You Reap(er) What You Sow: The Consequences of America’s Drone Program

This, my friends, is the General Atomics MQ-9 Reaper. It is an unmanned aerial vehicle (UAV) capable of both remote controlled and autonomous (can fly by itself a programmed route) flight. The Reaper is the first of its kind. Far more advanced than its predecessor, the MQ-1 Predator, it is a “hunter-killer” UAV designed for long-endurance, high-altitude surveillance.

While there are many other UAVs, the words “Predator” and “Reaper” have taken on another name“drones.” As you all are probably aware, this has been a hot topic for a while now; the development and implementation of these “drones” has led to heated debate surrounding their legality under international and domestic law. In fact almost every debate I have come across has focused on that. But you do not need another person telling you whether it’s legal or not. I’m not saying that I don’t think it’s important, but I find the costs and consequences of their continued use and development far more interesting…and troubling…

The Lockheed U-2 “Spy Plane”

The drone program cannot be fully understood unless you first take a quick crash-course in some Cold War history. It is likely that the idea of UAVs had been floated around as early as we were able to put a man up in a hot-air balloon, but it had to have been seriously considered in the wake of the 1960 U-2 Incident during the Eisenhower presidency. In 1960, an American Air Force pilot flying a reconnaissance mission for the C.I.A. was shot down over Soviet airspace and captured shortly thereafter, resulting in a diplomatic fiasco. The incident inevitably led to the development of faster and more elusive recon aircraft like the SR-71 Blackbird (It’s at the Intrepid in New York, check it out!) And while the U-2 is still being used in the 21stCentury to support U.S. military operations in theatres like Afghanistan and Iraq, the 1960 incident was a tipping point for aerial recon; it was probably at that point when strategists seriously started to consider developing something that could be flown remotely, without having to risk a perfectly good pilot. Fast-forward to 2011 with the loss of one of our RQ-170 Sentinels over Iran; while it’s not clear to the public whether our UAV was shot down or suffered a mid-flight equipment failure, no one was killed or captured, and Iran was unable to exact concessions. Imagine the diplomatic fallout of an American pilot being shot down and captured…in Iran…Scary thought, I know.

One of our UAVs went down over Iranian airspace. If a US pilot was in the cockpit the diplomatic fallout would have been the movie “Argo” on steroids.

In short, the drones of today are a byproduct of the Cold War. Building off of that, with the fall of the Soviet Union, it became clear that major threats could now originate in any corner of the world. But it wasn’t just the USSR that was being carved away, it was also the U.S. defense and intelligence budgets. The mentality at the time was “the Soviet menace is gone, how can we still justify this enormous National Security budget?” Satellite imaging was expensive and slow, and their utility was limited in the sense that they operate on a particular orbit that covers a particular path along the Earth (in this case, Soviet missile silos, airfields, military installations, etc). These orbits couldn’t simply be diverted to new trouble spots, at least in a timely manner; and even if they could, the new threats of insurgencies, terrorists, and transnational criminal organizations do not generate the same kinds of signature (intel-talk for patterns of behavior that are detected through signals intercepts, human sources and aerial surveillance, and that indicate the presence of an important operative or a plot against U.S. interests) as the construction of a missile silo or Soviet-bomber runways. The footprint/signature of many of the Post-Cold War threats are much smaller, subtler and lighter. Aerial recon aircraft like the U-2 and SR-71, though valuable, faced their own problems, the most important of which were survivability (we don’t want another 1960 U-2 Incident), cost (if sold today, one SR-71 would go for around $250 million), and technological capacity (high altitude + fast plane with a camera = blurry pictures). It is in this context that the MQ-1 Predator was developed in the 1990s, though it was originally strictly used for recon purposes.

What makes the drone so special?

From an operational standpoint, slow-flying manned planes like the A-10 and the AC-130 have been particularly useful in places like Fallujah and other complex urban environments, and they will continue to serve in many capacities. Pilots and gunners can get a good sense of the situation from on high, and it’s for that reason they coordinate with platoon commanders and Special Forces team leaders engaged in tactical operations on the ground. But while those manned planes still must fly at 180 knots (~207mph) to stay airborne, the unmanned Predator can fly at 75 knots (a lot less than 207mph). And while many other UAVs have to fly low, drawing attention with that annoying buzzing sound, a Predator flies at 15,000 feet—almost three miles up—where no one on the ground can hear it or see it. Then someone in the U.S. National Security community got the bright idea to strap a missile to it, and after a few successful tests the Predator became a self-contained multi-purpose unit that was able to transmit real-time imagery intelligence (IMINT) and if needed, engage the enemy. Lt. Col. Jay Stout, USMC (retired) quotes Lt. Gen. Walter Buchanan III, U.S.A.F., U.S. CENTCOM in a piece he wrote for the U.S. Naval Institute that speaks to the level of development and integration of our drones into close-air-support roles: “I have seen our UAV force evolve from one that was principally an intelligence-collection platform in Bosnia to one that today has a very potent air-to-ground capability and represents a truly flexible, combat platform.” I think it’s pretty clear that UAVs have shown itself to be an effective instrument for low intensity conflicts, whether for surveillance, assault, or both. And they will forever be in the toolbox of its users.

