by Dana Blankenhorn
  Volume VII, No. XXXII

This Week's Clue: Rebuilding America's Technology Leadership

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This Week's Clue: Rebuilding America's Technology Leadership
SSP (Shameless Self Promotion)
SP (Shameless Promotion)
The Internet Generation
The Growing Chinese Threat
Clued-in, Clueless

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For the Week of August 11, 2003

The technology industry is starting to pick up, but American producers are not participating.

The pace of change is slow and measured, even predictable. Chinese and Indian companies thrive in this environment. That is why America's high wage design jobs are following low wage support jobs overseas. With most chip production already located in the Far East it seems the crown jewel of our economic power is being lost.

Can this be turned around? Yes. But it will take a major effort. We have to make this our highest economic priority. We have to rediscover how we succeeded in the 1990s, and bring back what we can of those conditions.

America does best when the pace of change is at its maximum. That is when there is the highest premium on economic, political, and social liberalism. By that I mean free markets, an open democracy, and the liberty to speak, write and experiment.

Economic liberty, political liberty, and social liberty are connected. They are a triad. You can have limits on each one, but the country that succeeds best in a period of rapid change will be the one that maximizes all three, because its society will be most flexible, and best able to adapt.

For the U.S. that means getting government, and entrenched industries, out of the way of change. It means ending the copyright wars on terms consumers will accept. It means limiting, not expanding, patent protection, so companies will be forced to create new stuff instead of relying on lawyers to protect old stuff. I'm not just talking here about limiting patent and copyright terms, but on limiting their reach as well. The idea that a business method should be subject to 17 years of patent protection is absurd. The idea that copyrighting a chip design can prevent third-parties from making compatible ink cartridges for 75 years is equally absurd.

Why is this important? When our companies are afraid to innovate, or when the cost of innovation (including litigation) makes investments in innovation seem unwise, innovation does not stop. It moves. Once it moves it is difficult, if not impossible, to move it back.

The key to innovation is competition. Disney had a nice little "monopoly" on animation once, but Japanese anime creators had a more competitive market, and now they are taking over. The same thing is happening in semiconductors and software. We need more competition here or we can't fight off the competition from there. That means lower legal hurdles to competition, not just low financial hurdles.

If we can just get this right, the other changes I propose will be relatively minor, their impact relatively modest. But they can still be profound.

First, the tax law has to be changed. It's your money, it's raising your debt, you're going to have to pay it back, so the money should be spent in your country. We are subsidizing our competitors. There is nothing to stop individuals and corporations from plowing money saved on tax cuts into foreign investments. Forget for a moment the fact that this isn't targeted at high-growth sectors - it's not even targeted at the U.S. economy. That must change.

Second, we need to invest a lot more heavily in technology education. We need to encourage our smartest kids to learn science and engineering. We must make sure that finances will not be an object to an American's ability to learn these subjects. This is something all our competitors have learned. China is producing more than twice as many engineers as we are each year, and many of ours are foreign-born. American kids should be competing for and winning those places, and we need to make more places - a lot more.

Finally we need some inspiring new projects, some great works that will feed our kids' imagination and, more important, bring innovations the private sector can capitalize on. The Apollo program brought us Tang, Velcro, and it accelerated micro-processing. A Space Elevator can do the same thing for materials science. We need to get Americans to Mars, and make sure the Red Planet doesn't become property of Red China. We need to inspire young people, to make science glamorous again. We need a new sense of urgency.

We need to start this work right now. This is not a Democratic or Republican issue. I have problems with both parties' approach. Democrats tend to oppose big science, and are as guilty in the copyright wars as the Republicans. Republicans, on the other hand, are in power right now, and the deterioration of the tech economy is accelerating on their watch.

If we don't turn around the tech economy, if we lose our leadership to India and China, our national debt will never be repaid, and our nation will be the 21st century's Argentina. That is what is at stake. It's not just your money and your debt, but your future, and your children's future, that is on the line.


SSP (Shameless Self-Promotion)

I currently work as a business analyst with Progressive Strategies , a New York research firm that has the ear of the world's top technology companies.

My last book, "The Blankenhorn Effect" won the Computer/Internet category in the 2003 Independent Publisher (IPPY) awards .

