5G, Not Pre-G: The Case for a Modernized Economy
Alan Pentz, CEO
Washington DC
April 15, 2020 - As we’ve seen the devastation of the US economy proceed over the last few weeks, many voices have begun talking about additional stimulus bills and the need to rebuild the country’s supply chains and infrastructure. Economic nationalists view this as the perfect time to push a full reshoring agenda to bring low skill manufacturing and supply chains back to the US. Others have stars in their eyes over massive infrastructure projects and large scale investments in education and basic research.
I believe we need to take a deep look at our supply chain. We certainly cannot continue to depend on single sources for critical supplies or allow countries like India and China to block exports of key supplies. In a crisis it is inevitable that countries will privilege their own populations even at the long-term expense of their economies. For example, India is guaranteeing that its pharmaceutical sector will shrink as countries remember its actions during this pandemic. The US is guilty of taking similar actions and the very foundations (paywall) of the European Union have been called into question as countries like Germany blocked supplies to crisis centers like Italy.
Certainly this seems like a perfect case for reshoring critical supplies to prepare for future crises. I think this makes sense in certain limited areas. But reshoring is not without cost. There are only a limited amounts of capital, labor, and resources within our economy. If we divert it from high growth and high productivity areas, we risk reducing the productivity of our economy. Productivity leads to growth which leads to wealth which leads to geopolitical power. People aren’t rushing into the Euro during a crisis for this very reason and let’s not forget that China’s Made in China 2025 strategy is all about moving away from low productivity and low value manufacturing and moving up the value chain. We don’t want to meet them in the middle as we reinvest in old line industries. Rather we want to outpace China 2025 and leave them in the dust.
That said, I do believe the US needs to perform a careful review of its supply chains. Some amount of drug manufacturing capacity and access to active ingredients should be reshored and/or stockpiled. In other cases, we can diversify our supply chains ensuring that goods are available from multiple suppliers. We can also seek to assist countries we are closer aligned with politically or where we have greater influence to become part of the supply chain. I can see Mexico and Latin America benefiting greatly from such a diversification effort. But beyond that we need to seek to build with an eye toward the future rather than the past.
I count myself in the camp starry-eyed about building infrastructure and investing in R&D and education. I believe the US should focus on rebuilding its economy based on 5G and not seek to bring back a “pre-G” economy. Let’s concentrate on building out broadband, investing in AI, pursuing autonomous vehicles, the Internet of Things, and biogenetics. We clearly saw that broadband is a key to sheltering in place. Let’s ensure if we ever have to do this again that Zoom is a fully immersive virtual reality experience rather than staring at a grainy version of Hollywood Squares (note this is a GenX reference). Let’s create AIs that can detect a potential pandemic quickly and identify potential therapeutics to stop the spread in its tracks. Let’s educate a new generation of Americans with deep skills in these fields and technologies that can drive a new American Century. We’ve done it before in the wake of World War 2 and in the emerging Cold War and we can do it again. The decisions we make in responding to the long term effects of the Covid-19 crisis will shape how this next century plays out. We are in a Long Competition with China that will play out in the next several decades. Let’s not flub our chance to win this round.
Author
Alan Pentz, CEO and Founder of Corner Alliance, has worked with government leaders in the R&D and innovation communities across DHS, Commerce, NIH, state and local government, and the non-profit sector among others. He has worked in the consulting industry for over ten years with Corner Alliance, SRA, Touchstone Consulting, and Witt O'Brien's. Before consulting, Alan served as a speechwriter and press secretary for former U.S. Senator Max Baucus and as a legislative assistant for former U.S. Representative Paul Kanjorski. He holds an MBA from the University of Texas at Austin.
