THE major economic vulnerability in the United States is our crumbling industrial infrastructure. No matter how brilliant our science, how clever our engineering, how modern our manufacturing technology, or how creative our marketing, without a healthy infrastructure our products won't meet the competition. As a result, companies will flee our shores.
Industrial infrastructure underpins the workings of industry. It includes transportation for moving goods and people; communications and information; energy supplies; financial systems that allow access and movement of capital; education to build a literate work force; a regulatory apparatus that ensures national benefits; a reasonable societal cost; and means to maintain the health and safety of the work force. Such systems free entrepreneurs. Without a world class industrial infrastructure, US companie s cannot compete well.
Infrastructure distinguishes advanced countries. It is uniquely identified with the country. It is a prime attractant for foreign investment and for enticing foreign industry to move to the US. The infrastructure we took for granted in the past has how become our nemesis.
In the past, the federal government clearly recognized its role in building and maintaining this infrastructure. We have an extensive network of interstate highways. We earlier had the most extensive and effective system of rail transport in the world. We opened waterways to navigation throughout the country. We support private agriculture through a government agricultural extension network. We support educational activities at universities and colleges. Our laws and regulations encourage competition.
But US infrastructure has deteriorated. Since the 1960's we have underinvested in it. A recent study shows that federal investments in infrastructure outlays plunged from 24 percent in 1960 to a mere 11 percent in 1990. As a result, we lose tens of billions of dollars every year just in delays caused by overcrowded transport routes.
The Federal Highway Administration reports that nearly half of the nation's 578,000 primary bridges are structurally deficient or functionally obsolete. It also says 40 percent of the vaunted interstate highway system is at best in "fair" condition. As a percent of gross domestic product, the federal investment in infrastructure has declined from 2 percent in 1960 to 1 percent in 1990.
The White House seems only vaguely aware there is a problem. The standard response to calls for increased government investment in infrastructure is the mantra that "government should not pick winners or losers." This confuses investment in infrastructure with intervention in industry's marketplace prerogatives. Because of a lack of foresight, the administration shrinks from a thoughtful role for government.
Along comes Gov. Bill Clinton. He has a technology policy that, while not perfect, goes far beyond what we now have. First, he would put technology in the hand of his vice president - a stroke of genius. Only by such a move can one coordinate the necessary efforts among virtually all departments and agencies and raise these critical issues above bureaucratic turf battle.
His program would build "information superhighways" to address industry's growing needs for information. He would reshape the federal investment in R&D - $70 billion a year - to address national priorities. He would use the national laboratories - institutions that served us well in winning the cold war - to address post-cold war challenges. He would retrain the US work force for technical leadership in the 21st century. And he would establish and revamp programs to redress deficiencies in other elements
of the national infrastructure.
The White House under continuing pressure from Congress and industry, has reluctantly agreed to address "pre-competitive generic critical technologies." It has established several programs along these lines - but underfunded them. It agreed to the establishment of a technology administration in the Department of Commerce but failed to provide it with adequate staff or funds. It created a high visibility technology road show where cabinet members and presidential advisers tout the president's interest in technology. But the administration has given short shrift to any meaningful follow through. Industrial recovery under the Bush administration remains a distant hope. Longer term prospects are catastrophic.
The US urgently needs a technology policy. That policy must identify, set priorities, and determine costs among the national infrastructure needs. A national R&D agenda must be brought into the decision about federal expenditures. This includes an inventory of the nation's technology assets such as the national labs, upgrading the technical literacy and productivity of our work force, providing access to capital, and balancing the benefits of regulation against the cost of achieving the best results for the US.
America's innate entrepreneurial spirit can be revived by rebuilding our industrial infrastructure. So far, Mr. Clinton's proposals are the most encouraging, and exciting, proposals on the table.