[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
U.S. COMPETITIVENESS:
THE INNOVATION CHALLENGE
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SCIENCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
JULY 21, 2005
__________
Serial No. 109-24
__________
Printed for the use of the Committee on Science
Available via the World Wide Web: http://www.house.gov/science
______
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COMMITTEE ON SCIENCE
HON. SHERWOOD L. BOEHLERT, New York, Chairman
RALPH M. HALL, Texas BART GORDON, Tennessee
LAMAR S. SMITH, Texas JERRY F. COSTELLO, Illinois
CURT WELDON, Pennsylvania EDDIE BERNICE JOHNSON, Texas
DANA ROHRABACHER, California LYNN C. WOOLSEY, California
KEN CALVERT, California DARLENE HOOLEY, Oregon
ROSCOE G. BARTLETT, Maryland MARK UDALL, Colorado
VERNON J. EHLERS, Michigan DAVID WU, Oregon
GIL GUTKNECHT, Minnesota MICHAEL M. HONDA, California
FRANK D. LUCAS, Oklahoma BRAD MILLER, North Carolina
JUDY BIGGERT, Illinois LINCOLN DAVIS, Tennessee
WAYNE T. GILCHREST, Maryland RUSS CARNAHAN, Missouri
W. TODD AKIN, Missouri DANIEL LIPINSKI, Illinois
TIMOTHY V. JOHNSON, Illinois SHEILA JACKSON LEE, Texas
J. RANDY FORBES, Virginia BRAD SHERMAN, California
JO BONNER, Alabama BRIAN BAIRD, Washington
TOM FEENEY, Florida JIM MATHESON, Utah
BOB INGLIS, South Carolina JIM COSTA, California
DAVE G. REICHERT, Washington AL GREEN, Texas
MICHAEL E. SODREL, Indiana CHARLIE MELANCON, Louisiana
JOHN J.H. ``JOE'' SCHWARZ, Michigan DENNIS MOORE, Kansas
MICHAEL T. MCCAUL, Texas
VACANCY
VACANCY
C O N T E N T S
July 21, 2005
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Sherwood L. Boehlert, Chairman,
Committee on Science, U.S. House of Representatives............ 8
Written Statement............................................ 9
Statement by Representative Jerry F. Costello, Member, Committee
on Science, U.S. House of Representatives...................... 9
Written Statement............................................ 10
Prepared Statement by Representative Vernon J. Ehlers, Member,
Committee on Science, U.S. House of Representatives............ 11
Prepared Statement by Representative Michael M. Honda, Member,
Committee on Science, U.S. House of Representatives............ 12
Prepared Statement by Representative Lincoln Davis, Member,
Committee on Science, U.S. House of Representatives............ 12
Prepared Statement by Representative Russ Carnahan, Member,
Committee on Science, U.S. House of Representatives............ 13
Prepared Statement by Representative Todd Tiahrt................. 65
Witnesses:
Mr. Nicholas M. Donofrio, Executive Vice President for Innovation
and Technology, IBM Corporation
Oral Statement............................................... 14
Written Statement............................................ 16
Biography.................................................... 22
Financial Disclosure......................................... 24
Mr. John P. Morgridge, Chairman of the Board, Cisco Systems, Inc.
Oral Statement............................................... 25
Written Statement............................................ 26
Biography.................................................... 31
Financial Disclosure......................................... 32
Dr. William R. Brody, President, The Johns Hopkins University
Oral Statement............................................... 33
Written Statement............................................ 35
Biography.................................................... 41
Financial Disclosure......................................... 42
Discussion....................................................... 51
Appendix 1: Answers to Post-Hearing Questions
Mr. Nicholas M. Donofrio, Executive Vice President for Innovation
and Technology, IBM Corporation................................ 76
Mr. John P. Morgridge, Chairman of the Board, Cisco Systems, Inc. 78
Dr. William R. Brody, President, The Johns Hopkins University.... 79
Appendix 2: Additional Material for the Record
Statement by The Institute of Electric and Electronics
Engineers--United States of America (IEEE-USA)................. 84
U.S. COMPETITIVENESS: THE INNOVATION CHALLENGE
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THURSDAY, JULY 21, 2005
House of Representatives,
Committee on Science,
Washington, DC.
The Committee met, pursuant to call, at 10:05 a.m., in Room
2318 of the Rayburn House Office Building, Hon. Sherwood L.
Boehlert [Chairman of the Committee] presiding.
hearing charter
COMMITTEE ON SCIENCE
U.S. HOUSE OF REPRESENTATIVES
U.S. Competitiveness:
The Innovation Challenge
thursday, july 21, 2005
10:00 a.m.-12:00 p.m.
2318 rayburn house office building
1. Purpose
On Thursday, July 21, 2005, the House Science Committee will hold a
hearing to examine the relationship between federal science and
engineering research and education investments and U.S. economic
competitiveness.
2. Witnesses
Mr. Nicholas Donofrio is Senior Vice President for Technology and
Manufacturing at IBM Corporation.
Mr. John Morgridge is Chairman of Cisco Systems, Incorporated, and
part-time Professor at Stanford University's Graduate School of
Business. From 1988 to 1995, Mr. Morgridge was CEO and President of
Cisco.
Dr. William Brody is the President of The Johns Hopkins University. He
has previously served as Director of the Department of Radiology,
Professor of Electrical and Computer Engineering, and Professor of
Biomedical Engineering at Johns Hopkins, and Radiologist-in-Chief at
The Johns Hopkins Hospital. He is also Co-chair of the Council on
Competitiveness National Innovation Initiative.
3. Overarching Questions
How do federal science and engineering research and
education programs foster innovation and contribute to U.S.
economic competitiveness?
How is the global competitive landscape changing,
particularly with regard to innovation capacity, and what does
this mean for future U.S. economic performance? What are the
principal innovation-related challenges U.S. businesses face in
terms of competing in the global economy?
How can research and development (R&D) and math,
science, and engineering education and training better
contribute to the Nation's innovation system and the U.S.
competitive position? What specific steps should the Federal
Government take to ensure that the U.S. remains the world
leader in innovation?
4. Brief Overview
The importance of a strong scientific and
technological enterprise as a primary factor in driving
economic growth is well-established. Substantial and sustained
U.S. investments in research and education over the last 50
years spawned an abundance of technological breakthroughs that
transformed American society and helped the U.S. to become the
world's dominant economy. Economists estimate that these
technological advances have been responsible for up to half of
U.S. economic growth since the end of World War II. The
relationship between innovation and economic growth has only
grown in recent years as the world shifts to an increasingly
knowledge-based economy.
