Outlook for 2007
By George McClure
As a global competitor, the United States needs
technological innovation, adequate energy resources and a
supportive infrastructure. Workforce is key to competitiveness.
Shrinking employment benefits are a workforce concern. Other
elements are worth a look, too: climate change, immigration and the
Clayton Christensen of the Harvard Business School coined the term
disruptive technology to describe
developments that will affect the marketplace and the status quo,
but are not properly assessed by corporations who are best at
sustaining technology. When Alexander Graham Bell was seeking
backing for his electrical speech machine, the sustainers could see
no need for it, thinking that the telegraph was adequate for
electrical communications. When John Bardeen, Walter Brattain and
William Shockley at Bell Labs invented the transistor, it was a
curiosity. Perhaps it could replace vacuum tubes in telephone
repeaters. Who could have predicted its pervasive influence sixty
years later embedded in cell phones, laptop computers, personal
digital assistants, even digital televisions? The later invention of
the integrated circuit by Jack Kilby at Texas Instruments opened the
IBM, perhaps unwittingly, gave impetus to the
personal computer by opening the architecture of its product line to
others and by abdicating control of its operating system, giving
rise to Microsoft, Dell, Compaq and a host of other entrepreneurs.
Management must have seen the PC as irrelevant to its primary
markets (e.g., banks and other corporate users of its mainframe computers).
Earlier, the mainframe was a disruptive technology, too in 1943, four years before the transistor was invented, Thomas
Watson had estimated famously that the total worldwide market was five or
six machines [www.cs.cmu.edu/afs/cs.cmu.edu/user/bam/www/numbers.html].
With this preface, we will look at eight aspects of
the 2007 outlook: technology, energy, climate change, workforce,
employment benefits, immigration, infrastructure and the economic
In the financial community, the question is always: What is the next big thing? Speculators want to invest in
winners. Networking, enterprise resource planning, the PC and the
Internet have been among past winners.
Lightweight composite materials have made airliners
more efficient and are paving the way to very light jets (VLJs) that
will be sold in large numbers for air taxis and small business
travel. Already certified is the 5,520-lb. Eclipse 500, priced at
about $1.5 million, with a glass cockpit. Others in the pipeline
include the HondaJet VLJ, a product of the joint venture of Honda
Motor Co., Ltd., and the New Piper Corporation. Deliveries for
Eclipse will be increasing in 2007; Honda, with more seats and a
lavatory aboard its VLJ, plans initial deliveries in 2010, targeted
to the jet taxi market [www.microlightjets.com].
Piper will be marketing its own PiperJet VLJ in the same time frame
to the owner-operator market, with Honda offering sales and service
support for both [www.palmbeachpost.com].
NASA was instrumental in the development of the VLJ
through three programs: Advanced General Aviation Transportation
Experiments, the Small Aircraft Transportation System and the
General Aviation Propulsion (GAP) project. GAP formed a cost-sharing
agreement in 1996 with Williams International, a primary producer of
jet engines for cruise missiles. The goal was a light, small
turbofan engine. The result was a compressor made from a single
block of titanium and weighing less than one and a quarter pounds.
This permits a nine-to-one thrust-to-weight ratio, while most
commercial aircraft jet engines fall in a range between four-
Williams succeeded, paving the way for the VLJ.(1) Pratt &
Whitney is providing engines for the Eclipse, with initial
deliveries planned for December 2006 [www.eclipseaviation.com].
GE has teamed with Honda for its small jet engine [www.usatoday.com].
Including the time it takes to travel to an airport, get through
security, and wait for the now-less-frequent flights in the
commercial hub-and-spoke system, flying to a destination up to 500
miles away is no faster than driving on the highway. Productivity is
held down if only one client a day can be visited. The [VLJ] sales
proposition, for businessmen who don't live near a major airport but
have a small public airport nearby, is: 'If you could have an
airplane pick you up at that airport, fly you to the airport nearest
to your client, and then fly you back, for an extra 25 to 50 cents a
mile on top of what you are paying for coach, would you do it?" The
inevitable answer: 'In a heartbeat."
