Innovation's Infrastructure Investment

Infrastructure Peering

Innovation's Infrastructure Investment

By Hunter Newby, CEO  |  December 26, 2013

The "Innovation and the Economy" Financial Times (News - Alert) Special Report from Clive Cookson published on Oct. 17 reads: "Policy makers need to embrace a broader vision of innovation, and shape infrastructure and regulation accordingly."

The European-centric report connects technological innovation and economic growth. Its context may have been local, but its lessons and impact are most certainly global.

Here’s how it begins: "Innovation – now seen as the most important driver of growth and productivity – has become one of the biggest buzzwords in politics and economics." The "now seen" part is curiously desperate. Only now it is seen? Perhaps in Europe things are economically better than in the United States, but any fiat-based economy is bound to the same fate – grow, or implode. Therefore, what Europe is now seeing is most certainly something the U.S. must see as well.

The U.S. just raised its borrowing limit again, the Federal Reserve Bank continues to print money, and we all hold our breaths waiting for the economy to recover on its own. How is it possible to believe that a recovery can occur when the financial goalpost keeps getting moved further back through more debt, interest and currency dilution?

All that the politicians can do is kick the can farther down the road, borrow more, and the Fed must continue to lend to the U.S. all just to buy time for the economy to somehow magically grow at a rate that exceeds the payment obligations of the government and the Fed's printing press. It's ironic that business must generate a profit, but that profit is denominated in fiat currency that is controlled by this central bank – government relationship that constantly issues itself whatever it needs to function and reduces the value of that profit in the process. This needs to end.

The report is spot-on and for several reasons, not the least of which is the inclusion of infrastructure as a key ingredient of innovation and that innovation drives economic growth. One could argue that the only hope of an economic recovery strong enough to build up the escape velocity required to evade the fiscal black hole we are circling is to seek and support economic growth from a new source as the old economies of agriculture, retail, manufacturing, etc., do not have the mass or speed required to reach a successful level of entropy.

At least with technological innovation there is a chance that somewhere out in the future true economic growth will surpass the printed and borrowed variety and someone, anyone and hopefully everyone will believe it to be plausible. At the moment the world has nothing to use as a rationale to accept the policy du jour other than the alternative, which is oblivion.

The report states that the European Council will hold a special meeting on innovation to specifically address Europe's need for it and how they have arrived where they are in need of it.

"To be blunt, we are lagging behind, and the reason behind this is mainly because we've invested too little in the infrastructure, skill and organizational changes that are needed to reap the benefits of these technologies – and that is a disgrace," said Herman Van Rompuy, president of the European Council.

A document has been published ahead of this meeting, Plan I(nnovation) for Europe. It came from the Lisbon Council in Brussels and Nesta, a London-based foundation. The plan has seven key recommendations, one of which is to build a 21st-century infrastructure (including super-fast broadband and smart grids).

Apparently Europe doesn't have what it needs in terms of network infrastructure to support the desired/required innovation and economic growth. Europe, due to superior population density metrics, has much better infrastructure than the U.S. Basically this means that the U.S. should be paying attention and following along, but in reality, it’s leading this investment strategy.

The report concludes with a stark comparison to China and its sustained technological and industrial growth. It is not without flaws and growing pains, but the magic formula is referred to as absorption – combining the best ideas from around the world and essentially mashing them up to see what comes out.

China has gone beyond recognizing the need for innovation and a massive investment in the infrastructure to support it and moved on to building what is essentially a national laboratory and culture for mutated innovation development. From the new species of ideas created will be born new models that will destroy the old and give power to those that have them first and control them. This context is global, but will most certainly have local implications if the U.S. does not act now.

Hunter Newby (News - Alert) is CEO of Allied Fiber (www.alliedfiber.com).




Edited by Ryan Sartor
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