Industrial basic research has failed to demonstrate a return on investment that satisfies the ravenous appetite of Wall Street for quarterly earnings growth. So companies have increasingly directed capital to applied research and development, rather than basic invention and innovation.
This is no secret. But what is less well known is that university basic research has withered in many important fields, especially in the physical and information sciences, and engineering. The federal budget deficit is likely to stagnate recent growth in funding medical research.
In short, we are losing our collective will to fund basic science. When the visible fruits of these investments may not pay off for 20 years or more, we tend to forget why we need to make these investments in the first place. These days, shareholders keep stock only about eight months. Is it any wonder that investors have no interest in backing basic research for the long term?
The Department of Defense basic research budget, once the major source of funding for basic research, has been shrinking for more than two decades. We can credit the DOD’s unique funding agency€¦quot;the Defense Advanced Research Projects Agency (DARPA)€¦quot;with creating entire industries in which the U.S. is dominant today such as semiconductors, software, materials sciences and computer networking. Companies such as Sun Microsystems and Cisco Systems would not exist were it not for DOD-supported research conducted at Stanford University more than 25 years ago on the DARPA-net, the precursor to the modern day Internet.
As I see it, the No. 1 priority for the U.S. has to be to get back our spirit of innovation. To innovate, we need a cadre of talented scientists and engineers and an environment that supports the funding of high-risk ideas. Right now, both of these vital ingredients are in decline. Yet innovation is more important than ever to assure our position in the increasingly competitive global marketplace. When countries such as India and China can provide so much cheap labor, it should be obvious that our only competitive advantage is good old-fashioned American ingenuity.
How do we reinvigorate the creative energy that has served our country so well for 200-plus years? Let’s start by making four fundamental, yet simple, changes:
The knowledge we possess today won’t punch our ticket to the new world economy of the future. This is a high-risk flight, with no discount fares. The alternative is to slip into economic irrelevance. We need to ask: Where are we aiming? What destination will we choose?
William R. Brody is president of Johns Hopkins University, the co-founder of three medical device companies and co-chair of the Council on Competitiveness’s National Innovation Initiative.
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