The market over ten years is estimated at 35,000
VLJs. This growth points to the need for the next generation of air traffic
control, extending to 'free flight" to avoid stressing further the
ground-based control system [www.gao.gov/archive/1998/rc98246.pdf].
Other disruptive technologies include Web logs (blogs) [www.webcrimson.com],
open source software and nanotechnology [www.washingtontechnology.com].
Nanotechnology applications in manufacturing make
possible molecular manufacturing, building a wide range of products
that are impossible to make today. As noted by Eric Drexler, who
coined the word nanotechnology:
Molecular manufacturing will bring both great opportunities and
great potential for abuse. Advanced systems could be used to build
large, complex products cleanly, efficiently, and at low cost.
Building with atomic precision, desktop-scale (and larger)
manufacturing systems could produce the products like the following,
with consequences for many global problems:
Inexpensive, efficient solar energy systems a
renewable, zero-carbon emission source
Desktop computers with a billion processors
Medical devices able to destroy viruses and
cancer cells without damaging healthy cells
Materials 100 times stronger than steel
Superior military systems
More molecular manufacturing systems
Faster, cheaper, cleaner production of superior
products will also be disruptive. Costs, resource requirements and
economic organization will be transformed [www.eurekalert.org].
Forecasters predict an average $65-per-barrel price
for oil in 2007. An unusually warm winter could cut demand for
heating oil. Oil producers worry about the falling value of the dollar,
but they need our market even though Chinese demand is increasing
rapidly. At that price, extraction of oil from tar sands and oil
shale is profitable and will stimulate production from those resources, largely in Canada.
Photovoltaic panels have fallen in price and are now
being promoted as an alternative roofing material, producing
electricity for operating home appliances and/or selling the excess
back into the power grid. The solar energy market is estimated at
$11 billion worldwide now, and the total power market $1 trillion.
GE has contracted to buy the entire output of a Silicon Valley
startup producer of silicon wafers for solar cells [http://money.cnn.com].
Nuclear power development languished after the
initial push in the 1950s and 1960s. The last nuclear power plant
built in the United States (the 104th) was for the Tennessee Valley
Authority, coming online in 1996 [www.eia.doe.gov].
Almost 20 percent of power generated in the United States comes from
nuclear plants. There had been a focus on the problems in long-term
storage of spent nuclear fuel, but public opinion is shifting now
(with higher oil and gas prices) to favoring more nuclear power [www.nei.org].
Streamlining the application approval process and
developing standard reactor designs should shorten the approval
process so that new nuclear plants can be operating twelve years after the
initial application. Several power utilities have announced
intentions to build more nuclear reactors [www.fpl.com].
Major players in nuclear power include GE, Westinghouse, Toshiba
and the French Areva, the world's largest. Russia's Atomstroiexport
is a smaller producer.
Concerns for man-made effects on the earth's climate
have been documented in the movie, An Inconvenient Truth, by Al
and in the Stern Review on the economics of climate change, commissioned by British prime minister Tony Blair [www.hm-treasury.gov.uk].
Lord Stern suggests that the global economy could be
reduced by 20 percent or $7.2 trillion by climate change, but that
acting now to avert those consequences would cost just 1 percent of
global output [http://news.bbc.co.uk].
Critics of global warming have said the case is overstated, and that there are
higher priorities for government spending than on offsetting
possible effects of climate change.
A Wall Street Journal commentary by Bjorn Lomborg,
director of the Copenhagen Consensus Center, noted in response to
the Stern Report:
'The review is also one-sided, focusing almost
exclusively on carbon-emission cuts as the solution to the problem
of climate change. Mr. Stern sees increasing hurricane damage in the
United States as a powerful argument for carbon controls. However,
hurricane damage is increasing predominantly because there are more
people with more goods to be damaged, settling in ever more risky
habitats. Even if global warming does significantly increase the
power of hurricanes, it is estimated that 95 percent to 98 percent
of the increased damage will be due to demographics. The review
acknowledges that simple initiatives like bracing and securing roof
trusses and walls can cheaply reduce damage by more than 80 percent;
yet its policy recommendations on expensive carbon reductions
promise to cut the damages by 1 to 2 percent at best. That is a bad
The U.N. Climate Panel predicts a smaller change in
temperature in the year 2100 than does the Stern Report, and notes uncertainty even so in the
effects of carbon emissions. Stern continued:
'Mr. Stern suggests that there is a risk that the
cost of global warming will be higher than the top end of the U.N.
