The world of technology is changing rapidly. In fact, the pace of the change is accelerating, driven by the disequilibrium created by the coronavirus pandemic, but also because international competition has heated up enormously.
China is singularly focused on catching up (to the technological edge maintained by the United States and its allies).”
It does so legally by investing billions in key technologies; fomenting science, technology, engineering and maths education; and by mining open-source databases.”
It also does so illicitly via cybertheft and industrial espionage.”
So writes Anja Manuel, a co-founder and principal of Rice, Hadley, Gates & Manuel LLC, in the Financial Times. In writing these sentences, Ms. Manuel is setting the stage for a massive effort on the part of the government, the business community, and the citizens of the country to focus on the advancement of technology in the U.S. and fully participate in this evolving future.
Ms. Manuel is speaking from a consulting firm which demands a lot of attention in its own right. Rice is Condoleezza Rice, former Secretary of State, former Provost of Stanford University, and currently appointed Director of the Hoover Institute, among other things. Hadley is Stephen Hadley, former assistant to the President for National Security Affairs and assistant secretary of defense for international security policy, among other things. And Gates, is Robert Gates, former Secretary of Defense, among other things.
I mention these connections because they show the level of urgency to which this issue has risen. This is important not only for national security, but it is also important for the growth and development of the economy and for the health and strength of the American business culture.
Understanding the movement in this area is something investors need to be aware of because efforts like these are going to impact the whole structure of what areas of the economy are going to be thriving, what businesses are going to be prospering, and how economic resources, labor and capital, are going to be put to use.
In other words, efforts like these are effective, then the whole structure of the US economy is going to change even more rapidly than many of us now believe it is going to change, and this will impact what is going to be successful, and consequently, what we should be investing in.
Where The World Is Going
If there is one book that I would recommend to people about where the world is going these days, it would be the book by César Hidalgo titled “Why Information Grows.” Mr. Hidalgo is a professor at MIT.
Mr. Hidalgo writes that “understanding the nature of economic growth demands transcending the social sciences and including the natural sciences of information, networks, and complexity.”
In Mr. Hidalgo’s world “economies become distributed computers, made of networks of people and the problem of economic development becomes the problems of making these computers more powerful.”
The point is that this has been the whole history of the world. Information has grown and spread and the world has evolved and progressed. The evolution and progression have just accelerated and are moving faster than ever before. That is why it is more noticeable.
Some people get this, but others don’t. Some people and leaders attempt to stop or slow down the growth and spread of information, but in the end, these people and leaders have failed.
Information spreads and grows. The investor must accept this as a given.
Concern About How The US Is Progressing
Right now, however, there appears to be a rising concern that the United States, the United Kingdom and the European Union are not doing enough to support and encourage this evolution.
This is what Ms. Manuel is writing about and part of what Rice, Hadley, Gates, and Manuel, LLC is all about.
Today China, Russia, Iran and others recognize that technology can nullify the military and economic supremacy that the US, UK and their allies have long enjoyed.”
It is hard to direct one’s attention to this world of innovation and change with so much that is happening to the economies and economic structure of the West. We tend to focus on pain and suffering. Yet, innovation and creation are happening. I try to write about the new innovation taking place as much as I can.
But I also try to write about how established firms are letting down, not only the country or the government, but also the investment community. Two examples of recent note: see, for example, “AT&T: Still Going Nowhere” and “General Electric: Taking Advantage of Bad Times.”
What Ms. Manuel is arguing, and I agree with her, is that our leaders are not fully doing their job. That is, the political leaders seem to be adding little or nothing to the concern about keeping up.
What Needs To Be Done
Ms. Manuel is stating that
“the time for complacency is over. We need a strategy to remain competitive.”Crucially, this requires deeper mutual engagement.”
Just like in the post-World War II era, the US, the UK, and the EU need to pull together to establish norms for peaceful economic relations and international standards relating to technology development.
But we don’t need structures that are slow and bureaucratic. Ms. Manuel suggests that we need organizations that are flexible, with informal structures and working groups. These groups would be composed of senior officials, technology leaders, and academics. The effort is to get information flowing so that it can become knowledge and know-how.
Most of all, we need leadership from the top that recognizes that an effort like this is crucial to the competitive ability of the US, the UK, and the EU, relative to China, Russia, Iran, and others.
We need a vision for becoming the information capital of the world, as we have been for much of the past seventy-five years or so. This must become built into our economic and social structure; it must become the culture of the future.
According to Hidalgo, if we don’t flow with this evolution, we will lose it. China is intent upon assuming the leadership. This new world is going to happen, we just have to decide what role we are going to play within this future.
But such an effort would not only maintain leadership politically in the world. It would help us to create and develop the economic structure of the world.
And this is where it becomes important for investors. Investors need to decide on what role they are going to play in this evolving future.
Do we investors put our money into AT&T (NYSE:T) and GE (NYSE:GE), given the way they are performing? Or, do we look for and encourage those organizations and institutions that are working to create the future? Do we emphasize the advancing technology or do we hang back with our “legacy.”
Information is going to grow and spread. This is what history teaches us.
That is why investors need to learn more about ideas like those being spread by Ms. Manuel. Investors need to learn more about what technologies are being developed. Investors need to get behind these efforts and put their money into this future. Investors need to welcome, arm-in-arm, the next era.
By the way, investing in this way should provide some very nice returns.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.