When people say that they are debating the “Drone Program,” what they’re really talking about is the post-9/11 implementation of using U.S. armed UAVs like the Predator and the Reaper, to kill leaders of al-Qaida, in Afghanistan, Iraq and later in Yemen, Pakistan and Somalia (the three “covert action” campaigns that we know of). Since assuming office, President Obama has greatly accelerated the program, and in just 2 years authorized nearly 4 times as many drone strikes as did the Bush administration throughout its entire 8 years in office. The drones are launched from air bases in Afghanistan and Pakistan but are controlled by pilots in the U.S. After Sept. 11, 2001, U.S. President George W. Bush ordered U.S. drones to kill leaders of al-Qaida, in Afghanistan and later in Yemen and Pakistan. Since assuming office, Barack Obama has greatly accelerated the program. In just 2 years, the Obama administration authorized nearly 4 times as many drone strikes as did the Bush administration throughout its entire time in office. The most comprehensive list of U.S. drone bases abroad that I’ve come across was from Micah Zenko’s column in Foreign Policy, where he reconciled news sources with satellite photos to determine where the U.S. has kept 12 of its UAV bases. Although most were in Afghanistan, Zenko’s pointed out that we base our UAVs in Turkey, Ethiopia, Djibouti, Seychelles, Qatar, the Philippines, the United Arab Emirates, Yemen, and Saudi Arabia. The African continent’s US UAV launching bases are so many that it deserves its own hyperlink (the majority of these are used for surveillance flights.)

The implementation of UAVs in the Post 9/11 has enormous costs and consequences that I do not think have been seriously considered. And like I discussed before, I think we have a responsibility to ask more questions besides “is this legal or not?”

What do other people think about it?

I don’t claim to read or speak a lick of Arabic, Bengali, Urdu, or Pashto, but these people and the thousands of other people in pictures like this do not look very supportive of the United States.

Internationally, on a scale of “1” to “Greek mom who can’t let it go that I forgot to take out the garbage last week” lots of people are really, really mad about our drone program. One popular claim that is made is that the program violates the country’s sovereignty; for example, the Pakistani government has condemned their use as such a violation of sovereignty, but evidence that they’re allowing the strikes to happen is pretty clear. To get a better grasp on this, let’s go back to the Cold War: In July 1957, U.S. President Dwight D. Eisenhower requested permission from Pakistan’s Prime Minister Huseyn Suhrawardy for the U.S. to establish a secret intelligence facility in Pakistan and for the U-2 spy plane to fly from Pakistan. Fast forward to the drone debates of today and it seems impossible to not conflate the words “drone” and “Pakistan.” So in fact, our “drone program” in Pakistan that everyone’s been talking about actually has quite a long history, going back almost 50 years! And the drones we have operating in Pakistan are being held in the old baseswe used decades ago. And the sites were built by Pakistani laborers and are guarded by Pakistani security forces. The Yemeni government has also agreed to the strikes, though some opposition has been beginning to emerge. It is unclear how many of the average citizens in these countries deplore the campaigns, since it is likely that they don’t particularly care for mass shootings and bombings by radical jihadis either. One thing is clear: the host governments silently agree for the continued use of American drone strikes in their countries, but publicly denounce them. It is not clear how sustainable this model is, since drones can certainly subject host-governments to high levels of political pressure that make compliance with US requests more costly.

That U2 the Soviets shot out of the sky in 1960 flew out of Pakistan. Does that country sound familiar when talking about drones?

Do our drone strikes “create more terrorists?” that is, do we create more terrorists than we kill? Excellent question, and to tell you the truth, I do not know. By asking this question I am also making the point that we do kill terrorists with these things, lots of them. Imagine showing up to work one morning at your company and the boss tell you that you’ve been promoted to No. 2 because old No.2 got killed by a US drone.  If you Google “al Qaeda number 2,” you’ll find this story, but it’s one of many others. In fact it looks like the average is a little over one-a-year.

