Motorola Inc. has been running a series of advertisements entitled "Meeting Japan's Challenge." One of them stated that, according to the National Science Foundation (NSF), the United States spends "three times more" than Japan on research and development.
Motorola is one of the more innovative technology-based corporations, but its statement suggests some lack of understanding of what developing new products really means. In any discussion of innovation, what is important to measure is the amount of research and development undertaken by the private, market-oriented sector of the economy, as opposed to the government. This is where jobs are created. Here, the United States compares poorly with Japan.
We, unlike Japan, maintain an enormous complex of organizations whose primary source of income is the federal government. These include companies that are major government contractors, as well as nonprofit institutions and government-owned laboratories. About half of the scientists and engineers in this country are directly or indirectly supported by Washington.
The experience of these government-supported researchers in the real world of development, manufacture, and sale of commercial products is minimal. Creating new goods and services depends on close coordination with the marketplace during the research cycle. Subsidized institutions, and companies primarily engaged in contract research for the government, generally lack the incentive or experience to try to market the results of their work. Many pursue R&D programs directly competitive with companies that are not on the government dole but then fail to get any products or processes into commercial production.
The Department of Energy's Oak Ridge National Laboratory in Tennessee, for example, has no business spending money trying to develop improved gas-fired heating systems or fluidized-bed coal-combustion furnaces. Such projects, if economically viable, would be -- and are -- undertaken by private industry, where experience in these fields is already available.
The same goes for the Energy Department's Argonne National Laboratory in Illinois, which has been working in direct competition with both large and small companies on solar heating units and storage batteries. It jumped on the solar bandwagon simply because the money was available. These kinds of projects drain manpower and funds from the private sector.
Some corporations, especially in the aerospace industry, act as virtual appendages of the federal bureaucracy, deriving almost all their income from government contracts. They keep large lobbying staffs in Washington to ensure that the research dollars continue flowing their way. Little of their work ever finds its way into the marketplace.
Government research puts a drag on the economy in another way. The experience of some companies indicates that government-supported R&D projects may cost twice as much as they would if performed by a market-oriented concern. One reason for this is that the proposal process and bureaucratic delays of many government-supported R&D prorams are excruciatingly slow, compared with unsubsidized private research. For example, the Energy Department often takes more than nine months to complete arrangements for a contract with industry, and it is not uncommon for the agency to wait more than two years to pay a small company after the work is completed. Our most innovative high-technology enterprises tend to avoid any business with the government because of the red tape.
The proliferation of government research also detracts from our economic competitiveness by diverting resources from our universities. Government labs, contractors, and nonprofit institutions perform a considerable amount of basic scientific investigation -- that is, research with no specific application in view. Meanwhile, our universities are badly in need of both research funding and modern equipment. If taxpayers are going to foot the bill for basic research, then the work should go to professors and students in order to enhance our academic resources and turn out better-prepared science and engineering graduates.
Beneficiaries of government R&D spending have disseminated a false picture of the value of their work. This is particularly true of the aerospace industry and the National Aeronautics and Space Administration (NASA), which have grossly exaggerated and even completely misrepresented the so-called commercial "spin-offs" of our manned space exploration. For example, NASA has falsely claimed credit for such inventions as Teflon, metallized Mylar, and Velcro. These well all developed elsewhere before NASA even existed. Our man-in-space program, which has eaten up a large chunk of the federal research dollars over the past two decades, has little to show in economic returns. Most of the legitimate accomplishments of space research -- in areas of communications, meteorology, navigation, and reconnaissance -- have been achieved using unmanned satellites, and were initiated by the Pentagon.
All in all, NSF figures show that if you subtract our large R&D bureaucracy and our enormous defense and space programs, we actually devote a smaller percentage of our gross national product to industrial research than Japan allocates.
As the current administration moves forward with its philosophy of reducing the role of government in the economy, it should not neglect the federal R&D budget, which currently runs at about $40 billion a year. Specifically, the government should review the R&D programs in our government labs and nonprofit institutions and.
* Retain only those activities that serve unique government needs, such as in defense, that would not be undertaken by private industry.
* Turn over basic research to our universities.
* Transfer to industry all research related to commercial products and processes.
In addition, Congress should reassess our space programs and examine the benefits to industry, national security, and the public of the activities of NASA and the aerospace industry.
These steps could substantially reduce the federal budget. They would also have a positive impact on job creation and technical innovation and help the academic community. Our competitive position in world markets in the future will depend on our ability to harness effectively the nation's technological talent and resources. Our universities and private industry, not the government, are the best equipped to accomplish this mission.