Sputnik was the first Earth-orbiting artificial satellite. It was launched into a low Earth orbit by the Soviet Union on 4 October 1957. Although it only transmitted a beeping noise it changed the world forever. The chain of events sparked by Sputnik set man walking on the moon and led to a total overhaul of the American education system. Sputnikonomics is the term given after Obama’s State of the Union address last month. He said that in order for America to compete better against China, India and other emerging economies, our society had to invest in more long term infrastructure.
Although the Republicans confronted Obama for suggesting more spending after QE2, Sputnikonomics encompasses something disparate. The stimulus was a Keynesian measure which focused on stimulating demand but Obama’s plan is to improve long-term growth rates by boosting supply. This means greater productivity and increasing the pace of innovation – a supply-side policy – and one which was similar to that of Thatcher and Reagan in the 1980’s. But with major budgetary problems why spend more? The return on investment from the building of the Interstate Highway System in the 1950’s and 1960’s has been estimated at 35% annually. And investments in military technology during the original Sputnik moment gave us, among other things, satellites, the microchip, G.P.S., and the Internet, the cumulative benefits of which are incalculable.