Technological innovation and knowledge - Part 1

"And the people bowed and prayed

To the neon god they made

And the sign flashed out its warning

In the words that it was forming

And the sign said, "The words of the prophets

Are written on the subway walls

And tenement halls

And whispered in the sounds of silence" - From: The Sounds of Silence - Simon and Garfunkel?

A deepening cultural ethnocentricity is relegating the U.S. to an unprecedented state of mediocrity. This state is compounded by the Carl Sagan Complex. Carl Sagan stated that in a society exquisitely dependent on science and technology, so few know anything about science and technology. Deepening this idolatry is the?categorization of people and knowledge. It was Neil deGrasse Tyson who wrote that there are two categories of people; people who categorize others and people who don't.

From January 5, 2015:

I am grateful that the Charles Schultz and Fred Smith opinion piece appeared in the WSJ. It appeared on the day after the opinion piece on the arrogance of Silicon Valley, Balaji Srinivasan's suggestion of a "peaceful exit" from a country unduly influenced by Wall Street, Washington, DC, and Hollywood, the "paper belt." Silicon Valley (SV), it would seem, represents a unique community that would solve all our problems with technology and intelligence if only it was not hampered by the paper belt. This assertion reminded me of the Simon and Garfunkel song about isolation: ??I Am A Rock."

The WSJ opinion piece ignited a furious debate on the arrogance of SV in proposing its secession from a dysfunctional country.

My Comment: Schultz, the former Secretary of everything Federal and Smith, the head of FedEx, have reminded us of the central issue of our time.?

The Prize Revisited

For 40 years, since 5 November 1973, "OPEC's intervention in the global oil market has created market and price distortions that have cost the American economy trillions of dollars and stymied the innovation required to develop ??competing technologies."

This strategy has filled OPEC's coffers with $1 trillion each year for the last two years alone. More importantly and as noted by Messrs. Shultz and Smith, this has disrupted the ability of countries to spend the money on job creating innovation.

The U.S., due in part to technological innovation, stands on the verge of energy security and independence. "America's energy revolution has the potential to disrupt the status quo to the nation's considerable economic and foreign policy advantage."

Like plants, technical innovation and entrepreneurship do not thrive in a vacuum. They require nurturing, financing, education and global scaling. Yes, global scaling. As FDR pointed out in 1934, in order to maximize the benefits to the world of American knowledge; its manufacturing prowess, its leadership in education, food production, medicine, pharmaceuticals, infrastructure, logistics, - resources that America possesses in abundance, they must scale - globally. The benefit is not just global social welfare. It brings wealth and jobs to the exporter's country.

The U.S. must fix its inefficient process of delivering working capital where it matters most: to entrepreneurs and innovators that export. U.S. SMEs, when they do export, sell mainly to 2 countries, namely Canada and Mexico. By contrast, German SMEs, the "Mittelstand," sell to 6 countries on average. The result is that Germany has half the unemployment of the countries that surround it. While many banks retreat from trade finance, German banks provide working capital to the most innovative companies of that country in a relatively risk-free manner. The Mittelstand participate in the great intra-regional and extra-regional trade flows of the world.?

Just as American innovation has been constrained by OPEC market distortion, Europe has been equally constrained by its dependence on Russian gas and by its financial addiction to financing large, multinational corporations.?

The Paper Belt?

America's energy security and potential independence provide an opportunity to reorganize its dysfunctional trade finance systems. We have the opportunity to lead in providing robust economic growth, a healthier environment and an effective foreign policy - to the world.?

We cannot double exports until our bankers get off their ??Hollywood-driven addiction?? of financing the largest deals, benefitting the largest corporations. That is so Paper Belt!

We now, right now, have the resources to encourage and finance SMEs that want to be world beaters, but we waste talent and resources unequally on the large and wealthy rather than on the entrepreneurial and evolutionary.

Next: Finlandia: Russia and History?