While the U.S. continues to lead the world in
innovation capacity--R&D spending, number of scientists and
engineers, scientific output, etc.--recent indicators of the
level of U.S. support for research relative to other countries
show that this lead may be slipping. Overall U.S. federal
funding for R&D as a percentage of gross domestic product (GDP)
has declined significantly since its peak in 1965, and the
focus of this R&D has shifted away from the physical sciences,
mathematics, and engineering--the areas of R&D historically
most closely correlated with innovation and economic growth.
At the same time, other nations--particularly
emergent nations such as China and India--have recognized the
importance of innovation to economic growth, and are pouring
resources into their scientific and technological
infrastructure, rapidly building their innovation capacity and
dramatically increasing their ability to compete with U.S.
businesses on the world stage.
It has become increasingly apparent that the growing
innovation capacity of foreign competitors, combined with the
rise of the global economy and a relative erosion of federal
support for innovation in the U.S., could present a long-term
challenge to U.S. economic competitiveness.
As a result, some industry and academic leaders have
raised concerns that U.S. Government policy has been slow to
react to the rapidly changing competitive landscape. In
particular, calls from U.S. industry for a revitalization of
the U.S. innovation system have become louder and more
frequent. Numerous business associations representing nearly
every industry sector are now calling on the Federal Government
to respond to the competitiveness challenge by increasing
investments in the science and engineering research and
education.
5. Background
History of U.S. R&D Funding
Prior to World War II, the private sector funded most research and
development activity in the U.S. Federal Government support was
uncoordinated and targeted toward solving a small number of specific
problems. The onset of the war led to a substantial (and successful)
investment and effort to harness science and technology to meet the
challenges of the war. In 1945, President Roosevelt's science advisor,
Vannevar Bush, published a seminal report entitled Science: the Endless
Frontier, which argued that continued and expanded public support for
long-term, fundamental scientific research was as an important of
investment in peacetime as it was in wartime, noting that building the
knowledge base would ultimately lead to accelerated innovation and
greater future economic growth.
In response to the report, Congress made support for civilian
fundamental research a national priority, creating the National Science
Foundation (NSF) in 1950. The Soviet launch of Sputnik in 1957 further
broadened federal support for science and technology, resulting in the
creation of the National Aeronautics and Space Administration (NASA)
and significant spending increases on R&D and math, science, and
engineering education. Another important response to Sputnik was
passage of the National Defense Education Act in 1958, which provided
unprecedented resources for math and science education at the
elementary, secondary, and post-secondary levels. Together these events
led to a dramatic shift in the Federal Government's approach to funding
research and education. In 1935, the Federal Government support for R&D
comprised only 13 percent of overall U.S. expenditures. By 1962, the
federal portion had risen to 70 percent. Today, the federal portion has
declined to roughly 30 percent, in part because of increased
development funding by the private sector.
Role of R&D in Innovation
These efforts placed the U.S. at the forefront of innovation by
building a massive U.S. R&D enterprise and educating the next
generation of scientists and engineers. Ultimately, this paid
significant dividends for the Nation. While economists are not able to
precisely determine the economic impact of federal support for R&D, the
advancements resulting from such support have undeniably transformed
every aspect of American life. Computers, the Internet, lasers, jet
aircraft and modern telecommunications are just a few examples of
products made possible by federal R&D investments since World War II.
6. Issues
Overall Federal Support for R&D
The amount of the country's overall wealth devoted to federal R&D
has declined significantly since the post-Sputnik surge in support for
R&D. According to Office of Management and Budget statistics, in 1965,
funding for R&D as a percentage of GDP (measured as outlays), also
known as R&D intensity, was slightly over two percent (Chart 1). In
2005, it is estimated to be 1.07 percent.
While this ratio has recently begun to increase again, turning
upward over the last five years, the majority of those increases have
gone toward short-term defense development and homeland security
applications. For example, the Department of Defense (DOD) R&D
increases alone--most of which have supported development projects that
have very little impact on innovation or broader economic development--
has accounted for almost 70 percent of the overall R&D increases of the
last five years. Of the remaining increases, 75 percent has gone to the
National Institutes of Health (NIH) and the Department of Homeland
Security (DHS). At $71 billion and $29 billion, respectively, the R&D
budgets of DOD and NIH now account for over 75 percent of all federal
R&D. Meanwhile, funding for the physical sciences and engineering--the
areas historically most closely associated with innovation and economic
growth--have been flat or declining for the last 30 years.
The increased emphasis on short-term development at the expense of
longer-term basic and applied research, as well as the emphasis on
defense and biomedical R&D spending, has led many in industry and
academia (as well as the Science Committee) to question whether federal
R&D priorities are appropriately balanced to maximize innovation and
ensure long-term economic competitiveness.
Compounding these concerns, the long-term outlook for the federal
budget does not favor future increases in discretionary spending
(through which almost all R&D is funded). Absent major policy changes,
the growth in mandatory federal spending--primarily for health and
retirement benefits and payments on the national debt interest--will
demand a significantly greater share of the government's resources.
Shift of Private Sector R&D
During the heyday of the corporate research laboratory in the
middle decades of the 20th century, U.S. corporate laboratories
supported all stages of R&D, from knowledge creation to applied
research to product development, and were quite successful in their
efforts to nurture innovation. The most notable example of this was
AT&T's Bell Laboratories, which grew to be one of the world premier
research organizations of the last century, developing numerous
breakthrough technologies that changed American life, including
transistors, lasers, fiber-optics, and communications satellites.
Researchers at Bell Labs and other corporate laboratories were eligible
for, and received, grants from federal research agencies such as NSF
and DOD, but they received core support from the parent company and
they conducted basic and applied research directed toward developing
technology relevant to the company's business.
While overall growth of industry-funded R&D has remained strong in
recent years, the focus of this R&D has shifted significantly away from
longer-term basic research in favor of applied research and development
more closely tied to product development. Because of market demands
from investors to capitalize on R&D quickly, large corporate
laboratories of the Bell Labs model are increasingly rare (notable
exceptions include companies such as IBM and GE). Instead, corporations
now focus research projects almost exclusively on lower-risk, late-
stage R&D projects with commercial benefits, leaving the Federal
Government as the predominant supporter of long-term basic research.
Increasing Competitiveness of Foreign Countries
While trends of support for the innovation system in the U.S. have
showed signs of slowing and even eroding, other nations are committing
significant new resources to building their science and technology
enterprises. More than one-third of OECD (Organization for Economic
Cooperation and Development) countries have increased government
support for R&D by an average rate of over five percent annually since
1995. The European Union has recently established a target to achieve
EU-wide R&D intensity of three percent of the EU economy by 2010. (By
comparison, the current U.S. R&D intensity, public and private sector
combined, is 2.6 percent of GDP.) Similarly, individual nations,
including South Korea, Germany, the U.K. and Canada, have recently
pledged to increase R&D spending as a percentage of GDP.
