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Flying High?


America's technological might has made it possible for humankind to probe everything from the rings of Saturn to the structure of atoms. But now the U.S. is facing stiff challenges from abroad. Korean scientists have made breakthroughs in cloning. Britain is a leader in studying stem cells, which offer promise in many disease areas. World-class research labs are springing up in India, Singapore, Taiwan, and, especially, China. And even as the world invests more in science and technology, there's a growing chorus of worries at home about the health of U.S. research. The fears: America is underfunding breakthrough science, failing to educate its own citizens well enough, and alienating talented foreign-born students, scientists, and engineers with a tangle of new immigration policies. "Our only real advantage is in knowledge -- and we are not doing well," warns Norm Augustine, former CEO of Lockheed Martin Corp. (LMT) Adds Nobel laureate and Massachusetts Institute of Technology physicist Jerome I. Friedman: "We are living off the investments of the past."

How grave are these threats to America's future in science and technology? "We can be scared, perhaps very scared, or we can say that we are still bigger and better," says Diana Hicks, chair of the School of Public Policy at Georgia Institute of Technology. "You can argue either way, based on the evidence." The best assessment, though, is that America is not yet in any large peril. Certainly, there are legitimate concerns. But worries now being voiced will increase the chances that corrective steps will be taken, ranging from boosts in funding to streamlining the visa process.

Consider R&D spending. Overall, U.S. investment looks very strong. From 1994 to 2000, total R&D expenditures jumped from $169.2 billion to $265 billion, the largest increase for any six-year period in the nation's history. The U.S. National Institutes of Health budget doubled in the five years before 2003, rising to $27.2 billion and helping to make America the world's biotech powerhouse. And overall, the U.S. spends 2.7% of its gross domestic product for R&D, compared with, say, 1.9% for the European Union.

All of that is good for America and good for the world, as the innovations streaming from U.S. labs help improve computing and communications and fight diseases, among many other benefits. Nevertheless, lurking under the impressive overall figures are some disturbing facts. U.S. R&D spending has leveled off since 2000. Budget analyst Jules J. Duga of the Battelle Memorial Institute calculates that companies' estimated 2004 R&D spending of $181 billion will mark the fourth consecutive year of small decreases (after adjusting for inflation).

WHAT ELSE IS NEW?

And while Uncle Sam's contribution has increased to a record $89 billion for 2004, big boosts for biomedical research, along with defense and homeland security R&D, have come at the expense of other crucial disciplines. Government funding for the physical sciences, which in the past spawned everything from semiconductors to carbon buckyballs, has stopped rising (in inflation-adjusted dollars). In today's superfast world, yesterday's "big thing" becomes a commodity and moves to lower-cost offshore factories, says Stanford University physicist Burton Richter, a Nobel laureate: "So now, if we don't fund the physical sciences, where will the Next Big Thing come from? We don't generate new ideas like we used to." That's why Richter is spearheading an effort to increase federal support for basic research in the physical sciences.

So far, no data support the idea of a significant slowdown in U.S. innovation. With more than 10 million people with degrees in science or engineering, America still leads the world in scientific papers and patents. But other nations are catching up fast. Within a few years, China plans to graduate 350,000 new engineers annually. In contrast, U.S. universities produce less than 100,000 per year. And as many other nations invest heavily in science and technology, the number of papers and patents from researchers in Taiwan, South Korea, Hong Kong, and Singapore is soaring. The world is increasingly populated with innovators. "We are at a watershed in the global economy," says Denis Fred Simon of Rensselaer Polytechnic University.

Overall, this global innovation explosion "is a good thing. We want a productive world," says C. Paul Robinson, president of Sandia National Laboratories. But it presents new challenges for the U.S. Companies increasingly need to scour the world for ideas. In the future, "the U.S. can only count on making at most one in five inventions," predicts Greg E. Blonder, a former Bell Laboratories scientist who is now a venture capitalist. The good news is that U.S. researchers appear to be rising to this challenge by tapping into overseas talent. The Georgia Institute of Technology, for instance, is working with Bangladesh scientists on monsoon forecasting and is also collaborating with universities and companies across Asia and Europe in fields such as microelectronics and advanced sensors. Says provost Jean-Lou Chameau: "Nowadays it would be very arrogant to think that we have all of the research expertise concentrated in one area or country."

Collaboration becomes ever more important as the flow of talent to the U.S. slows. Greater opportunities in countries outside the U.S. mean that fewer foreign-born researchers will be studying, working, and staying in the U.S. The number of visas granted to foreign scientists and engineers has been declining since 2001, aggravated by restrictions imposed to fight terrorism. Because of foreign students' visa troubles, "there has been a precipitous drop in graduate school applications," says James S. Langer, vice-president of the National Academy of Sciences. "It is having a major effect on science and technology in the U.S.

