It seems to me….
“A country’s economic growth may be defined as a long-term rise in capacity to supply increasingly diverse economic goods to its population, this growing capacity based on advancing technology and the institutional and ideological adjustments that it demands.” ~ Simon Kuznets.
Trump ran for U.S. President under the campaign slogan “Make America Great Again” but since taking office, aided and abetted by Congress, has done almost everything in his power to weaken the U.S.’s position as the world’s leading economic superpower. There isn’t any complex question as to what needs to be done – it is basic economics. Everyone should remember from Economics 101 that long-run economic growth is fundamental to not only sustaining a nation’s rising standard of living but also its ability to pay mounting costs of numerous social programs such as Social Security and Medicare.
Long-term economic growth only occurs when the amount of output produced by the average worker steadily increases productivity which is computed by dividing a nation’s real GDP by the number of people employed. The three primary factors affecting productivity increases are physical capital (human-made resources such as buildings and equipment), human capital (the improvement in labor created by education and knowledge embedded in the work force), and technology (the technical means for the production of goods and services).
Factor intensity of production is a measure of inputs such as land, labor, capital, workers… compared across various industries to highlight the intensity with which an industry utilizes a given factor. Total factor productivity (the Solow residual), a reference to how efficiently and intensely inputs are used in the production process, is now primarily related to technological progress which has become a major force motivating economic growth. Technology has the potential to significantly raise the basic standard of living for everyone on the planet; national competition and survival has become dependent upon science, industry, and organization.
For the past fifty years, the rational exuberance of the American economy has been propelled by research and development from a triangular alliance of government, academia, and private business but that relationship has been significantly weakened in recent years. This tripartite machine of government working with universities and private corporations was not merely a random array with each group pursuing its own aims. Instead, during and after World War II, the three groups were purposely fused together into an innovation triangle.
The person most responsible for forging this assemblage was Vannevar Bush, an MIT professor who in 1931 had built an early analog computer (the Differential Analyzer). Bush was well-suited to the task as he was well-known in all three areas: dean of the MIT School of Engineering, a founder of the electronics company Raytheon, and the U.S.’s top military science administrator during World War II.
Bush produced a report in July 1945 at the behest of President Roosevelt (eventually delivered to President Truman) that advocated government funding of basic research in partnership with universities and industry. He chose an evocative and quintessentially American title for his report: “Science, The Endless Frontier”; his introduction deserves to be reread whenever politicians threaten to defund research necessary for future innovation. “Basic research leads to new knowledge…It provides scientific capital. It creates the fund from which the practical applications of knowledge must be drawn.”
“New products and new processes do not appear full-grown. They are founded on new principles and new conceptions, which in turn are painstakingly developed by research in the purest realms of science. A nation which depends upon others for its new basic scientific knowledge will be slow in its industrial progress and weak in its competitive position in world trade.”
Government spending was not funneled into government-run labs, as had happened with the Manhattan Project, but instead research funding went to universities and private contractors.
Few corporate research centers, most notably Bell Labs, existed prior to World War II. Bell Labs brought together theoreticians, materials scientists, metallurgists, engineers, and even telephone-pole climbers. Bell Labs showed how sustained innovation could occur when people with a variety of talents were brought together, preferably in close physical proximity, where they could have frequent meetings and serendipitous encounters.
After Bush’s clarion call produced government contracts, other corporate research centers began to proliferate. Xerox created its Palo Alto Research Center, known as Xerox PARC, that had as one of its leaders Bob Taylor, who had helped create the Internet while running DARPA’s Information Processing Techniques Office. Xerox PARC developed the graphical user interface now used on personal computers, the ethernet, and dozens of other innovations that became part of the digital revolution.
In addition, hybrid labs combining government, academia, and industry were launched. Among the most notable were the RAND Corporation, originally formed to provide research and development (hence the name) to the Air Force, and Stanford Research Institute (SRI).
The question is whether the U.S. will now yield its position as the world’s leader in science and technology. For the first time since World War II, U.S. primacy is in jeopardy.
A 2017 report from the Atlantic Council echoed Vannevar Bush’s phrasing when it called such examples of federally funded basic research at university and corporate labs “the nation’s scientific seed corn, enabling basic, pre-competitive R&D that will mature into harvestable technologies in the future”. However, the report noted, “federal R&D spending has shrunk significantly over the last few decades; once the world leader, the U.S. now ranks twelfth in government-funded R&D spending as a percentage of GDP”. Federal research and development (R&D) spending has declined from about 1.2 percent of GDP in 1976 to less than 0.8 percent in 2016. This is the lowest level since the pre-Sputnik era.