However, no nation has increased its support for innovation as
dramatically as China. It has doubled its R&D intensity from 0.6
percent of its GDP in 1995 to 1.2 percent in 2002 (this during a time
of rapid GDP growth). R&D investments in China by foreign corporations
have also grown dramatically, with U.S. investments alone increasing
from just $7 million in 1994 to over $500 million in 2000. China is now
the third-largest performer of R&D in the world, behind only the U.S.
and Japan.
The increased innovation capacity of other countries is also
becoming evident in output-based R&D benchmarks. For example, the U.S.
share of science and engineering publications published worldwide
declined from 38 percent in 1988 to 31 percent in 2001, while Western
Europe and Asia's share increased from 31 to 36 percent and 11 to 17
percent, respectively. Similar trends have occurred in the area of U.S.
patent applications and citations in scientific journals.
Education and Workforce Issues
While the supply and demand of future scientists and engineers is
notoriously difficult to predict, most experts believe that the
transition to a knowledge-based economy will demand an increased
quality and quantity of the world's scientific and technical workforce.
As is the case with R&D figures, trends in the distribution of the
world's science and engineering workforce are also unfavorable to long-
term U.S. competitiveness.
The world is catching up and even surpassing the U.S. in higher
education and the production of science and engineering specialists.
China now graduates four times as many engineering students as the
U.S., and South Korea, which has one-sixth the population of the U.S.,
graduates nearly the same number of engineers as the U.S. Moreover,
most Western European and Asian countries graduate a significantly
higher percentage of students in science and engineering. At the
graduate level, the statistics are even more pronounced. In 1966, U.S.
students accounted for approximately 76 percent of world's science and
engineering Ph.D.s. In 2000, they accounted for only 36 percent. In
contrast, China went from producing almost no science and engineering
Ph.D.s in 1975 to granting 13,000 Ph.D.s in 2002, of which an estimated
70 percent were in science and engineering.
Meanwhile, the achievement and interest levels of U.S. students in
science and engineering are quite low. According to the most recent
international assessment, U.S. twelfth graders scored below average and
among the lowest of participating nations in math and science general
knowledge, and the comparative data of math and science assessment
revealed a near-monopoly by Asia in the top scoring group for students
in grades four and eight. These students are not on track to study
college level science and engineering and, in fact, are unlikely ever
to do so. Of the 25-30 percent of entering college freshmen with an
interest in a science or engineering field, less than half complete a
science or engineering degree in five years.
All of this is happening as the U.S. scientific and technical
workforce is about to experience a high rate of retirement. One quarter
of the current science and engineering workforce is over 50 years old.
At the same time, the U.S. Department of Labor projects that new jobs
requiring science, engineering and technical training will increase
four times higher than the average national job growth rate.
Industry Concerns and Reports
As a result of the aforementioned trends, U.S. businesses have
become increasingly vocal about concerns that the U.S. is in danger of
losing its competitive advantage. In an effort to call attention to
these concerns, several industry organizations have independently
produced reports specifically examining the new competitiveness
challenge and recommending possible courses of action to address it.
Prominent among these efforts is the National Innovation Initiative
(NII), a comprehensive undertaking by industry and university leaders
(including those representing IBM, Cisco, and The Johns Hopkins
University) to identify the origins of America's innovation challenges
and prepare a call to action for U.S. companies to ``innovate or
abdicate.'' The December 2004 NII final report, Innovate America:
Thriving in a World of Challenge and Change, intends to serve as a
roadmap for policy-makers, industry leaders, and others working to help
America remain competitive in the world economy.
Other industry associations that have also produced recent reports
include AeA (formerly the American Electronics Association), the
Business Roundtable, Electronic Industries Alliance, National
Association of Manufacturers, and TechNet. While the companies and
industry sectors represented by these organizations varies widely, one
general recommendation was common to all of the reports: the Federal
Government needs to strengthen and re-energize investments in R&D and
science and engineering education.
7. Witnesses Questions
The witnesses were asked to address the following questions in
their testimony:
Questions for Mr. Donofrio
What role does innovation play in bolstering U.S.
competitiveness?
What principal innovation challenges do your company
and its industry sector face in terms of competing in the
global economy?
How can research and development and math, science,
and engineering education and training better contribute to the
strength of the Nation's innovation system and to the U.S.
competitive position?
What should the Federal Government be doing to
strengthen the Nation's innovation system, particularly with
regard to federal programs to support research and technical
workforce development?
Questions for Mr. Morgridge
What role does innovation play in bolstering U.S.
competitiveness?
What principal innovation challenges do your company
and its industry sector face in terms of competing in the
global economy?
How can research and development and math, science,
and engineering education and training better contribute to the
strength of the Nation's innovation system and to the U.S.
competitive position?
What should the Federal Government be doing to
strengthen the Nation's innovation system, particularly with
regard to federal programs to support research and technical
workforce development?
Questions for Dr. Brody
What role does innovation play in bolstering U.S.
competitiveness?
What principal innovation challenges does the U.S.
face in terms of competing in the global economy?
How can research and development and math, science,
and engineering education and training better contribute to the
strength of the Nation's innovation system and to the U.S.
competitive position?
What should the Federal Government be doing to
strengthen the Nation's innovation system, particularly with
regard to federal programs to support research and technical
workforce development?
Chairman Boehlert. The hearing will come to order. I want
to welcome everyone here today to hear from our witnesses, who
are true captains of industry and intellectual leaders.
The reason for this hearing should be clear. We want to
send a message. If we don't invest today in science,
technology, and education, then our economy simply will not
continue to thrive. Happily, we have some key allies in
Congress promoting this message, such as Chairman Frank Wolf on
the Appropriations Committee, the Chairman of the subcommittee
of jurisdiction, and his fellow appropriator, John Culberson,
but we have more work to do to ensure that all of Washington
understands what is at stake.
We used to be so far ahead of everyone else that when we
looked around, we couldn't find the people in second place.
Guess what? They are breathing down our neck now. I like being
preeminent. I like being number one. We have got our work cut
out for us to maintain that position. We live in financially
constrained times in Washington. The jockeying for federal
funds gets more intense each year, and most of us have scars to
prove it. We need more forceful and more vocal advocates, both
inside and especially outside of government, if research and
education are to get the attention they need.
Today's hearing is just one effort among many to raise the
profile of these issues. Many associations have gone into high
gear, and I want to draw particular attention to the National
Innovation Initiative of the Council on Competitiveness, which
is now moving into a legislative stage. Also, we hope the
Innovation Summit this fall, which Dr. Vern Ehlers, our
distinguished colleague on the Committee, and a scientist in
his own right, we are working on this together, to put together
with industry groups, thanks to Chairman Wolf, that will
galvanize the type of support we need for this most important
and most urgent mission we are upon.
