Competitiveness and US Policy

INTRODUCTION

From every corner of the political landscape, we hear that the world has changed: the Cold War is over and an anachronistically mobilized United States must find new direction. In Science in the National Interest, Clinton and Gore present such a direction in glowing terms. If, they explain, in the name of competitiveness we apply a touch of industrial policy here and a bit of education and R&D reform there, we will advance into the 21st century as the powerhouse that we should be.

Of course, anytime the government presents a glowing picture of anything it is time to begin questioning. In Privatizing Public Research, Cohen and Noll certainly do just that. "The U.S., " they explain "has not yet found a politically workable and economically attractive means of encouraging technological progress." And further, they continue, "the new competitiveness rationale will not succeed in revitalizing that national R&D effort."

LOOKING AT COHEN AND NOLL

Two major themes of Cohen and Noll are astute and worthy of consideration if we are to evaluate the administration's present competitiveness policies. Firstly, Cohen and Noll explain the rationale behind government involvement in S&T development. Simply put, such involvement is warranted because national strength is enhanced by the continual advancement of S&T. During the Cold War, for example, technological advancement was the cornerstone of US mutually assured destruction policy.

Yet, defense is only part of the story. S&T development yields positive social and economic benefits as well. As Bush noted fifty years ago and as Clinton echoes today, continually advancing technology means more jobs, a higher standard of living and a strong global position, both militarily and economically. S&T development, goes the traditional argument, not only benefits the developers, but society in general as well.

Taking for granted the benefit of S&T development, the government finds itself in a unique position to enhance S&T development. On the one hand, it has the resources to develop S&T in areas where the benefits to society are potentially great but where the risks frighten off possible private sector investors. Such is the rationale for government mission projects, infrastructure development, and R&D expenditures through labs and schools for basic research. The government dumps money onto the research landscape to create a knowledge pool and infrastructure from which industry can draw upon or spinoff in order to create marketable products. R&D carried out in the name of defense, for example, yielded commercial products and jobs for thousands of Americans.

On the other hand, through policy like trade regulations or intellectual property laws, the government can make S&T development easier, safe, and more efficient for private sector players. For instance, the relaxation of anti-trust legislation makes it easier for industry collaboration. Further, with programs like ATP, the government even outwardly funds consortia.

No one doubts that either of these methods worked well during the Cold War. The threat of the Russians, combined with general economic well-being due to our fortunate historical position following World War Two and a general societal support for science and scientists, made for an hegemony which was milked for all it was worth.

Yet that hegemony has clearly shattered. The communist threat has subsided (not that the Cubans can tell) and in the last fifty years our competitors have significantly bridged the post- World War Two economic gap. Of these points, the administration is painfully aware. What are we to do with this vast military-industrial complex built upon a huge constituency resisting any attempts at downsizing? Clinton and Gore present another option...one with less political pain of course. To validate continued government support of S&T, the Clinton administration has adopted the competitiveness rationale as an alternative to the Cold War policy.

The competitiveness rationale argues that because our economic security is being threatened, economic goals should be of primary importance in the allocation of S&T resources. Cold War institutions can remain in place but they must refocus on competition and make every dollar count. Hence, the government has been both privatizing their S&T functions (ala NIST's ATP and the metamorphosis of DARPA to ARPA), and encouraging an array of collaborations between schools, research organizations, US firms, state governments and even foreign firms. The government, the hope is, will still invest heavily in S&T development but that money will go more directly towards economic enhancement than towards the hazy-flaky category of "basic research." The idea is to get more economic bang for the buck.

Unfortunately, there are several flaws in the competitiveness rationale as it is being implemented by Clinton and Gore. Cohen and Noll's second theme address this point by focussing on the inability of competitiveness policy to take the place of the Cold War policy .

Cohen and Noll warn firstly that the focus on collaboration may lead to cartels and monopolies. Though such collaboration has been crucial for Japan and Germany in their stunning economic growth, collaboration is not particularly democratic and when combined with our system may lead to unacceptable ends. Cohen and Noll (page 77) warn that, "the main effect of centralized R&D is to transfer wealth to members of domestic cartels, not to promote the economic welfare of most citizens."; vision of isolated leaders of the megacorporations of Neuromancer or Blade Runner dominating over a huge underclass living at, and below, the poverty level. Already, modern cultural anthropologists are comparing cities like Los Angeles, and New York to Third World countries.

Secondly, the government is not set up to pick winners. Neither the US government nor its Cold War institutions are set up to gauge the rapidly changing world of global economics. They are slow, unable to monitor public research projects, and too prone to political influences. Together, these characteristics of the government make it functionally paralyzed in the rapidly advancing, complex, interdependent world of high-tech economy which dominates the modern age. If the government acts at all, it will act either too quickly with too little knowledge or too slowly when it finally can make a decent choice.

LIMITATIONS OF COHEN AND NOLL

However, the Cohen and Noll argument is limited. While it is true that no particularly excellent model has surfaced, it is not true that such a model might not evolve from the rationale of competitiveness. The problem is not with the stimulus for change based on economic competitiveness. As public opinion of the Japanese during the "auto crisis" suggests, Americans can indeed by roused by economics. The problem is applying cold war ideas and institutions to new environments which do not follow the old rules.

Though they have certainly added to the debate in a useful way, Cohen and Noll have missed what is essential about this era. In one thousand years Asimovian Psychohistorians will look on our generation as a missing link...those who stood at the crossroads between two cultural species...behind them and around them the hulking metallic grind of the Industrial Age and ahead of them and around them the hazy and formless Information Age. We, mostly unaware, are living our lives at the punctuated moment of punctuated equilibrium. We witness change that they will describe, as influential as the advent of Christianity or the Enlightenment, agriculture or industry. Yet, for us in the now, the punctuation is frustratingly questionmarkish. Most sense that society is moving, but no one knows exactly where we are going. As such, it is essential that policy makers look not at how to apply old ideas to a new world but that they try to understand the rules of the new world so that they can make new ideas altogether. Hence, it is suicide to match a new competitiveness rationale, with old Cold War institutions. If competitiveness is to be our battle cry, we must yield to its needs.

The American government is unique. If, unlike the Japanese government, it is not constructed to play the market, it should not. If, on the other hand, it is set up as a focal point of the American will and energy, it should be just that. Though, I am far from qualified to make suggestions, I would offer my advice to policy makers. Let circa 25% of total R&D expenditures go towards traditional curiosity driven projects, guided by traditional peer review frameworks. This will assure that the knowledge pool is still filled, if not at ideal levels, at least satisfactory ones. Let the other circa 75% go towards economically oriented research. But have such research funded by a government/industry partnership and guided by a peer review system made up of representatives from industry and science. Leave the government out of the loop. It is too slow and does not belong.

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