A modern Marshall Plan to help US in R&D battle
Congress has before it some unglamorous legislation that is vastly more important than such headline-grabbing temptations as the Korean plane resolution and Interior Secretary Watt's loose lip.Skip to next paragraph
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That legislation (eight separate bills at the moment) sounds dull. Basically it would exempt research and development (R&D) limited partnerships from antitrust action and confirm favorable tax treatment. Hardly the stuff to stir patriotic speeches.
But passage of the best features from these bills could do for American industries a modest version of what the Marshall Plan did for European industry after World War II.
The Marshall Plan provided capital to rebuild and modernize the industrial base of Western Europe. The R&D partnership plan - which could be called the Merrifield Plan after its chief architect, Assistant Secretary of Commerce R. Bruce Merrifield - would help to rebuild and modernize the industrial base of America. It would do so not through General Marshall's massive infusion of government capital, but through stimulating private funding of innovative research and development.
The aim of the Merrifield Plan is to help both high-tech and low-tech US companies compete on the world trade scene. That means competing with such innovators and industrial organizers as Japan. It also means competing with nations that have cheap labor or cheap natural resources with which to take advantage of innovations developed elsewhere.
Dr. Merrifield has already worked with the Semiconductor Research Corporation , a 12-company consortium, on plans for a limited partnership that would develop a 4 million-bit computer memory - a two-generation leap beyond the 256K computer chip expected to be marketed next year. And he has held talks with Lockheed, Boeing, and McDonnell Douglas about a joint effort to design the next-generation jetliner. That process is so complex and filled with risk, he says, that no single company can any longer afford to go it alone. He also sees such older ''smokestack'' industries as steel using R&D partnerships to help them modernize all their techniques. And he says he believes the petrochemical industry and machine plastics industries must continue to innovate or see cheap-resource, cheap-labor countries take over.
The aim of the Merrifield Plan is not to create American monopolies in the world market. Ultimately he sees the R&D partnership legislation helping to expand world trade - and thus helping to wipe out the Damoclean $75 billion in debt hanging over the world economy. The R&D bills would encourage this trade-expansion course instead of trying to save threatened American industries through protectionist tariffs or quotas. The latter approach would worsen world trade as a whole and worsen the debt problem.
The bills now before Congress come from two directions.
On Capitol Hill itself the legislation owes a lot to the so-called ''Atari Democrats'' (who presumably would rather be called the IBM Democrats nowadays, in the wake of Atari's troubles). Its backers also include such Republicans as Sens. Charles McC. Mathias Jr. of Maryland, William V. Roth Jr. of Delaware, and -Warren B. Rudman of New Hampshire. On the Reagan administration side, it is almost entirely the work of Dr. Merrifield, who heads the Productivity, Technology, and Innovation Office of the Commerce Department.
The pragmatic Atari Democrats - such as Sens. Paul E. Tsongas of Massachusetts, Bill Bradley of New Jersey, John Glenn of Ohio, and Gary Hart of Colorado, plus US Rep. Don Bonker of Washington - have tried to tug their party into support of measures like the Merrifield plan in the interest of stimulating trade, new industry, and new jobs.
They have used the Japanese success story as a goad, because antitrust action has been a basic tenet of Democratic faith since early in the century, and exempting any business enterprise is looked on with suspicion. The Merrifield formula also gives R&D partnerships tax-shelter treatment to help them through the red-ink years of research and start-up before a product sells or is licensed. Many Democratic liberals also look at such tax sheltering with suspicion.
The Atari Democrats are fighting a battle, in short, against other more ''liberal'' Democrats (who in this instance are more reactionary) who want to protect American industries and jobs by tariff or quota restrictions.
While the Atari-ites were fighting for the heart of the Democratic Party, Bruce Merrifield was waging a one-man campaign for the attention of the leader of the GOP and his White House staff.
Merrifield's first step was to win support of the knights that guard the antitrust grail - a feat comparable to carrying off the America's Cup to Perth. For nearly a year, beginning in July of 1982, Merrifield worked to convince the tough-minded head of the Justice Department's antitrust division, Bill Baxter, that his plan to stimulate innovation in US industry would not let the dragon of monopoly in the back door. He succeeded. In fact, he gained enthusiastic backing from Baxter's office - and aid in writing the legislation.
Then the White House had to be persuaded to provide more than lip service. Why should this unglamorous bill be given high priority at a time when the Korean plane and education were the big payoff issues?
Again the persuasive Dr. Merrifield carried the field. Now it is up to the Atari Democrats and Atari Republicans to convince their colleagues that this legislation creates a major answer to Japan Inc. and the industrial subsidies of Europe.