climate panel's estimates, inventing, in effect, a "worst-case
scenario" even worse than any others on the table. Therefore, the
estimated damage to GDP jumps to 15 percent from 11 percent. Moreover, Mr. Stern
admonishes that poor people count for less in the economic calculus,
so he then inflates 15 percent to 20 percent.
'This figure, 20 percent, was the number that rocketed
around the world, although it is simply a much-massaged reworking of
the standard 3 percent GDP cost in 2100 a figure accepted among most
economists to be a reasonable estimate."
Even so, there is another problem: The Kyoto
Protocol failed for a number of reasons, including industrial nations' concern over the
reduction in their economies. And, according to Stern:
'Moreover, there is a fourth major problem in Mr.
Stern's argument that has received very little attention. It seems
naΓ―ve to believe that the world's 192 nations can flawlessly
implement Mr. Stern's multitrillion-dollar, century-long policy
proposal. Will nobody try to avoid its obligations? Why would China
and India even participate? And even if China got on board, would it
be able to implement the policies? In 2002, China decided to cut
sulfur dioxide (SO2) emissions by 10 percent they are now 27
despite SO2 being nationally a much bigger health and environmental
problem than climate change."
'Last weekend in New York, I asked 24 U.N.
ambassadors from nations including China, India and the United
prioritize the best solutions for the world's greatest challenges,
in a project known as Copenhagen Consensus. They looked at what
spending money to combat climate change and other major problems
could achieve. They found that the world should prioritize the need
for better health, nutrition, water, sanitation and education, long
before we turn our attention to the costly mitigation of global
'We all want a better world. But we must not let
ourselves be swept up in making a bad investment, simply because we
have been scared by sensationalist headlines" [http://online.wsj.com].
Other global warming skeptics pointed out that:
'The U.N.'s Intergovernmental Panel on Global
Warming had already been created when researchers retrieved the
first long ice cores from Greenland and Antarctic in the 1980s. The
ice cores revealed 400,000 years of the planet's temperature history
and a 1,500-year cycle that was too long and moderate to be
discerned by Celtic tribes or Viking seamen. Physical evidence of
the 1,500-year climate cycle has also been found by more than 100
recent peer-reviewed studies by leading research institutes in the
bottom sediments of six oceans and hundreds of lakes, in ancient
relict tree rings from around the northern hemisphere, and in the
cave stalagmites and glacier movements of every continent plus New
Zealand. The North American Pollen Data Base shows nine complete
reorganizations of our trees and plants in the past 14,000 years, or
one every 1,650 years" [http://online.wsj.com].
A successful previous environmental agreement was
the Montreal Protocol on Substances that Deplete the Ozone Layer
(1987), ratified by 155 countries. Industrialized countries
eliminated halon consumption as of 1 January 1994, and
chlorofluorocarbon (CFC) consumption as of 1 January 1996.
Developing countries have a grace period and must complete their
phase out by 1 January 2010, though several countries will complete
their phase out much earlier. For methyl bromide used as a fumigant,
industrialized countries froze their consumption at 1995 levels and
will eliminate all use by 2010, while developing countries were to
have frozen their consumption by 2002 based on average 1995-98
consumption levels [www.foei.org].
The World Bank sees a real concern in increasing
greenhouse gas emissions. According to Global Economic Prospects
2007: Managing the Next Wave of Globalization, a 50 percent
increase in expected by 2030, and a 100 percent increase by 2050 [www.worldbank.org].
In December 2006, The Financial Times reported that the
United States had condemned as illegal plans to include all airlines flying
to and from the European Union in the European Commission's
greenhouse gas trading scheme from 2012.