Research provides the basis for future employment. While the U.S. has led the rest of the world in basic research since the end of World War II, we are rapidly falling behind in areas in which we once had a considerable lead. Corporate and private research investment credits need to be substantially increased for all independently peer-reviewed projects whether done directly or funded at accredited research educational institutions. Research funding for all national labs and institutes of health should also be increased along with adequate funding for NASA to conduct a meaningful manned-space development program leading to a permanent base on the Moon and eventually beyond. Basic research must initially be done through public funding as corporate or venture capital investment will not be available until any such development is demonstrated to be financially viable.
There isn’t any question as to whether there is public approval. Around eight-in-ten U.S. adults say government investments in medical research (80 percent), engineering and technology (80 percent), or basic scientific research (77 percent) is usually worth the cost.
This decline in scientific investment in basic research and university labs is not a partisan phenomenon or a product solely of the Trump administration. For almost twenty-five years, federal funding for university research and state funding for higher education has been in decline. Between 2011 and 2015, during the Obama administration, federal investment in university research declined by 13 percent.
But it’s now becoming even worse. In the latest proposed budgets from House Republicans and the Trump administration, federal funding for science and technology research would be cut by an additional 15 percent.
The potential economic and security ramifications can be foreshadowed by looking at the opposite approach now being taken by China which is heavily funding basic scientific research including in such vital fields such as artificial intelligence (AI) and genetic engineering. China’s funding for research and development has grown by a factor of over a hundred from just over $3 billion to over $400 billion. Indeed, the government recently created a ‘mega-ministry’ to streamline the funding process. The number of citations of Chinese scientists in quality publications is also rapidly increasing. They came out ahead of the U.S. in scientific publications, at least in terms of raw numbers, for the first time in 2016 with 17,000 more papers produced.
Political and ethical restrictions in the U.S. make it even more important for the U.S. to stay ahead of China in other ways, most notably funding basic research in science and investing in university and corporate labs.
A good place to start would be revitalizing our investments in research universities, now being decimated by cuts and other challenges. The U.S. has thirty-two of the top fifty universities in the world, magnets for the world’s best students. But the U.S. seems increasingly unwelcoming to foreign students, many of whom will be the next generation of entrepreneurs and leaders from around the world, whose applications this year have fallen by as much as 30 percent in some programs. The Trump administration also proposed slashing funding for basic research and Congress came close to taxing graduate student fellowships and imposed a tax on university endowments which help fund costs not covered by tuition.
Reversing such policies is the critical first step to once again creating the research breakthroughs that will lead to future innovations rather than continuing on our current path of destroying our seed corn prior to the next harvest. It is crucial to our nation’s future to restore funding for those primary factors upon which productivity growth and innovation are dependent: physical capital (infrastructure improvement and repair), human capital (education and training), and technology (research and development).
Our present path is clearly unsustainable. Unless reversed, the inevitable result will be economic degradation and national decline. I rarely recommend reimplementation of a policy from the past but there is much to be learned from history. We once-again need someone similar to Vannevar Bush to lead our research and development. The question is whether there is sufficient will and wisdom to reverse our present course.
That’s what I think, what about you?
 Simon Smith Kuznets was an American economist and statistician who received the 1971 Nobel Memorial Prize in Economic Sciences “for his empirically founded interpretation of economic growth which has led to new and deepened insight into the economic and social structure and process of development”.
 Isaacson, Walter. How America Risks Losing Its Innovation Edge, Time, http://time.com/longform/america-innovation/?utm_source=time.com&utm_medium=email&utm_campaign=the-brief-pm&utm_content=2019010719pm&xid=newsletter-brief&eminfo=%7b%22EMAIL%22%3a%22rlLoGrfqYePpxcyxABaDgg%3d%3d%22%2c%22BRAND%22%3a%22TD%22%2c%22CONTENT%22%3a%22Newsletter%22%2c%22UID%22%3a%22TD_TBP_B7CDE014-4C97-43CB-B5F0-2CECFB924640%22%2c%22SUBID%22%3a%2284531314%22%2c%22JOBID%22%3a%22934449%22%2c%22NEWSLETTER%22%3a%22THE_BRIEF_PM%22%2c%22ZIP%22%3a%22960039319%22%2c%22COUNTRY%22%3a%22%22%7d, 3 January 2019. Significant portions of this document are either directly based on or copied from this article.