But unfortunately, we cannot have a complete, enlightened debate on the drone’s actual effectiveness (or ineffectiveness) without the official numbers, which have yet to be disclosed. The Bureau of Investigative Journalism has committed itself to trying to get their own numbers, and the New America Foundation’s database if also often cited. Sen. Lindsey Graham became the first public official earlier this year to have his own number, some 4,700 total deaths attributed to our Pakistan/Somalia/Yemen program. Micah Zenko of the Council on Foreign Relations put the number at closer to 3,500.  All of the projects from advocacy groups, other non-profits and think tanks that cite numbers cannot be independently verified.  Though we do know that Faisal Shahzad, the man responsible for trying to set off the car bomb in Times Square in 2011, cited America’s drone program killing civilians as a reason for his actions. Arguments of their accuracy (killing terroritsts) and their inaccuracy (killing civilians) have been butting heads. I can see where someone can be coming from though: “A man in Yemen walking back from a hard day’s work, just in time for dinner, only to find what’s left of his wife and children, maybe even some good friends too, under a pile of rubble that used to be his home. He finds out that it was “the Americans” who blew up his home because they mistook the gathering of so many people in one area “suspicious”. He was pro-American at first; he hates the terrorists that make it unsafe for him and his family to move up in the world. But now his enemy is America, because it’s personal now, they killed the people he loved.” There are too many of these narratives to dismiss all of them as untrue, but it is unclear as to how many civilians have been killed. The Obama administration insists that civilian casualties have been minimal, despite the expansion of these strikes under his tenure. When you see photographs of women and children mangled, it could have been a hellfire missile, but it could have very well been shrapnel from a terrorist’s bomb.  The kicker to all of this is that the program remains shrouded in secrecy, and that although there may be some evidence, there is not enough to accept it (or reject it).

What are the implications for the victims and the pilots?

An eye-opening study was done by students at Stanford and NYU that focused on the psychological effects of living under drones, with a focus on Pakistan. The study is certainly an eye-opener, whichever “side” of the debate you happen to be on. But it seems that not enough is asked about the UAV operators, the pilots who are operating these vehicles from cubicles thousands of miles away in the United States. Are they detached and desensitized from the task of taking someone’s life? Has it turned the “human element” of war to a video game of “joystick killing”? We had a similar debate about the sniper, and the aerial bomber before that, and all the way back to the longbow. Recent numbers show that these pilots are just as prone to mental illnesses like PTSD and Psychosis as those who get into the cockpit and fly overhead on conventional runs. High operational stress is still there.

Inside the “cockpit”.

One epidemiologist was quoted saying: “[Drone pilots] witness the carnage. Manned aircraft pilots don’t do that. They get out of there as soon as possible.”

Proliferation and the future

The technology itself, since it’s now readily available to the public, is only limited by the imaginations of those who wish to be innovative. The most recent military development was just this summer, when the X-47B drone successfully took off and landed on an aircraft carrier. In the next decade drones will have their own floating bases in the form of US Carrier Strike Groups. But Peru is using them for geological surveying, since the terrain is quite rough and human pilots don’t come cheap, especially since the terrain is not suitable for safely landing in an emergency. Even here in the U.S., drone technology is being implemented by the agriculture industry to monitor crops and spray pesticides. For kids, they’re the new racecars and kites. Maybe one day they can even serve as flying billboards in cities. These observation vehicles were around before; it just so happens that someone in the government got the idea to rig one with a hellfire missile and see what would happen. It was bound to happen at some point.

Big, small, fast or slow, if there is a need, there is a drone to help get the job done.

But a natural consequence of our drone program is that by us being the first to design and implement one (especially on the military front), other nation states can do so as well. And they are. China, Russia, Israel, Iran, India, the UK and Turkey all have their own drone programs.  Though not as sophisticated as ours, they are all making strides. In reality though, if there’s one thing I’ve learned about China, it’s that they are not particularly innovative when it comes to hardware; if anything, the recent NY Times story about the People’s Republic’s efforts to hack our networks to acquire our latest drone technology secrets tells me that we are still on top. Granted, this does not mean I am not concerned. Given the advantages of using drones, these countries may be inclined to use them in disputed territories or national airspace to test the resolve of their regional rivals.  Just this month Japan scrambled some fighter jets to address an “unidentified drone” near the Diaoyus islands which China claims is rightfully theirs, along with several others. With the already existent potential for miscalculation and escalation, we could see more conflicts with drones as the instigator.

Senator Rand Paul filibusters John Brennan’s confirmation as Director of the CIA. Made for some riveting CSPAN.

We all remember Sen. Rand Paul’s blitzkrieg of a filibuster that was covered by C-SPAN from start to finish, and perhaps for the first time in a long time, that channel was entertaining television. And once that happened it became pretty clear that the debate about America’s drone program was not going to go away. But elements of the existing debates do not consider the second-order consequences. Do drones subject governments to high levels of political pressure that make compliance with U.S. requests more costly? Do they create more insurgencies and resentment for the U.S.? What does our embrace of drones mean for their proliferation by our allies, but more importantly for our adversaries? Many of these consequences are also discounted in analyses of drones that focus exclusively on how many terrorists are killed relative to civilians. I do not see using UAVs in U.S. counterterrorism tactics going away anytime soon. But beware of the consequences because you will always reap(er) what you sow.

Advertisements

“Beware of Greeks Bearing Debt: Will Greece Go Off the Euro Standard?” – David Kessler

 

I am pleased to announce that Dave Kessler has agreed to join The Brooklyn Diplomat team. This operation is now a two-man wolfpack! Dave’s a fellow Loyola grad and loves reading and writing about global affairs. He’s taken a few more economics courses (ok, maybe a lot more) so he will be able to offer more geoeconomic analysis than I am comfortable dealing with. That hasn’t stopped us from having intellectually stimulating conversations on things like the eurozone crisis and the rise of China though. In his spare time, Dave loves thinking big thoughts with his Jesuit educated bretheren, and hitting the gym with some of them (me included). Welcome Dave! Now without further ado, David’s first piece!

