Class 24 Nov. 26 Science and Technology Policy in the US

William Bonvillian, “Meeting the New Challenge to US Economic Competitiveness”

· While it seemed a world-dominating Goliath in the mid- and late- 90s, the US now faces major structural challenges and a number of new Davids around the globe, led by China and India.

· The economy regained strength during 2003 and 2004, but created no new jobs. The manufacturing sector’s share of the economy is continuing to shrink, and the growing service sector is seeing global competition in low-skilled service jobs, and is starting to see it in high-skilled service jobs as well.

· Underlying these developments is a major demographic shift – an upcoming rapid increase in the nonproductive population of seniors, which will put much strain on the Social Security System and pose a big national problem, inhibiting the country’s future ability to invest in growth.

· 70s and 80s = US faced strong competition from Japan, focused in the manufacturing sector and particularly consumer electronics, cars and IT. The US lost dominance in consumer electronics but saved its car industry (in part through quotes on imported Japanese vehicles). SUVS became the new platform for the US car industry, and advanced computer chips and software kept the US in the lead in some sectors of IT.

· US benefited from investments in science education and from major Cold War federal R&D investments. It also explored private-public collaboration to bridge the gap between government supported research and private sector development.

· DARPA (Defense Advanced Research Project Agency) became a unique organization focused on moving revolutionary technology from the research to the development stage.

· Excessive enthusiasm for IT fueled a stock market bubble, but real gains in productivity occurred and translated into widespread societal gains.

· Today, the US faces a very different competitive situation against China. While Japan was a high-wage, high-cost, advanced technology economy, China is low-wage, low-cost but still has an advanced technology economy, making it a much more complicated competitor.

· Like Japan, China has manipulated its currency to gain advantage (strategy = undervalue its own currency to stimulate exports and buy US government bonds to create leverage in US policymaking).

· The markets are also different than in the 80s – then the competition was over manufacturing, while today most sectors, including services, face direct competition, and the increasing fusion of services and manufacturing is creating a new field of battle. Focus is shifting from machines to talent and knowledge.

· One school of economic theory says that technological innovation accounts for more than half of historical US economic growth, making it a far more significant factor than capital and labor supply, which are the dominant factors in traditional economic analysis. The theory says that new technologies ignite a chain reaction of related innovation that leads to a surge in productivity throughout the economy.

· This theory may be restrictive, however, because while we have almost a century worth of data for capital and labor supply, we have little to understand the dynamics of innovation-based growth. We can look at macro-data, but this is inherently misleading.

· Despite lack in innovation metrics, the underlying logic of growth theory is convincing, and if innovation is indeed the big factor in growth then the nation must innovate its way to continuing competitive advantage.

· The country cannot wait for the results of a perfected innovation model, so it must go on what it already has to begin strengthening a few key links of the innovation chain: R&D funding, talent, organization of S&T, innovation infrastructure, manufacturing and services.

· R&D funding: has been in long-term decline in the US and is currently at 1% of GDP, with life sciences receiving more funding than physical sciences; the congressional appropriations system is falling apart, which threatens the viability of federal R&D capacity; industry R&D spending, which focuses on development, cannot substitute for federal investment in research. Much political action will be necessary to change the current trend. Without increased funding, the nation with have to choose between two strategies for making the most of declining research funds: 1) random disinvestment or 2) a conscious program of niche investment (focus on quality, not quantity).

· Talent: “prospector theory” = number of capable prospectors a nation or region fields corresponds to its level of technological discovery and innovation; a nation shouldn’t try to fit its talent base to what it estimates the size of the economy will be, but rather the talent base will determine the size of the economy; but, despite decades of discussion about the importance of educating more scientists and engineers, the percentage of US students entering these fields is not increasing; the No Child Left Behind Act should help make science and math courses more rigorous, but it needs to be backed up with adequate funding for this to happen; because improving the science education system will take at least a decade, the US must continue to rely on a large number of foreign-born scientists and engineers

· Organization of science and technology: the US has had the same organizational structure since the 50s; until the creation of the Homeland Security Science and Technology Directorate, DARPA in 1957 was the last major new R&D agency; over the decades, solo inventors have been mainly replaced by complex organizational networks linking industry, universities and government research agencies

· Innovation Infrastructure: research progress must be coupled with an effective infrastructure to quicken the pace of innovation; government has an historic role in supporting this infrastructure

· Manufacturing and services: reliable and cost-competitive products must be manufactured to reap the final reward of innovation; manufacturing remains the currency of the global economy, as selling high-valued goods globally is still the way to gain wealth; however, US trade deficit in goods is rapidly increasing; both low end and high end manufacturing are moving abroad, talent erosion in the manufacturing base is a big concern; the US will only gain back a comparative advantage in manufacturing sectors if it updates its processes

· The US has the most flexible and resilient economy in the world; however, it needs innovation in order to keep growing, and needs the political will to implement innovation-encouraging policies

Henry Kelly et al, "Flying Blind: The Rise, Fall and Possible Resurrection of Science Policy Advice in the United States":

