No concert hall performer, no rock musician is more sensitive to his work environment than our American businessman. Any criticism of the established order affects "confidence" and without confidence business slumps. On the other hand businessmen fret, complain, grouse, moan, kvetch, fuss and bitch as no prima ballerina would dare. The most temperamental operatic diva is less demanding than the tycoonate of industry and the mogulia of finance.
If it isn't thoughtless consumers insisting they get what they paid for, it's labor unions, or government regulations, or foreign exchange which is irritating the leaders of business and industry. Either the tariff is too high or too low, the interest rates too small or too large, the cash flow too wide or too narrow, something is always wrong in the finicky eyes of these conductors of the nation's prosperity.
The latest lamentations are over America's lagging rate of innovation. (Innovation is a pompous word used by businessmen when trying to sound oracular. Invention means the same thing.)
We Americans aren't inventing widgets at the rate we used to. Since nobody knows what the rate is, the financiers and government officials making statements about it are letting their words be guided by their subjective impressions.
Nevertheless, our upper-drawer people are worried lest the Germans and Japanese out-invent us. But if we may be losing out total technological dominance of the world, it would not be surprising. That dominance has only existed since the beginning of World War II. It came about through the contributions of refugee scientists and the fact that the societies we are most competitive with had been knocked flat. We not only ended the war richer and in one piece but in possession of our former enemies' science and scientists. We would have had to be classic dumbbells not to have become supreme.
Since then in some industries we've slipped from leading the world to becoming a backward nation. The most notable is steel. Japan is so much ahead of us that it can import the raw materials and fuel to make it from thousands of miles away and still undersell Ohio steel manufacturers who get their supplies from Minnesota and West Virginia.
The reason for this is that the American steel industry spends next to nothing on research and development. Last year the U.S. Steel Corp., once the pride of American capitalist technology, spent slightly less than $50 million on R&D. That may sound like a lot but it was $30 million less than what Bristol-Myers spent and they make toothpaste.
The figure shows U.S. Steel hasn't really even made an effort to stay technologically abreast of its foreign competitors. It devoted one half of 1 percent of its sales to R&D or about $300 per employe or 36 percent of its profits. Compare that to Tonka Toys. Yup, they're the people who make those nice little trucks and fire engines for the kiddlypoos. Tonks, that high-tech giant, devoted almost 2 percent of its sales to R&D or $698 per employe or a sum equal to 412 percent of its profits. Is it any wonder that the last major invention to come from the steel industry was the pop top can? (For all the figures on this topic see Business Week for July 3.)
The fuel industry did scarcely better. Its R&D effort as a percentage of its total sales was about one fourth of the average of all industry's. So much for the millions spent on televised propaganda messages about how the oil industry is working day and night in the labs to bring us new, cheap, non-polluting and inexhaustible sources of fuel. Either they're just funning us or all those oil corporation employes are doing the research on their own time without billing the company.
Some of the innovation lost in product development has been applied to thinking up reasons for why more money isn't being spent on inventions. Excuse No. 1 is that R&D money has to go into thinking up ways to satisfy government health and safety regulations; reason No. 2 is that taxes are too high to justify risking money on perfecting a new idea; reason No. 3 is that even if they do come up with a good idea, the government will prosecute them under the antitrust act if they try to make a little money out of it.
Then there are some possible reasons that businessmen don't mention. By not spending money now the taxpayers can be blackmailed into paying for R&D later. That's how the atomic power industry paid for its development costs. And finally, who needs it? Just keep Japanese steel out of the country; then give our fellows bellows and two strong arms and we'll make you all the horse shoes you'll ever want.