Greece is the posterboy for the “European Sovereign Debt Crisis.”  In the media there is always talk of a new “Greek Bailout.”  Academics, officials, panelists and the average Joe all debate about where Greece went wrong and how it can fix itself.  The fiscal conservatives point to all that is wrong with “big government.”  The socialists blame the “draconian” austerity measures forced upon Greece and her people by foreign financiers.  Others point to pervasive corruption, Southern European culture, and further variables to attribute to Greece’s disastrous state of affairs.  Any and all of these things may be to blame, but perhaps Greece’s currency is the foremost problem causing such misery.

With one out of every four laborers out of work and youth unemployment at more than 60% this year, Greece’s situation (as well as Spain’s) has nearly reached Great Depression proportions. This is further disturbing when one considers that the entire economy of Greece has contracted from a high of $341.6 billion in 2008 to $289.6 billion for last year representing a GDP decline of roughly 15% in just four years. To exacerbate the financial troubles facing Greece, prices have risen steadily as the crisis has worsened! The trouble is that the most attractive method by which Greece can become competitive again is through consumer price deflation; this is due to the fact that as part of the Eurozone, Greece, although a soverign nation, cannot control the value of its own currency.  As for the Euro, it has fluctuated against the USD from   €1.6 : $1.0 to €1.2 : $1.0 from 2008 – 2013. Currently estimates stand at €1.3 : $1.0. Because the supply of Euros is controlled by an independent institution, the European Central Bank (ECB), Greece cannot engage in recession countermeasures such as “Quantitative Easing” (“QE) as is currently being mobilized in the US. QE is a tool whereby a central bank increases the money supply by purchasing securities.  Therefore, Greece has solely fiscal alternatives to control the collapse of its economy such as deficit spending (a method John Maynard Keynes suggested in his work, The General Theory of Employment, Interest and Money, to alleviate the Great Depression.)

Sadly, these options are also compromised due to the austerity measures placed upon Greece as a precondition for bailout loans.  These bailout packages have come with serious public spending reductions, including the slashing of 150,000 jobs from 2010 to 2013.  Thus, austerity creates more unemployment and reduces short-term growth potential. Moreover, the growth potential in many countries facing similar situations like Greece is challenged by the need to acquire capital in order to repay loans. As a result, instead of tax reduction, which aids growth, tax increases often occur during austerity in many debt-stricken countries.  Thus, countries such as Greece are forced into a corner where they can engage in neither monetary nor fiscal expansion to stimulate their economies.  But Greece’s situation is not news to historians. Although the “Greek Question” is unique in its specifics, it is strangely familiar to another such situation that occurred in 1920s Britain.

Following the First World War, the great nations of the world returned to the monetary system known as the “Gold Standard.”  For decades before World War I, the Gold Standard played its part as the rock upon which a nation’s currency could rest.  Due to the heavy debt burdens during the War, countries left the gold standard as they printed new money to pay for the war.  After the war, nations thought it best to return to the former gold standard.  With a percentage of a nation’s currency directly underwritten by an amount of gold, nations could trust in the sable value of each another’s currency.  An exchange rate would be determined for a specific currency to gold and an individual could go to a bank and exchange his/her currency for that amount of gold.  All currencies pegged to gold were considered “reserve currencies” as was gold itself.  In the 1920’s, this gold standard began to unravel.  One of the key reasons for this dramatic change was the reality that, because a specific percentage of a nation’s currency was underwritten by Gold, the amount of liquid money in an economy was restricted by how much gold was in circulation.  The positive end of that system was the low level of inflation experienced by a country on the gold standard, making a safe investment for other nations.  Conversely, the key negative end of this system was the inability for that currency to depreciate in times of recession.  This was due to the fact that the amount of money in a society was regulated by the supply of gold.  Moreover, domestic prices of goods and services are slow to adjust to an overvalued currency.  As a result, prices of export goods and services may be compromised due to a currency that is too expensive during times of economic recession.  This could, and did, lead to high levels of long-term unemployment for countries like Britain during the 1920’s (Pg. 218).  To counter the high price of the British Pound Sterling, the British authorities and Bank of England attempted to deflate prices within the economy. They achieved some success, albeit failing to bring prices to a competitive level (Pg. 220). (Liaquat Ahamed brilliantly describes the whole gold standard failure in his book Lords of Finance: The Bankers Who Broke The World.)