• P. 1-10:
• The need for effective science and technology advice continues to increase while the infrastructure for providing such help is in a state of crisis. Lacking good advice, the nation may not act on problems until they are costly and difficult to solve.
• Main issue: if Congress or the President don’t want objective scientific advice, no institutional solution can fix the problem because there is no way to force the President to meet with scientific advisors or make Congress create legislation based on given scientific analysis.
• Options are considered in 3 categories: 1) strengthening science and technology advice for Congress, 2) strengthening science and technology advice for the President, and 3) ensuring that individual citizens are NGOs have the information needed to conduct their own analyses so they can participate in public debate.
• Recommendations given by report:
• 1) Congress: the gap created by the loss of the Office of Technology Assessment (OTA) in 1996 has not yet been filled. Recommendation = start a significant effort with OTA’s ability to assemble external expertise and conduct detailed analysis of complex technical subjects as a distinct organization within GAO reporting directly to the GAO director.
• 2) President: management of S&T issues at the executive level is haphazard; recommendations: establish a strong National Science and Technology Council (NSTC) managed by a civilian executive secretary appointed by the President, formalizing the role of a Presidential S&T advisor; reauthorize the Office of S&T as an office that would secure independent advice through independent advisory boards, conduct periodic assessments of S&T policy issues, and at least one advisory board should have terms of six years to ensure continuity between administrations
• 3)Public Information: good government depends of holding public officials accountable to the public they represent, which means individuals and independent private organizations must be able to evaluate the running of federal programs; recommendations: remove controls on unclassified scientific information, create new internal checks on secrecy, adopt an affirmative disclosure policy and mandate routine publication of advisory committee reports.
• There are two types of complaints: 1) policy decisions are being made without the benefit of serious, timely, unbiased analysis and 2) high quality analysis is available but ignored, distorted or suppressed.
• P. 27-44: The Current State of Science Advice
• In spite of widespread recognition for scientific and engineering advice outside of the Department of Defense, designing effective institutions has been difficult.
• Advice to the President: in 1956 President Eisenhower created the President’s Science Advisory Committee (PSAC) to provide advice on a wide range of S&T matters. In 73, however, Nixon fired his science advisor and disbanded the PSAC because of political disagreements. In 76, Congress created the current Office of Science and Technology Policy, which basically forced the President to have some form of formal science advice. The President selects his advisors. The National Security Advisor (NSA) has far greater influence because there has never been doubt that Presidents need security advice.
• Office of S&T Policy: director and no more than 4 associate directors, all approved by the Senate; director “provides advice on the scientific, engineering, and technological aspects of issues that require attention at the highest levels of government”; the OSTP also studies trends in science, initiates studies and reports to Congress and the President on annual accomplishments; it has no specific budget authority; the office is further weakened by the perception that it is partly a lobby for research funding rather than being a vital part of the White House decision making team; basically, the role of the office depends on the relationship between the president and his director; under the current President Bush, the rule of the OSTP has declined
• The National Science and Technology Council (NSTC) was created in 1993 by President Clinton and is a cabinet-level council that “is the principal means for the President to coordinate science and technology policies across the Federal Government.”; it has very little authority, and while the President is the nominal chair of the NSTC, Bush has never attended a meeting; reasons for weakness = most agencies and departments have far better ways of influencing the policy process than working through NSTC and its effective chair, the President’s science advisor; in comparison, the National Security Council and its Advisor are much more influential; another weakness = nature of NSTC’s “product,”; the NSC’s “product” is security always, but NSTC’s product rarely ends up being actual science policy, but an agriculture product, or an energy product
• President’s Council of Advisors on S&T: senior group of non-governmental advisors, PCAST; role and access to the President depend heavily on his preferences
• The Critical Technologies Institute: a Federally Funded Research and Development Center (FFRCD) chartered by Congress in 1992 and renamed the S&T Policy Institute (STPI) in 1998; funded through the National Science Foundation, but acts under the guidance of OSTP; through it, Congress wanted to develop publicly available analyses of key S&T issues, but it never really reached this goal
• The National Science Board (NSB): established in 1950 along with NSF to provide oversight for the NSF research portfolio, but its mandate is open-ended, potentially including almost any aspect of the US R&D effort; considered a part of the NSF and is not a principal resource for the President.
• Advice to Congress: 535 individual clients who all have slightly different perspectives, as well as a large number of different committees and subcommittees, meaning what works for advising just the President will not work with Congress; the fragmentation of responsibilities in Congress makes it extremely difficult to develop anything near a coherent treatment of research priorities
• Office of Technological Assessment: created in 1972 because Congress felt it was not getting appropriate S&T advice; designed to be bipartisan, but many Republicans felt that the organization had a Democratic bias, creating much tension; the OTA was eliminated in 1994
• Congressional Research Service (CRS): began as the Congressional Reference Service in 1914; provides all congressional offices with nonpartisan information and research, and gives immediate answers to questions and short-term studies; most of its work is done in response to requested topics; has an excellent reputation for impartiality
• Government Accountability Office (GAO, formerly General Accounting Office): founded in 1921 and serves as an instrument of oversight through the evaluation of ongoing programs; has offices across the country and continually monitors a variety of projects; currently can only complete one to three technology assessments per year
• Congressional Budget Office (CBO): created in 1974 to provide nonpartisan analyses needed for economic and budget decisions; S&T function is to evaluate the science-related budget requests for the Department of Energy, NIH, NSF, etc.
• National Academy of Sciences: founded in 1863 by Abraham Lincoln to investigate, examine, experiment and report on any subject in the arts or sciences for any department of government; the National Research Council is part of this; criticisms of the academies include: timeliness, flexibility and bias and balance