by James A. Bacon
Despite awakening this morning with a hangover resulting from a fabulous New Year’s celebration last night, I was curiously and uncharacteristically upbeat about the year ahead. I still have grave reservations about the fiscal future of this country and I still believe Boomergeddon is in our future. But for some odd reason, I have been dwelling today upon the positive.
Internet of Things. The next wave of technology innovation, the contours of which are just now coming into view, will be as breathtaking and transformative as the World Wide Web and the wireless revolution and, in fact, represents the extension of those technologies into new domains. It goes by many names but the one that seems to be catching on is the Internet of Things (IoT). Prices are plummeting for sensors, wireless connectivity, data storage and data processing power, with the result that virtually all man-made things will be capable of being connected over the Internet, will be capable of sensing their environment and communicating with other things, and will generate massive amounts of data that can be mined for tremendous gains in productivity and energy efficiency. In so doing, the IoT will spawn a new array of cool products and services. As a bonus, the new wave of innovation will not be as focused on Silicon Valley as previous technology revolutions. The innovation will be more dispersed geographically and the resulting wealth creation will be more broadly shared.
Energy revolution. Say good-bye to Peak Oil, at least for two or three more decades. The fracking revolution has unleashed a bounty of fossil fuel production in the United States that seemed unimaginable only five or 10 years ago. Energy production is booming and the long-sought dream of North American energy independence is fast becoming a reality. The energy sector is spawning millions of jobs, directly in energy production and indirectly in industries that supply the trucks, the pumps, the pipe and, increasingly, the IT that supports energy production.
Manufacturing revival. The Internet of Things, also known as the “industrial internet,” will inspire another wave of productivity-enhancing innovation in the manufacturing sector, while inexpensive natural gas and electricity will create a tremendous competitive advantage for energy-intensive, U.S.-based manufacturers. These tectonic shifts in competitive advantage are occurring at the very same time that rising labor costs overseas are undermining the logic for off-shoring manufacturing capacity. In fact, the “reshoring” movement is gaining momentum. The revival of energy production and manufacturing augurs well for the blue-collar workforce and creates the prospect of increasing jobs and rising wages for a segment of America that has been badly battered over the past 20 or 30 years.
Illegal immigration. The effects of the energy revolution and reshoring movement will be felt even more dramatically in Mexico, which is undergoing the most profound economic liberalization in its history. The combination of a falling birthrate, shrinking labor surplus and unprecedented opportunity for Mexican workers will dry up the largest source of illegal immigration into the United States. Declining illegal immigration is good news for multiple reasons. First, it defuses a contentious social issue and it clears the way for immigration reform that will allow the admission of more legal immigrants, especially those with education and skills that will benefit the economy. Second, plugging the gusher of poor, ill-educated immigrants into the U.S. will mean less competition for low-paying jobs. Wages for unskilled and semi-skilled labor are far more likely to rise, creating better opportunity for the economically dispossessed.
Global warming. How else can I say this? The Global Warming hysterics have been proven wrong. While true believers still cling to their conviction that runaway human-caused global warming will propel temperatures ever higher and unleash wave upon wave of environmental calamity, it is becoming obvious to everybody else that the worst-case scenario is not happening and will not happen. While carbon dioxide emissions may push temperatures modestly higher than they otherwise would have been, global temperatures have been stable for a decade and a half, confounding computer-model predictions that positive feedbacks in the climate system would lead to out-of-control warming. The most heartening story of the past month has been that of the scientists studying Global Warming getting trapped by Antarctic ice that was supposed to be melting! To explain the non-warming, climatologists have speculated that aerosols from Chinese air pollution are reflecting sunlight and heat or that the heat is hidden undetected in the ocean depths. Either way, the theory must be revised, the science is not “settled” and it is becoming impossible to bamboozle the American people into panicking over impending environmental doom. If calamity is not lurking around the corner, there is no justification for re-engineering the U.S. economy according to the specifications of know-it-all progressives…. which is very good news for the U.S. economy.
Teen pregnancies. There are positive social developments as well. Teen pregnancies, perhaps the primary cause of poverty in the United States, continue their dramatic decline. Teen girls are delaying sexual activity, and they are more likely to use birth control when they do have sex. Delaying motherhood increases the odds that young women will graduate from high school and find jobs that will lift them out of poverty. And it reduces the number of children growing up in households headed by baby mamas who are ill equipped to raise them. If the reservoir of U.S. poverty is not continually replenished through teen births and illegal immigration, eventually, it will become far less intractable.
I could go on. The genomic revolution portends great advances in health care. Medicine will be increasingly personalized, tailoring treatments to the patient’s genetic make-up. The urban revival is bringing vitality back to the urban core of American metropolitan regions. So many cool things are happening. Just speaking from my narrow personal experience here in the Richmond region, the City of Richmond has much more to offer than it did when I came here 25 years ago — it’s a great place to live. New technology, including online learning, offers the prospect of shaking up our moribund educational system. The coupling of digital technologies or “smart cities” with smart growth and the emerging discipline of fiscal analytics (see “Fiscal Analytics and the Next Municipal Revolution”) portends a golden age for local government.
True, the federal government remains unreformed. The national debt has surpassed $17 trillion and interest payments on that debt will, at some point, become unbearable. The sequester has bought us time, but no one is talking seriously about entitlement reform. Indeed, Obamacare represents a spectacular step backwards — locking Americans into greater dependence for health care upon a fiscally irresponsible federal government that has no chance of keeping all of its promises. Meanwhile, unchastened by their failures, liberals and progressives remain as intent as ever to impose their fevered visions upon a reluctant nation. So, yes, there are many reasons to be pessimistic. But the United States is a great nation. There is much vitality within us. Many things are going our way. We will persevere.