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Testimony before the Senate Subcommittee on Science, Technology and Space of the Senate Committee on Commerce, Science and Transportation, Sen. Bill Frist presiding (16 April 1997).
I appreciate the committee''s invitation to testify on the science and technology programs and policies presented to the Congress by the Administration. I have been engaged in implementing technology policy as well as thinking about improving it for at least 30 years, in the government as director of the NBS, now NIST, as chief technical officer of the IBM Corporation, and until last June as Director of the Science Technology and Public Policy Program in the John F. Kennedy School of Government at Harvard. I have held Senate-confirmed appointments by Presidents Johnson, Nixon, Carter and Reagan. I am deeply concerned about the lack of consensus behind an enduring national policy for keeping the nation innovative and technologically strong.
I have devoted the last eight months to the chairmanship of the Technology Policy Assessment Project, headquartered at Harvard University. I would like to share with the Committee some of the thinking arising from this project. The Technology Policy Assessment Project is an effort by scholars and other experts from around the country to evaluate the progress of the last four years in technology policy and to provide to the Administration and Congress some ideas for helping the nation''s technology policy become more effective and enjoy more broadly based support, both politically and in the private sector.
It is a pleasure to acknowledge the encouragement and support our project has received from Dr. Gibbons and his staff and from the Technology Administration in Commerce, headed by Dr. Mary Good. They have very generously given us access to senior officials, participated in our workshop last fall, and have facilitated the review of our work. I would also like to acknowledge the support this project has received from the Competitiveness Policy Council, a bi-partisan council established by the Congress in 1988. Howard Rosen, executive director of the Council, has contributed importantly to the project. The members of the steering committee are Profs. Richard Florida of Carnegie Mellon University and David Hart of Harvard, together with James Keller of Harvard. The views expressed in our project are those of the Steering Committee, not of the CPC. Nevertheless we share with CPC a conviction that America needs a broadly supported, long range policy for ensuring that the nation''s capability to innovate serves the goal of a rising standard of living for all Americans.
Next week, at the AAAS R&D Colloquium on April 24, we will release a Working Paper summarizing the Steering Committee''s views on how such a bi-partisan consensus might be achieved and outlines six policy principles to guide it. Last week the policy journal Issues in Science and Technology published a paper entitled "From Technology Politics to Technology Policy," where I summarized much of what is in the Working Paper. I have brought copies of this article for the Committee, the press and the public. Later this summer MIT Press will publish a book, provisionally titled Investing in Innovation, in which a larger group of experts explore in depth many of the areas of technology policy that have been prominent in the policy agendas of both the Congress and the administration. The views of the authors are independent; they have not been censored but they have been criticized by government officials who find some of our evaluations less optimistic than proponents might have hoped. But we believe that a critique based on independent thinking is essential for progress toward bi-partisanship.
Much of the conflict between conservatives and liberals over technology policy reflects differences in philosophy about the role of government that goes back many decades. In the 1940s the debate between Senator Kilgore of Tennessee (a Democrat) and Dr. Vannevar Bush (a Yankee Republican) shaped much of the Cold War policy for science and technology. But the end of the Cold War, at a time when American high tech firms were facing increasingly fierce competition from Asia, has stimulated a more immediate debate: as defense R&D expenditures decline, should the federal government replace them with investments in the civilian economy? If so, how and under what policy constraints?
Unfortunately, this debate has not only become emotional at times, but it takes place at a time when a sea change is underway in the way private firms innovate and in the way they are affected by the globalization of markets, of technology, of finance. Thus federal technology policy is chasing a moving target.
Without going into detail, here are the key trends: All industries, both manufacturing and services, are increasingly dependent on research-based innovation. Firms in other countries are adept at acquiring technological skill and deploying it in world markets. The largest American firms are focusing on assembly production, marketing and distribution world wide. They are downsizing and redirecting their famous central research laboratories and are outsourcing much of their need for innovation to their medium sized first-tier suppliers. Firms look increasingly to outside sources of new technical ideas (to universities, national laboratories, and other smaller firms). Industry doesn''t want government to run their innovation for them. Industry wants government to create the knowledge, the human skills, and the capability to innovate in a broad range of American institutions that they can draw on to keep their own pace of innovation high.
