Not Your Father’s Disruption

BRANDON J. WEICHERT | THE WEICHERT REPORT

Innovation and disruption are two sides of the same coin. Historically, whether talking about the transitioning away from horse-and-carriages to automobiles or from an industrialized economy to a post-industrial “knowledge” economy with all of the trappings of computer technology, new innovations have catapulted society forward but have tended to disrupt existing businesses and institutions. While disruption can, at times, have negative connotations, it can also be positive in the long-term. More importantly, innovation occurs in a non-linear and unpredictable fashion.

We’ve gone through incredible phases of development before. Initially, development from the Stone to Bronze Age took an extremely long time. During the Industrial Age, though, things started to change. From the beginning of the Industrial Age (which the great English historian, Arnold Toynbee proclaimed as having begun in Great Britain in the 18th century), the world developed incredible technology in every aspect of life in a little more than a century. Meanwhile, the digital age began with the first silicon-based computer chips in the mid-twentieth century. From that point onward, the world has experienced advances–and rapid dislocations–at historic paces.

Despite this, though, there will be nothing more disruptive than the coming technological revolutions that are only just now beginning to take hold. In his 2009 work, The Next 100 Years, geopolitical analyst, George Friedman, dubs the 2020s as a decade of crises. As we approach the dawn of a new decade in the 21st century, we can already see the devastation, disruption, and opportunities in store for us. Automation, the rise of artificial intelligence, is upon us.

Artificial Intelligence: Job-Killer and Life-Saver

Soon, A.I.-controlled machines could displace as many as 40 percent of the world’s jobs could be lost to A.I. And, that’s not just in the much-maligned (though little understood by the global elite) Old World, manufacturing-type job sectors either. As Luigi Zingales cautioned his readers way back in 2005, automation will soon work its way up the development ladder; consuming white-collar, “knowledge”-type jobs–ranging from lawyers to doctors to professors–that many assumed were protected from the kinds of disruption that have usually been reserved for the blue-collar industries in the West.

But, it isn’t just in the area of automation where life will be disrupted (and, in some cases, bettered) writ large. Biotechnology is the next big tech sector that is set to pop in much the same way that the computer industry exploded during the dot-com boom of the 1990s. Yes, there are far more stringent regulations imposed upon biotech companies and research institutions in the West today than there ever were on computer companies, but it isn’t only the West that is investing in and developing biotechnology that will fundamentally alter and disrupt human existence.

China Is Edging Out All Competition In Advanced Tech Industries

As I’ve written elsewhere, China is, in many respects, leading the world in researching innovative and disruptive biotechnology. Chinese biotech firms, such as Sinogene, are leading the way in cloning technology; the founder and owner of Sinogene has expressed an interest in being able to perfectly clone human beings within the next decade, so as to conduct medical experimentation and to have compatible organ transplants at the ready. Of course, few understand how deeply entwined with the People’s Liberation Army that firms like Sinogene are.

Recent reports have suggested a PLA program to use biotechnology to artificially enhance a team of their special forces soldiers to make them more combat ready and effective. This process, known as “gene-doping,” could have profound impacts on the battlefield. And, beyond the battlefield, Chinese biotech could fundamentally transform the way that totalitarian police state keeps its people under their control. Essentially, China is investing where few Western firms dare to go–and they are beginning to attract Western minds to their endeavors. Beijing is creating the atmosphere in China that will ensure that China, not the United States, is the hub of biotechnology development. And, since biotech is the next great industry to “pop,” this would give the Chinese Communist Party unprecedented influence over such a dangerous and experimental field.

The realm of quantum computing is also developing at unprecedented rates. Silicon-based computers, which currently run the world, have been exponentially increasing their capabilities since 1968. Yet, this trend, known as Moore’s Law, is coming to an end. Inevitably, nothing can sustain unlimited growth. Already, companies like Hewlett-Packard (HP) are devising strategies for effectively expanding the capabilities of the fastest silicon-based computer chips in order to keep pace with consumer expectations and technical requirements.

