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The Independent Investor: The Droning of America

By Bill SchmickiBerkshires Columnist

Whether you call them unmanned aerial vehicles, remotely piloted aircraft or simply drones, these remote-controlled devices are expected to become a big business both here and abroad over the next decade. The question is whether this new technology will impact our lives in ways we are willing to accept.

The worldwide drone market in 2007 totaled $3.7 billion. This year revenue estimates have over doubled to $7.5 billion, with the U.S. accounting for two-thirds of those sales. By 2022, it is expected to top $11 billion. The military has accounted for much of that spending with drones accounting for an estimated 31 percent of our military aircraft fleet.

However, public opinion over the use of drones in warfare is divided in this country. Some critics look at drones as little more than murder machines given the drone's ability to indiscriminately deal death from the sky at a push of a button on whomever or whatever we choose. And the "we" is also a problem. Exactly who and under what authority are these drones attacks undertaken? The answers are mired in confusion and unresolved morality.

Supporters argue that drones have allowed the U.S. to exert targeted force almost instantly at a massively reduced cost without risking American lives. From tactics to strategy, the drone has transformed and revolutionized modern warfare. The numbers speak for themselves. Over 50 high-ranking al-Qaeda and Taliban leaders have been "neutralized" in drone attacks. Of course, no one really knows how many civilian casualties accompanied these successful "kills" in the process.

I bring up this controversy because having transformed warfare, drones are now preparing to do the same thing in the commercial space. Everything from law enforcement to border patrol, from agriculture to cinema and dozens of other applications are cropping up as drone technology becomes cheaper and more accessible.

How will these applications threaten American civil liberties, if at all? Will the government use of drones (as they are purported to have used cellphone and other electronic communications) to spy on American citizens in the name of national security? Will its use by local police forces usher in an era of police states, as some claim?

Counterbalancing these fears are the positive benefits of this new technology. Imagine the usefulness of drones in fighting wildfires, patrolling our borders, locating kidnappers, dusting crops, hurricane hunting and surveying things like oil spills, tornados, hurricanes, power lines, archaeological digs and gas spills.

The list of applicants looking to fly drones is expanding and consists mostly of universities, manufacturers and public agencies, but experts expect that list to lengthen as soon as the regulatory environment becomes clearer. The Obama administration has ordered the Federal Aviation Administration (FAA) to come up with the rules and regulations necessary to integrate unmanned civilian aircraft into U.S. airspace by 2015. The FAA is also tasked with establishing six dome-testing ranges and to fast-track requests for permission to use drones. That should jump-start the industry and lift sales to $13.5 billion in three years, according to a report by the fledgling industry trade group, the Association of Unmanned Vehicle Systems International.

The real question is whether an American bureaucracy, such as the FAA, along with a morally bankrupt Congress, will be able to craft legislation that answers both the legal and ethical issues inherent in this new and promising technology while allowing America to take advantage of this opportunity. Given their track record, I am less than hopeful.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

     

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