Is the US losing the tech race?

There is a lot of unfounded hype about the Chinese tech industry, as I talked about here.

But none of that matters. Consumer gizmos don’t matter. Mobile apps don’t matter. What matters is this:

For the first time, China has demonstrated that it is far ahead of the United States in a critical new technology, namely quantum communications. A Chinese satellite succeeded in transmitting so-called entangled photons to earth stations. That’s the high-tech equivalent of sending a message in undeveloped photographic film: If you try to read it, the light will destroy it. The Chinese breakthrough has huge implications for cryptography, and for a host of other applications. […]

China has the world’s fast supercomputers built entirely out of Chinese components. It has the world’s largest radio telescope. It has thousands of surface-to-ship missiles that can hail down on American aircraft carriers from the stratosphere, and it has ultra-quiet diesel electric submarines that can lurk on battery power for weeks. It has satellite killer missiles. China might spend barely over $1,000 to equip foot soldiers, about 1/100th of what America spends, but it has invested massively in high-tech defense.

Between 1999 and 2013, China’s share of world high-tech exports rose from 3% to 26%, while America’s fell from 18% to only 8%.

A couple of years ago I sat across from the founder of a high-tech start-up in Shenzhen. He showed me an app on his phone with a map of the South China Sea and thousands of dots. “Each one of these is a ship. We know its location, course, speed and the condition of its motor.” How? The data is obtained by sensors mounted on cheap high-altitude balloons attached to the ground by fiber-optic cable. China can field thousands of such balloons, on the coast and on ships. If all the satellites in the sky were knocked out in a war, the U.S. would be blind–but China would still have complete coverage of its own territory and coast.

We need a Kennedy-style Moonshot or a Reagan-style Strategic Defensive Initiative to revive our high-tech industries. We don’t have high-tech companies anymore: We have a set of monopolies like Microsoft and Google that collect rents, and trade with the volatility of a Procter and Gamble. All the technologies that gave us the present economy depended on fundamental breakthroughs in physics. We no longer aim for breakthroughs. We write apps for ever-more-sophisticated toys.

Goldman is absolutely correct. The obsession with social media, the “sharing economy” and similar nonsense misses the point that the US is rapidly losing its edge in advanced technology and R&D.

If this trend is not reversed soon, it’s obvious that the US is completely finished.

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