Government is moving much more slowly than industry in rethinking its role. But there is real progress. For the most innovative thinkers are focusing on ways to enable the innovative capacities of private sector, not just for economy but for environment and military security. On the environmental side, there is growing recognition that reliance on end-of-pipe regulation is less effective and more expensive than it needs to be. Policies aimed at encouraging innovations in process technology can, in many cases, do a better job of effluent reduction while keeping the firm''s product cost fully competitive. On the defense side, the increasing reliance of defense acquisition on dual use technology promises to lower costs (which are now largely carried by private investment) and increase the rate of technical progress. Thus, the idea that federal technology policy should be aimed at enabling rapid private sector innovation is not only the right policy for the economy; it is also the right policy for getting the government''s jobs done most economically.
Unfortunately, this shift in private sector structure and practice has already reduced the contribution the great corporate laboratories such as the Bell Telephone Labs, the IBM T. J. Watson Laboratory, the GE Central Research Laboratory used to make to the nation''s scientific and technical knowledge. It must be replaced and expanded by public investments in the institutions the big firms are increasingly turning to for innovative products and services. Despite the rigors of budget balancing, and not withstanding the excellent competitive performance of US industry today, this is not the time to reduce this public investment. It is the time to increase the investment at least as fast as the economy grows, and to target it more skillfully.
I am very pleased that the draconian reductions in government investments in R&D that were projected by both Administration and Congress in the last two years have now been ameliorated somewhat. Dr. Teich reports that the planned reductions over the budget balancing time have been cut in half. But that is still a serious problem for the American economy, since in Japan, Korea and China we see governments increasing public investment in research and in incentives for innovation accelerating at impressive rates.
But this afternoon I want to focus on two policy ideas that could enable Americans to get a lot more benefit from its public investment, at whatever level.
Basic technology research
The first is profoundly important. Most of the public debate concerns the quest for a science policy and its relationship to a companion technology policy. What we need is a research policy supporting an innovation policy.
I am not playing with words here. I am calling attention to policy conflicts that have their origin in the language we use in the debate. I know the Congress is generally comfortable with public investments in "scientific research" or "basic science." Many members, but not all, are uncomfortable with government supporting research of special interest to the private sector when it benefits preferentially particular firms in a competitive market. No one (Democrat or Republican) believes government should support commercial product development unless government plans to buy most of the product.
There is nothing wrong with this until people attribute to the word "science" a purity from commercial value that demeans it and to "technology" the notion that commercial markets will create all of it that the economy needs. Researchers understand that the boundary between scientific and technological research is very fuzzy indeed. The gap between research and development is a chasm easily seen and hard to bridge. One must invent technology to make progress in science. It takes scientific thinking to make progress in technology. I am pleading for the acceptance of the idea that support for basic technology research should be at least as strong as public support for basic scientific research. We should mean both when we say "research."
In its annual "Views and Estimates" report to the House Budget Committee on March 20, 1997, the House Committee on Science, chaired by F. James Sensenbrenner (R-WI) tried to make the distinction between the government programs he supports and those he opposes. Here is the language Congressman Sensenbrenner used in explaining the Committee''s report to the Budget Committee on March 20, 1997. [Press release from the House of Representatives Science Committee.]
"Federal R&D should focus on essential programs that are long term, high risk, non-commercial, cutting edge, well-managed and have great potential for scientific discovery. Funding for programs that do not meet this standard should be eliminated or decreased to enable new initiatives."
To make clear what the Committee majority does not like, Sensenbrenner said:
"Beyond the demonstration of technical feasibility, activities associated with evolutionary advances or incremental improvements to a product or a process, or the marketing or commercialization of a product or process should be left to the private sector."
I do not think that Mr. Sensenbrenner''s views as stated here are in conflict with sound policy, with one small exception I will note in a second. But it should not require six qualifying adjectives for him to describe the research the government should support. And he complicates the issue when at the end of the sentence he seems to restrict his approval to scientific discovery, implying that we would not be equally enthusiastic about technological discovery, if it were also "long term, high risk, non-commercial, cutting edge, [and] well-managed."
