Anthony J. Pennings, PhD

WRITINGS ON DIGITAL ECONOMICS, ENERGY STRATEGIES, AND GLOBAL COMMUNICATIONS

From Sputnik Moment to the Reagan Revolution

Posted on | February 6, 2011 | No Comments

President Obama has mentioned the Sputnik satellite several times in speeches over the last few years to refer to the contemporary challenges facing the US such as climate change, oil depletion and the decline of the American economy. Most recently in the 2011 State of the Union address, he spoke of the Soviet Union’s space success that cut deep into the American psyche and resulted in the the Cold War descending to even chiller depths. He also mentioned that the event sparked the public will for massive investments in science and technology. He called on America to recognize the present as another Sputnik Moment.

    “Half a century ago, the Soviets beat us into space with the launch of a satellite called Sputnik. We had no idea how we’d beat them to the moon. The science wasn’t there yet. NASA didn’t exist. But after investing in better research and education, we didn’t just surpass the Soviets; we unleashed a wave of innovation that created new industries and millions of new jobs.”

Within months of the Sputnik flight, a new trajectory for America’s space program was set. Drawing on Nazi technology and following Arthur C. Clarke’s schematics to put “rocket stations” into orbit for radio communications, the US accelerated a rocket program. This program refined the propulsion and guidance technology to launch chimpanzees into space and set human astronauts on the lunar surface. Sputnik would help propel satellite research and development. It would transform strategic international espionage and reconnaissance based on Blackbird and U-2 aircraft into a space-based network of covert remote sensing and spy satellites. It would also help create the Intelsat network of global communications connecting the broadcast, telephone data communications systems of countries around the world.

Picking the Fruits of the Cold War

But perhaps more significant was the payoff that began some 20 years later as the technologies created by the Cold War became instruments of economic transformation. President Ronald Reagan, whose 100th birthday anniversary is today, restored a certain measure of American pride, energized American entrepreneurial spirit, and created a new-found skepticism about a growing US bureaucracy. But to really understand his legacy it is important to realize how he cashed in on America’s stock of research and development originating from that Sputnik moment. The Reagan Revolution was one of commercializing and privatizing the fruits of the Cold War and the developments that came out of it. Ronald Reagan helped transition military, space, and intelligence technologies into the commercial practices and products that would spur the economy for several decades.

He addressed the American public in 1981 on US economic problems.

Originally a great admirer of the New Deal, Reagan was changed by his days in Hollywood when he was subject to the New Deal/Cold War’s top tax rate of 92% on his movie and public relations earnings. He became an admirer of Friedrich Von Hayek and other free market advocates including George Gilder and Arthur Laffer, proponents of supply-side economics, which favored the producers in the market equation between supply and demand. In other words, Reagan believed the way to get the American economy on track was to “get government off our backs” and create incentives such as tax breaks for “suppliers” to create new products and services. In the production of commerce, these suppliers would have to hire workers and buy the resources that go into the new products.

Reagan inherited a struggling economy suffering from two oil crises and stifling inflation. After he had taken over, Fed policy rocked the economy further by increasing interest rates to record levels and sending the unemployment to 9.7%. Trade deficits with Japan and Germany added to the outflow of capital along with increasing dependence on oil.

What characterized the economic turnaround of the 1980s was the transition of Cold War technology into microprocessors, personal computers, compact discs, satellite television, and data communications. Supply-side economics, with the help of prominent “supply-siders”, such as Intel’s Gordon Moore, Microsoft’s Bill Gates, Apple’s Steve Jobs, Lotus’ Mitch Kapor, and CNN’s Ted Turner as well as others such as Michael Dell, capitalized on the space race’s microprocessor and satellite technology to create a new information and communications age. Transistor technology, shaped by Mutually Assured Destruction (MAD) and the Apollo Moon project into the microprocessor technology of the 1970s, became the brains of the Apple and IBM personal computers that characterized the decade. Satellite technologies and the Space Shuttle were launched on the back of rockets designed by the engineers educated by the GI Bill. Data network technologies invented to create a defensive radar warning shield to protect against nuclear attack became the local area networks (LANs) and global X.25 data lines that propelled enterprise computing and online financial markets.

So the original Sputnik moment, within the context of the Cold War, sparked an extraordinary surge in science and technology that Reagan’s supply side economics helped commercialize into today’s computerized global society. Can Obama’s America create a similar transformation? Are the Bush and Obama tax cuts enough to unleash the “wave of innovation” that will result in the networked green economy needed to overcome the problems associated with the declining availability of affordable petroleum? Was the stimulus that was needed to recover from the abyss of the Great Recession be enough to mobilize the educational and research resources needed create the industries and jobs of the future? Has the “War on Terror” developed a sufficient stock of technological innovations that can be mined for economic adoption? What additional resources can be mustered in an age of continuing deficits and partisan political fighting?

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AnthonybwAnthony J. Pennings, PhD is the Professor of Global Media at Hannam University in South Korea. Previously, he taught at St. Edwards University in Austin, Texas and was on the faculty of New York University from 2002-2012. He also taught at Victoria University in Wellington, New Zealand and was a Fellow at the East-West Center in Honolulu, Hawaii during the 1990s.

Category: disruption, dystopian economies, how IT came to rule the world, space systems
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    Professor at State University of New York (SUNY) Korea since 2016. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, digital economics, and strategic communications.

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