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International Friction and Cooperation in High-Technology Development and Trade: Papers and Proceedings Opening Address The Honorable Daniel Goldin, Administrator, NASA Good morning. I had a speech all prepared, but I changed it this morning because I thought about an experience I had recently and I want to share it with you. For the first time since I have been in Washington, my parents came to visit me during this past Memorial Day weekend. On Saturday morning I took my mother on an errand to Old Town, Virginia, to buy some bagels. So we drove into Old Town, and we went to Chesapeake Bagel where there was a line of 25 people waiting to buy bagels. My mother notices that there are garlic bagels and blueberry bagels and salt bagels. She, however, just wanted to buy a bagel. There was a grandfather in front of us in line with his two grandchildren of about 10 and 12. So while waiting in line, my mother engaged these two kids in conversation and found out all about their lives—she has a way of doing that. When it was their turn to order, one of the kids stepped up to the counter and said, "I will have a salt bagel, split in the middle, put some butter on it, give me bacon on the side." My mother was dying, because the only way to eat a bagel is plain with cream cheese and maybe a little smoked salmon. When we got back in the car with the bagels, my mother had tears in her eyes. When I asked her what was wrong, she said, "I can't handle the change in the world. Ethnicity is disappearing. It is moving so fast, and we don't have history, we have boutiques. Where are we going? I feel so lost." We then had a long discussion about how wonderful things are now, and I reminded her that when I was a child and we went swimming, they would not allow us in swimming pools for fear of polio. But through technology, we had the Salk vaccine and the Sabin vaccine.
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International Friction and Cooperation in High-Technology Development and Trade: Papers and Proceedings It became clear to me at that point that my mother was reflecting the frustration of people not just in America but in the world, that things are moving at an unbelievable pace. And she is right; everything is changing. The Cold War has ended and there are international realignments. National priorities are changing. The focus just ten years ago was on defeating the evil empire, and now people are worried about building bridges and tunnels in Shanghai; in Japan they are worried about how they can win the digital revolution. They have already beat the United States in the analog revolution. We now have the emergence of the Pacific Rim. For some people, it is scary. For other people, it represents opportunity. The former Soviet states—specifically the Ukraine, are moving at the speed of light. They are really changing fast. But in the United States we are focusing on what to do about this deficit that we built up during the Cold War. On top of this, we are going from a manufacturing to an information-based society overnight. Just a few years ago only 3 percent of Americans earned their living in information-based technologies. In 20 or 30 years from now it will be 50 percent. The sophistication and the information content in goods is skyrocketing. In 1984, 80 percent of the computer market was in hardware, 20 percent was in software. In 1990, the respective percentages were 20/80. Today, 10 percent of the market is in hardware and 90 percent is information, R&D, and services that go with that computer. But the really interesting point is that opportunity still exists. Only 50 percent of the people in the world have telephones. The globalization of the marketplace is another change. You could have inflation and recession, you could put off the future, you could sell, and then you could come back. But you could sell to the same market and you would be protected. But now, because of the internalization in the marketplace, you cannot put off the future. If you do not keep up, you are wiped out. We cannot get away with cutting back on investments in the future anymore. Budget pressures are driving dramatic changes in industry and government. Industry faced this first. The investment community demanded shareholder value. Now if I had asked my mother in 1950 what shareholder value meant, she would have told me, "I would be able to clip coupons for the next 20 years from AT&T." But if you read The Washington Post or The New York Times business section today, you will find that some corporation got a new CEO because last year's stock price did not go up, even though the CEO was trying to position the company for the future. So stockholders were demanding his head. Who is accountable for the future? Today, shareholder value means where the stock is at today. And if it is low, then the CEO has three months to fix the company. No one wants to hear about the future value of the corporation. The top players are shifting their research goals for fast payoffs. Who is accountable? Who is accountable in America or any other country for the next genera-
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International Friction and Cooperation in High-Technology Development and Trade: Papers and Proceedings tion? Wall Street is driving us because this is what the investment community is demanding. So the corporations have to pay down this enormous debt that they have from the pac-man activities in the 1980s when they all bought each other out. They also are facing the reality that in this era of global competition, they can no longer pad the books and keep people on. They have to keep up their productivity, and the productivity has to match the expectations of the marketplace. The corporations are not just cutting back on corporate R&D, they are cutting back on the percentage of corporate R&D that goes for long-term basic research. We juxtapose that with this passion in America to pay down the debt, which we must do. In order to win the Cold War, we built up a $5 trillion debt. We have got to pay it down. We are so unidimensionally focused in America on paying down that debt. This is not just in America. Go to Russia. Over the weekend I met with some friends who are familiar with Russia. They were telling me that R&D in Russia is being decimated. The issue here is, in a society with all these things going on, you cannot be unidimensional. You cannot talk about the children and then cut the budget. To me, this is the issue that we have got to