America is competing with China in the top industries that define the future of business in the U.S.
It's "a death match, if I may exaggerate," Richard Vague, secretary of banking and securities for the commonwealth of Pennsylvania, argues in an interview with ThinkAdvisor. "Unlike the past 20 or 30 years, we have a serious and very capable competitor."
The industries range from 5G mobile networks and electric vehicles to supercomputers and genetic engineering, including the controversial gene-editing technology CRISPR, already in use in "dozens, if not hundreds" of trials in the U.S. and China, says Vague, formerly managing partner of Gabriel Investments, which he founded.
His new book is "An Illustrated Business History of the United States." Starting out in 1763, it details through today — and talks about the future — important companies and inventions, particularly discussing the crucial role of financial institutions.
The stock market by industry sector is shown with enlightening pie charts from 1840 through 2018. In the former, the biggest sectors were finance, transports, consumer discretionary, utilities and industrials. In 2018, it was the financial sector that led as well.
In 2019, Vague released "A Brief History of Doom: 200 Years of Financial Crises," wherein he points out that runaway private debt has been a prelude to nearly every modern financial crisis.
In the interview, he opines that if the rate of growth in U.S. debt — which saw an "uptick" over the last year or two — continues for about two years, America will be in the highly risky danger zone for another financial meltdown.
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Vague is concerned, too, that if, within the next 20 years, the largest U.S. companies aren't constrained as to the types of businesses they're permitted to enter, it will have "a stifling effect on innovation."
In the interview, he tells of brokerages of the early 1900s that, perhaps surprisingly, had special departments to serve female clients and with female brokers. Then he reveals why by 1930, only 2.5% of brokers in the country were women.
ThinkAdvisor recently held a phone interview with Vague, 65, speaking from Philadelphia. His heavy business background focuses largely on banking.
He was co-founder and CEO of two credit card companies, one sold to Bank One, the other to Barclays. He also co-founded Energy Plus, a supplier of electricity and natural gas, which was sold to NRG Energy.
Here are highlights of our interview:
THINKADVISOR: You said in a June 2019 interview with me that runaway private debt has been a prelude to nearly every modern financial crisis. Is this occurring now?
RICHARD VAGUE: Yes. It was very calm and benign for about a decade after the great financial crisis. But in the last 12 to 24 months, we've seen a real uptick, particularly on the corporate side.
If I use a "green-yellow-red" scoring system, we've gone from a kind of benign green no-risk scenario to a yellow zone. If the rate of growth in debt that we're seeing today continues for another couple of years, we're going to be touching the red zone.
Broadly, where do you foresee U.S. business headed in the future?
We're obviously increasingly tied up in a death match, if I may exaggerate, with China in areas like 5G, artificial intelligence, electric vehicles, supercomputers and genetic engineering.
There are probably six or eight industries that define the future, where, unlike the past 20 or 30 years, we have a serious and very capable competitor. This means that incredible things are going to happen more rapidly going forward.
From a philosophical perspective, what do you predict?
We're entering an era where we're all about transforming ourselves. One of those arenas is genetic engineering, where astonishing things are happening.
It's going to allow us to treat disease but also do things that are ethically daunting, like define the genetics of our offspring. This is no longer science fiction. This is confronting us right now.
Inventor and futurist Ray Kurzweil and a number of other folks believe that we'll be living our lives through avatars instead of physically.
Whether that occurs or not, something close to that will happen where we transform our lives by making them increasingly digital with the ability to change attributes about ourselves.
Do you think the gene-editing technology CRISPR will be more influential despite ethical objections to it?
The ethics always lag, for better or worse. CRISPR and [technology] like that are going to be everywhere. There are dozens, if not hundreds, of FDA trials using CRISPR right at this moment, and probably more than that happening in China.
We're doing cancer treatments where CRISPR is involved. It's all about altering the genetic structure of cells within the living body.
What's the most significant change personal computers have brought to the world of business?
What's interesting is how different this innovation is compared to those of a century or two ago.
The big inventions of the 19th century were things like railroads and the telegraph, which allow mankind to transcend time and space in a way that had never been possible in history and therefore to create enormous leaps in productivity.
All the things that had to do with the sustenance of our day-to-day lives got much cheaper and much better quickly. The things that business is starting to be about now are comfort and controversy.
Business is more about guys arguing on CNN and Fox. What we're focused on now that we're a wealthy society is far different from the things of a century ago.
But there have been huge technological advances, right?
A lot of what's going on in technology today is improving our ability to gossip and to buy things that don't mean anything.