But, as things like artificial intelligence–and cloud computing–become a reality, it will be impossible for silicon-based computers to remain at the forefront. New forms of computing that offer users greater processing speed and power will be required. Things like bio-computing and, more interestingly, quantum computing are suggested as replacements. IBM and Google have made extensive investments into the development of quantum computers, but it is China that has crafted a coordinated strategy for besting the Americans in quantum computing development.

Middle-Out Development: Chinese Quantum Technology

What’s more, from their initial investment in quantum computing, the Chinese managed to develop next generation communications technology–the quantum internet–and are working on streamlining it now. Meanwhile, China supposedly has built a quantum radar and are readying to link this technology to Russian-built S-400 air defense batteries. This is important because, not only are the Russian-built S-400 (and S-500) systems reputedly capable of shooting down U.S. fifth-generation fighters (the F-35 and F-22 Raptor), but merging them with quantum radar would effectively render previously hard-to-track stealth technology completely visible at farther and longer rangers, with stunning accuracy.

The F-35 program cost U.S. taxpayers $1 trillion over a decade (that’s more than the entire GDP of the Russian Federation, as Sean McFate loves to remind audiences). For a fraction of that cost, thanks to the unpredictable and non-linear path of technological development today, China created a workaround to this U.S. stealth threat for a fraction of the cost–while moving up the technological development ladder in the process!

The initial investment into quantum computers led to the development of the quantum internet and radar. Investments in quantum computing will assist in the development of artificial intelligence and cloud computing. All of this will redound to the expansion of overall computational power, an unprecedented economic expansion, and inevitably even more advancements.

While getting advancements first is by no means a fait accompli to dominating emerging technology sectors, getting there first gives one a considerable leg up on their competition, In this case, China has invested copiously–and developed an integrated strategy–in becoming the leader in emerging technology development. Things are so out-of-control that KPMG assesses that Shangai, not Silicon Valley, will become the world’s number one technology innovation hub within the next year.

Space: The Final Frontier (To Get Wealthy & Disrupt Society)

New technology, particularly, the sort we are talking about and experiencing today, have the capability to undermine markets, in some cases enhance human comfort, in other instances they can fundamentally transform the national security environment. Biotech, quantum computing, artificial intelligence are but the beginnings. In my opinion–and this is a wildly unpopular thought–it is in the area of space development that poses the most likely place to disrupt human civilization.

And, at the risk of sounding like a dreamer (or worse, a utopian), space is the place that will afford humanity–specifically, the country (or countries) that come to dominate and exploit this frontier first–the most hopeful future imaginable.

Writing in The Diplomat, Peter Garretson, argues that space is full of the natural resources required to maintain an advanced civilization such as ours. Rare earth minerals, as I recently argued in the glorious pages of American Greatness, are in abundance on the moon and beyond. Solar energy could be essential in seeking viable, renewable energy sources to offset the pollution caused by non-renewable sources of energy.

Garretson writes:

States pay close attention to economic opportunities that do not even amount to a single percent of their GDP.  States play hardball over energy resources that are mere years of domestic supply. But within space lies not a percent, not 10 percent, not 100 percent of a nation’s GDP, but many, many times the value of the entire global GDP in resources. Within space is not a small energy source, but sufficient supply of constant solar energy to light a fully developed world six to seven times over.  As poetically explained in Bob Zubrin’s The Case for Space, nothing is a resource until the cleverness of humanity makes it so.

How are we not developing space for economic benefit?

Also–and this is the disruptive component of space development–once the costly infrastructure for space mining, permanent settlement, and travel is established, the commodities markets on Earth will be severely disrupted; prices will plummet as supply will likely outstrip demand (there are millions of resource-rich asteroids within reach, for example); consumers will benefit as the price for just about anything reliant on these commodities collapses also.