The straw that broke the camel’s back was the beginning of the US Stock Market Crash of 1929 that sent shockwaves across already weak world markets.  By 1931 Britain became one of the first major industrial powers to abandon (Pg. 479) the gold standard; following this Britain began to recover that same year. This was a result of a depreciation that followed their departure from the gold standard.  Once sterling was allowed to depreciate, it could compete with other competitive nations’ currencies as British goods became less expensive.  Thus, by departing from Gold, the British Pound Sterling was revalued in monetary markets while simultaneously giving the British government and the central bank more control over their money.  The Pound Sterling was no longer pegged to gold.  (Soon after Britain, almost every other nation left the gold standard and few have ever returned.)

The Nobel-Winning economist Milton Freidman once wrote,

“The argument for a flexible exchange rate is, strange to say, very nearly identical with the argument for daylight savings time. Isn’t it absurd to change the clock in summer when exactly the same result could be achieved by having each individual change his habits? All that is required is that everyone decide to come to his office an hour earlier, have lunch an hour earlier, etc. But obviously it is much simpler to change the clock that guides all than to have each individual separately change his pattern of reaction to the clock, even though all want to do so. The situation is exactly the same in the exchange market. It is far simpler to allow one price to change, namely, the price of foreign exchange, than to rely upon changes in the multitude of prices that together constitute the internal price structure.”  (Although today currencies fixed to precious metals such as gold are not common, there are many currencies that are pegged in much the same manner to other currencies such as the USD.)

Right now the Euro is a freely floating currency however its valuation represents the currencies of 17 states with total financial disunity.  Without a united fiscal policy, the Euro and its value simply cannot represent the individual needs of each economy.  The belief in establishing the single currency represents ideas that a European currency would work very similar to the US Dollar.  Let’s address this point further.  Though the US Dollar represents 50 individual states, the comparison stops there.  Firstly, if prices are too high in one state, one can much more easily move to another state because English is generally spoken throughout the country.  Secondly, the federal government provides financial unity that European Union lacks; If a certain state is in financial difficulty, the federal government can supply it with aid (the recent American Recovery and Reinvestment Act of 2009 is an example).  Finally, the most profound difference in the examples lies in the political structure of the Eurozone.  In the US, the federal government is incentivized to help states out because its representatives in key leadership positions (Congress/President) are elected by the whole population of the country.  In Europe, a German MP is not elected by Greek citizens; therefore to the German MP there may be much less incentive to approve an aid package to Greece.  Conversely, because Greece does not add to Germany’s economy, a German taxpayer should be skeptical about paying for a Greek bailout.

Due to these inhibitors, Greece is using a virtually fixed currency.  Greece must now seriously weigh its options in regards to the single European currency.  As observed, Greece can’t seem to stop the hemorrhaging of its economy despite its attempts at reform.  Both its monetary and its fiscal instruments are currently unavailable and it has very few options.  Its options are: A) wait until the depression passes and remain on the Euro or B) leave the single currency and risk the return to the Drachma.

This is no easy choice. The single currency has indeed brought some clear advantages, none the least of which is political unity with its Western and Northern European neighbors who now have a vested interest in its survival.  Furthermore several transaction costs of doing international business within the Eurozone have been completely eliminated due to a common currency, not to mention also the relative stability of possessing a hard currency (a currency that is accepted almost anywhere in the world).  Finally, there is now even hope that certain other notoriously recessed economies such as Spain are finally returning to growth in the near future.  For Greece however, there are signs that the worst has yet to come.  In May of this year, the Organization for Economic Cooperation and Development (OECD) forecast did not expect the economy to improve in Greece until 2014 at the earliest.  Furthermore, it stated that improvement would result, “…if export demand strengthens, competitiveness improves further and investment returns.”  All three of these factors are heavily influenced by the value of the Euro and can be undermined if the Euro appreciates before then.

What Greece needs now is a serious assessment of the risks and benefits of being on the “Euro Standard” and take it from there.  Perhaps, like Britain in 1931, Greece will leave the fixed currency model and adopt a currency that can represent only its economy. Britain did not join the Euro yet still reaps the benefits of being in the European Union, perhaps Greece could follow suit.

Innovate NYC: The Rise of Small Tech Startups in the Big Apple

If you don’t think it is already, New York City is poised to be the tech capital of the world.

I sat down with my good friend, Chris Corrado, a Staten Island native studying Computer Engineering at Stevens Institute of Technology, to talk about tech startups in our hometown of New York City. He has worked for Nomura and currently works at Susquehana International Group. Below is a transcript of our conversation.

Peter: Chris, we go way back, and it seems like yesterday that we were in the Scouts where we had no electronics on our camping trips. And now where when we visit the ol’ Troop on their excursions and the little guys have the latest tech gear.

Chris: I know, tell me about it. These kids don’t know what it used to be like, with Mr. Jim chewing us out every time he saw a phone screen! But that’s reality, once something like a new piece of technology gets off the ground it takes a life of its own.

Peter: So listen, you and me are both East Coast guys, we’re New Yorkers. What’s the deal with all these startup companies in NYC? Shouldn’t they all be in Silicon Valley on the other side of the country? If I had a quarter for every one I came across here I’d be my own venture capitalist firm!

