When Will the Next Breakthrough Come?

10/26/2009 10:03 am EST

Focus: MARKETS

Terry Savage

Author, The Savage Truth on Money

Is there any way out of America’s financial woes? If you stand back and take an honest look at the growing debt and the promises we’ve made, the situation seems hopeless. Not only have we promised baby boomers a return of their Social Security and Medicare premiums, the government is adding a new entitlement for health care coverage and even money to buy a new car!

It’s little wonder that foreigners who are helping fund our nearly $12-trillion national debt are thinking twice about lending us money. It appears that America has few choices when it comes to making good on its promises. 

The obvious ones, such as higher taxes or borrowing more or “printing” more money, all come with dire consequences. They will either throw the economy into a deeper recession or produce an inflation that would also lead to higher interest rates. 

It seems like a no-win situation for America. The world is saying that the emperor has no clothes, that the dollar will soon have no value.

There is only one way out of our financial dilemma: economic growth.

And before you give up on that possibility, a look at history might give you some reason to be optimistic. Gary Alexander is an economic historian who says we’re way overdue for a “technological miracle.”  This is not wishful thinking. 

In a fascinating blog at Navellier.com, Alexander points out that this new millennium is woefully lacking in new inventions compared to the start of the 20th century. In fact, we’re way overdue for a game-changing new technology. 

Alexander’s commentary certainly makes his point:
                                   
“We’re 98% deep into the first decade of the 21st century, but where is the first scientific ‘Eureka!’ moment? The dawn of the last century delivered an almost non-stop wave of world-changing inventions in the first few years after 1900, ranging from the titanic to the trivial:

• On December 14, 1900, Max Planck presented the postulate that gave birth to quantum physics.

• 1901: Guglielmo Marconi sent out the first trans-Atlantic radio broadcast, [while] King Gillette invented the double-edged safety razor and Hubert Booth invented the vacuum cleaner.

• 1902: The first trans-oceanic cable was laid, and Enrico Caruso recorded the first “hit” record. Also: Willis Carrier invented air conditioning, and George Claude invented neon lights.

• 1903: Henry Ford incorporated his car company, and the Wrights’ first plane took flight. 

• 1904: The diesel engine was first demonstrated, and the New York subway opened. Benjamin Holt invented the tractor, and John Fleming invented the vacuum diode tube.

• 1905: Albert Einstein published several scientific bombshells, including his [special] theory of relativity.

“So far this decade, it seems to me, only the trivial inventions have seen the light of day,” Alexander continues. “The art of fracturing our minds through Twitter, iPod, YouTube, FaceBook, BlackBerry, and other sideshows can’t erase the crying need for world-changing innovation in green technologies, which will make us and our planet better off.”
                       
So, what will be the next technology that changes all our assumptions about growth, about our very survival? Will it come from nanotechnology? Will it be a breakthrough in curing disease?  Will it be a new sort of fuel that provides energy at zero or low cost? 

It’s likely to be all of these—and more. But we don’t know for sure, and that’s the point: We’ll never know if we give up on our future, if we stop trying to create a society that fosters innovation and hope. And we’ll never reach those breakthroughs if we stop investing in the ideas and talent that will create a better future.

Where do you think the breakthrough will come? How are trying to capitalize on it? And what policies should we follow to encourage it? Please post your comments and join the conversation.

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