The plan announced last week to encourage U.S. industry to outwit the Sonys and Volkswagens of the world is in the tradition of the slapstick waiter in tails who grandly uncovers the serving dish -- and reveals a ham on rye.
Nothing wrong with that, except that the contributions of about 750 people, spread over 18 months, were invested in what was touted as the government's determination to devise a plan for a renaissance of Yankee ingenuity. The final product, however, is mainly a bunch of warmed-over, friction-free, low-cost schemes that have been around since at least the Kennedy administration.
Among them, for example, is an item of $1.2 million next year to circulate data from the government's own $10-billion-a-year research establishment. Another calls for the State and Commerce departments to seek interviews with "volunteer returning U.S. overseas visitors about observed foreign technological developments, and collect photographs and other unpublished information." From the $50 billion a year that the U.S. government and industry spend on research and development, $6 million to $8 million will be set aside to establish centers to promote so-called generic technologies -- skills and knowledge, such as welding and corrosion prevention, that are of broad value to industry. And the National Science Foundation will be given an extra $20 million to pay for academic/industrial research.
Then, too, there are vague promises to do something on those items that stir ideological passions, such as providing exclusive rights for industrial exploitation of government-financed research and antitrust exemptions for collaborative research by competing industrial firms.
When it was announced last year that the Commerce Department would lead mammoth study -- it eventually involved some 250 officials from 28 government agencies, plus 500 representatives from industry, universities, labor and elsewhere -- a lot of informed doubts were expressed about the need for still another study. For example, Dr. Betsy Ancker-Johnson, the former assistant secretary of commerce for science and technology, publicly observed that the problems of industrial research and innovation, and the government's role as promoter and inhibitor, had been exhaustively examined and that the files were thick with diagnoses and remedies. As a result of past inquiries, various remedies were already in the works or had been adopted, such as NASA's own network of centers for trying to get space technology into down-to-earth industry.
Nonetheless, Carter's own circle of technocrats persuaded him to undertake still another inquiry, in the form of a Domestic Policy Review, which, in this administration, is the narration of organized inquiries, leading to the ultimate in the hierarchy of presidential paper work -- the Decision Memorandum. Presiding over the review was Ancker-Johnson's successor, Assistant Secretary Jordan Baruch, who, when asked last week what he now knows about industrial innovation that he didn't know before the study, offered nothing but the observation that the multimillion-dollar inquiry was a valuable educational process for industry, government, universities and labor.
The misfortune in all this is that many well-understood and promising opportunities exist for promoting innovation by American industry, and it's likely that a good number of them, apart from the pallid items announced by the administration, were forwarded to and then buried by White House. The problem for this administration is that these opportunities involve a combination that it finds difficult to accept: expenditures and uncertainty.
For instance, numerous studies have established beyond doubt that small research firms and high-technology companies easily run rings around our industrial giants when it comes to inventiveness and devising products that create jobs. Typical of these studies is one by the Office of Management and Budget that found that, between 1953 and 1973, half of all major innovations in the United States came from firms with fewer than 1,000 employees. Nevertheless, only a small splinter of government research funds -- less than 4 percent -- is awarded to small science-based companies; the administration refuses to mandate a larger share for these productive organizations.
As for tax breaks for innovation-producing activities, past inquiries did lead to changes that last year loosened up the venture capital that is the lifeblood of small research enterprises. But for research entrepreneurs, the tax laws are an impediment to expanding their activities. Carter, in announcing his plans for promoting innovation, conceded that "while it might be possible to make changes in the tax code that would promote innovation, these changes should not be viewed in isolation from other aspects of our economy."
The matter is being studied.