Chris: Yea, I mean there are quite a lot of small tech start-ups that you may (or may not have) heard of in 2013. And a lot of them are calling New York home instead of Silicon Valley now. There’s that saying “there’s an app for everything”, but now the new one is “there’s a startup for everything” Look for a technology job in New York City; you’ll see what I’m talking about. I’m a 4/5 at Stevens Institute of Technology (just across the Hudson in New Jersey) studying Computer Engineering. It’s amazing to see how many technology entrepreneurs there are in New York. If there was any hope in humanity left, faith restored. Technology has become a driving force for 21st century innovation and it’s amazing to be a part of it. I hope the trend you alluded to continues in New York.

Peter: So now you just mentioned your college career over at Stevens. As much as I dislike Jersey (I’m not really sure why, it’s a New York thing I guess), you bring up a good point. NYC is the new place to be if you’re involved in technology. New York has to do two things now to make sure that this trend continues: it has to support innovative education in the Greater New York City area in funding programs for Computer Science, Engineering, IT, etc; and it also has to incentivize individuals and companies and other rent-seekers to double down here.

Chris: Right, I think Stevens is a good example, even though it’s in Jersey, but a good chunk of the students live and work in NYC.  We can’t make every school tech focused, but there has to be a way to incentivize the individual student to pursue coursework in these subjects, maybe through things like grants and contests. Stevens’ prides itself on being the Innovation University in the fields of Science, Technology, and Engineering. It almost isn’t fair how close we are to NYC. Technology roots from a genuine interest in making things around us better, and Stevens is a good place to look at for making things better. Just recently, we had a team enter into the Solar Decathlon which is happening over in Irvine, California in October 2013. It won’t be the first time Stevens entered into the Decathlon, either. You can see the house develop if you happen to be in Hoboken walking along River Street. Making alternative energies a reality is important for economic growth as well as operational efficiency of everyday tasks.

Peter: Ok so you answered the question and just made your sales pitch to prospective students who are considering Stevens all in one response, bravo. Another thing to consider too, I think, is that the real money is in lower Manhattan. The financial district is home to the New York Stock Exchange and some of the top global financial corporations.

Chris: Absolutely. Not only does New York City have prime real estate for innovative tech companies to start up and grow their ventures (because everyone knows that NYC is the capital of the world) – but it also has a lot of capital to help make New York City the tech capital of the world. That being said, having worked for a few of these financial institutions on the technology side of things, I’d like to lay out two observations that I feel are worth mentioning.

Peter: Let’s hear it.

Chris: Ok, first of all, technology in the finance industry is almost always used as a means toward an end, not as an end in itself. In other words, technology is used to promote and ease the way of doing business. For example, stock trading is almost entirely done with a computer nowadays.

Next, check out Forbes’ Top 10 financial services companies to work for (mine, SIG, was number 1!). You’ll find that SIG has more employees that focus on technology than we do on actual business. This is rare, and I find this rarity a little troubling.

Lastly, I’ve noticed there are constraints on when you can do things on the technology side within said financial companies. I’m sure over at Google, Dropbox, or even Vine, they don’t mind if you start tinkering with an environment to make it better. (In fact, that’s a good chunk of their job descriptions…) Finance is a different animal; it requires patience and a high level of inference. If you can be successful in finance and understand how technology works with the business, there is nothing stopping you from innovation. On the other side, if it looks like it may look like a bad decision, yeah. Don’t touch it.

Peter: So what is it you’re trying to get at here?

Chris: I’m sort of using the finance example as a dead end for technology. Places that allow for more innovation like Google or similar companies allow for more technological growth.

Peter: Thanks for clearing that up. But who’s to say that these financial companies don’t have an experimental technology department, or that they invest in and fund tech companies to acquire their solutions and applications and hardware?

Chris: They probably do, but most of them are not nearly as dynamic. SIG is an exception. Most companies are focused on promoting the business root of it all, but if technology is going to expand beyond where it is, businesses that focus on innovation have to be a priority. Finance companies that rely on technology to grow don’t necessarily contribute to that growth itself, they throw money at the problem. In other words, they more or less fund it by doing what you say, contracting with HP, Dell, etc.

Peter: But from an economic standpoint, I thought that division of labor was a good thing. Am I wrong now?

Chris: What do you mean?

Peter: Shoemakers focus on making shoes, Mechanics work on cars, and Finance guys are good at finance, so they focus on that. If there is a need within a company that falls outside of its expertise, you acquire that solution from someone who can fulfill that need.

Chris: Right. A technology founded and created from an innovative company. Not necessarily the finance company. Finance guys always want the latest and greatest stuff. They’re like the kids with the big pockets that can get all the cool toys!

Peter: So what you’re saying is that what is needed is not more companies that rely on technology to grow, but rather the other way around? More tech companies that relies on capital to grow? What about the market getting flooded?