QUICKER CLEARANCE

Bush administration officials stress that the visa problem is not easy to solve. "Imagine the outcry if we let a terrorist in to study biological methods or physics," says C. Stewart Verdery Jr., Assistant Secretary for Border and Transportation Security Policy and Planning at the Homeland Security Dept. Still, he says: "We agree that if we make it unduly difficult for people to come and work in high tech, we will have done serious damage."

That's why the Administration is taking action. And there may be reason for optimism on the visa front. A Sept. 7 letter to the scientific community from the State Dept. claims that "98% of all Visa Mantis cases [which involve a security check designed to protect against sensitive technology transfers] are being cleared in less than 30 days." While skeptical scientists are waiting for firm proof, "we have seen a really big improvement in the rate at which cases are being cleared," says Wendy D. White, director of the Board on International Scientific Organizations at the National Academy of Sciences.

No such improvement has come in another area of contention -- stem cell research. Scientists charge that the Administration is stifling work that holds the promise of treating a host of diseases. The White House has prohibited federally funded scientists from freely experimenting with all but a small selection of embryonic stem cells because of opposition from anti-abortion advocates. "In the U.S., you have this absolutely ridiculous position on federal funding. Most of the best researchers [in publicly funded labs] can't touch these cells while private companies can do anything," says Austin Smith, director of Edinburgh University's Institute for Stem Cell Research. But that could change. California voters will soon decide whether to sell billions of dollars in bonds to support research in stem cells.

The fears about inadequate research support and slowing immigration are real. But do they strike at the heart of America's technological might, or are they just niggling worries, overshadowed by an innovation engine that still holds awesome power? The complete answer won't be known for years -- and, of course, will depend on everything from future R&D funding to visa policies. But if past history is any guide, it's unlikely that the U.S. is facing any serious threats to its ability to compete in the world.

Flash back, for instance, to the dark days of the late 1980s and early 1990s, when many politicians and scientists lamented that the U.S. was in an irreversible decline. The sense of American supremacy was being rocked by every new wave of imported Toyotas, memory chips, machine tools, and Walkmans. Self-appointed rivals of the U.S. rubbed it in. "Americans today make money by shuffling money around instead of creating and producing goods," scoffed Sony Corp. (SNE) Chairman Akio Morita in the book he co-authored in 1989, The Japan That Can Say No.

Japanese arrogance was short-lived, of course. America quickly responded to the challenge. Companies shook off their complacency, adopting cutting-edge manufacturing tools and coming up with fresh breakthroughs. Bioengineered cancer treatments, the world's fastest microprocessors, world-leading equipment to fabricate semiconductors, software to rig up wireless networks, major advances in a mysterious realm known as nanotechnology -- these are but the latest emblems of resurgent American technology. "The story of the '90s is a reminder not to underestimate U.S. R&D," says Curtis R. Carlson, president and CEO of SRI International. "It's much easier to see the problems than the opportunity."

HANDWRINGING

Worriers concede that the U.S. is hardly in dire straits. "Is the sky falling? No. It's maybe drooping a bit," says Richter. True, more countries are investing in science and technology than in the 1990s. And we can't count on another Asian stumble. But the game has changed. With companies increasingly searching the whole world for new innovations, it matters less than ever where discoveries are actually made. And even with the new competition, "the U.S. is leading in pretty much all of science," observes Cherry Murray, senior vice-president of physical sciences research at Lucent Technologies' (LU) Bell Labs. It is painful to lose some ground in physical sciences, but "we are doing very well with biology and medicine," she asserts.

Indeed, for all the handwringing, "I've never seen a time with more opportunity," says SRI's Carlson. "Everywhere you look, there is one wave of technology after another." And as the pace of innovation increases, America benefits by having the immense amount of capital and the entrepreneurial culture needed to win the race to market.

Drop in at IBM's (IBM) Thomas J. Watson Research Center, for example, where solid-state physicist Phaedon Avouris and his team are weaving gossamer threads of carbon, atom by atom, into new kinds of transistors. Or visit with Dr. Thomas T. Perls at Boston University School of Medicine to learn how people might one day live healthy lives of more than a century. Or explore SRI's spin-off company that's making artificial muscle, a "smart" solid-state material that might replace less efficient motors in everything from air conditioners to automobiles. Or consider a future world that has switched from climate-altering fossil fuels to a host of clean energy technologies, which might include a radically different and safer species of nuclear reactor. Meanwhile, researchers are genetically tinkering with microbes and plants to produce not just better crops but renewable energy as well.

And it's a safe bet that somewhere in America's vast research enterprise, excited researchers are on the cusp of the Next Big Thing -- something as revolutionary as the transistor, the Web, or gene splicing. These scientists may not have a clue themselves how their inventions will change the world, just as the creators of the computer, or the laser, or the Internet couldn't imagine the sweeping transformations that their work would eventually bring. But what they do share is a still-undimmed faith in the power of science and technology to probe, illuminate, and, ultimately, improve the human condition.

By John Carey


American Apparel's Future
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