This is a critical time for research and education, as
Congress and the Administration are working on both the Fiscal
2006 and 2007 budgets. We need to act now if future generations
are to enjoy the standard of living that leaders like our
witnesses today have brought to the United States. And I remind
people all the time of so-called glory days of the '90s. Ten
consecutive years, quarter after quarter, year after year,
growth in our economy. More Americans employed than ever
before. Guess what? That was a technology-driven era, and we
have got to replicate that in this generation and in the next
generations to come. And we are going to succeed if we do it
right, and we are going to fail if we fail to recognize the
importance of the basics, like K-12 math and science education.
Like federal investment in the science enterprise.
And I remind everybody of this saying right up here on the
wall: ``Where there is no vision, the people perish.'' We are
not going to perish, because of the work that we are doing on
this committee, and because of the outstanding leadership we
enjoy from people like our distinguished panel of witnesses
today.
With that, let me give the microphone to another very
distinguished American, my colleague from Illinois, Mr.
Costello.
[The prepared statement of Chairman Boehlert follows:]
Prepared Statement of Chairman Sherwood L. Boehlert
I want to welcome everyone here today to hear from our witnesses
who are true captains of industry and intellectual leaders.
The reason for this hearing should be clear; we want to send a
message; if we don't invest today in science, technology, and education
then our economy simply will not continue to thrive. Happily, we have
some key allies in Congress in promoting this message such as Chairman
Frank Wolf and his fellow appropriator John Culberson. But we have more
work to do to ensure that all of Washington understands what's at
stake.
We live in financially constrained times in Washington. The
jockeying for federal funds gets more intense every year. We need more
forceful and more vocal advocates, both inside and especially outside
of government if research and education are to get the attention they
need.
Today's hearing is just one effort among many to raise the profile
of these issues. Many associations have gone into high gear, and I want
to draw particular attention to the National Innovation Initiative of
the Council on Competitiveness, which is now moving into a legislative
stage. Also, we hope the Innovation Summit this fall which Dr. Ehlers
and I are working to put together with industry groups, thanks to
Chairman Wolf, will also galvanize support.
This is a critical time for research and education as Congress and
the Administration are working on both the fiscal 2006 and 2007
budgets. We need to act now if future generations are to enjoy the
standard of living that leaders like our witnesses today have brought
to the United States.
Mr. Costello. Mr. Chairman, thank you, Mr. Chairman. I have
a full statement that I will enter into the record. I do have
brief comments that I would like to make.
First, let me thank you for calling this hearing, and let
me join you in welcoming our witnesses here this morning, to
explore the Nation's innovation capabilities and its
competitiveness in the global economy.
There are many examples of how the excellence of our
science and technology enterprise has played a central role in
our economic competitiveness. To stay in the lead, as you
indicated in your opening statement, as the rest of the world
makes increasing strides to catch up, we must make the
appropriate investments in research and development, and in the
education of new generations of scientists and engineers.
Unfortunately, the Administration has not placed a high
priority on research investments, particularly for non-defense
research. The best measure of federal support for the research
that underpins innovation and creation of advanced technology
is the federal science and technology budget. The
Administration proposed a 1.4 percent spending reduction in its
budget for Fiscal Year 2006. While the House passed the
appropriation bills increasing this funding level, the increase
is still below the inflation level. If we continue to chip away
at the research base, we jeopardize our economic strength and
technological competitiveness for the long-term.
Of perhaps even greater concern for the long-term is
whether the correct policies are in place to ensure that we
have the type of scientists and engineers needed in the future.
Ranking Member Gordon and myself have recently organized and
held in this very room a roundtable discussion to look at
supply and demand of science and technology workforce,
including the effects of offshoring.
Several things became apparent as a result of that
roundtable discussion. First, there is no straightforward
answer on whether there is a shortage or a surplus now, and
there is no accurate way to predict future demand in this
country. It is also very clear that we have entered a new era
of international competition, in which our economic competitors
are producing increasing numbers of well-trained scientists and
engineers, and that the U.S. companies are going offshore for
their low-cost technical talent.
The question then is what kind of skills will enable U.S.
scientists and engineers to differentiate themselves from, and
thereby command higher salaries than, foreign scientists and
engineers. With unemployment levels in engineering at historic
highs and U.S. companies announcing that they are reducing
their professional workforce, it is difficult to see how these
careers will attract the most talented young people, our
American students, who have other career options.
These are difficult issues that go beyond simple solutions,
such as more funding for R&D, or training more scientists and
engineers. We need more information on the factors that lead to
the offshoring of science and engineering jobs, and on the
impact of this trend on the career choices of our students.
It does little good to invent new technologies if the
manufacturing and production is done offshore, yet we are
hearing that in venture capital invested high tech firms, that
this is exactly what is happening. Developing successful
policies to address these issues will require a frank and open
discussion between industry, government, and universities.
Mr. Chairman, I look forward to hearing the testimony of
the witnesses here today, in particular, as to how they think
that innovation will create more jobs in the United States, as
well as other important issues. And again, I thank you for
calling this hearing this morning, and look forward to hearing
our witnesses.
[The prepared statement of Mr. Costello follows:]
Prepared Statement of Representative Jerry F. Costello
Mr. Chairman, I am pleased to join you in welcoming our witnesses
this morning to this hearing to explore the Nation's innovation
capabilities and its competitiveness in the global economy.
No one serving on the Science Committee can fail to appreciate the
relationship between innovation economic strength and security.
We have had many opportunities to review through the Committee's
hearings how the excellence of our science and technology enterprise
has played a central role in our economic competitiveness.
To stay in the lead in competitiveness, as the rest of the world
makes increasingly greater strides to catch up, requires that we
progress even faster. That means making appropriate investments in
research and development and in the education of new generations of
scientists and engineers.
And I want to stress the word appropriate, we can't expect to re-
cycle the policies of twenty years ago and expect them to work today.
Unfortunately, this Administration has not placed a high priority
on research investments, particularly for non-defense research.
The best measure of federal support for the research that underpins
innovation and creation of advanced technology is the Federal Science
and Technology budget.
The Administration proposed a 1.4 percent spending reduction in its
budget for fiscal year 2006. While the House-passed appropriation bills
have turned this into an equivalent increase--even so, the increase
will trail the inflation level.
If we continue to chip away at the research base, we jeopardize our
economic strength and technological competitiveness for the long-term.
Of perhaps even greater concern for the long-term is whether the
correct policies are in place to ensure we have the type of scientists
and engineers needed in the future.
Ranking Member Gordon and I recently organized a roundtable
discussion to look at supply and demand for the science and technology
workforce, including the effects of off-shoring.
Several things became clear from that event. First, there is no
straightforward answer on whether a shortage or surplus now exists, and
there is no accurate way to predict future demand. Indeed, one of the
witnesses pointed out that past predictions of shortages of scientists
and engineers have been notoriously wrong.
