Four letters that could energize America.

• Author: Sun, Robert
• Position: Education - Science, technology engineering and mathematics

OUR COUNTRY is in danger of becoming the world's first "derivative economy." Once renowned around the globe for our prodigious ability to manufacture, invent, and revolutionize, the U.S. is becoming a place where pastimes take precedence. Image is king, and quick money is the goal. Eighty years ago, banking profits accounted for less than five percent of all U.S. corporate profit. In recent years, they peaked at around 40%. College graduates are lured with the promise of making big money virtually overnight.

Today, America is known for storylines instead of production lines. Reality TV, video games, celebrity gossip, and other forms of entertainment have become multibillion-dollar industries that consume not just people's spare moments, but the majority of their day. "Personal fulfillment" drives the ambitions of millions; the quest for superficial success leads to the latest status symbol, the hottest trend, and the sexiest fashions.

Even in foundational sectors of the economy, real output is defined not by what you can make or build, but by what premise you can sell. Over the past few decades, our country's competitive position has weakened because the best and brightest minds have been siphoned off into Wall Street firms. The finance industry is the largest recruiter of mathematicians and physicists on college campuses--they lure not only the brightest business graduates, but those individuals who might have pursued amazing research and development careers. Those bright minds who previously created integrated circuits, lasers, and the like now are creating derivatives.

Nowhere else in the U.S. economy, in fact, has the word "derivative" been so thoroughly embraced than on the Street "Derivative" actually defines an entire class of financial instruments that have no inherent worth--their values derive from the performance of other instruments. They essentially are bets on the movement of interest rates, credit risks, foreign exchange rates, and equities. The global market for derivatives mushroomed to a notional value of 1.2 quadrillion dollars--that is $1,200,000,000,000,000--in 2011, according to financial authority Paul Wilmott, more than 15 times the entire 2012 world gross domestic product of 79 trillion dollars.

Derivatives can be so complex that few truly understand them. When they "blow up," the results potentially are catastrophic--Societe Generale's $7200,000,000 default and AIG's $18,000,000,000 implosion are just two well-known examples. Since 2000, the estimated losses from derivative meltdowns have exceeded $40,000,000,000. Because most major banks worldwide are highly leveraged--sometimes 50 to 1--any major loss is magnified, threatening to bring down other bulwark institutions with them.

Such pursuits have brought the U.S. economy to the verge of an abyss. Our national...