Thursday, January 27, 2011

State of the Union Analysis

President Obama’s 2011 State of the Union address was one of the most future-oriented addresses to Congress in recent memory, despite proposing relatively few new ideas. Although the speech consisted mostly of the same policy recommendations that could have been given by any Democratic politician of the last two decades, the things the president chose to emphasize offer some hints to the direction the United States is heading.

I felt that the first half of the speech dealing with domestic policy was far stronger than the foreign policy section. President Obama hit most of the key policy ideas that will dominate American politics in the coming decades, referring several times to “investing in the future.” As America’s infrastructure crumbles and its education system falls behind that of other nations, viewing this type of spending as an investment rather than an expense is absolutely essential for our future wellbeing. President Obama mentioned his National Broadband Plan for the second year in a row. Although it is a welcome step in the right direction, it is woefully inadequate at meeting the needs of a 21st century economy. If the goals are met, broadband coverage in the United States in 2020 will be about the same as South Korea has today. Additionally, President Obama failed to take a firm stand on net neutrality or wireless carrier oligopolies, which have made the United States one of the least efficient countries in the developed world in telecommunications.

The President touched on our need for a new energy policy, referring to it as our “Sputnik moment” which is absolutely essential for the long-term success of the United States. I was pleased to hear him voice support for nuclear power, and continued subsidies of solar and wind power. The biggest flub from this section was his continued advocacy of biofuels, which have largely been discredited as an economical, environmentally-friendly form of energy. Biofuels sound to me more like an excuse for agricultural subsidies than a serious energy proposal.

President Obama hit a positive note on education, where he signaled a willingness to break with the teachers' unions, which have begun to fall out of favor with many Democrats. He touted the success of his Race to the Top Initiative, which has been the most progressive piece of education legislation in decades, and urged Congress to replace No Child Left Behind with an initiative that encouraged educational innovation. There were a couple areas of education policy that I would have liked to hear the president mention: online schools and charter schools. Although both are in their infancy and have problems which will need to be solved, mentioning them would have fit quite nicely with his theme of investing in the future, which will certainly not be dominated by traditional brick-and-mortar schools giving students standardized curricula.

President Obama’s calls for bipartisan deficit reduction were a bit difficult to take seriously, since neither political party has shown any real interest in the subject. The US structural deficit is only a problem inasmuch as it is larger than our rate of economic growth. President Obama proposed an ill-advised five-year discretionary spending freeze (which doesn’t square very well with his “investing in the future” theme, or the fact that we still have extremely high unemployment) but did not offer any substantial cuts to entitlements. He called for modest income tax increases after 2012, which will certainly be opposed by Republican members of Congress. President Obama’s deficit reduction commission offered a series of centrist proposals and compromises to reduce the size of the deficit, but the president mentioned almost none of them. I think that Obama's deficit reduction pledge was one of those promises that presidents make during State of the Union addresses that are forgotten a few weeks later...and perhaps that is for the best.

The foreign policy section of the speech was mostly boilerplate rhetoric, and provided a very odd contrast to the high-flying futuristic vision of the domestic policy section. The president could have continued the theme of investing in the future (for example, by offering more humanitarian assistance to African and South Asian nations) but instead chose to focus primarily on the same trouble spots that have dominated US foreign policy for a decade: Afghanistan, Pakistan, Iraq, Iran, and North Korea. Although he offered nothing substantively different from his previous policies, he did have the foresight to point out that the real danger of terrorist groups comes not from a repeat of 9/11 or isolated bombings, but from weapons of mass destruction. Nuclear proliferation poses the greatest short-term threat from terrorists, by far.

It was disappointing to hear the president utter not a single word about the chronic crisis in Israel and Palestine, indicating that he has given up on Israeli Prime Minister Benjamin Netanyahu as a potential peacemaker. To make matters worse, Palestinian President Mahmoud Abbas has no legitimacy in the eyes of his people, and lacks the political ability to agree to a compromise. It is time for some creative thinking on the subject. Efforts are afoot at the United Nations to establish a unilateral peace agreement which could be imposed on all parties in the conflict. Although this certainly would not bring about peace in the Middle East immediately, it would change the dialog from prodding both nations to compromise (which they have been unable to do for nearly 50 years), to instead urging them to adhere to the UN-imposed peace plan. Unfortunately, such an effort has no chance of success without at least the tacit approval of the United States. If the next 50 years in the Middle East are to be brighter than the past 50 years, President Obama will need to think outside the box about how to help the region establish peace.

Perhaps the most outside-the-box foreign policy idea the president mentioned was his statement that the United States “supports the democratic aspirations of all people,” in reference to the Jasmine Revolution in Tunisia. Although this notion has been well-established for some time in theory, it has not always been the case in practice, and under the circumstances I was surprised to hear it in the State of the Union address. But supporting democracy in an inconsequential global backwater is one thing. As the Tunisian unrest spreads to key US-aligned countries like Egypt and Yemen, it remains to be seen if the president will support the democrats, although the early signs are encouraging.