It is also clear we have entered a new era of international
competition in which our economic competitors are producing increasing
numbers of well trained scientists and engineers and that U.S.
companies are going off-shore to avail themselves of this low-cost
technical talent.
The question then is what kinds of skills will enable U.S.
scientists and engineers to differentiate themselves from, and thereby
command higher salaries than, foreign scientists and engineers. With
unemployment levels in engineering at historic highs and U.S. companies
announcing that they are reducing their professional work force it is
difficult to see how such careers will attract the most talented
American students, who have other career options.
These are difficult issues that go beyond simple solutions, such as
fund more R&D or train more scientists and engineers. For instance, we
need more information on the underlying factors that lead to the off-
shoring of science and engineering jobs and on the impact of this trend
on the career choices of our students.
It is timely to explore what policy options are available to ensure
the Nation maintains its current prominence in technology and
innovation. In addition, we need to address how innovation will create
more jobs in the U.S.
It does no good to invent new technologies if the manufacture and
production is done off-shore. Yet we are hearing that in venture
capital invested high-tech firms that this is exactly what is
happening.
Developing successful polices to address these issues will require
a frank and open discussion between industry, government and
universities.
I look forward to discussing these matters with our distinguished
panel, and I thank the Chairman for convening this hearing.
[The prepared statement of Mr. Ehlers follows:]
Prepared Statement of Representative Vernon J. Ehlers
As a firm believer that innovation is the key to U.S. economic
growth, vitality, and national security, I am pleased that the Science
Committee is holding this important hearing. One of my top priorities
in Congress has been to educate other Members about innovation and
foster policies that enhance it. The United States is on the cutting
edge of global competition because of our past investments in science
and technology. Whether we remain in that position depends on how well
we understand the drivers of innovation and how we choose to respond.
There are many ways we can foster innovation and competitiveness at
the national level, but some are less obvious than others. I have
consistently advocated for two main goals: increased funding across the
federal agencies that support fundamental research; and strengthening
math and science education in our current and future workforce.
Economists attribute more than half the economic growth in the past 50
years to technological innovation. Federally funded basic research has
been responsible for groundbreaking technologies, such as magnetic
resonance imaging (MRI), the global positioning system (GPS), human
genome mapping, fiber optics, lasers, and the Internet. Bolstering our
workforce requires improving current training programs and
strengthening core math and science teaching and curricula throughout
our K-12 system. In the House I co-chair the Science, Technology,
Engineering and Math (STEM) Education Caucus, a member organization
that works to support STEM Education at all levels. Improving the
science literacy of our current and future workforce will ensure the
quality of our intellectual infrastructure. In addition to the ways I
have mentioned, we must continue to be aware of other areas that impact
the innovation process and maintain Congressional awareness and support
of those areas.
I have been working on these issues for some time now. In 2002, as
Chairman of the Science Committee's Subcommittee on Environment,
Technology and Standards, I held a hearing about innovation in
manufacturing. Following that hearing I developed the Manufacturing
Technology Competitiveness Act, which passed the House overwhelmingly
in the 108th Congress. Unfortunately the Senate did not have time to
take it up last year, but we are at it again even stronger this time
around and expect this year's bill, H.R. 250, to be on the House Floor
soon. The Manufacturing Technology Competitiveness Act authorizes the
highly successful Manufacturing Extension Partnership program. This
federal-State partnership program, run by the National Institute of
Standards and Technology (NIST), provides expert advice to small and
medium-sized manufacturers who want to improve their processes to
remain competitive. My manufacturing bill also establishes
collaborative research programs at NIST that would foster partnerships
between small and large manufacturers, academic researchers, and other
partners to do manufacturing-specific research.
I know that today's witnesses will share personal experiences and
creative ideas on ways we can promote an environment of innovation to
maintain U.S. competitiveness across all sectors of the economy. I am
happy to see the Committee has invited representatives of both the
business and the academic communities, because there are no ``islands
of innovation'' and I believe new partnerships between traditionally
separate communities will be important for future innovation. I look
forward to learning from all of our witnesses how we might make
government, industry, academia and others work together as a team for
creative innovation.
[The prepared statement of Mr. Honda follows:]
Prepared Statement of Representative Michael M. Honda
Chairman Boehlert and Ranking Member Gordon, thank you for holding
this hearing today with these distinguished witnesses to address the
vitally important issue of U.S. competitiveness in the global economy
and the role of innovation in maintaining the U.S. preeminence.
I represent from Silicon Valley, where tens of thousands of high
tech workers have lost their jobs over the last few years. Many of
these jobs have moved overseas, a fate formerly only associated with
unskilled jobs. These are highly skilled jobs, though, held by highly
educated people. We can't just ``retrain'' them to move up into higher
skilled jobs these jobs are at the top rungs of the engineering ladder.
This aspect of the problem makes it a very difficult one to tackle.
One thing that has troubled me about the debate over out-sourcing
is that it has been portrayed as an ``us vs. them'' confrontation,
pitting the U.S. against other nations, usually Asian ones such as
India, China, or Taiwan. I disagree with this notion, however, because
the truth is that American executives running American companies are
making decisions to move jobs to other countries. They are not coming
in and ``stealing our jobs,'' we are giving those jobs away.
Why are we doing that? It seems to be a complex question. Simple
business sense tells us that there must be something about the demands
placed on companies by American consumers that is driving this out-
sourcing. And there must be some benefit that companies see to making
the move.
Until we can identify those factors, we will not be able to figure
out what needs to be done. We will be left to flail about, trying
stopgap measures that do not really address the root of the problem.
In the end, it looks like either we need to stop the jobs from
moving out of the country, become resigned to the fact that these top
tier technology jobs going away and accept a workforce shift to the
service sector, or maybe create whole new high tech fields in which the
U.S. leads the rest of the world, so that the jobs need to stay here.
I am not sure how we are going to do that, since I do not know the
underlying factors that have led to the problem. I hope that our expert
witnesses can help us understand some of the causes behind the trends
and then develop some policies to address some of these questions.
[The prepared statement of Mr. Davis follows:]
Prepared Statement of Representative Lincoln Davis
Thank you, Mr. Chairman and Ranking Member, for holding today's
hearing. Many say the U.S. is losing its competitive edge when it comes
to technology and innovation. In Tennessee's Fourth Congressional
District, I see jobs being lost or jobs going overseas, where labor is
cheaper. At the same time, I see other nations investing more heavily
in research and technology than we are. Other countries are surpassing
the U.S. when it comes to certain areas of technology like computer
chip manufacturing or technology customer service.
How can the U.S. regain its competitive edge? I believe that the
Federal Government should support math and science education in our
public schools to encourage more children to pursue science and
technology careers.
I also believe we should look carefully at our national budget and
find a way to maintain balance, providing cost-effective health care
and Social Security, while also giving adequate funding to science and
technology research.