Rather than resisting the development of space resources, policymakers should be crafting ways to manage the newfound “problem” of abundance. Humanity absolutely requires the energy, materials, and opportunities that the harsh mistress of space provides. Too rapid of development, though, would totally upend markets. What’s more, the first groups that manage to make it to space and develop its resources–those who gain the almighty-first-mover advantage will likely benefit the most. Like the first investors of the dot-com era, those who got on the proverbial ground-level first made the most amount of money (when the risk was the highest).

Presently, China and India are leading the packs in space development. The United States watches passively as Chinese state-owned enterprises and Indian resourcefulness best American plans for dominating space (particularly, the moon). China is the first of a new spate of nations to land on the moon. The Chinese, unlike the Americans, have an integrated strategy for dominating the moon before the Americans can. China is the most resource-starved of all great powers. They will not countenance letting the United States interfere with their acquisition of vital (and lucrative) natural resources on the moon, asteroids, and beyond.

And, should China manage to build up their space resource development program; should they manage to get ahead of the Americans, they will be able to close off key access points in space to the U.S. and its companies. The space mining industry alone is worth trillions of dollars. That’s the GDP of several medium-sized countries. Imagine being able to pay off the U.S. $22 trillion debt load (or, at least, a significant portion of it) due to taxes generated by the lucrative space mining sector. And, that’s just the beginning.

Remember: innovation is non-linear and can be spun-off in various different directions.

A space program is a great way to push the limits of existing technology while experimenting with new ones in real-time. Computer science, medical science, and a variety of other sciences that may not be obviously related to the space sector were advanced at breakneck speeds, thanks to the massive investment and commitment to space exploration during the 1950s, 60s, and 70s. Today, despite the drastically reduced status of NASA, spin-off technologies are still emanating from NASA and space research and development.

China, on the other hand, has a robust investment in space. It is pricey now and success is not guaranteed (although, in what great endeavor is success a guarantee?) but victory goes to those who keep trying. Their investment and capabilities are growing in this region whereas the American investment and capabilities, despite what the Trump Administration has said, is on the wane. In 50 years, China could be the most dominant power on Earth because it will dominate the critical strategic high ground of space (and monopolize access to the abundant natural resources there).

Understanding Innovation and Disruption Will Be Key

Innovation and disruption are fused. In everything from biotechnology to computer technology to space development, the country that invests consistently and possesses a clear strategic vision will not be able to control the path of development. Although, that country will most definitely be able to benefit from the fruits of that development. The United States did not simply appear as the most dominant technological nation on Earth. It worked assiduously over the course of many decades to out-compete its rivals.

For years, the United States has become comfortably numb to the threats it is facing in geoeconomics, space, the high-tech sector, and beyond. We are now at risk of being passed over by a totalitarian state, like China. Should this occur, the United States could become what the Spanish or French Empires of old were: outdated, unable to compete, and ultimately, obsolete. We should not fear disruption and we should not restrict innovation.

Instead, the approach that was favored by JFK and Ronald Reagan should be embraced: full-throated, across-the-board innovation. Only by unleashing the “animal spirits” of American entrepreneurship and know-how can the United States maintain its lead over its geostrategic rivals and benefit the most from whatever innovations are around the corner.

Meanwhile, understanding that disruption will be the new norm, U.S. policymakers and leaders will better be able to formulate effective policy responses to these dislocations. Andrew Yang, the gonzo Democratic Party candidate for president in 2020, is one of the very few people–from either party–that is addressing problems of the future.

While his Universal Basic Income is over-the-top, it is an attempt to ameliorate the damage endured by ordinary Americans as automation becomes a complete reality. Notice how Yang and others are not advocating for the discontinuation of automation. Instead, they understand that it is key to balance between innovation and disruption.

Let us advance ahead of the Chinese and our other competitors while mitigating any destructive impacts that such innovation may incur. And, let us be aware that stability of the kind that pervaded previous eras will not be experienced again until at least the middle of this century. The 2020s will be difficult indeed.

We should face the future with bold resolve rather than timidity, though, and beat out our competition lest we become a second-rate, middling power. These are the stakes.

COPYRIGHT © 2019  THE WEICHERT REPORT. ALL RIGHTS RESERVED.

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