R&D; Needs to Trickle Down : Civilian Economy Gets Little Spinoff From Weapon Programs

In the absence of arms-control agreements going far beyond anything now in sight, there is no way that the United States can disengage from its military competition with the Soviet Union. A number of experts see a danger, however, that in the process of “winning” the arms race we will lose another: the global economic competition with Japan and other allies.

If that happens, the ultimate result will be great injury both to national prosperity and to national security.

Somehow we must learn to do a better job of turning our vast expenditures for military research and development into a tangible asset for the civilian economy.

Although Americans gripe and grumble about the ups and downs of the business cycle, fundamentally we have grown up with a comfortable, even smug, confidence in the strength of the U.S. economy and in American technological superiority.

A determined optimist can take comfort from the fact that American scientists still win a disproportionate number of Nobel Prizes, that the United States still has far more scientists and engineers at work than any other free-world country and that a lot of them are working on the frontiers of technology.

Unfortunately, there is a less comforting set of facts.

The American ability to compete has sharply deteriorated in recent years, as plainly demonstrated by world trade statistics. We have lost ground not only in traditional industries such as autos, steel and chemicals but also in consumer electronics and such high-technology areas as memory chips and satellite launchings.

Last year the gap between what the United States bought from other countries and what it managed to sell reached a mind-boggling $148 billion. High technology, which is supposed to be America’s strong suit, is doing well nowadays to break even on world markets.

There are a lot of explanations--including complacent managers, a too-strong dollar (until lately), antitrust laws that inhibit corporations from pooling their research efforts, a tax system that rewards consumption while discouraging savings for investment, and unfavorable trends in the training of scientists and engineers.

The last item is especially important. Erich Bloch, director of the National Science Foundation, points out that we are attracting a smaller fraction of our best students to the sciences, that the number of engineering Ph.D.s has been declining since the early 1970s and that half of all the Ph.D. degrees in engineering awarded in this country are going to foreign students who may or may not remain here.

There is still another factor that worries many experts, and that is the distorting effects of the manner in which the federal government spends its research and development dollars.

Fact No. 1 is that little more than a quarter of the federal R&D; effort goes into civilian research; the Pentagon gets the rest.

At first glance, this would seem to be a non-problem. After all, if most of the airliners around the world were made in America, it is in large part due to the spinoff from the design and manufacture of bombers. This country’s missile and space programs created the massive market that made possible the production of cheap semiconductors and integrated circuits.

Today the federal government is providing 70% to 80% of the money for research into such cutting-edge technologies as lasers, artificial intelligence and advanced materials.

But, on balance, the system is not geared to the timely transfer of technology from weapon programs to the civilian economy.

Craig Fields, speaking for the Defense Department’s Advanced Research Projects Agency, said recently that the super computer research being coordinated by his agency may produce “some opportunities for industry spinoffs, but not much.” National economic needs, he noted, are not the major focus of the agency’s efforts.

Some expert observers see a change for the better in recent years, but a frequently cited study found no more than 10% of civilian spinoff per military research dollar.

One factor is that U.S. military R&D; programs naturally tend to be concentrated on technologies of direct relevance to the development and manufacture of weapons, but are too esoteric or expensive to translate directly into products of large civil sales potential on world markets. We tend to excel in items produced in small numbers with very high price tags--in other words, products with a very narrow and small market--the very opposite of what we need from the standpoint of creating jobs and reducing our global trade deficit.

The Japanese, having negligible military expenditures, are able to concentrate their efforts on technologies and products with a broad market appeal--and a clear and early payoff in commercial terms. (Witness the commanding Japanese position in items ranging from numerically controlled machine tools to video recorders.)

Several other important factors are pointed out in a paper published by the Berkeley Roundtable on the International Economy: the shroud of secrecy that descends on military research projects; the Pentagon’s preference for dealing with large, familiar firms instead of more innovative, adaptive small companies; the inefficiencies born of the built-in protection that big defense contractors enjoy against foreign competition, and the relative insensitivity to cost in the defense business.

As much as Pentagon critics like to think otherwise, the answer isn’t to take a meat ax to the defense budget. The potential threat from the Soviet Union is not a figment of Ronald Reagan’s imagination. The crying need is to develop a system that maximizes the benefit to the civilian economy of military R&D.;

Some helpful steps have been taken to increase the collaboration between university researchers and the government, and among high-technology companies. As a result of a law passed in 1980, a higher proportion of federal patents is being licensed commercially. But a lot more needs to be done.

It would indeed be ironic if the U.S. government, in single-minded pursuit of maintaining its lead in military technology over the Soviet Union, allowed its economic base to go to pot--thereby undermining not only the country’s future prosperity but also its long-term ability to support an adequate defense program.