A bright economic future - if we don't spoil it

Recent technological developments hold out the promise of a new industrial revolution, but we must learn to spread the wealth.

26 December 12 19:25, Norman Bailey

The news that after seventeen years the US Food and Drug Administration (FDA) has finally approved the production and sale of genetically-modified (GM) salmon, which grows twice as fast as ordinary salmon, may open the door for many other GM foods, which have been blocked both in the US. and in Europe primarily by environmental and animal rights groups, who have demonized GM by referring to its products as "frankenfoods". These modern Luddites have succeeded until now in denying to the hungry of the world a new abundance of foodstuffs that scientific advances have made possible.

The environmental lobby is also hard at work trying to throw monkey-wrenches into the development of new sources of oil and gas throughout the world through new technologies, particularly the so-called "fracking" process, which has unlocked vast new deposits of these fuels. So far they have succeeded in delaying an oil pipeline from the Canadian west to refineries in Texas as well as stopping development in parts of Europe and Asia. That gas is a cleaner fuel than coal (Poland and China take note) and that so far wind and solar power have not proven to be viable alternatives, does not seem to faze them. What is possible is demonstrated by the fact that the U.S. is how self-sufficient in gas and the domestic price has plummeted.

Science-fiction industrial techniques such as 3-D manufacturing and advanced robotization hold the promise of a new industrial revolution to rival those of the first industrial revolution of the late 18th/early 19th centuries and late 19th/early 20th centuries.

Vast financial resources locked up in corporate cash hoards could be available to develop these and other extremely promising technologies. So what is needed to open the cash boxes and put the technologies to work? Above all, a reduction in regulatory and taxation overkill in the U.S. and Europe; a substantial slowing and eventual reversal of the process of governmental indebtedness, and a reigning-in of the ideological excesses of the environmental lobby. If these things are done the outlook of the economic future would go from dim to bright in a remarkably short period of time.

But be careful. All of these developments, but particularly the industrial ones, accelerate the substitution of capital for labor in the mix of factors of production, a process which has been going on for many decades. If the ownership of capital assets is not substantially widened in society disparities of wealth, already worsening, will worsen further and more and more segments of the population will become dependent on government handouts for their survival.

The future is ours to shape. Will we be up to the task? Or will the forces of reaction and populism overwhelm the natural evolution of scientific and technological processes? Optimism is hard to come by, due to the lack of intelligent, informed leadership in the principal Western countries.

Norman A. Bailey, Ph.D., is Adjunct Professor of Economic Statecraft at The Institute of World Politics, Washington, DC, and a lecturer at The Israeli National Defense College (MABAL), 2011-2012 session.

Published by Globes [online], Israel business news - www.globes-online.com - on December 26, 2012

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