kressel and I propose to start a dialogue about the twin demands of national defense and economic growth. We can do once again what America did during the Reagan years. We still have the world’s best universities, the best scientists, and the most agile capital markets. But we don’t have unlimited time. We have a lead, but our lead is slipping, and if we don’t innovate, countries who learn to copy our present range of technologies will overtake us.

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Top Rated Comments   
Reduced entrepreneurship is only half the problem. The other half is the poor literacy and numeracy of our country. The vast ignorance is appalling. You cannot innovate, if you are ignorant. You cannot be an entrepreneur, if you have no skills.

The Progressives have crippled this nation, and there is no way back. It takes only on generation to lose liberty, and a few generations to get it back. Most countries never get it back, if indeed, they ever had it.

We are just now entering the bondage phase of the Tytler cycle. I weep for my children.
43 weeks ago
43 weeks ago Link To Comment
All Comments   (34)
All Comments   (34)
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NIST Releases Cybersecurity Framework, Silent on NSA's Role

http://www.gpo.gov/fdsys/pkg/FR-2013-02-19/pdf/2013-03915.pdf
42 weeks ago
42 weeks ago Link To Comment
The commercialization of technology flows in cycles, in part due to excess liquidity from existing cash cows. Also, new industries flow 50 to 60 years AFTER the scientific clarification.

There is good, new science out there. The problem is getting capital to take the risks to bankroll it. Capital usually takes those risks when the rate of return from established industries falls and to make money, one needs to risk money.

A sign of a coming innovation cycle is when returns are dominated by financials, rather than honest profits from operations. Think Great Depression funding radio, TV, jets, nuclear. Think Junk Bond Era bankrolling PCs and the internet.

Today, capital has near zero or even negative retun. Money is desparately seeking return but will not invest until government and politics gets out of the way.

For that. Obama and the Democrats must be pushed from power.
43 weeks ago
43 weeks ago Link To Comment
David Goldman: you wrote: "But we explicitly reject industrial policy: governments should pick winners or fund businesses." Did you mean government should NOT pick winners or fund businesses?
43 weeks ago
43 weeks ago Link To Comment
Yes, the "not" was missing -- thanks.
42 weeks ago
42 weeks ago Link To Comment
"Employment in the companies that make up the Russell 2000 index now stands at half its 2007 level." Never heard that stat before. It reminds me of economists discovering after the Great Crash in the autumn of 1929 that 'freight car loadings' had fallen off in the spring of that year. Indicators smindicators - we didn't have any back then. Now we have so many that maybe we are failing to take notice of some quirky fact about employment in the Russell 2000 companies and wont see it coming any better the the former tycoons who jumped out the window back in 1929.
43 weeks ago
43 weeks ago Link To Comment
I like the optimistic attitude by the author, but as many posters below have pointed out we have huge obstacles to overcome for this rebirth to occur.

One obstacle not mentioned is that the top power brokers now have well tested and effective tools to keep tabs on everyone, all the time, and use this information to persuade judges, senators, candidates, editors, citizens groups and the like to get their thinking in line or destroy them.

If the U.S. electorate ever figured out what was really going on and could coalesce to deal with the crooks nothing will likely change.
43 weeks ago
43 weeks ago Link To Comment
Here's some interesting straws in the wind. Looks like some of the low information left are catching a clue.
Hans Blix has come out for thorium reactors
http://phys.org/news/2013-10-hans-blix-scientists-thorium-nuclear.html#ajTabs
Here some global warming scientists (including James Hanson) call for "safe nuclear" because wind and solar won't do the job.
http://phys.org/news/2013-11-experts-nuclear-power.html
43 weeks ago
43 weeks ago Link To Comment
Nothing will happen in this Country until this president and his corrupt leftist cronies are GONE, NOTHING. Even money that supported this president will not bring their overseas profits home, google, Apple to name two. Add to these incompetents obamacare and you scare the hell out of investment money to the point where Brazil and India look more attractive. Add to that again corruption in government circles today in America and it will be a long time before confidence is restored. As bad as things are today they will probably get much worse unless we see some more of the change that was promised, and it sure as hell won't be the Obama change.
43 weeks ago
43 weeks ago Link To Comment
Mr Goldman,
Don't omit the strong influence of our changing demographic and the emergence of the ill-educated underclass supplemented constantly by the illegals crossing up from the Rio Grande.
This ensures the increase and the continuity of the Democrat voter base.
No amount of entrepreneurial effort and capital investment effort and technical know-how can overcome the natural voting proclivities of such an expanding underclass.
They can be employed....but if they remain uneducable, and they will...they become a churning, stagnant workforce perpetually dependent upon the "benefits" proffered by the Democrats.
43 weeks ago
43 weeks ago Link To Comment
Que Six Million Dollar Man music.

Barack Obama: Fellow Democrats, we can transform a nation. We have the political power. We have the lies. We have the Six Hundred Million Dollar Dysfunctional Web Site. We have the capability to create the world's first Zombie Nation. America will be that nation. Much better for us than it ever was before. Dumber, weaker, poorer, more dependent, more unhealthy and more subservient.
43 weeks ago
43 weeks ago Link To Comment
Reduced entrepreneurship is only half the problem. The other half is the poor literacy and numeracy of our country. The vast ignorance is appalling. You cannot innovate, if you are ignorant. You cannot be an entrepreneur, if you have no skills.

The Progressives have crippled this nation, and there is no way back. It takes only on generation to lose liberty, and a few generations to get it back. Most countries never get it back, if indeed, they ever had it.

We are just now entering the bondage phase of the Tytler cycle. I weep for my children.
43 weeks ago
43 weeks ago Link To Comment
Reduced entrepreneurship is only half the problem. The other half is the poor literacy and numeracy of our country.

This is an important point. As a leader in IT projects, I've been repeatedly shocked at the subliteracy of emails from the younger guys. If you can't think critically and piece two thoughts together, how can you solve big problems?

A dumbass population is the socialist's best friend. It's a rich garden of compliancy and easy votes delivered to you by the union brothers and sisters of the NEA and AFT. Education has been in a "crisis" since the 1980s, and the only changes since have been to add to the failure. Better to have the school nurse administer strong drugs to students to keep them calm. They wouldn't want an agitated, eager to learn student messing up their lifestyle, now would they?
43 weeks ago
43 weeks ago Link To Comment
My bible study just moved from Joshua to Judges. In judges the pattern is very much like that described by Tytler--even though he was referring to the ancient Greeks. In fact my class mapped the two over on to one another. They map pretty well.

That said, there will be a revival in the USA. If you look at the book of Judges, that's just the way it works. And the capital will return to the USA. That's also the way it works. The deserts will bloom and all the world's deserts will be turned green in fulfillment of the ancient prophecies as well as because of advances in water and energy technologies and because that's the way it works. And Americas greatest days are ahead when thousands, then hundreds of thousands, then millions of people swarm off the planet like a great locust storm. Because the way to the deserts of the moon and Mars and beyond are through the deserts of earth. And because that's the way it works. Then the bad stuff sets in because that's the way it works.
43 weeks ago
43 weeks ago Link To Comment
"Revival" won't happen with dumbed-down public education and tax dollars being siphoned off via vouchers to support fundamentalist religious schools that teach creationism and that the world was created in 4004 B.C.
43 weeks ago
43 weeks ago Link To Comment
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