Where Will the Next Economic Boom Come From?
Why biosciences could lead the U.S. recovery into the next decade
This is part of a series on the next engine of growth for the U.S. economy. To read more, see the selection of articles at the bottom of the page.
If you want to know what industry will power the next U.S. economy, follow the money. Where are investors really looking? And where is research and experimentation really happening?
Abraxas Discala, is CEO of the Broadsmoore Group, a financial advisory and investment firm founded in 2009. He sees the future the same way many urbanists and mayors see it: It's all about alternative energy. "The Internet bubble was the last real boom. The next boom is alternative energy, getting away from our need on OPEC oil," he said. "I think it could be five or six times what the tech boom was."
China's overwhelming investment in solar energy in the last five years has been formidable, Discala said. But solar is a long term bet that isn't guaranteed to take off. "I'm more interested in coal and natural gas, where T. Boone Pickens has a phenomenal plan," he said. "The fact is, if we just turned our 18-wheelers to natural gas right now, we would reduce our dependency on oil by 50 percent."
The other space Discala sees a productivity revolution is in regenerative medicine -- where scientists create living tissue to heal illnesses or replace organs. With enough government investment at its back, technologies like stem cells and soft tissue manufacturers should have breakthroughs in the next decade that will pay off dramatically, not only in the United States, but throughout the world where foreign governments will want to buy and license our innovation.
FOLLOW THE R&D
Innovation is the key to spotting the next boom, says economist Michael Mandel. That's why he focuses on research and development investments. If you follow the R&D money, it's a clear picture.
"The truth of the matter is the US in the last 10 years has put its R&D money into information technology and biosciences," he said. "That's really it. We have not really put it into energy."
What would an infotech and bioscience economy look like? First, it could resemble a communications revolution, with telecom providers like Verizon, Internet giants like Google and Facebook, and Web services like Groupon and Mint soaking up legions of software engineers, computer support specialists, web developers and programmers. These highly skilled, highly educated, and highly paid jobs where the United States still has a competitive advantage over the rest of the world.
This would, as a National Journal reporter told me, resemble Tech Boom: Part Two, "but this time, we get it right."
THE FUTURE IS SCIENCE...
Like information technology, bioscience is a term that evokes vague visions (beakers? lab coats? titration? ... titration!). But Mandel sees it more concretely. He sees the ramp up in bioscience investment from the 1990s starting to pay off in real products with vast implications for every industry. Microcellular organism-based technology to produce energy. Bioprocessing to juice productivity on our farms. And new machines, pills and treatments to make our health care industry more efficient.
"We need a biosciences revolution because it's a direct attack on our biggest problem, which is tremendous amount of resources sucked up by health care," he said.
"Imagine if we had a pill to deal with Alzheimer's patients. Now those bodies are freed up to do other things. And those costs are freed up. That drives growth across the entire economy."
It's a compelling vision, but it raises the question: If biosciences are the future, why aren't they the present? We've been investing in the next big pharmaceutical breakthrough (cancer? AIDS? heart disease?) for two decades with frustratingly little to show for our efforts.
"For a variety of reasons it turned out that bioscience has lots of good science but not a lot of good products," Mandel acknowledged. "If we're looking for what the future looks like, there are two separate futures. One is this record of weakness could continue in which case, in which case, that's all she wrote. The other thing that could happen is it could have turned out to be a pause," he said.
"I'm betting that we'll see this bioscience drought as a pause rather than a stop."
... NOT ENERGY
The most surprising thing about Mandel's vision is his pessimism about alternative energy. At a time when almost every mayor, urbanist and government leader talking about the need to develop clean energy sources, Mandel's says the money just isn't there to build a competitive advantage for the United States.
"We have no investment in green energy R& D," he said. "We have no dynamism there. When your local university invests 70 percent in life sciences and 2 percent in energy, why put your bet on energy?"
THE NEXT ECONOMY
A series of articles about education and job creation trends that will impact the next decade.
Is College No Longer Worth It (or More Worth It Than Ever?)
America 2020: Health Care Nation
The Health Care Employment Bubble
Four Horsemen of the Job-pocalypse
What If Education Fails to Fix the Jobs Crisis?
The Hollowing Out of America's Middle Class
Is the Next Economic Boom Another Tech Revolution?
How to Navigate the Part-Time Economy