"The inclusion of non-EU airlines on a
non-consensual basis runs counter to EU member states' legal
obligations under the Chicago Convention ... and their bilateral air
transport agreements, including with the United States," a government spokesman
The European Commission had made the decision
"despite strong objections raised by the United States and many other
countries," he added, in a move that would "circumvent the
appropriate multilateral body," the U.N.-run International Civil
Aviation Organization [www.ft.com].
The impending start of retirements for baby boomers
has raised concerns about the adequacy of the U.S. workforce to meet
future demands. But most boomers indicate a desire to continue
working at least part-time in retirement, whether for pay or in a
volunteer capacity. Possible legislation to permit phased
retirement, in which a worker can cut back on work hours and receive
a proportionate share of a retirement pension from the same
employer, would help in this transition. The Employment Retirement
Income Security Act (ERISA) currently prohibits this practice.
Consequently, an employee can retire fully from one employer then
go to work for another employer, but cannot stay in a senior role for
the long-time employer, perhaps working in a mentoring capacity
where the intellectual property on the job he or she has acquired over
the years could be most useful.
In terms of purchasing power, engineers' median
compensation has declined over the past decade, at a rate of 1.85
per year from 1996 to 2005. It took $1.28 in 2005 to buy what 1.00
bought in 1995.
Another factor depressing future after-tax pay is
the Alternative Minimum Tax (AMT), which is stealthily descending on
more taxpayers. Enacted in 1969, and originally intended to target
high-income folks who arranged their affairs to avoid tax
altogether, the levels at which it applies are not indexed for
inflation. Therefore, more and more taxpayers will be affected if
AMT remains in place at present levels. In 2006, 3.8 million
taxpayers are affected. By 2007, the number is expected grow to 23
million or one in six taxpayers. By 2010, one in five taxpayers will
pay AMT, including almost every married taxpayer with income
between $100,000 and $500,000. Calculation of the AMT removes tax
preference items such as deductions and personal exemptions, and
taxes the rest at a minimum of 27 percent. Deductions for home
mortgage interest, for state and local real estate taxes, and for
children are tax preference items, not credited for the AMT.
Affected taxpayers calculate their taxes twice the regular way and
for AMT, then pay whichever tax bill is higher [www.house.gov].
Congress debates reduction or elimination of the AMT
every year. But since it hasn't come up with another way to replace the
revenue generated by the AMT, Congress does
very little, other than periodically raise the threshold to
which the tax applies. The AMT increase alone this year is estimated at
$34 billion. To eliminate it would cost $671 billion; taken together
with tax cuts, replacing the lost revenue would cost $3.3 trillion
over ten years [www.cbpp.org].
The concern remains that the widespread use of H-1B
guest workers discourages America's youth from studying engineering
and computer science. The same firms that decry the lack of enough
of our youths in the engineering pipeline press for expanding caps
on H-1B quotas, thus perpetuating the downward spiral.
A small counter-trend is developing, where foreign
engineers educated in the United States are returning home, perceiving
greater opportunities there. Some young Americans with computer
science degrees have gone offshore for better job opportunities than
they can find at home.
In a report issued in December 2006, the New
Commission on the Skills of the American Workforce recommends a
major overhaul of U.S. public schools [www.skillscommission.org].
The commission included 26 education, labor and
business leaders from both political parties, including two former
federal education secretaries. In 1990, the first Commission on the
Skills of the American Workforce released a different report, but
with the same purpose: to examine the world economy and determine
what American workers need to survive in it. Several of the
original commission recommendations were enacted.
The new Commission proposed $60 billion in
major changes to the public school system, including:
Creating required state board
examinations at the end of 10th grade, allowing students to
enter community college, prep for a more elite school, or
remediate to pass the examination
The timing is fortuitous for the reauthorization of
the No Child Left Behind program in 2007.
Prototypical U.S. Industry in Ten Years (if all
Source: The New Commission on the
Skills of the American Workforce
Forecasts of workforce demand through 2014 are made
by the Bureau of Labor Statistics [www.bls.gov].
