America and the Transition

The transition from an industrial to an information economy, from an Industrial Age to an Information Age has had a profound effect on the uneducated and unprepared. The Information Economy places a requirement for more energy to support its data centers now focused on AI.

The transition is also inflicting pain on certain sectors of employment.

Carl Sagan’s Foreboding

Carl Sagan noted that we are a society exquisitely dependent on science and technology in which hardly anyone knows anything about science and technology. :Science is more than a body of knowledge; it is a way of thinking." “I have a foreboding, he wrote, of an America in my children's or grandchildren's time?– when the United States is a service and information economy; when nearly all the key manufacturing industries have slipped away to other countries; when awesome technological powers are in the hands of a very few and no one representing the public interest can even grasp the issues; when the people have lost the ability to set their own agendas or knowledgeably question those in authority; when, clutching our crystals and nervously consulting our horoscopes, our critical faculties in decline, unable to distinguish between what feels good and what's true, we slide, almost without noticing, back into superstition and darkness."

The Service and Information Economy

My Comment: The principal issue with a service and information economy which was also was predicted for banking by Walter Wriston’s “In the future, all we will sell is information,” is whether such an economy creates a sufficient number of gainful jobs. It is already evident that the lower rungs of our American economic ladder are filled with logistics providers - people using micromobility in our large cities to deliver food and documents, Amazon's EV vans created by Rivian, delivering to the last mile, and the newly arrived immigrant using fuel efficient cars and SUVs to deliver food and executives to their inner city, national and international appointments.

The functioning of such an economy is necessarily based on law, supportive of title to intellectual property or IP and the selling of ideas occurs in stages from local and national scale to global scale.

A Personal Experience

Return to Friedrichshafen

I visited lovely Friedrichshafen on the Bodensee or “Border Sea” between Germany, Austria and Switzerland when I was bored with commercial banking and trade finance and decided to sell bicycles to the world. I managed to sell licensed bikes, trikes and accessories to 34 countries and in the process learned a great deal about international trade, trade shows, marketing, manufacturing, logistics, culture and much more than I would have learned within the confines of banking.

Banking, Science and Technology

In America, Banking, Science, Technology and Law have had a fraught relationship. Initially JP Morgan, for example, supported Nicola Tesla’s experiments, his R&D at Shoreham, Long Island, where Tesla built Wardenclyffe:

Morgan withdrew his support of Tesla when other scientists were able to copy and patent Tesla’s innovations because the scientist failed to patent them before they were exploited by others. As a result, an enraged Morgan tore up the contract providing the banker/investors financial support and Tesla was relegated to digging ditches in NYC for $2.00 a day while his hotel bills were paid for by a few of his wealthy friends.

Fast Forward

Friedrichshafen, a very picturesque venue that I visited for an international bicycle show, figures in trade shows intended to present to the world the latest in scientific and technological innovation. In the same vein, the Hanover Fair, that I have also attended, serves for presenting a wide variety of electronic and industrial products. Its size and significance for revealing innovations to the world is truly mind-boggling.

The Alternative

Unlike Tesla, Edison, also backed by Morgan, was able to exhibit and sell his ideas throughout Europe because he realized that selling overseas would lead to the exponential growth of his company and of his ideas. Unlike Tesla, Edison patented his ideas and was able to sell such innovations as the light bulb, electricity generators and film and audio production from their modest beginnings in places like New Brunswick, NJ to the world.

The American film industry is proof of the success of American ideas in scaling globally. From a modest film studio in New Brunswick,

Edison’s extraordinary imagination and perspiration and the financial support of J. Pierpont Morgan:

led to the global expansion of American culture and ideas - of the American imagination.

Today

Today, the financial successor to Morgan, JP Morgan Chase is supporting Saudi Arabia’s Vision 2030, Prince Salman’s extraordinary view of what the world will be like by that year.

In contrast, there are 2 other visions of what our future holds in terms of energy, employment, imagination and opportunity.

The CHIPS Act represents the Biden Administration’s view of what’s in store in America’s future. The manufacture of microchips in places like Arizona (onshore) it proposes, in collaboration with such global minds as that of Morris Chang, who was educated at MIT and Stanford, and the Dutch purveyors of ASML lithography, will change America and the world.

The Grand Alliance

Morris Chang realized as early as anyone how smartphones would transform computing - and therefore how they would change the chip industry too. The media focused on young tech tycoons like Facebook’s Mark Zuckerberg, but then 77-year-old Chang had a perspective that few would match. Mobile devices would be a "game-changer" for the chip industry, he told Forbes, perceiving them as heralding shifts as significant as the PC had brought. He was committed to winning the lion's share of this business, whatever the cost.

Chang realized that TSMC could pull ahead of rivals technologically because it was a neutral player around which other companies would design their products. He called this TSMC's "Grand Alliance,” a partnership of dozens of companies that design chips, sell intellectual property, produce materials, or manufacture machinery. Many of these companies compete with each other, but since none fabricate wafers, none compete with TSMC. TSMC could therefore coordinate between them, setting standards that most other companies in the chip industry would agree to use. They had no choice, because compatibility with TSMC's processes was crucial for almost every company. For fabless firms, TSMC was their most competitive source of manufacturing services. For equipment companies and materials firms, TSMC was often their biggest customer. As smartphones began to take off, driving up demand for silicon, Morris Chang sat at the center. "TSMC knows it is important to use everyone's innovation" Chang declared, "ours, that of the equipment makers, of our customers, and of the IP providers."

That's the power of the Grand Alliance! The financial implications of this were and are profound., "The combined R&D spending of TSMC and its biggest customers" he bragged *exceeds that of Samsung.” TSMC is spending $40 billion to create two factories, fabs, in Arizona.

Enter the Dutch

The Dutch now control many of the most iconic marques of the U.S. auto industry with Stellantis, the constellation of autos, that now owns Chrysler, Jeep, Ram, and Dodge. The challenge now is to make EVs affordable while retaining manufacturing jobs in America.

The Dutch manufacture the world’s most advanced chip lithography equipment. ASML Holding N.V. (commonly shortened to ASML, originally standing for Advanced Semiconductor Materials Lithography) is a Dutch multinational corporation founded in 1984. ASML specializes in the development and manufacturing of photolithography machines which are used to produce computer chips.

As of 2023 it is the largest supplier for the semiconductor industry and the sole supplier in the world of extreme ultraviolet lithography (EUV) photolithography machines that are required to manufacture the most advanced chips.[2] As of March 2024, ASML was the most highly valued European tech company, with a market capitalization of about US$397 billion.[3][4]

ASML's corporate headquarters is in Veldhoven, Netherlands and the location for research, development, manufacturing and assembly. ASML employs more than 42,000 people[1] from 143 nationalities and relies on a network of nearly 5,000 tier 1 suppliers.[5] ASML has a worldwide customer base and over sixty service points in sixteen countries.[5] It has offices in the Netherlands, the United States, Belgium, France, Germany, Ireland, Israel, Italy, the United Kingdom, China, Hong Kong, Japan, South Korea, Malaysia, Singapore, and Taiwan.[5]

Another vision of what the world will be like in 2030 is perpetrated by the Quartet of Chaos:

which is why our collaboration with Europe:

is so vitally important.

Politically, today is a critical voting day in our Democracy and the effort to do away with the CHIPS Act would have massive geoeconomic, geostrategic and geopolitical effects.

Next: Geopolitical implications and the American Future: Machiavelli and Tulips

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