Most federal research dollars go to university scientists, who are
training tomorrow's generation of innovators. We must fund federal
research in a balanced way so that the physical sciences receive the
same level of support as the biomedical sciences did a few years ago.
I am interested in hearing ideas from today's witnesses on how the
U.S. can regain its competitiveness. Thank you, Mr. Chairman. I yield
back the balance of my time.
[The prepared statement of Mr. Carnahan follows:]
Prepared Statement of Representative Russ Carnahan
Mr. Chairman and Mr. Ranking Member, thank you for hosting this
very important hearing today.
Many have noted recently that manufacturing plants are shifting
off-shore, but we must also recognize that high-end engineering jobs
are being moved off-shore. Additionally, U.S. companies are moving to
establish industrial research labs abroad.
Like many other Members sitting here today, I believe strongly in
promoting science and engineering education. We have a tremendous
responsibility as legislators to recognize that our nation is no longer
leading the pack in STEM (science, technology, engineering and math)
performance and that related job markets are shifting overseas.
Deciding if and how we will remedy this situation is our greatest
challenge.
Mr. Donofrio, Mr. Morgridge, and Dr. Brody, thank you for your
willingness to join us. I am eager to hear your testimony and your
recommendations.
Chairman Boehlert. Thank you very much, Mr. Costello, and
our panel today is composed of three very distinguished people
in their own right, and I want to thank each of you for serving
as instructors for this committee. And we do something on this
committee that some people might find a little bit rare. We
sort of sit back and listen. We invite people like you, who
have distinguished records in the real world, if you will. We
have Nobel laureates. And we sit back and we listen, and we
hope to learn, and we respect you for your willingness to serve
as guides for us, and to help inform us.
In the final analysis, Congress is going to be a success or
failure based upon the direction in which we take this country,
and we are not going to do it in the dark of the night, on the
back of an envelope, in some lobby. We are going to do it in
open hearings, where we get the best guidance we can get.
And with that, let me present to my colleagues and to the
audience our distinguished witnesses: Mr. Nicholas Donofrio,
Executive Vice President for Innovation and Technology for the
IBM Corporation; Mr. John Morgridge, Chairman of Cisco Systems,
Incorporated; and Dr. William Brody, President of The Johns
Hopkins University.
Thank you very much, gentlemen, for appearing here. And we
would ask you to summarize your statements as much as you can,
which would provide greater opportunity for the interaction
here. We ask the obvious questions, and then we sit back and
say, hmm. You will notice we have a timer there, and Mr.
Morgridge, in front of you, you are all veterans. You have been
through this drill before. The chair is not arbitrary. I am not
going to cut you off in mid-sentence or even mid-thought or
mid-paragraph, but we would try to summarize it, so that we can
get to the exchange here.
With that, Mr. Donofrio, you are up first.
STATEMENT OF NICHOLAS M. DONOFRIO, EXECUTIVE VICE PRESIDENT FOR
INNOVATION AND TECHNOLOGY, IBM CORPORATION
Mr. Donofrio. Good morning, Mr. Chairman, and distinguished
Members of the Committee. My name is Nick Donofrio, and it is
my pleasure to be with you today. At the outset, I extend my
most sincere gratitude to Chairman Boehlert for his personal
leadership, and to the committee for its longstanding support
of science, technology and innovation.
My testimony this morning is focused on the principal
innovation challenges we faced in IBM and within the
information technology industry, and I will also share my views
on the role innovation plays in the competitiveness of the
United States of America.
IBM's transformation over the past few years has been
driven by new global marketplace realities and opportunities
which, taken together, have shifted our focus from the
development and manufacturing of products and technologies to
the robust application and integration of technology. The shift
is enabling us to deliver new value to our clients around the
world as we align around a single business model--innovation.
Innovation that is collaborative, open, multi-disciplined, and
global.
For the information technology industry and for the United
States of America's economy, a new era of growth is beginning,
due in large part to the emergence of a new computing
architecture and the new business models it enables.
The change is fundamentally driven by the convergence of
three historic developments. The first is network ubiquity, as
evidenced by the Internet, which is fast becoming the world's
operational infrastructure. The second is by open standards,
widely adopted technical and transactional specifications that
are spurring the creation of new kinds of products and
services. And the third, the emergence of the network ubiquity
and open standards has been enabled by a new business design
that allows for the enablement of institutions to integrate
their business operations horizontally, and respond rapidly to
business challenges, responding in a way that we at IBM call
on-demand.
Implementing these fundamental concepts enables businesses,
governments, and institutions of higher learning to innovate in
new and entirely different ways, and it is affording new growth
opportunities in both economic and societal activity. Seizing
the opportunities demands unique foresights and capability, and
nations must choose carefully. Investment, talent, and
infrastructure are increasing everywhere, making the world more
tightly integrated. For companies in a broad range of
industries, as well as governments, the choice is either
innovation or commoditization. Institutions may choose to be
innovative by investing in managing, leveraging intellectual
capital, or they can be commodity players, by differentiating
themselves through low price, economies of scale, and efficient
distribution of other parties' intellectual capacity and
capability.
The choice will impact nations as well as industries. Only
by understanding, anticipating, and managing the forces of
innovation and commoditization can we properly address the
challenges to national economic prosperity. So, how do we, as a
nation, capitalize on the most important developments in
technology, infrastructure, and business organization? How do
we translate those developments into the differentiators and
distinguishers for American prosperity. In short, how do we
optimize for innovation?
Today, innovation is the arbiter of national
competitiveness. We must recognize innovation as a national
priority, and adopt innovation as a core strategy for the 21st
century knowledge-based economy. Reaching higher levels of
innovation is complex, and since the basic idea is to transform
ideas and intellectual property into new value, the private
sector is the primary agent.
Still, the Federal Government has enormous influence. That
is because innovation no longer is driven solely by investments
in research and development. It must be viewed from both the
supply and demand sides. Policy and infrastructure create a
national platform that can accelerate or impede the pace and
quality of innovation. The Council on Competitiveness National
Innovation Initiative calls for the United States to develop an
integrated, coherent approach to innovation across a number of
policy areas. The vitality of the ecosystem will stimulate
innovation.
We cannot focus only on the discrete components, but on the
entire ecosystem. A proper mix of policy measures will make the
United States a more attractive and fertile environment for
innovation investment. And I have included in my formal,
written statement a number of policies I believe will have the
greatest potential for national innovation success. Allow me
just to cite a few.
Our country needs the world's deepest collection of
business and technological innovators, able to create and apply
intellectual capital; that is what defines competitive
advantage. Workforce skills must include both technology and
strategic expertise. Equally important, our nation's structural
transition to a services economy needs to be supported by a
deepened understanding of how services can support and interact
with manufacturing and other, more traditional activities. The
services sector today accounts for the bulk of employment in
the United States, and in other high wage economies. More than
75 percent of the United States gross domestic product is
services-based, and with the exception of India and China, at
least half the workforce in every high wage country is
concentrated in the services sectors.