The fastest growth is seen for jobs requiring doctoral degrees; the
next fastest is for associate degree jobs. Productivity improvements
and offshoring will reduce the demand for manufacturing workers,
with many of those workers who are displaced competing with
less-skilled workers for available positions. Vocational training
will also be needed to meet growing demand in construction and
maintenance fields not vulnerable to offshoring.
A concern with the loss of manufacturing to offshore
facilities is that the R&D supporting manufacturing technology often
goes with it. Some 90 percent of patents awarded are connected to
manufacturing technology, so this becomes an issue in
competitiveness and innovation. Technology applications account for
as much as one-third of long-run economic growth and two-thirds of
productivity gains [www.nam.org].
Other workforce issues to watch for in 2007 are an
increase in the minimum wage and some efforts at making health care
affordable. One initiative for the latter is standardized electronic
health records [www.nam.org].
For health insurance, the number of uninsured
continues to rise now estimated at more than 46 million [www.cbpp.org].
However, skeptics of that number point out that the number of those
who are without coverage for more than a year is closer to 21
million. The rest are between jobs, healthy young workers who don't
want to pay for coverage or students. See Tales 20-25 at
The Pension Protection Act (PPA), signed into law in
2006, sounded the death knell for defined benefit pensions by
tightening funding requirements for employer-run pension funds. The
trend already underway, to change to either a cash balance pension
plan (still considered a defined benefit plan) or to move totally to
a defined contribution plan (e.g., 401(K), 403(B) or 457 plans)
accelerated. In addition, the Financial Standards Accounting Board (FSAB)
tightened its requirements for pension funds as well, with FSAB
Statement Number 158, which also provided for more transparent
What PPA did do was provide safeguards intended to save the
Pension Benefit Guaranty Corporation, but which may not accomplish
even that if large numbers of healthy pension plans, that have been
paying premiums into PBGC, exit the system in the wake of the
stricter reporting requirements.
Employers, who have already capped their
contributions to employee health plans, may push for a
government-run program that will eliminate their obligation
entirely. Automakers establishing assembly plants in Canada stand
to benefit from the state health plan for their employees residing
The move to more personal responsibility for
retirement planning comes at a time when there is more movement
between employers and shortened tenure for the workforce. The state
of Ohio has lost 32,337 manufacturing jobs and 93 plants over the
past 12 months, according to the 2006 Ohio Manufacturers Directory [www.manufacturersnews.com].
The losses may have aided Representative Sherrod Brown in his successful
bid for the Senate, replacing Senator Mike DeWine in the 2007 110th
Congress. Brown made innumerable floor speeches about the hollowing
out of the industrial base in Ohio.
There may be movement by Democrats to shore up
Social Security in 2007, but the inclusion of Personal Savings
Accounts is highly unlikely. The bigger problems of funding for
Medicare/Medicaid will likely be left until after the 2008
It is likely that something will be done to fix
immigration in 2007, since voters in November considered it a
priority issue. The House had focused on protection of the borders
before the election, while the Senate wanted a path to citizenship
as a reward for good behavior by illegal aliens. It was estimated
that the Senate bill would add 100 million new citizens in 20 years,
to the 300 million we have now [www.heritage.org].
There was no joint conference in 2006, so the bills died.
Estimates are that our population is swelling by 2 million per year
from immigration, half of it legal. But under the Senate bill it, was
estimated that 28.3 million immigrants would join our ranks over ten
years, including current legal quotas and expanded ones [www.heritage.org].
In 2007, the use of U.S. passports will be extended
to include returns to the United States from Canada, Mexico and the
Caribbean. Since this new policy will include cruise ship
passengers, a flurry of passport applications is expected in early
2007. A common way for non-citizens to remain in the United States is to
overstay a tourist or visitor visa, thus becoming an illegal alien [www.usimmigrationsupport.org/visa_b2.html].
The Department of Homeland Security created the
US-VISIT program to provide a database of such visitors. [www.immihelp.com/visas/usvisit.html].
