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“Rebooting after the economic crash: IT, ET and America 3.0.”Professor Jonathan Taplin , USC Annenberg School and ARNICThe financial crisis will leave the next president with the task of rebuilding a shattered American economy. Professor Taplin will describe the potential roles of information technology and energy technology in America 3.0.
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America 3.0
Rebooting after the American Crash
Taplin’s Blog-December 25,2007
“So where does the aforementioned dread come from? It comes from a sense of profound economic peril. We have lived as a country off the rich inheritance of past generations and now the party may be coming to a close.”
Prof. Nouriel Roubini-10/9/08
“A housing bubble, a mortgage bubble, an equity bubble, a bond bubble, a credit bubble, a commodity bubble, a private equity bubble, a hedge funds bubble are all now bursting at once in the biggest real sector and financial sector deleveraging since the Great Depression.”
Crashing Economy
Hidden Unemployment
The Conventional Wisdom
The Real Culprit
Overcapacity
America 1.0 We hold these truths to be
self-evident, that all Men are created equal, that they are endowed by their creator with certain unalienable Rights, that among these are Life, Liberty and the Pursuit of Happiness
Thomas Jefferson It will be our policy to
cultivate tranquility at home and abroad and extend our commerce as far as possible
George Washington
1776-1915
America 2.0-Making the World Safe for Democracy
1917-1980
America 2.5-The Conservative Revolution
The Neoconservative Gospel
The twin poles of the Neoconservative philosophy first elucidated by Irving Kristol in The Public Interest in 1965: In domestic affairs the
national government should shrink (by cutting taxes and business regulations)
In foreign affairs the government should grow (by becoming the world’s sole military superpower).
Preemptive Wars & Tax Cuts
The Long War
Something Had to Give
The Upside of Down- Thomas Homer-Dixon
Creative Destruction
“Schumpeter’s signature legacy is his insight that innovation in the form of creative destruction is the driving force not only of capitalism but of material progress in general. Almost all businesses, no matter how strong they seem to be at a given moment, ultimately fail and almost always because they failed to innovate.”
Joseph Schumpeter
The Interregnum
The old is dying and the new cannot be born; in this interregnum there arises a great diversity of morbid symptoms. - Antonio Gramsci
The Interregnum of 1649
The End of Empire
Unobserved Revolution
The New Interregnum
Empires Always End
The Cost of Empire
Imperial Overstretch
Cultural Decline
Accelerating Inequality
Scientific Regression
Signs of Decline
Imperial Overstretch
Budget Priorities
“One cannot help but wonder: were there alternative ways of spending a fraction of the war’s $1-$2 trillion in costs that would have better strengthened security, boosted prosperity, and promoted democracy?”-Joseph Stiglitz, fmr. Chief Economist, World Bank
The Free Rider Problem
Do we get oil any cheaper?
$700 Billion/year outflow for oil
Who Finances the U.S.?
Personal Savings Rate
Source: Federal Reserve
Signs of Decline
Scientific Regression
Education-12th grade science scores
Source: O.E.C.D.
Health Care
The United States ranks 23rd in infant mortality, down from 12th in 1960 and 21st in 1990
The United States ranks 20th in life expectancy for women down from 1st in 1945 and 13th in 1960
The United States ranks 21st in life expectancy for men down from 1st in 1945 and 17th in 1960.
And yet, the United States spends at least 40% more per capita on health care than any other industrialized country with universal health care Source-WHO
Global Warming
Energy Efficiency (BTU/GDP)
1-Denmark 2-Switzerland 3-Japan 4-Italy 5-Ireland 6-Austria 7-Germany 8-France 9-Finland 10-United Kingdom
21-Portugal 22-Belgium 23-Norway 24-Argentina 25-Uruguay 26-Greece 27-Bangladesh 28-United States 29-Sri Lanka 30-El Salvador
Source: International Energy Agency
Industry in Denial
Wars for Oil
U.S. Business Under Attack
Signs of Decline
Cultural Decline
Capitalism’s Crisis
“It can no longer be assumed that welfare is greater at an all-around higher level of production than at a lower one. The higher level of production has, merely, a higher level of want creation necessitating a higher level of want satisfaction.”-J.K Galbraith, The Affluent Society
Disconnected
Source: New York Times
Civil Unrest
U.S.Daily Gun Deaths=81
The Underground Economy
$650 Billion per year U.S. is world’s largest consumer of
cocaine and methamphetamine
Brave New World
Bread and Circuses
Signs of Decline
Accelerating Inequality without Regulation
U.S. Wages & Productivity
Source: New York Times
50 Million Jobs at Risk
“The total number of current U.S. service sector jobs that will be susceptible to offshoring in the electronic future is two to three times the total number of current manufacturing jobs”-Alan Blinder, former Fed Vice Chairman
Income Distribution
The Housing Bubble
The Fatal Move-6/4/04
Run On The Bank
Derivatives
”Derivatives are like hell… easy to enter and almost impossible to exit”. - Warren Buffet
America 3.0
Government, Technology & Innovation
Assumptions-1/21/09
Unemployment will be close to 8%. The Christmas Retail season will have
been the worst in 25 years. Many retail bankruptcies or closures More banks will have failed States and Municipalities still having
credit market problems Credit card defaults and bankruptcies
will have climbed significantly
Tools For Recovery
Mass Collaboration
ExtendedEnterprise
Industrial AgeCorporation
Value Creation
Critical ResourcesPhysicalFinancial
Knowledge
Self-Organization
TraditionalHierarchy
BusinessWebs
MassCollaboration
Think Globally, Act Locally
“All Innovation happens at
the edge”-John Seely Brown
The Role of Experimentation
“It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.” –Justice Brandeis
Imagine 2020
Energy independent Universal healthcare Reduced carbon
footprint Highly educated
public Multi-lateral Foreign
Policy
From Consumption to Investment
“To provide a stable recovery path government spending needs to fill the gap – not consumption. Public works programs, badly needed infrastructure repairs, as well as spending on research and development projects should form the heart of our path to recovery.”-Bill Gross
R & D + Infrastructure
$500 Billion per year
How do we pay for it?
Freedom Energy Tax $146 Billion-in gas taxes $170 in other carbon taxes 90% to states ($31 Billion/yr. to Calif.) 10% to Alternative Energy R & D
No payroll taxes for below $40 K earners Cut Federal Middle class Tax bracket but restore
Clinton era taxes on wealthy ($250K+) Raise Corporate Taxes back to the postwar norm
Capital Investment Debt
Harness Nature
“We only need to capture 1 percent of 1 percent of the sunlight to meet all of our energy needs (3 percent of 1 percent by 2025) and nano-engineered solar panels and fuel cells will be able to do this.”-Ray Kurzweil
Modern Nuclear Power
Modern Transportation
LA-San Francisco in 2 hours with minimal pollution
Universal Broadband
Rebuild Bridges and Highways
Education
Double Teacher Salaries U.S. High School
Teacher-$36,000 (1.2x average income)
Korean High School Teacher-2.5x average income
Cut Classroom Size
Universal Health Care
The U.S. pays $98 billion a year in excess administrative costs, with more than half of the total accounted for by marketing and underwriting — costs that don’t exist in single-payer systems.
The U.S. pays $66 billion a year in excess drug costs, and overpays for medical devices
McKinsey & Co. Report
Become World Leader in ET and IT