Overall, the policy prescriptions in the State of the Union were mostly good ideas that can potentially garner the bipartisan support they will need to become law. The speech itself, while very progressive and futuristic, was somewhat uninspiring. The biggest disappointments came not in what Obama said, but in what he didn’t say. Perhaps the State of the Union address is not the ideal forum for floating trial balloons of creative new ideas, but if Obama is serious about investing in the future at home and abroad, he will need to develop more innovative solutions of his own than what he offered on Tuesday night.

Saturday, January 1, 2011

Predictions For 2011

After revisiting my list of predictions, I realized that I didn’t have very many for 2011, due to my focus on things at least five years out. In honor of the new year, here are some of my predictions for 2011, in no particular order:

Electronic wallet? There’s an app for that. On December 16, 2010, Google and Samsung released the Nexus S, the first smartphone equipped with near-field communication. Near-field communication is an emerging technology that enables the transfer of data between devices at a range of 4 inches or less. This will eventually replace boarding passes, credit cards, and ATM cards among other things and will allow the easy transfer of money over the phone. 2011 is the year when the technology will first be useful, if not exactly mainstream yet. The places where it will take off the most quickly are developing countrieswhere credit card companies have never posed a lot of competition. Those of us in the US and Europe will probably have to wait a couple more years.

Is that a television or a computer? 2011 will be the year when the television and computer converge, just as the cell phone and computer have done in the last three years. An assortment of devices that hit the market in the last half of 2010 will serve up video content from the internet onto the television. The immediate effects will be relatively unimportant – people will be able to enjoy their favorite videos from YouTube, Netflix, Vevo, and Hulu on a much larger screen. In the longer term, this will change the way people view television and make them question if paying for channels they never use is really a good investment, especially if the same content is available online.

Human development will be widespread. Last year, all but seven countries in the world improved their score on the UN's Human Development Index (5 of those were stagnant while 2 actually lost ground). Emerging markets developed much more rapidly than wealthy nations. The long-term global trend has always been toward higher standards of living, and barring another severe economic downturn, we can expect the same from 2011. The vast majority of countries will share in economic gains, and developing countries will continue to outpace the US, Europe, and Japan.

At least one company offers genome sequencing for $1,000 or less. This one may be a bit of a reach, but I’m going to predict that 2011 will be the year that the holy grail of genomics – the $1,000 genome – is finally reached. For the last several years, the cost of genome sequencing has been following a Moore’s Law like trajectory, dropping nearly tenfold per year. A year ago, the cost of a simple genome sequencing was $6,000 and $10,000 from the two leading companies, Life Technologies and Illumina, respectively. It is therefore possible that by the end of 2011 a company will be able to do it for $1,000 which will throw open the doors to many more customers. Shortly after this milestone is reached, health insurance companies may begin covering the service, and the era of personalized medicine will dawn.

Shake-ups in the Axis of Evil. In his 2002 State of the Union address, President George Bush famously labeled Iraq, Iran, and North Korea the “Axis of Evil” and called for regime change in the three nations. During his presidency, Bush only deposed one of those regimes, but in 2011 he may get his wish in at least one more. Kim Jong-il, the supreme leader of North Korea, is believed to have suffered a stroke and has appeared very frail in his recent public appearances. He has been hastily creating a succession plan to transfer power to his 26-year-old son, Kim Jong-un, but the younger Kim has very little influence with key military officers who are necessary to sustain the regime. Wikileaks recently reported that Ayatollah Ali Khamenei of Iran has terminal leukemia. Khamenei is the glue holding the regime together; for example, he recently intervened personally to dissuade the Iranian Parliament from impeaching President Ahmadinejad. It is unclear if the Iranian regime can survive in any form without Khamenei. If either Kim or Khamenei dies, there will be a power struggle as various factions within the governments jockey for position in the power vacuum left in the deceased leader’s wake. Iran stands a real chance of serious democratic reform. North Korea does not (barring a total collapse and reunification with South Korea), but a shakeup could at least generate some Chinese-style economic reforms and perhaps an end to the bellicosity on the Korean Peninsula.

By 2011 – Near-field communication comes equipped in many new smartphones. Mobile payments become even more popular in the developing world, and makes inroads in Europe and the United States.
By 2011 – Internet-equipped televisions or add-ons will become popular.
By 2011 – At least 75% of countries improve their score on the Human Development Index compared to 2010, with the biggest improvements in developing countries.
By 2011 – At least one company offers genome sequencing for $1,000 or less.
By 2011 – There will be a major shakeup (or a total implosion) in the top leadership of North Korea and/or Iran.
By 2011 – Tablet computers continue to sell well. The market will become competitive with several new tablets seriously challenging Apple’s iPad.
By 2011 – Gaming (led by Microsoft’s Xbox Kinect) will begin to become gesture-based, rather than controller-based.
By 2011 – Voice Over IP services, such as Skype, become popular on smartphones, thus portending the eventual demise of traditional voice-telephone services.