Summary
News of the Peoples Republic of China’s (PRC) first successful test of a hypersonic missile perforated the headlines in August. The test sent a nuclear-capable hypersonic missile into low-earth orbit around the globe to its target, demonstrating potential to circumvent U.S. missile defense systems and possibly strike North American targets. Media commentary suggested it was a “Sputnik moment” for the PRC, a reference to 1957 when the Soviet Union launched Sputnik 1, the first successful satellite to orbit the earth, signaling that the U.S.’s geopolitical rival achieved a level of technological prowess that effectively challenged its position as a global superpower. Whether the comparison is hyperbole or fact is arguable. However, it is a clear indication matched with other geopolitical and economic signs that the U.S. has a contemporary competitor in the PRC, challenging its position on the world stage, and not just from a security standpoint. As the U.S. gains an appreciation for the emerging competitive environment, the first of many serious questions must be asked: What does it actually mean to compete? What defines competition in this context?
That was the question the Potomac Institute for Policy Studies explored during the kick- off event of its Global Competition Project on September 29th. The Honorable Alan R. Shaffer, former Undersecretary of Defense and Potomac Institute Board of Regents member, facilitated a panel of distinguished guests to examine the issue. The panel included Dr. Melissa Flagg, founder of Flagg Consulting LLC and a former Senior Fellow and Adjunct Professor at Georgetown University; Mr. Jaymie Durnan, Assistant to the Director for Strategic Initiatives at MIT Lincoln Laboratory and Chairman and Co-Founder of the Andrew W. Marshall Foundation; and Dr. Laurie Giandomenico, Vice President & Chief Acceleration Officer at MITRE.
Together, the diverse panel of experts, senior Potomac Fellows, Potomac staff, and attending guests discussed tenets of great power competition: What is important for the United States to consider is to ensure the Nation, its partners, and allies wield a competitive edge that will render prosperity and security in the future. Questions around the topic “what is compe- tition?” were primarily explored through four different lenses: economics, national defense, technology, and societal implications.
ECONOMICS
In investigating the role of economics in compe- tition with near-peer geopolitical adversaries, the panel delved into the current economic status of the U.S., focusing on whether the status quo practice will allot the fiscal and material resources necessary for the U.S. to succeed in the future. It was argued that the U.S. economy is in an alarmingly fragile state based on the national debt, which stands at $28.2 trillion, noting that if the debt was dispersed across the population it amounts to $226,000 per person. The debt-to-GDP ratio is also the largest it has been in U.S. history. If the current course is continued, the U.S. will pay more to service its debt in the near future than it will pay annually to defend the nation (approximately $700 billion per year). Other economic factors highlighted that currently weigh on the competitive posture of the U.S. include: the fact that mandatory spending in the federal budget has risen from 25% to 67%, supply chain fragility issues continue to plague the country and the rest of the world, and the U.S. has one of the worst income gaps in the developed world. Panelists indicated that the U.S. must improve its economic trajectory, or it will lack the financial stature and stability to effectively compete on the global stage in the future, particularly when it comes to defense spending and in R&D investments that lend to economic growth and prosperity.
NATIONAL DEFENSE
The impact of contemporary and prior conflicts on defense spending led the discussion to the state of the U.S. Armed Forces and their readiness to thrive in an era of great powers competition. For the last 30 years DoD has been primarily focused on conflict in and around less advanced nation states like Iraq and Afghanistan, and the containment and engagement of non-state actor and terror threats. It has only been in the last decade or so that emphasis shifted to emerging near-peer threats from more advanced nation states such as China, Russia, and Iran.
As a result of the focus in Iraq and Afghanistan, the U.S. has largely deferred fielding advanced weapons and capabilities relevant to a potential near peer conflict for nearly 30 years. It has instead chosen to remodel and modernize aging legacy platforms to allegedly meet current contemporary needs, instead of focusing on the future. Currently, the U.S. spends more to sustain legacy platforms designed to fight the wars of the 20th century (like Desert Storm) than it does on combat enablers like cyber and electronic capabilities—those of which will weigh more heavily in deciding the outcome of conflict in the 21st century. However, the emergence and recognition of near-peer threats is driving a sharp increase in demand for more advanced military capabilities.
Subsequently, there is a surge of systems in the defense pipeline that, due to the economic fragility of our economy, are in danger of not being properly funded. Statistics cited from the American Enterprise Institute estimate that the U.S. would need five percent of real growth in the budget to afford the military modernization needed to be able to field a proficient deterrent force that would disincentivize our adversaries from conflict. And in the event of a conflict, provide us with the advantages necessary to win. In almost unanimous agreement from the panel, these advantages will most certainly come from an ability to foster a healthy environment for technological advancement as the U.S. has done in the past.
