Technology is the result of social and political choices. An extreme example is Moore’s Law, which was merely an observation about the improvement of integrated circuits but became the narrative that dictates progress in the semiconductor industry since 1965.

Examining these narratives can give us insight into where we are heading and what we are missing. In this post I have started to compile the most salient in American Industry today.

Table of Contents

Rethinking defense systems
Restructuring supply chains
Serious entrepreneurs against the malaise
Three pillars of sustainable energy
Highway to space

 

Rethinking defense systems

In the future of warfare, spending is becoming less correlated with primacy as new asymmetric technologies come online. Exquisite platforms like aircraft carriers and F-35s are less effective against lower cost, distributed, and autonomous systems.

The socialist market economy of China has the structural advantage of being able to diffuse talent and technology from the consumer space – often leaders in autonomous systems – into their defense needs.

In the US, DoD prime suppliers are driven by cost-plus contracts that result in very high costs of innovation. An overhaul can’t happen soon enough, Sillicon Valley is tapping into their defense roots to bridge the gap.

The rate limiters of progress seem to be IP regulation, available ‘patient’ capital, and the security overhead to work with the DoD.

See: The Kill Chain, Rebooting The Arsenal, Unrestricted Warfare

 

Restructuring supply chains

In the last 50 years, US firms followed the outsourcing model of moving manufacturing overseas to improve margins. Today, at least 94% of Fortune 500 companies have some form of investment in Chinese supply chains.

The unseen effect is a brittle system accruing risk over time. It is like being an old person with a young man’s insurance – sure the premium is low but wait to pay the deductible.

Restoring the industrial base is imperative for national interest as it protects our way of living from being disrupted. The challenge is to do it with a limited labor force and under the high competitive pressure of globalization.

Robotics, retraining and upskilling, immigration policy, and automation are the immediate levers.

See: The Reshoring Imperative, Restoring American Competitiveness

 

Serious entrepreneurs against the malaise

Legislators’ compensation is not tied to the outcomes of their policies. This is a strong predictor of their ability to advance the infrastructure of our economy – mediocre at best.

Can we increase the Government’s efficacy by parlaying it with free markets?

The bold entrepreneurs and startups attempting to solve these problems have a chance to take on larger shares of GDP – enough to justify the longer lead times on venture capital returns.

See: American Dynamism, A New Industrialist roundup

 

Three pillars of sustainable energy

The transition to sustainable energy depends on deploying supply, demand and matching technologies – the matching piece is storage.

The rate limiter is access to raw materials for battery cell production. And although the minerals – Nickel and Lithium – are ubiqutuous, the US does not have commerical mining and refining operations for them.

China on the other hand has been on a 30-year campaign to secure mining operations and developing processing technologies. Unless we rethink and allocate capital, the transition is beholden to them.

See: Battery Day, Securing Metals Supply

 

Highway to space

Space has been historically a low volume, low demand industry given the high CAPEX to move things into orbit. Reusable rockets are dramatically improving the tonnage to orbit cost, sort of the equivalent of opening a highway to space.

Reliable and low cost access to space is critical for national security, connectivity, and deep space research. But there is also the hopes of building an entirely new supply chain around exploiting the properties of low gravity.

See: Starship