deal with nationally and internationally. Now, what is the output? There is an unbelievable displacement of people around the world who have lost their jobs as a result of improving productivity. Jobs are being shifted. Education is a mess. And again, I am focusing here on America, but these same problems exist all over the world. There is anger. There is uncertainty. There is a call for change. There is a lot of frustration in America. In my view, the major reason for the frustration is that productivity has not been keeping pace with the expectation on the standard of living. Consider the expectation for the standard of living in the developing nations. Half of the people in the world do not have telephones. Think about how critical phones and high-speed digital communications systems are, and think of what it means to be in the part of the world without it. So here in America we have built up this anger and frustration. We have an incredible R&D machine and we are now on the verge of destroying it, not out of maliciousness, but out of this desire to solve our budget problem. As we engage in a national debate, the rest of the world is watching. What is going to happen to the expectations of a world whose population will double in the next 40 years, a world that has expectations for a higher quality of life, if everybody walks away from R&D and technology for the next ten years until things are straightened out? To me this is the heart and soul of the issue that the R&D community had better deal with. I have never heard such silence in my life. I do not see any passion in the R&D community. R&D investment basically serves as a pool for investments. It is like aquifers. It takes tens of thousands of years for an aquifer
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International Friction and Cooperation in High-Technology Development and Trade: Papers and Proceedings to fill up with water, but we can drain it in only a few decades. We cannot all sit silently by and satisfy the desire for shareholder value for today. It will be a disaster for the competitiveness of America and our citizens' expectations. So what are we going to do? Clearly, a first step is to increase productivity. America is 19 in the world in the rate of growth in our R&D account. Other countries are growing at 5 or 6 percent. The United States is going negative at 2 percent. This is a recipe for absolute disaster. What about the downsizing of corporate America? It is now clear that the U.S. government has to do something. There is this enormous pressure to downsize and restructure the federal government, and I agree with it. The President agrees with it. You can eliminate tasks, but you cannot eliminate people. Those U.S. corporations that have been successful in restructuring have completely disrupted their corporations. For example, as Ford Motor Company started downsizing, they found an increase in defective products. If we in the government and in this administration do not work with Congress and if we move too fast, we will do dumb things. It takes time, focus, and energy. But the R&D community has been silent. Academia in America is in even worse shape because the cost of an education at a private university is far outstripping the inflation rate. I believe that there is a real need for improved productivity in American universities or they will price themselves out of existence. For 1994, approximately half of the Ph.D.'s awarded in physical sciences were to noncitizens of the United States. They are filling the seats, but is that accomplishing any of the goals for higher education? We have got to get R&D more productive. At NASA we cut our budget by 36 percent. We took billions out. We downsized from 215,000 people to roughly 160,000 people. The number of government employees will go from 25,000 to about 17,000, and we are about a third of the way there already. The amazing thing is, at NASA we have started 21 new programs and we are getting higher output. So our productivity is going up by leaps and bounds. And yet, three years ago, we were saying that we did not know how to cut. We now recognize we can do it, but we are planning to make the cuts over a five-year period. You cannot do it in one or two years. No corporation could downsize that drastically in one or two years without losing key capability. Government must downsize; the R&D community and universities must do it. This is the challenge for Congress and the administration to work on. You cannot tell people to do things. You have got to help them understand on both sides. And you have got to get out ahead of the power curve and not wait or hold off. Government interests need partnerships. Because of the financial necessities, U.S. industry is doing 3- and 5-year investments, not the 10- to 20-year investments. The government looks to 10- and 20-year basic research. But with-
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International Friction and Cooperation in High-Technology Development and Trade: Papers and Proceedings out that basic research, you will not have the products by the year 2015. Other countries are doing a great job. The U.S. needs a clear national vision. A decade or two ago, the Europeans said that they were going to own 50 percent of the long-haul jet transport market. America laughed. In the Airbus factories there are pictures of cartoons of the Airbus 320 eating up the American aircraft industry. This is the image in the heads of the people in Toulouse. It is dog-eat-dog global competition, and America is giving away marketshare. Now you may have to give away some marketshare, but you also have to compete. You have to have the best technology, the best financing, and the best management. That is how you hold world leadership. An example: Boeing just put its 777 into operation. Fifteen years ago, in the late 1970s, NASA did basic research on jet engines. We had no idea that the 777 was going to come out. But we did fundamental research on engines and for efficiencies, noise, and durability. The GE-90 engine is loaded with that technology. What if no one had come up with a plan to do this research? Yet, to cut the budget, there have been numerous people on both sides that have said that we should cancel the aeronautics program in this country. We started this program back in 1917. Cancelling it is unacceptable. We need a national commitment to R&D investments. President Clinton has proposed 3 percent of gross domestic product. I would say that that is the minimum necessary. The 3 percent is a