Another Homeland Security program expected in 2007
is an expansion of a Treasury Department system to create a risk
profile for travelers to and from the United States, providing for a wealth of
personal data to be retained for up to 40 years. The data on
travelers would be classified to allow inspectors to determine a
risk assessment [www.insightmag.com].
Look for the expansion of programs globally under
the banner of 'managed migration," as the cost of travel is reduced
and mobility is enhanced. GATS Mode 4, which sets rules for
'temporary movement of natural persons," is a controversial topic
for the World Trade Organization. Expansion could supersede guest
worker limits for signatory nations. It is being promoted by
The American Society of Civil Engineers updates the
Report Card for America's Infrastructure biannually [www.asce.org].
You can look at the report for your state. Among the current (2005)
Commuters spend 46 hours per year stuck in
traffic 5.7 billion gallons of gasoline are wasted
27 percent of highway bridges need repair or
350,000 contamination sites must be cleaned up
in 20 years
Federal funding for drinking water provides for
less than 10 percent of the national need
The last major road building program in the United
produced the 41,000 mile interstate highway system some 50 years
ago. Maintenance costs have soared and some of those roads are
crumbling. One proposal for dealing with the crisis in roads is to
sell them or lease them to private interests, who will promise to
maintain them, make payments to the states that can reduce their
debts, and, in exchange, are given the right to set and increase
tolls (within limits).
Is selling off turnpikes and sections of interstates the new wisdom?
Goldman Sachs thinks so, with the leasing of the Chicago Skyway and
the 157-mile Indiana Toll Road starting the groundswell [www.infowars.com].
Rights to the Indiana Toll Road cost foreign
interests $3.8 billion, with their return over 75 years estimated at
more than $11 billion. A 99-year lease for the connecting 7.8-mile
Chicago Skyway cost the same operators $1.83 billion
New Jersey Governor John Corzine (formerly with Goldman
Sachs) is weighing the sale of the New Jersey Turnpike (part of
I-95) to private interests. He says the sale could be a central
element in plans to offset 20 percent of homeowners' property tax
bills, costing $2 billion per year. It would also permit paying down
some of the state's massive debt. He promises a decision by the end
of April, according to the Newark Star-Ledger. The going rate for
sale of a toll road seems to be 40 times annual revenues.
In Texas, Governor Rick Perry would have
public-private partnerships build a $184 billion, 4,000-mile toll road network(2). His administration has signed a $1.3 billion
contract for a toll road between Austin and Seguin (on I-10) to be
operated by Cintra, a Spanish firm.
Not everyone thinks this is a good idea [www.motherjones.com].
Another prospect for privatization is the air traffic control
system. The existing system could be overwhelmed by the addition of
5,000 very light jets to the existing load of commercial passenger
and freight flights plus general aviation [www.casa.aero].
In the Next Generation Air Transportation System
Integrated Plan, published in December 2004 by the Joint Planning &
Development Office, a range of outcomes is seen by 2025 that
could include increases in demand to a level of up to three times the
number of operations in today's current National Airspace System [www.jpdo.aero].
Impending retirements of many existing air traffic
controllers add to concerns [www.gao.gov].
While the United States continues to assign the operation of
its air traffic control system to the Federal Aviation
Administration, many countries, including Canada, have privatized
this function. The Reason Foundation is a strong proponent for doing
the same thing in the United States [http://rppi.org/air.html].
Bankers are calling this the 'Goldilocks
economy" just right. Housing is on a downturn, but that
trend is not
expected to last more than six months. There is a large inventory of
unsold cars to be worked off. The Institute for Supply Management,
issues a monthly index of manufacturing activity, based on
purchasing activity. In November, the index slid to 49.5 in from 51.2
in October. Readings below 50 indicate contraction [www.ism.ws].
The conclusion: the decline in manufacturing
activity ended a 41-month
expansion period. However, labor costs are contained; interest
rate spreads, between short-term and long-term issues, are narrow,
indicating little expectation for inflation; and the next interest
rate move by the Federal Reserve is expected to be downward.