Chris: I think that’s what all of these start ups exactly are. And I think that’s where we’re headed. The saying “less is more” shouldn’t apply at this stage of the game. And when it comes to technology, the more the better, because there will always be someone out there with new and better ideas. The market can certainly get flooded with subpar startups but I think those will be filtered out by or consolidated with other really significant ones. Hate to say it but a situation like Vine and Instagram where one trumps the other is proof of that. It’ll probably work itself out.

Peter: I know I’m the more politically savvy one, but I want to ask if you have any comments on what the next Mayor of New York City can do to continue the tech trend.

Chris: Sure. In his third term, Mayor Bloomberg made it pretty clear that he wants technology entrepreneurs to continue coming in and remain in the city. He put a lot of effort behind the We are Made in New York initiative, an online resource that highlights hundreds of tech startups and links them with other New York City based tech companies. That’s a program that’s here to stay and the next Mayor should try to find more ways to get all these people talking. The next Mayor may also want to consider tax incentives for startups that choose to make their home here; that’ll mean more money in their pockets to invest in their venture.

Peter: Ok, so all in all, if you want to be surrounded by and succeed in the technology field today, NYC has what you’re looking for in some way shape or form.

Chris: That’s right. And while we aren’t at the point of having malleable liquid crystal phone screens just yet, at least we have cool windows to look forward to.

Peter: Chris, always great talking to you, but we’re out of time. Next time we’ll have to talk Cyber-security. It’s become a buzzword on the political front, and but I’d like it if our readers can get your take on some Cyber-security issues. Until next time.

Pivot to Asia: As Syria Burns, Chuck Hagel’s Visit Reminds Us That The Pivot Is Underway

U.S. Defense Secretary Chuck Hagel, center, chains his hands with his counterparts from Vietnam, right, and Thailand before the ASEAN meeting in Bandar Seri Begawan, Brunei, on Thursday. The trip’s message: The U.S. is committed to its “rebalance” toward the Asia-Pacific region.

I’m probably not the first one to notice these things, but did anyone notice where Chuck Hagel, the Secretary of Defense, was while the U.S. deliberated a military strike on Syria? He’s home now, but Secretary Hagel had been on a tour of the Asia Pacific, building ties with his regional counterparts and other senior defense leaders. His tour of the region is part of a larger strategy that the Obama Administration has dubbed the “pivot” to Asia in 2011. To get an idea of what that word means, Foreign Policy ran an article by Hillary Clinton a few years ago that spells out the Administration’s rationale. It is becoming more clear as to what this pivot actually is, and what it means for the largest country in the region, China.

Although the U.S. has withdrawn combat forces from Iraq and is beginning to wind down our military involvement in Afghanistan, recent turmoil in the MENA region (Syria, Egypt, take your pick there are lots) are only buzzword examples that prove that we are not leaving the Middle East. Pakistan, a nuclear power, has a complicated relationship with us (highlighted by the raid on bin Laden’s Abbotabad hideout), and the fear of greater political instability and a conflict with their rival India is always just over the horizon. Iran also inches closer to a nuclear weapon. So let’s dissolve the illusion that we’re leaving the Middle East. Do I have to reference Michael Corleone here?

So to be clear, we’re not leaving the Middle East and moving everything we have into Asia (because even if we try, it will pull us back in anyway). But it is important to realize that there is more to the world than the Middle East, and that U.S. interests in Asia are grounded in a geographical reality. A popular image surfaced on the internet recently, with a circle over a section of Asia that reads “There are more people living inside this circle than outside of it.”

A little over 50% (51.4% based off what I pulled together from the U.S. Census Bureau’s numbers) of the entire world’s population live inside that circle. This reality itself is enough to argue that a rising Asia would be foolish to ignore. Another reality that is shouldn’t be ignored is the fact that more than half of this circle is water. And it just so happens that this circled water is very important.

Let’s look at the map again, this time with country borders and names of bodies of water for reference.

Look at India. The Indian Ocean serves as a major energy highway; oil and natural gas from the Arabian Sea via the Persian Gulf to the rising middle-class in East Asia and beyond. The Indian Ocean also connects trade routes that utilize the Suez Canal in Egypt, allowing ships to pass into the Red Sea, then the Gulf of Aden passing the Horn of Africa (Somalia) the Arabian Sea, into the Indian Ocean, and onward to the archipelagos of Southeast Asia and the South China Sea.

Let’s look at the map again. Find the South China Sea. The South China Sea itself is allegedly rich in offshore hydrocarbon reserves. Moreover it is the major international sphere of commerce. And you can argue whatever you wish, but a key underpinning of the majority of Post Cold-War global growth has been the U.S. Navy and Air Force. 90% of all goods in global commerce utilize the world’s sea lanes. The U.S. has kept these vital sea lanes open and secure for the global commons for half a century. When you take into account the fact that roughly half of that 90% figure runs through the South China Sea, the region’s importance to the global economy is difficult to push aside.

All over South and Southeast Asia their coasts are blessed with many deep water ports, and like most countries, a great deal of their populations hug the coastlines. It’s simple mathematics: safer sealanes = safer economy = safer society (notice my language, I didn’t say “safe,” I just said “safer”. It’s not always good, but it could always be worse.)

