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Wounds to the US, external and self-inflicted

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It is appropriate to end this series with the direct threats to US economic, military, and diplomatic strength, and to note that many of those impacts are due to self-inflicted wounds which show no signs of amelioration.

I submit that bin Laden and al Qaeda is categorically winning the war on terror, despite any numbers of enemy killed or detained, if for no other reasons than the:

  • Vast expenditures that the US is diverting to non-productive military and counterterrorist efforts (deflection)
  • Induced uncertainty and doubt inhibiting business investment (deference)
  • Security efforts that virtually repel foreign nationals that seek employment, education, and safe haven here (personal deflection)
  • Collapse of support for US diplomatic and commercial initiatives in a startlingly large and growing portion of the globe (isolation, even some revenge)

Our own tunnel vision, reactionary steps, and misadventures make for self-inflicted wounds. For al Qaeda's part, they now knows that the best way to attack us is economically (Peter Berger says they know that a dollar expended costs the US a million) and if they cannot get at US soil, then Saudi Arabia will do. This is a war of attrition and al Qaeda can afford to buy time.

Add to that our:

  • Unbounded borrowing for military (some related to the GWOT) and domestic purposes that do not result in increased manufacturing output
  • Demographics race which the US is losing not only to China, but closer to home, Mexico -- which in the case of China had significant GDP impacts that will increasingly impact our military readiness and force projection
  • Cost overhangs of a mature workforce which I do not limit to retirement per se but, say, the roughly $US 2000 tax that goes into the glove box of every US car for health care and pension (all major US competitors have combinations of national health insurance, younger workforces, or little ability to protest)
  • Catastrophic lapse in fostering investment in general higher education, especially the sciences and engineering, especially so as I feel education is an essential national strategic weapon, and was the instrument - not crop production - that allowed the US to make its economic breakout in the 19th century. The PRC can sift the best of its populace and field a technical body equal to the population of the US.
  • Outsourcing of an increasingly larger portion of our GNP to low cost countries with no greater thought than short term lower production costs, and with no national strategic plan - at least to this writer - to replace maturing and sunset industries with sunrise industries (No, I am not against outsourcing per se but we are reaching an accumulative percentage of GNP based upon individual corporate action that the issue deserves some attention from the administration before it significantly awakens voter anger and visits us with equally dim alternatives)

For a thoughtful look at requirements and impacts of globalizing and outsourcing, I recommend World assembly required? which looks at Boeing's efforts retain market share, fend off Airbus, and gain a larger share of Asian markets. As of early 2003, Boeing made 36% of an average aircraft while buying in 64% from domestic and foreign suppliers. That figure is expected to tilt to outsourcing with the new 7E7 Dreamliner (Japan will make a third of it), especially as Boeing holds out the US auto industry as a model. While Boeing forecasts that China will need some 2,400 new aircraft (197 billion USD) over the next 20 years, is earnestly seeking more Chinese participation, the Chinese are categorically not resigned to foreign domination of its airspace. In China tries to break Boeing, Airbus domination with self-made aircraft, the People's Daily says:

China now pins its hopes on ARJ21, (short for Advanced Regional Jet for the 21st century), a self-designed passenger aircraft of the country's own intellectual property rights, to lead its fight against domination by Boeing and Airbus in the aviation industry. ARJ21 is not a large mainline plane, but its birth means [it] will fly side by side with Boeing and Airbus planes. Unlike earlier planes jointly developed with foreign countries, ARJ21 is a completely China designed airplane [and] although a regional jet, ARJ21 is of a higher grade that lies between feeder and mainline jets. "China is now able to make large mainline aircraft, on top of designing, China can also produce and manage mainline aircraft.."

I was amused at this comment:

Since it adopts general equipment of mainline jets, such as Boeing 737, its designing work is more difficult because it's harder to put equipment of the same size for large aircraft into a smaller one.

Applying common product migration strategies, that also means that they are designing in the next generation of aircraft needs that will be able to absorb ARJ21 modules. Difficult, possibly, but more like good family of parts design to me.

The US must have the strategic infrastructure in engineering, manufacturing, and education to compete in that coming environment. A few more allies so that we look less like Snow White and the Seven Dwarfs would also be helpful, but I digress.

We'll wrap up tomorrow with some GDP implications on the ability of the US to support a substantive military-industrial complex.

Part 5

Gordon Housworth



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