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Rebuilding the US Economy Is Not a Matter of More Economic Shell Games

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					     Rebuilding the US economy is not a matter of more economic shell games

                                          Michael C. Sekora


    As the country searches for a solution to our economic meltdown, we must examine deep-rooted

causes, not just the events of the past few years. America’s declining competitiveness has been

visible for decades to those who were looking, and in the 1980s, both underlying causes and

solutions were identified.


    Most of this year’s pundits and policy-makers focus discussion on the manipulation of funds—

stimulus packages, tax revenues, cost-cutting measures—but our country’s former economic

greatness came about through the manipulation of technology, not through the manipulation of

funds. Understanding the difference between economic-based planning and technology-based

planning is key to identifying what we have been doing wrong. And shifting our thinking away

from the purely economic-based solutions that have been accepted without question as valid is key

to finding real answers to our crisis.


    Under the Reagan administration, I initiated and directed a program, the Socrates Project within

the US intelligence community to address America's declining competitiveness. The first part of the

Socrates mission was to determine the true source of America's declining competitiveness. To

accomplish this, the Socrates team utilized all-source intelligence to assemble, for the first time in

the history of mankind, a bird's-eye, holistic view and understanding of competition worldwide.


    This bird's-eye view went far beyond, in terms of scope and completeness, the extremely narrow

slices of data that were available to the professors, professional economists, and consultants that had

traditionally addressed competitiveness. As a result, the conclusions that the Socrates team derived
about competitiveness in general and about the US in particular were in direct opposition to that

which professors, economists and consultants had been saying for years and had been accepted as

irrefutable underlying truths by decision-makers throughout the US.


    What the Socrates team determined was that the source of the problem was that at the end of

WWII decision-makers throughout the US began shifting away from technology-based planning,

which had been used to build the US into a super-power, and began adopting economic-based

planning until within a few years economic-based planning had become the standard, unchallenged

foundation for decision-making throughout US industry, government and academia. At the same

time the rest of the world continued using and refining their technology-based planning—including

China and India who were aggressively using it to build themselves into the next great super-

powers.


    In economic-based planning the foundation of every decision is a matter of how to most

effectively acquire and utilize funds to either generate the maximum profit as in the case of a

company, or in the case of a government agency or non-profit organization to accomplish an

objective. For a country this can mean changing tax and interest rates; tax incentives for house

ownership or research and development; portfolio management of federal R&D funds; or seed

capital for start-up companies. And the measure of the effectiveness of the manipulation of the

funds is also fund-based--a country's trade balance, GDP, standard of living, budget deficit/surplus,

etc. As a result, the person viewed as the one most capable of making decisions for a nation's

economic health is the economist. The economist determines how to correctly manipulate the funds

on the front end (e.g., decrease interest rates) to generate a particular measure of success on the

back end (e.g., decrease unemployment payments).
    The reality is that there is rarely agreement among economists about what kind of manipulation

of funds on the front end is required to generate a particular measure of success on the back end.

Even when a general consensus is reached on a particular course of action, the chosen course of

action produces results that, more often than not, only roughly match what the economists

predicted.


    From the Socrates all-intelligence-source view of worldwide competition, the true nature of

generating, maintaining and measuring economic health was obvious and it could be seen to work

in a very logical, systematic, and highly intuitive fashion.


    The economic health of a country, state, region or private or public organization is dictated by

its competitive advantage in the world marketplace--the ability to sell goods and services. The

foundation of all competitive advantage is a matter of satisfying customer needs better than the

competition. And satisfying customer needs is accomplished with technology—any application of

science to accomplish a function.


    To satisfy customer needs better than the competition, an organization or a region must exploit

technology more effectively than the competition does. Technology exploitation is both acquisition

and utilization of technology, and research and development is just one of the many mechanisms for

exploitation. To be most effective, exploitation will have aspects that are offensive and defensive

relative to the competitors. Competitors attempt to out-maneuver each other in the acquisition and

utilization of technology, like chess players moving pieces on a board, to consistently excel at

satisfying customers needs to acquire and maintain the competitive advantage--technology-based

planning.
    Technology-based planning, not economic-based planning, is the most effective foundation for

the full range of decision-making for a country. However, almost all current plans to tackle our

economic crisis address science and technology as nothing more than a global research and

development and education race, with each country attempting to “out-R&D” and "out-educate" all

the other countries in order to get to the finish line first. To those who propose these plans, winning

the race requires nothing more than America increasing its R&D and education spending--in other

words, manipulating the economics, not manipulating the technology.


    Only recent legislation introduced by Congressman Wolf addresses US competitiveness through

sophisticated acquisition and utilization of technology--technology-based planning. Wolf has made

the shift in thinking that is essential to getting at where we have gone wrong and where we can re-

enter the path to prosperity.

				
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Description: As the country searches for a solution to our economic meltdown, we must examine deep-rooted causes, not just the events of the past few years. America’s declining competitiveness has been visible for decades to those who were looking, and in the 1980s, both underlying causes and solutions were identified.