But the elephant in the room on this pivot (or should I say, dragon?) is China. Let’s take a quick look at the People’s Republic of China (PRC) through the lens of this “pivot to Asia”.

Chinese Strategy, Priorities: The Art of War
Chinese defense planners face a complicated situation, where geography plays a major role in their calculus (the map from before helps a lot here). Geographical challenges include but are not limited to:

1) land borders with more than a dozen countries (including proximity to nuclear powers in Russia, Pakistan and India), 2) island nations surrounding its eastern seaboard (thereby naturally challenging its access to the sea), 3) and ongoing island and maritime disputes with its neighbors (notably with Japan and the Philippines).

Coupled with China’s last ~100 years of economic and military inferiority which they attribute to Western imperialism and the Unequal Treaties , we can assess that although currently limited in particular military capabilities, their goals and strategy consists of consistently-defined objectives since their slow and deliberate rise to power starting in 1978.

It is for reasons outlined above that China’s primary concern about the pivot is encirclement. The U.S. presently maintains troops and/or security commitments with South Korea, Japan, the Philippines, Thailand and Australia; it sells armaments to Taiwan and is bolstering relations with Myanmar and Vietnam, all of which (with the exception of Australia) were historically tributary states and were seen as an extension of mainland China. China was the regional hegemon in their glory days, as we are in the Western Hemisphere.

Chinese culture values actions and gestures over words. How can they not see the U.S.“rebalance”/“pivot” to Asia nothing other than military encirclement? They fear encirclement much that the objective of the world’s oldest and most sophisticated board game, Weiqi, is precisely that: encirclement. Weiqi is also based on the central tenents of Sun Tzu’s The Art of War. Sun Tzu’s maxims – deception, flexibility, sudden, unexpected moves and gradually creating situations that best achieve political objectives–is a more holistic approach to warfare that differs from the American paradigm of warfare. For the Chinese, the art of war should not be limited to the battlefield.

Evidence from Chinese history and current events suggests that the PRC is adjusting accordingly, and have strategically placed their Weiqi pieces in various parts of the globe to counter and circumvent ours. Chinese expansion of investment abroad plays a vital role in its grand strategy. In total GNP, the People’s Republic of China (PRC) has hurdled ahead of Germany and Japan, and now ranks second in the world. The recent assessment according to the National Intelligence Council’s (NIC) Global Trends: 2030 (if you have time, read the whole thing) predicts the PRC eventually overtaking the U.S. as the world’s largest economy. Massive foreign investment in Africa, Latin America, and Eastern Europe have paid significant dividends in access to raw materials, economic development and enhancing Beijing’s status as a world power. It’s also becoming pretty clear that China aims to operate its Navy further afield. China has and continues tofund
the building of ports
all along the Indian Ocean, in Myanmar, Sri Lanka, Bangladesh, Pakistan, Kenya and the Horn. These projects, like the one in Gwadar all have their unique business underpinnings by Chinese companies, and they are certainly tailored to the individual area. But taken together they also make what the Chinese call a “string of pearls,” commercial ventures whereby political influence can eventually be exerted. Don’t believe me? Google “East India Company”.

However, China’s rise has not been without consequences. Every day it is becoming clearer that the Chinese economic miracle is coming to a halt; it’s not really surprising though. I’d love for 10% annual growth for every country, but that kind of growth for any country is simply unsustainable. Other proliferating domestic challenges are also expected to test the PRC’s national spending priorities with which the military may have difficulty competing for. The demand for social spending because of China’s slowing birthrate, aging society and pollution, coupled with the widely-predicted slowdown in economic growth, will force PRC leaders to face the large opportunity costs and trade-offs concerning defense spending. The situation is likely to exacerbate with rising income inequality, ethno-religious tensions in the borderlands, and the political system’s uncertain future; expenditures with a focus on domestic security are more likely. China’s domestic instability has been primary concern of China’s leaders for centuries, and it may worsen in the future–particularly if there is less economic growth that has so far legitimized the CCP’s grip on power. Their numbers are pretty opaque and PRC leadership will have to come up with some kind of comprehensive reforms to keep China unified. Either way, if China destabilizes or if it grows stronger and continues to grow militarily, it pays for us to be there; in the case of the former to help respond to potential regional crises and in the case of the latter to balance the dragon with the eagle.

The U.S. has been rejecting the charge that we seek to “contain” China. The pivot may not be containment, but the rise of any great power must be managed and must be balanced against issues like an increasingly nationalistic Japan and the rise of Indian sea power. Ideally the U.S. would like to see an Asian power web, whereby more Asian states (China included) have greater economic, military and diplomatic cooperation with each other, as well as with the U.S. These interrelationships will probably balance each other out, and balance against a rising China and miscalculations that can bode ill for regional stability. So it’s not all about China…But it just so happens that all of the arguments for a pivot start and end with China…