Tuesday, October 04, 2005
Are We Losing our Technological Edge?
America's Fall in R&D: "Nobody Cares"
"I think our politicians believe that that the leadership we have enjoyed since Sputnik has been God-ordained. It's not."
--Brian Halla, Ceo, National Semiconductor
A Businessweek interview with CEO Brian Halla of National Semiconductor discussing the danger of the U.S under funding of basic research. Halla compares the Chinese approach to state supported education, research and development with the U.S. government's reliance on private sector R&D to keep America competitive in the world market. Halla's observations are disturbing but not surprising, his testimony is one of many accounts of the increasing imbalance in resources devoted to basic research in the sciences which will result in "America losing its technological edge." Halla describes several key reasons for China's phenomenal growth and increasing competitiveness in the world market. He also discusses U.S. failures to promote technological innovation since the end of the Cold War. Halla also believes that the American public is ignorant of the competitive threat that China poses not just for traditional manufacturing jobs but also for high-tech production and professional activity:
Businessweek asked Halla if China has an educational advantage in this competitive market:
The central issue here is the question of what role should government have in creating the conditions for economic prosperity in a free market society. China with its centrally planned economy is supporting its IT sector with massive funding and planning. The U.S. has chosen a free market approach that relies on the corporate sector to fund long term research and development for future competitiveness. On the question of education there is also clearly a different philosophy it at work. The emphasis on science and engineering in China is producing a generation of technical professionals that our educational system is not going to match. Another key factor that made America powerful, prosperous and independent was our ability to produce for a large domestic market that is still the envy of the world in its ability to out consume any other domestic market in the universe. Access to our market is a powerful card that we have played in the past to control our economic rivals. Halla cites our ability to influence Japan by threatening limits on their ability to export to the U.S. But China is swiftly developing an enormous domestic market that will ultimately dwarf the U.S. market. Halla explains the comparison:
"I think our politicians believe that that the leadership we have enjoyed since Sputnik has been God-ordained. It's not."
--Brian Halla, Ceo, National Semiconductor
A Businessweek interview with CEO Brian Halla of National Semiconductor discussing the danger of the U.S under funding of basic research. Halla compares the Chinese approach to state supported education, research and development with the U.S. government's reliance on private sector R&D to keep America competitive in the world market. Halla's observations are disturbing but not surprising, his testimony is one of many accounts of the increasing imbalance in resources devoted to basic research in the sciences which will result in "America losing its technological edge." Halla describes several key reasons for China's phenomenal growth and increasing competitiveness in the world market. He also discusses U.S. failures to promote technological innovation since the end of the Cold War. Halla also believes that the American public is ignorant of the competitive threat that China poses not just for traditional manufacturing jobs but also for high-tech production and professional activity:
I think the perception of most people outside the technology industry is that China is still full of people working with their hands by candlelight. It's not like that. China has state-of-the-art semiconductor fabs and state-of-the-art everything, and they're producing cool stuff.
And I don't think that most people understand that China is graduating 400,000 engineers a year when the U.S. is graduating 65,000. The U.S. is still the IQ magnet of the world, but the best and brightest are finding more and more reasons not to come here. One is they can't stay once they get their PhD. Two is that it's just tougher to get in here, post-9/11.
Businessweek asked Halla if China has an educational advantage in this competitive market:
I often tell a story that illustrates this. There's a major university in the [San Francisco] Bay Area that you would have thought was one of the best-funded universities in the world. And one of our fellows at National is a professor there. And he said they just got a new gift of a network analyzer from Agilent (A ). It's worth about $110,000 and they put it on a metal cart, and professors will hide it away and hoard it. And to use it, you have to sign up for it days in advance, and they roll it around from lab to lab.
And then he was invited over to China to give a speech and was given a tour of Tsinghua University. And he was shocked and amazed that every lab had one of those very same Agilent network analyzers. Some of them had never been used or turned on, but they had them just in case they ever needed one. The funding is incredible, and meanwhile we're sitting here thinking we're doing fine.
I think our politicians believe that that the leadership we have enjoyed since Sputnik has been God-ordained. It's not. Someone has to fund it. We're not asking for handouts for companies. But the vast majority of companies these days don't do R&D, they just do D. And we work with universities to get the R, and now the universities are saying that they can't do basic research anymore.
Look at Bell Labs back in the 1940s. It was very unsuccessful in that only 1 of 20 projects was successful. But look at the successes: the transistor, the laser, the Telstar satellite, stereophonic sound. That's my long-winded way of saying funding needs to increase for basic research.
The central issue here is the question of what role should government have in creating the conditions for economic prosperity in a free market society. China with its centrally planned economy is supporting its IT sector with massive funding and planning. The U.S. has chosen a free market approach that relies on the corporate sector to fund long term research and development for future competitiveness. On the question of education there is also clearly a different philosophy it at work. The emphasis on science and engineering in China is producing a generation of technical professionals that our educational system is not going to match. Another key factor that made America powerful, prosperous and independent was our ability to produce for a large domestic market that is still the envy of the world in its ability to out consume any other domestic market in the universe. Access to our market is a powerful card that we have played in the past to control our economic rivals. Halla cites our ability to influence Japan by threatening limits on their ability to export to the U.S. But China is swiftly developing an enormous domestic market that will ultimately dwarf the U.S. market. Halla explains the comparison:
Five years ago, I talked with a peer CEO friend of mine who dismissed the China threat by saying he had heard it all 20 years before, with Japan. But Japan is a tiny island that ran out of people very quickly, and their cost of wages dramatically exceeded the U.S.'s. Second, Japan had to obey our laws, because the U.S. market was the only market, and so when it came to dealing with anti-dumping legislation, they had to obey, because they had to sell here.Access to the Chinese market may in the long run be more important to us than access to American consumers is now to them.
But it's different with China. They have a total addressable market of 400 million upper- to middle-class spenders they can sell to without ever having to touch the U.S.