combination of government and industry. America better start the dialogue today. You cannot put off the future. Some countries in the world are committed to major R&D efforts; others are not. Unless we face this challenge, the future will be very bleak. The clash between expectations for increasing standards of living and the ability to produce will become a major problem. This is not just a national issue. This is an international issue because when the expectations do not get met and people get frustrated and angry, the weapons business booms again. I am for a strong America. But a strong America has to be a competitive America; it has to be economically competitive and superior technically before we can have productive international cooperation. At NASA, the programs under way are doing unbelievable things. An example: In the early 1970s, NASA developed some ultraviolet astrophysical platforms. The astrophysicists looked out at the cosmos and found absorption lines. They looked at the stars and saw these funny carbon molecules and were puzzled. Then in the mid-1980s, at the University of Arizona, they had a process fluke. They had an op jet running with a laser, and they produced these strange carbon atoms in small quantities. Later, in 1990 in Germany, they were doing some experiments with benzines. They found these funny things called bucky balls, the carbon-60. It has a lot of interstitial nodes so that if you put teflon in it, you can have designer lubricants, if you can make it in quantity. It is a semiconductor. It is wideband gap. It is like gallium arsenide. But it
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International Friction and Cooperation in High-Technology Development and Trade: Papers and Proceedings is not expensive like gallium arsenide. It looks more like amorphous silicon. You can make it by the roll. It has a very high molecular weight, and they are making incredible plasma engines for space propulsion. There is a problem with the convection currents on the ground that could possibly prevent us from controlling the process dynamic. So now MIT is looking at zero gravity and space. Which brings us around to the space station. I knew I would get you here. One of the possibilities is in the zero gravity of space you do not have convection. You can do controlled combustion experiments to understand the physics of it on the ground. The possibilities for society are enormous. You could make an entire wall of a house as a semiconductor. It is the ultimate in flat pounds of space. You can roll it out and roll it up. You could build a house out of it, and because it appears not to degrade with radiation, you could generate electricity. Why do we look at the cosmos? Because we have to be intellectually stimulated. You never know where basic research is going to lead, and sometimes these discoveries take decades. Now that we have finally figured out what a fullerine is and what it might be, it might take another decade to even get to the point where it can be produced. My point is, you cannot give away the future because you are so worried about what is going on in the present. We have got to be assured and confident not cut the budget, throw away the future, and define shareholder values as the stockmarket value at this minute. And you do not go after the federal budget. I believe that everyone is very well meaning in this debate. I do not criticize the politicians. I criticize the R&D community. We are the enemy because we understand, and we are so busy protecting what we have got that we are not taking the time to explain it to America or to the countries that we live in. Stop being so silent and speak out. Thank you. SYLVIA OSTRY: This climate that you discussed, both in government and R&D applications, is absolutely true. The implications are quite frightening for the longer term. What do you see as possibilities for intergovernmental cooperation? Do you see an opportunity for an international cooperation that would help governments pool some of their resources? DANIEL GOLDIN: That is a very insightful question. We have an expression at NASA, ''cooperation, not just competition." And I put "not just" in the middle, because each nation has to decide what is fundamental to its survival, its enrichment, and its set of priorities. These are the things that we must do for national defense, and that is sacred. These are the things that we must do. In Europe they said, "we must beat the pants off the United States and take away 50 percent of the market share in the long-haul jet transports." That was a national and regional decision, and that is good and that is accept-
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International Friction and Cooperation in High-Technology Development and Trade: Papers and Proceedings able and that is fine. In the United States we said, "we are going to be leaders in the world and launch; this is in our domain." We will have international participation, perhaps not at the prime level, but certainly at the subtier level. In basic research we could do the same thing. If you could sort out where your priorities are and know where you are going, I think there are tremendous possibilities. I believe the international space station is a litmus test. If we cannot succeed with the international space station, then we will set international cooperation back into the dark ages. It may not be everybody's favorite choice. But the R&D community and the international scientific community had better learn how to love the space station. Its failure would devastate the spirit of international collaboration, which is essential to the future, and leave an environment of mistrust. Also, international commitment is very important for another critical aspect. We need, together in the world, to understand the impact of the human species and natural forces on our environment, because we need to put into effect international rules on the environment, not based on passion, but based on scientific fact. If just the developing countries do this, or one country does it by itself, then mistrust could develop about what their data means. They might feel that collaboration or commitment was not to provide a sustainable environment, but for economic leverage. International commitment is crucial for the aircraft industry. When we talk about the 50 percent marketshare for Europe for the Airbus, there are American companies working for Airbus. We would like to have the American companies prime. We need to have international collaboration in