Students also must be prepared to become innovators.
Education must be transformed and realigned, and reform must
start with the curriculum. For example, creative and
integrative instruction can be achieved through the development
of problem-based learning, which is particularly helpful in the
development of scientific, mathematical, and technical talent.
Our nation benefits greatly from a diversity of talent, a
diversity of culture, and a diversity of thought and insight
from all over the world. Innovation does not happen in
isolation. It is a multi-disciplined and multicultural event.
We need national immigration policies that enable the United
States to attract and retain the best minds in the world.
Unlocking innovation demands that we rethink our ideas also
about intellectual property. While the ownership of
intellectual property is an essential driver of innovation,
technology advances are often dependent on shared knowledge,
open standards, and collaborative innovation. The best
intellectual property framework balances both proprietary and
open approaches.
I will close now with these brief thoughts. Economies
around the world are replicating the characteristics that have
given Western nations such an advantage. Many companies in
rapidly developing nations, such as China, Indian, Brazil, and
Russia, are leapfrogging to new computing architectures and
business designs, and those countries are developing very
specific innovation strategies and higher levels of skill. As
the United States considers its next steps, I urge that any
dialogue on innovation be made in a global context.
The forces of the global economy of integration and
advances in technology are presenting complex challenges. The
status quo simply cannot be an option. Government, business,
academia and labor must work together to create a climate and a
culture to facilitate cross-border, cross-organizational, and
cross-disciplinary collaboration. That is the only environment
for innovation to thrive in.
America has a long and proud history of recognizing when
change is required, and seizing upon that opportunity, and
rising to the challenge. We are at such an inflection point
today. I am very enthusiastic about our opportunities, and
about our outlook for prosperity, and I thank you very much for
listening.
[The prepared statement of Mr. Donofrio follows:]
Prepared Statement of Nicholas M. Donofrio
Good morning, Mr. Chairman and Members of the Committee. Thank you
for inviting me to join you today. My name is Nicholas Donofrio and I
am the executive vice president for Innovation and Technology in the
IBM Corporation. I appreciate the opportunity to offer IBM's views on
U.S. competitiveness and the innovation challenge. Given the
fundamental role of innovation in underpinning American economic growth
and national security, I believe this hearing is more important now
than ever.
I also wish to thank Chairman Boehlert for his longstanding support
of science, technology and innovation. Under his leadership, this
committee has been an outstanding proponent for the pillars of growth
in our society--namely, research, technology and skills development.
I will focus my testimony today on the principal innovation
challenges we face--both inside IBM and within the information
technology industry--as we compete in the global economy. You also have
asked me to provide my views on the role innovation plays in driving
the competitiveness of the United States.
With regard to IBM, no longer are we focused exclusively on the
development, manufacture and delivery of information technology, but
rather on the application and integration of technology to deliver new
and lasting value to our clients around the world. We have conducted an
end-to-end transformation of our business, driven by major new global
marketplace realities and opportunities. As a company with $96 billion
in revenue, and which operates in 174 countries, we believe we bring
unique insight to global trends and a solid base from which to make
national recommendations. IBM is aligned around a single, focused
business model--innovation. Innovation that is collaborative, open and
multi-disciplined.
TRENDS
History suggests that a sustained period of growth is about to
begin for the $1.4 trillion information technology industry. At the
same time, new markets are opening up on its borders. We believe that
the drivers of growth are very different today and will remain so for
the foreseeable future; they are propelling information technology and
business services, and they are affecting not only IBM and the IT
industry, but also the American economy as a whole. Further, a major
factor in the accelerated growth of the American economy in the post-
1995 period has been the increase in productivity gained by the
application of information technology to business processes.
The rewards of that growth will not be shared equally; they will,
as in the past, flow to those enterprises and nations that can innovate
and turn disruptive shifts to their advantage. Such conviction is what
sharpens our focus on innovation in IBM, for the benefit of our clients
and the nations where we conduct business.
Our economy today is moving into a new era, underpinned by cyber-
infrastructure, a new architecture of computing and the new business
models they enable. The essential ideas about the networked
organization and global economy are clearly taking hold. Those changes
are driven by the convergence of three historic developments:
Network Ubiquity: In less than a decade, the Internet--the most
visible evidence of an increasingly networked world--has reached some
800 million people, and is projected by some analysts to reach more
than a billion people by 2007. The Internet has not only connected
people and opened up access to the world's information, it is rapidly
becoming the planet's operational infrastructure. It is linking people,
businesses and institutions, as well as billions--ultimately
trillions--of devices. It is facilitating and transforming transactions
of all kinds--from commerce, government services, education and health
care, to entertainment, conversation and public discourse.
Open Standards: Technical and transaction specifications underpin
all industries. When they become standards--that is, when they are
widely adopted--they enable growth by spurring the creation of many new
kinds of products and services. Standards made possible electrical,
telephone and TV networks, CDs, DVDs, credit and debit cards and global
financial markets--and by extension, all the other business and public
services those systems enabled. Today, standards are truly taking hold
in information technology. They determine how computers operate and
software applications are developed, how digital content is produced,
processed, distributed and stored, and how transactions of all types
are managed. These standards are ``open''--that is, not owned or
controlled by any one company or entity. (The Internet itself, for
example, is built on open standards.) This is common in other
industries, but a radical departure for the information technology
industry.
New Business Designs: The simultaneous emergence of the networked
world and open standards is enabling entirely new business designs,
giving CEOs and other decision-makers options that were not feasible
before. Companies can now be far more flexible and responsive to
changes in the economy, buyer behavior, supply, distribution networks,
consumer tastes, geopolitical realities--even the weather. That is
because their business operations can be integrated horizontally, from
the point of contact with customers through the extended supply chain.
And because vital information is captured and managed enterprise-wide,
networked companies can anticipate and respond much faster, or, in
other words, on demand.
The fundamental shifts I have described are creating significant
competitive advantages for institutions around the world, particularly
in the management and integration of their business processes.
Companies are innovating in new areas, such as supply chain management,
engineering design services, human resource management, after-sales
services and customer care. Governments are transforming their legacy
agencies to organize around missions rather than departments. Academic
institutions are delivering their course ware through the Internet in
addition to the traditional classroom. Institutions are radically
innovating in their business operations and processes using information
technology and the services and expertise associated with business
process transformation. This new organizational structure and
marketplace are growing dramatically, and American industry is at the
forefront. We see global opportunity in excess of $500 billion that can
be addressed by both information technology and non-information
technology companies.
Enterprises around the world are innovating through the
transformation of their businesses because they recognize that new and
integrated processes result in genuine competitive advantage.
