Commentary
US Science and Technology Is On A Losing Path
Norman R. Augustine
A retired chairman and CEO of the Lockheed Martin Corporation
Chair of the National Academies Committee on Prospering in the Global Economy of the 21st Century
The history of the aerospace industry in the 20th century provides a good lesson for industries that are wondering what to expect in the 21st century. In the 20th century, breakthroughs in aviation created the opportunity to move people and goods efficiently over very great distances. As a result, the aerospace industry boomed, both in the US and in other countries. Bill Gates has referred to aviation as the "World Wide Web of the 20th century." It was the aerospace industry that led the way to the flattening of the modern world.
Today, the breakthroughs pioneered by aviation are being extended to many other industries. Now we can not only move physical items efficiently over great distances, we can transport information in large volumes ... and at very little cost.
This transition to a borderless economy provides great opportunities for companies that are prepared to take advantage, as the history of the aerospace industry amply demonstrates. But in any dynamic, technology-intensive industry, leadership can be lost very quickly.
Thus, many other industries are now joining the aerospace industry in learning to compete in an uncertain and quickly changing world.
Today, candidates for many jobs that currently reside in the US are just a mouse click away in Ireland, India, China, Australia and dozens of other countries. At first, manufacturing jobs were the ones most susceptible to moving overseas. I recently traveled to Vietnam, where the hourly cost of low-skilled workers is about 25 cents, less than 1/20th of the US minimum wage. But the competitive disadvantage is not confined to so-called low-end jobs. Eleven qualified engineers can be hired in India for the cost of just one in the US.
At the same time, other countries are rapidly enlarging their innovation capacity. They are investing in S&T and encouraging their highly trained citizens who are working abroad to return home. Even more important, these countries are creating the well-funded schools and universities that will produce future scientists and engineers.
The US is not competing well in this new world. Other nations will continue to have the advantage of lower wages, so America must take advantage of its strengths. But those strengths are eroding even as other countries are boosting their capacities.
Throughout the 20th century, one of America's greatest strengths has been its knowledge-based resources – particularly its S&T system. But today, that system shows many signs of weakness. This nation's trade balance in high-technology goods swung from a positive flow of $33B in 1990 to a negative flow of $24B in 2004. In 2003, foreign students earned 59% of the engineering doctorates awarded by US universities. In 2001, US industry spent more on tort litigation and related costs than on R&D.
A major factor determining US competitiveness is the quality of the workforce, and the public school system provides the foundation of this asset. But that system is failing specifically in the fields most important to the future: science, engineering and mathematics.
In a recent international test involving mathematical understanding, US students finished 27th among the participating nations. In China and Japan, 59% and 66% of undergraduates, respectively, receive their degrees in science and engineering, compared with 32% in the U.S.
In the past, the US economy benefited from the availability of financial capital. But today it moves quickly to wherever a competitive advantage exists, as shown by the willingness of companies to move factories to Mexico, Vietnam and China. One of America's most powerful assets is its free enterprise system, with its inherent aggressiveness and discipline in introducing ideas and flushing out obsolescence. But other nations have recognized these virtues and are seeking to emulate the system.
The aerospace industry is especially susceptible to these broader economic trends. Without well-educated scientists and engineers, the industry will not be able to compete with well-organized programs in countries with abundant engineering talent.
In addition, security issues in the industry highlight its reliance on homegrown talent, as opposed to importing its people from abroad.
Troubles in the aerospace industry also could have implications throughout the US economy. In particular, the industry has been especially effective at making use of and producing systems engineers, some of whom eventually move to other industries. If aerospace were to decline, a considerable portion of these valuable individuals would be lost.
I recently chaired a 20-member committee, created by the National Academies, and asked by Congress to examine the threats to America's prosperity. We concluded that the US needs to start doing several things differently. America needs to recruit new math and science teachers and support students who are pursuing degrees in those subjects. The US government should increase research funding by 10% annually over the next several years, with primary attention devoted to the physical sciences, engineering, mathematics and information sciences. Our committee asked the government to provide permanent tax incentives for US-based innovation so America can be one of the most attractive places for long-term innovation-related investments.
The elements of success in the modern world are not mysterious; they comprise an environment that fosters innovation, leadership in S&T, and well-trained workers. We have time to do something about the current trends if we start now.
Norman R. Augustine, a retired chairman and CEO of the Lockheed Martin Corp., chaired the National Academies Committee on Prospering in the Global Economy of the 21st Century. The panel was created by the National Academy of Sciences and the National Academy of Engineering at the behest of members of Congress from both parties. It included 20 of the nation's most prominent business leaders, educators and scientists, including three Nobel Prize winners. For more details, see <http://www.nationalacademies.org/prospering>.