aeronautics. Now, these activities will be market-driven. But I want to tell you, if we start pulling in our tents and we do not do basic research where it is in our national interest to do it, then it will be a disaster. No one has the resources to do all the research alone. The infrastructure costs will be monumental. Not everyone can build a super collider. Not everyone can build launch facilities. And not everyone can build wind tunnels. Simply put, you have to decide where you want to collaborate and where you are going to compete. PARTICIPANT: In the great competition for funding in Congress, how do you think the scientific community as a whole should approach lobbying on the Hill this year and in the coming years? You seem to be saying that the community needs to take a different approach in its lobbying to get the funding that they need. How should that approach change? What is the approach now? How has it been effective and ineffective, and how should it change in the next few months and years? DANIEL GOLDIN: In America the R&D community should stop the scientific cannibalism. People think that canceling the space station will make wonderful
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International Friction and Cooperation in High-Technology Development and Trade: Papers and Proceedings science for other areas. But remember, that did not happen with the super conductor and the super collider. First, the scientific community should lose its self-interest. As I have said, we are at a crisis point. We are cutting back our long-term R&D investments. The members of Congress are not at fault, the American public is not at fault. The scientific community has not taken the time to explain its importance to the American people. Let me will give you an example. At a recent meeting of the AAAS [American Association for the Advancement of Science], the main message of my speech was that the American scientific community needed to communicate with America. They are not communicating. They are too busy. Why is it so hard for the scientific and technical community to understand that their customer is the American public and not the U.S. government? The American public does not understand the correlation between astrophysics and mammography. They do not understand the need to spend $40 billion a year on federally funded research. I do not think it is an issue of lobbying. The issue should be what is in the national interest. The scientific community also has to be more productive in their research. PARTICIPANT: NASA had a TV show, "NASA Selects," that I thought went a long way in helping the American people understand and get excited about space and space exploration. But it was canceled. Isn't this the type of program that could reach out to excite the American people? DANIEL GOLDIN: The government should not be in the business of promoting itself so that it can get funding. I feel very strongly about that. We can educate, but we should not promote. "NASA Select" is no longer. We have "NASA TV," and it is becoming much more focused on providing educational materials. But there is a very narrow line. However, those in the research community are spending inadequate time in communicating with children. Everyone is too busy with their focused research that they are not taking the time to communicate with children. People are so focused on their work that they have lost sight of what we are trying to accomplish as a nation. There is no wonder that our kids are 13th in math and science. We will lose the digital revolution. There is a $1 billion market in long-haul jet transports. There is a quarter of a trillion dollars in the high speed civil transport market. There is a robotics market. We have lost the stationary robotic wars. Now the field robotic wars are starting. It is all up to us. PARTICIPANT: With respect to international cooperation on basic research but with the Airbus case in mind, would you comment on whether or not NASA would be willing to allow Aerospatiale to participate in the X33 and X34 programs?
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International Friction and Cooperation in High-Technology Development and Trade: Papers and Proceedings DANIEL GOLDIN: My gut reaction is no. But I really do not know for sure. Aerospatiale and Airiane want to wipe out the U.S. launch market. We should call it what it is. What do we want? We want to win that marketshare back. We have to talk straight. There is nothing wrong with competition. But we could certainly work together on the space station. Maybe we could choose to compete on launch vehicles. But we cannot be squeamish about competition. Competition is wonderful. It builds moral integrity and strength. And it is okay for us to want to beat the Europeans with a new revolutionary launch vehicle instead of having a 5 percent improvement. But I am not sure that Aerospatiale should be involved. PARTICIPANT: Within the environment of advocacy, how do you make successful decisions about which R&D is the most productive for the long term, and how is NASA participating in that process? DANIEL GOLDIN: We have to be very careful here. If you are talking about scientifically productive, NASA is qualified to do it. If you are talking about economically productive, NASA has to be told what to do. We will do fundamental things. We will do ultraviolet scanning of the heavens to understand the matter between the stars and Earth. When we develop a process defect and come up with a fullerine, we will work hard to see how to make fullerines. But under no condition is NASA going to develop products and get them to industry so that we can get more money from the government. Basic research is essential. I contend that we do not have enough peer review inside NASA. Many of the NASA scientists do not have to compete. They do not feel the heat of competition; this is not good. At NASA we are starting to transition NASA science into an institute where we have a partnership with industry and academia, and get them on the board of trustees of this particular outfit. At NASA we are making unilateral decisions about how to balance our budgets between human space flight and robotic space flight and aeronautics technology. It would be nice to get some objective holistic input. It cannot be done overnight. The problem we have in America is that everyone wants the quick fix. And if you get the quick fix, it is a disaster. Therefore, we have designed our budget to ensure some stability.
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