Photo by Spc. Joshua Leonard/U.S. Army/CC BY 2.0.
TECHNOLOGY
To be competitive with contemporary geopolitical rivals, the U.S. must recommit to maintaining its historical advantages in technology and R&D investments. As was the case with national defense, panelists drew concerning parallels between the nation’s economic state and the pace and status of U.S. technology. Unsurprisingly, the shared concern focused on how to alter federal spending to maintain a competitively advantageous position in technology on the global stage, while also meeting the other looming financial obligations.
A significant part of the historical prosperity experienced by the U.S. is credited to its promotion of innovation, the subsequent development of technology, and proliferation of that technology in the free market. Critical to those efforts have been investments in R&D by the U.S. government over time. However, the amount the U.S. spends on R&D has fallen from 2% to 0.7% over the last two decades. Meanwhile, prominent geopolitical rivals like the PRC have prior- itized science and technology innovation as a core pillar of its modernization strategy, committing a significantly higher portion of their GDP to technology R&D than in years past. Panelists expressed that if such trends continued, they may result in the U.S. being displaced as the world’s leader in technology.
Clarity in understanding the current global competitive environment can be found in examining history. To that end, the panel discussed how exactly the U.S. came to be the technological powerhouse it is today. Accelerating throughout the 1960s, the U.S. led the world as the premier technological power, accounting for over 90% of global R&D spending at the time. 65% of that was carried out by the federal government. This was, in part, due to the vacuum created by WWII, wherein almost all industrial powers experienced catastrophic destruction of their industries and economies. The U.S. ended the war with a relative economic advantage, postured to shape and fill the vacuum, especially in the years to come as a Cold War strategy would be developed to address a rising post-war Soviet Union. It was during this time that a myriad of federal science and technology organizations were created, and a tight cooperative relationship existed between the industrial, scientific, governmental, and military communities. Since then, relationships between industry and government have reversed, where today the majority of R&D for advanced technologies is generated by commercial industry, and therefore not necessarily tied to an integrated national vision or strategy.
The global R&D landscape for advanced technology has changed as well. Between 2000 and 2021 other nations further prioritized investment in advancing technology in their economies resulting in global R&D funding tripling from $890 billion to $2.2 trillion annually. For many countries the increase in R&D was deliberately coordinated with national governments to accentuate overall potential advantage. Meanwhile, the role of the federal government in U.S. R&D technology innovation flattened or declined, now representing less than 10% of all U.S. R&D spending. A sharp contrast to the 65% of R&D after WWII.
The panelists voiced recommendations for the U.S. to consider adopting in order to improve its global competitive posture from a technology perspective. Those recommendations included: fostering radical collaboration between industry and the federal government by framing a charter of goals both industry and government can agree on; shaping impact driven investment based on a unified strategy of defined goals and values; fomenting alliances by investing in global industries and countries aligned with U.S. values and goals; directing R&D investment towards the creation of new sustainable markets; and adherence to democratic principles, investment orientation, and business practices that further interests of the U.S. and its allies and partners.
SOCIETAL IMPLICATIONS
The last lens through which our panel sought to tease out the vital tenets of competition, and conceivably the most important, was that which considered the broader societal implications. A point made early-on (and essentially met with unanimous agreement) was that addressing the global competitive environment will mean little if it does not comport with the needs, wants, concerns, and values of the U.S. citizenry—a task complicated by several society-level divisive issues the country is currently facing (racial and political tensions, economic disparity, etc.).
An unfortunate reality of U.S. society today is its seeming trend toward increased balkanization. The nation’s zeitgeist is arguably characterized by the placing of more value in scoring political points over opponents than finding commonality in policy solutions that are best for Americans and based on shared principles. As a result, tribalism is all too common a factor in today’s societal-level decision making. In this reality, it is inherently difficult to cultivate a national strategy that allows for the U.S. to succeed in a globally competitive environment, especially if that strategy is to be congruent with values shared across the American populace.
“Global competition” was also characterized as much a clash of ideologies as it is a clash of nations. To that end, consequences and opportunities must be carefully considered in how the U.S. seeks to gain competitive advantage over a nation like China whose government’s values are largely antithetical to that of the U.S. and many of its partners and allies. At stake is the ability to effectively wield “soft power” abroad—the leverage of exported culture and goods for influence—manifesting national values and those shared with allies and partners in engagements with the international community.
The discussion concluded by emphasizing the importance of seriously examining and ultimately incorporating our most essential shared national values in how we define global competition and in the strategies we craft to address it successfully.