Bottom line: government should support research, both scientific and technological, (1) when the market does not provide sufficient incentive for the private sector to undertake it, (2) when the most competent performers are selected by merit review, (3) when the results are likely to diffuse to much or all of the U.S. economy, and (4) when it is necessary to carry out the government''s operational responsibilities. Do not shy away from supporting research simply because it may be useful, just as one would not shy away from exciting science simply because you cannot say just how it may be useful. Seen in this light much of the Advanced Technology Program, the Program for New Generation of Vehicles in the Commerce Department, the Dual Use Applications Program in Defense, and the Environmental Technology Initiative in EPA can (or at least should) be seen as basic technology research. This is what "precompetitive" tries to reflect.
Making technology accessible to users
The second principle is based on the reality that private firms are increasingly looking outside their own organizations for innovative ideas, products and processes. "Not invented here" is much less of an impediment than it used to be in American firms. Just as firms are changing the ways they look for ideas and are emphasizing an array of new relationships with universities, government funded laboratories, and smaller firms, so too the government should pay more attention to how technical ideas are made accessible to potential users. Thus in selecting performers for government funded research, government should take into account the likelihood that the results of the work will find their way to many other users in one form or another.
Technology transfer, or diffusion, is a body contact sport. Even in the most abstract fields of science, information flows primarily through personal contact. Two kinds of institutions have particularly effective ways of making their technical knowledge useful and available to others. Universities do it when their graduates carry their new ideas with them to private employment. Firms do it internally, when the research is conducted there. If the firm''s government-funded research is conducted through a consortium of firms and other research institutions, the sharing by the industry can also accelerate access to new knowledge. Finally, national laboratories try to do the same thing through their CRADA arrangements with private firms, but I suggest that the use of consortia here too may increase the effectiveness of technology diffusion.
Another policy tool for promoting the efficient use of new research outputs is to recognize the contribution state governments can make in assembling cooperative firms and other institutions to address the competitive needs of industries in which region specializes. I have long felt that this was an opportunity the Commerce ATP program has overlooked, although the companion program in Manufacturing Extension has worked collaboratively with states from the beginning and with considerable success.
Finally, let me call attention to the categorization contained in the GPRA (Government Performance and Results Act), recognizing inputs to and outputs and outcomes from government S&T programs. I would call attention to the difference between outputs and outcomes. When government funds research, or provides incentives for innovation, it has a right to expect results (the outputs of knew knowledge and new technology that the program was intended to create). But technical knowledge is an asset for broader public purposes. The outcomes we seek may be job creation, wage enhancement, a cleaner environment, a cure for cancer or a well defended nation. It is possible to keep our eyes focused on those outcomes, and every agency should understand the processes that relate government program outputs to societal outcomes. But that does not mean government should itself undertake to create the outcomes except in special cases such as defense, and perhaps health and environment. The linkage between enabling the society and realizing societal goals should in most cases be left to the processes of non-federal institutions. But government can help make those private and local institutions innovative and provide them with access to the best ideas and talent for research.
A few words on practical implementation of these ideas
Make sure that funding is adequate for both basic technology research and basic science research. This may require an acceleration in funding to NSF, beyond that now planned. In the current budget and there are some compelling opportunities to do this. For example, research for the Next Generation Internet. Think of NSF as the National Research Foundation, which is what Vannevar Bush wanted to call it.
Keep the Technology Administration in the Department of Commerce strong. Give it an external policy advisory committee something like the old Commerce Technology Advisory Board which was the focus of expertise in innovation and technology creation and use in the federal government in the 1960s and 1970s.
Keep the ATP program, which has performed quite well against the objectives given it by the Congress, but consider institutionalizing it in the Technology Administration as a companion to NIST, not as a NIST activity. Look to states for leadership in creating consortia of manufacturers with state technology agencies and education, finance and labor organizations to maximize the valuable outcomes from ATP while keeping the government''s financial role focused on advanced technological research.
Focus more attention on the needs of middle sized to smaller firms specializing in technology. They are increasingly looked to by the big firms to provide rapid innovation. Many are not organized with conventional corporate research organizations, but need strong links to universities, to the MEP network, and to one another to keep their innovation driven by the latest research.
