Trump taking wrong approach to China, says Reagan official who helped 'Star Wars' beat the Soviets

Key Points
  • Reagan administration used tech-based planning to leapfrog Soviet Union on missile defense.
  • What worked for 'Star Wars' program can helped cut China's innovation edge in drones, chips.
  • Trump's focus on balanced trade should be scrapped in favor of pursuing best technology.
The Ground-based Midcourse Defense element of the U.S. ballistic missile defense system launches during a flight test from Vandenberg Air Force Base, California, U.S., May 30, 2017.
Lucy Nicholson | Reuters

The former director of a U.S. intelligence program that helped Ronald Reagan improve America's missile defenses has lashed out at President Donald Trump's technology policies, saying they won't be enough to guarantee America's economic and military superiority over China.

The criticism from Michael Sekora, a trained physicist who ran the Socrates Project for the Defense Intelligence Agency from 1983 to 1990, comes soon after an upbeat meeting between the White House and tech leaders, and amid reports Trump is considering Chinese trade sanctions.

Project Socrates was tasked three decades ago with discovering the reasons why America was losing its economic competitiveness to Japan and others.The program's findings ultimately helped the U.S. surpass the Soviet Union in missile defense technology, according to Sekora, who now runs a Texas-based consulting firm called Quadrigy.

By favoring government procurement of products made by U.S. firms like Apple, Microsoft and IBM and a balance-of-trade approach to foreign policy, "Trump is addressing the symptoms, not the disease" that's caused the U.S. to slip behind China in several key technologies, Sekora told CNBC in a phone interview.

China now has the world's fastest supercomputers, manufactures most of the world's computer chips and is the leading maker of drone hardware, he observed.

"Anybody who thinks China's advantage is cheap labor and currency manipulation is not paying attention," said Sekora, who ran the government effort to boost U.S. competitiveness for Presidents Reagan and George H.W. Bush.

Socrates helped 'Star Wars' leapfrog Soviet technology

"When we applied Socrates (principles) to Star Wars, we leapfrogged over the Soviets," he said.

The feat was accomplished using what Sekora calls "technology-based planning," a strategy that calls for the U.S. to acquire the world's best technologies whether they're built here or overseas—with little regard for how much they cost.

While it was panned by many scientists at that time, the missile-defense program Reagan championed laid the groundwork for the GPS satellite system that underpins many of today's telecom and Internet services.

President Ronald Reagan in 1982.
Getty Images

It also put tremendous economic pressure on the Soviet Union to keep pace.

Now, the worry among strategic thinkers like Sekora is that China has become the main threat to America's lead in military capability and economic output.

"China has become a superpower faster than any nation in world history," Sekora told CNBC. The key is, China has done it through technology-based planning.The country "is run by engineers and physicists, not MBAs and economists," Sekora said.

Technology-based planning over a finance-based approach

By stark contrast, Trump is merely continuing U.S. policy, in place since the end of World War II, that calls for the U.S. government to follow a budget-driven procurement process.

"Every person Trump has appointed is from the world of finance-based planning," said Sekora.

This approach to planning was the main reason behind a decline in America's competitive position, the Socrates analysts found.

"Socrates fulfilled its mission: To find the reasons behind America's declining competitiveness," he added. "And the main reason was finance-based planning."

Sekora's chief criticism is that such an approach requires the Department of Defense and other U.S. agencies to stay within budget, rather than focus on getting the best weapons systems possible—whether they're built entirely here or composed of some parts from overseas.

"The measure of success within the DoD is: 'Did you stay within budget when you built your tank?'" Sekora said. Instead, the goal should be to build the best tank (or missile) possible, despite the cost, he added.

"It's not like we didn't care about the money, but [getting] the best technology came first," Sekora said.