You have my permission to forward this newsletter widely. And if you have trouble subscribing let me know . Remember: it's journalism that keeps the Clues coming...


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Takes on the News


The new frontier in software is autonomics.

What is autonomics? It's a name derived from your nervous system, specifically the nerves that cause your heart to beat and your lungs to expand. You don't think of your heart beating. You don't have to, because it's driven by the autonomic nervous system.

The central core of autonomics is software that monitors your system on an ongoing basis and fixes bugs automatically, without human intervention. This goes alongside new programming tools that let you write software based on business rules, rather than the requirements of the program. The result should be systems you can clone, so if you need new power during tax season you can get it, or if you're finishing a computer animated film you get the virtual "ink-and-painting" done faster than you can call Korea.

The benefits of this are obvious. You get lower costs and a great deal more flexibility. But the dangers are not obvious. Once again you're laying-off highly-qualified programmers. You can lose touch with the new capabilities of computing when business heads replace computer geniuses. And unless you can find new tasks for the talent to work on, you're adding to the risks our technology leadership will be lost to overseas competitors.

But these must be minor quibbles. Economics is all. As autonomics rises, it's up to us to find new horizons for software and new services software can provide.


The Internet Generation

Both my kids belong to the Internet Generation. They are as familiar with computing and the Internet as I was with TV at their age.

Old fogies in the media business have suddenly gotten their undies in a bunch over this but they really don't know the half of it.

Computing and the Internet are being hard-wired into this generation's brain. When they want to know something they Google it. When they want to buy something they Froogle it. They don't need newspapers or magazines, they don't require TV (even cable) for entertainment. This doesn't mean all the old media dies, just as radio didn't die with TV. But the older media all have to make way, and the rate at which knowledge - even specialized knowledge - ripples through society will start to accelerate at a constant rate.

But this is just the start. Once my generation took TV as a given, they started to change TV. A new social vocabulary developed. Politics was transformed, as was the culture of celebrity. Even Americans formed two distinct social classes - those who were on the tube regularly and those who were not.

All these assumptions are now subject to change but I cannot tell you how they will change. You'll have to ask my kids. And even they don't know. You'll have to wait until they grow up.

Here are some early indications, which I have gotten from watching my children at work and at play. Reading is actually increasing as a form of entertainment, because it's easier to find something you actually want to read. Gaming is giving TV a big run for its money, and its time. The loss of old Web content, the expiration of links, is going to be a much bigger issue as time goes by, because a fact will either exist online or (to a growing number of people) it won't exist at all. (This is especially important when it comes to news, where papers insist on pulling stories behind firewalls and charging for access.)

As I said, however, all these are just guesses - one old fogey to another.


The Growing Chinese Threat

The Chinese threat to America's technology leadership is picking up pace.

  1. A Hong Kong company announced the V-Dragon , a Chinese-designed and built chip optimized around a version of Linux with extensive support for Mandarin pictographs.
  2. Chinese physicists announced the discovery of a new sub-atomic particle . The new particle holds the properties of a meson, but is much narrower. Combined with the discovery of other multi-quark states, the new particle challenges the strong interaction theory, or Quantum Chromodynamics. That's not all it challenges.
  3. China is moving to standardize on Linux, eliminating the dependence that nation's software writers have on American technology.

In all these cases, it must be noted, American companies and scientists are collaborating closely with their Chinese colleagues. The battle for technology supremacy can, in fact, be a win-win game. But once China leaps ahead in any area, its government quickly moves to make independence in that area a policy, then export the results just as America has. Their one-sided view of "fair trade," in other words, is identical to ours, and if we fail to compete at any time we will be crushed.

You have been warned.


Clued-in, Clueless

Clued-in is Al Zollar of IBM, who claimed at an Asia-Pacific technology conference that a "set of forces" is attempting to derail Linux, and hinted that Microsoft and SCO Group are among those responsible. . Yuh think, Al? So when is IBM going to do something about it?

Clueless is Peter Kedrosky, for this story urging-on the RIAA in its legal campaign to put music swappers in jail. "We don't need to catch every speeder on a highway to slow down the general pace of traffic," he writes, having never been on an Atlanta freeway. Fear will only accelerate the industry's sliding sales. The only way out is innovation.


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