The falling dollar favors exports over imports and
is not worrisome as long as it doesn't fall too far causing other
countries to lose confidence in the dollar as the reserve currency
of choice, and pull out some of their funds. We have been living
beyond our means (the national savings rate has been negative for
months now) and the interest payments on the national debt are our
collective equivalent to running a balance on a credit card.
The euro, pound sterling, and Canadian dollar have
all risen against the dollar, encouraging visitors to travel to the
United States for shopping tours. Airbus is shifting its supplier contracts
to have them denominated in U.S. dollars rather than euros, seeing
an advantage in doing so. We would like to see the Chinese raise the
value of their yuan (around 8 to the dollar), but they don't want to
reduce the level of their exports to the United States by making them more
costly. They will be buying nuclear power plants from the west
Westinghouse and/or GE. Westinghouse is now owned by Toshiba, which
bought control in October from British Nuclear Fuels.
By 2020, China expects to spend some $50 billion on
30 or more new reactors, adding to the nine from the 1970s now
operating. Toshiba-Westinghouse won a $5.3 billion contract in
December to build four nuclear power plants in China. A condition in
the contract was sharing the technology with the Chinese [www.msnbc.msn.com].
Two units will be built at Sanmen, in Zhejiang province, and two at Yangjiang,
in Guangdong. They will be AP1000 units with capacity of 1100MW
each, and should start operating by 2013. Westinghouse, which has
the world's largest installed base of operating nuclear power
plants, said the contract will create or sustain nearly 5,000
well-paying jobs in the design, engineering and manufacturing
sectors in the United States [www.earthtimes.org].
The development in emerging countries could change
the economic rankings, with only the United States and Japan still
among the top six economies in 2050. Goldman Sachs coined a term for
the fast-growing economies BRIC for Brazil, Russia, India and China.
Its report on BRICs is found at [www2.goldmansachs.com].
Citigroup has issued its outlook for 2007,
largely benign [www.national-economists.org](3).
It is increasingly hard to single out the United
States in the global economy. For example, the title as the world's
largest automaker will likely pass to Toyota in 2007, as the
surpasses Ford and General Motors [www.theautochannel.com].
But GM sells a transmission to BMW for one of its luxury cars. And
Freightliner, now a subsidiary of DaimlerChrysler, will open a
second factory in Mexico in 2007, taking advantage of NAFTA. The
$300 million plant at Saltillo, Coahuila, in northern Mexico, will
have a capacity of 30,000 trucks annually, employing up to 1,600
In 2002, DaimlerChrysler agreed to construct a
delivery van manufacturing facility in Pooler, Georgia, near
Savannah. The $754 million facility, the largest in the state, was
scheduled to be in production in 2006. In addition to the approximately 3,300 new
plant jobs, it is estimated that another 700 new jobs will be
created by the location of automotive suppliers near the new plant.
Economic impact studies indicate that as many as 10,000 additional
jobs would be created as a result of the plant's location.
Projections indicate that Georgia's financial
commitment of slightly more than $220 million to the project will be
recouped in new revenues to the state in less than 10 years. The
total incentive package, including local commitments, was
approximately $320 million.
At the outset of this survey, the role of Bell Labs
in innovation was mentioned. After the breakup of AT&T, Bell Labs
was spun off as Lucent Technologies which in November was acquired
by Paris-based Alcatel SA. IBM has transformed itself into a
The question remaining to be answered: Can the U.S.
survive as an information/management/finance economy, without
James Fallows, Free Flight: From Airline Hell
to a New Age of Travel, New York: Public Affairs, 2001.
World Bank, Public-Private Partnership Units:
Are they needed and what should they do? [http://rru.worldbank.org/Discussions/topics/topic76.aspx]
Lewis Alexander and Colleagues, Citigroup, 'A
Year of Transitions: Market Implications for 2006 and Beyond," [http://www.fullermoney.com/content/2005-12-08/StephenMillerCitigroupProspectsFinancialMarkets2006.pdf]
George McClure is a
member of IEEE-USA's Communications Committee, a member of the
IEEE-USA Career and Workforce Policy Committee, and technology
policy editor for IEEE-USA Today's Engineer. Comments may be