Michael Mandel, Business Week’s chief economist looks at several parameters. He identifies nine technologies, from tissue engineering to fuel cells that showed high promise in the late 1990s but have failed to deliver. Between 1998 and 2007 US InfoTech stocks have declined by almost 30% and he discusses the relationship between these factors and the current economic downturn.
Although it poses more questions than it answers, the report is well worth reading. We already know that investment in R&D has been declining, and that the USA is now ranked #6 (with China #1) on a range of innovation-based competitiveness metrics:
And what about education? Mandel does not address this variable, but many observers believe that the decline in math and science literacy is a critical factor in this equation. California’s budget crisis has now resulted in the effective suspension of the CalGrant college aid program.
Mandel signs off by observing that:
The professor, trader, and author Nassim Nicholas Taleb calls technological breakthroughs “positive Black Swans”—unexpected events with huge positive consequences that in retrospect look inevitable. Some, such as Google, come out of nowhere to dominate within a short time. Others take years to mature and are surprising only because people forgot they were there. We’ve learned over the past 10 years just how unpredictable technology can be. But right about now, the U.S. could use a few positive Black Swans.
Post written by Peter Bloch, consultant to CAS-IP