How Can America Keep its Lead ?

in Technology Graham Allison and Eric Schmidt argue forcefully for a national effort to preserve America’s technological leadership against a rising China (“China Will Soon Lead the U.S. in Tech,” op-ed, Dec. 8). But we need stronger medicine than they prescribe to “organizeanational response analogous to the mobilization …that won World War II.” Messrs. Allison and Schmidt cite the Innovation and Competition Act, which would spend $50 billion a year over five years on science and technology.

 The federal development budget fell to 0.3% of GDP last year from 0.8% in 1984. More than $100 billion a year of additional funding would be needed to restore the 1984 level. Research isolated from manufacturing isn’t effective. The great inventions of the digital age came from the collaboration of federal agencies (notably Darpa), corporate labs and the factory floor. Manufacturing investment fell to 1% of GDP in 2019 from 2.4% in 1984, and capital stock has stagnated since 2001. 

By my reckoning, manufacturing capital stock is now about $1.5 trillion below the pre-2001 trend. China’s decisive advantage lies in the integration of R&D with manufacturing, mining, logistics and transportation. Messrs. Allison and Schmidt cite China’s lead in 5G coverage, but more challenging is China’s application of 5G to automated ports, industrial robots, smart cities and telemedicine. 

We need a radical revision of the tax code to favor capital-intensive manufacturing rather than capitallight software businesses, and in some cases, e.g., broadband infrastructure, an industrial policy. We also need to train engineers and skilled factory workers, but only 7% of U.S. graduates major in engineering vs. 33% of China’s. We cannot train engineers fast enough to close the gap, so we will need to revise immigration criteria to favor skills. DAVID P. GOLDMAN Deputy editor, Asia Times New York



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