INDUSTRY CHANGE
Like other major structural shifts before it, the new era--
networked, built on standards and with wholly new business and
institutional models--is opening up new possibilities for profit and
growth for business, while also affecting other realms of societal and
economic activity--from government, to health care, to education.
Seizing the opportunities presented by that shift, as always,
requires unique foresight and capabilities. Despite the turmoil in the
economy in recent years, some nations have managed to increase their
prosperity, advance the frontiers of science and learning, and build
multiple kinds of new expertise. For them, the result today is an
economy poised for sustained growth in traditional markets and robust
growth in the new markets. But, as I mentioned, the growth will not be
shared equally. In the years ahead, choosing wisely will prove
important. Significant rewards will accrue to those who are up to the
challenge.
Capabilities, investments and infrastructure are increasing
everywhere. Global interconnections make it possible for people to work
from virtually anywhere. The world is indeed becoming more tightly
integrated. For American companies in a broad range of industries--as
well as governments--the choice is either innovation or
commoditization.
Companies that create new, high-demand technologies and services
enjoy, for a time, barriers to entry, as well as superior margins and
pricing power, since there are few other providers of that technology
or service. However, alternative technologies or capabilities
inevitably emerge, decreasing the innovator's advantages. In short,
that segment of the industry ``commoditizes.'' There are still
attractive opportunities to be pursued, but with much less profit
potential.
The global innovation-commoditization cycle has never been more
pronounced than it is today, and it forces distinct choices. Winners
can be the innovators--those with the capacity to invest, manage and
leverage the creation of intellectual capital--or the commodity
players, who differentiate through low price, economies of scale and
efficient distribution of other parties' intellectual capital.
Perhaps the greatest risk is to get squeezed in the middle--being
attacked by low-price competitors, while lacking the expertise and
intellectual capital to keep up with the most aggressive innovators.
GLOBAL TRENDS AND OPPORTUNITY
The dilemma affects nations, as well as industries. Understanding,
anticipating and managing the forces of innovation and commoditization
can address many of the challenges to national economic success. Today,
companies and organizations are coming to a new way of conceptualizing
and managing business activity. Essentially, they are choosing to move
to a higher value space in the overall national economic picture. A
networked, interconnected model enables them to achieve higher levels
of responsiveness, flexibility and efficiency than legacy, Industrial-
Age business models. This new flexibility offers great potential for
growth, by increasing productivity and by creating entirely new
capabilities.
There are many examples of new capabilities. In health care, for
instance, we now see personalized medicine on the horizon--as the
integration of patient histories and genomic data is changing the
nature of diagnosis and patient care. In insurance, we see products and
services tailored to the driving habits of individual policyholders.
So, how do we, as a nation, enable that transformation? How do we
capitalize on the most important developments in technology,
infrastructure and business organization in which we currently have
global leadership? How do we translate those developments into
differentiators for American prosperity? How do we strategically align
ourselves to innovate and leverage the networked world, based on a
combination of expertise, advanced technology, and business insight,
for productivity gains and economic success? In short, how do we
optimize for innovation?
MOVING TO THE FUTURE
Innovation has become the new arbiter of national competitiveness.
We must recognize innovation as a national priority. For the United
States to thrive in the hyper-competitive world economy we must, with
urgency, mobilize business, government, educators and researchers to
adopt innovation as a core strategy to build the foundation for a 21st
Century knowledge-based economy.
Innovation success will be a product of many stakeholders
collaborating and sharing the risk of change. To facilitate the
process, our nation's policy architecture must be modernized to address
the changing nature of innovation, the new opportunities I have
described and the new global competitors. The redesign of our nation's
innovation policies must be balanced, consistent and coordinated, and
focused on crucial challenges.
INNOVATION ECOSYSTEM: A KEY CONCEPT
Achieving national innovation success is complex. It requires far
more than the management of ideas, technology transfer and research and
development. The challenge is not only to generate fresh ideas and
intellectual property, but to transform ideas and intellectual property
into new value. As such, they become commercially successful. The
private sector is the primary agent for innovation. The Federal
Government, however, has enormous influence over the pace of
fundamental knowledge advances, the incentive for private enterprises
to invest in innovation and the conditions under which innovation may
thrive.
Innovation is not just R&D driven. It needs to be viewed on both
the supply and demand side, and in a global perspective. A basic
prerequisite for the next generation of innovation policies is to move
toward a thoughtful integration with all the dynamics of the National
Innovation Ecosystem, as illustrated in the following chart:
The push and pull of supply and demand do not occur in a vacuum.
They are strongly influenced by public policy and the overall
infrastructure for innovation offered by our society.
Public policies related to education and training, research
funding, regulation, fiscal and monetary tools, intellectual property
and market access demonstrably affect our ability to generate
innovation inputs and respond to innovation demands.
The same can be said of infrastructure--be it transportation,
energy, health care, information technology networks or communications.
Taken together, the policy and infrastructure environments create a
national platform that can accelerate--or impede--the pace and quality
of innovation. [Excerpted from: InnovateAmerica, Report of the National
Innovation Initiative, December 2004]
AN INTEGRATED POLICY APPROACH REQUIRED
In 2004, IBM Chairman and Chief Executive Officer Sam Palmisano co-
chaired the National Innovation Initiative of the Council on
Competitiveness. One of the central findings of its report is that the
United States needs an integrated, coherent approach across a number of
policy arenas to maintain global economic leadership. The total mix and
composition of federal policies affect private sector innovation
behavior.
Many of the critical choices lie outside the traditional sphere of
research and development and innovation supply policies. Policies which
influence the supply of talent, risk capital, the demand for innovative
goods and services and the robustness of regional innovation networks
also are important. A higher level of national innovation performance
will result from an integrated end-to-end (idea to market) approach by
the Federal Government. The vitality of the ecosystem will stimulate
innovation. Focusing only on the discrete components--investing in
schools or sector-specific initiatives--is not enough. We must find
ways to address the entire ecosystem.
The National Innovation Initiative report presents recommendations
under three broad themes: talent, investment and infrastructure. They
represent a new approach to drive U.S. competitiveness--making clear
that innovation is not a checkpoint on the economic agenda, but rather
the organizing principle of the agenda. If the U.S. seeks to remain the
most attractive and fertile environment for innovation in the world,
such policy measures must be pursued as a coherent and clearly-
articulated strategy.
COMPONENTS OF A NATIONAL INNOVATION POLICY
The highest-leverage policy choices for consideration in a national
innovation policy include:
1. Establishing an innovation focal point within the Executive
Office of the President to frame, assess and coordinate
strategically the future direction of the Nation's innovation
policies.
2. Creating new metrics for the national innovation ecosystem
to drive performance and monitor results. New metrics of the
knowledge-based economy should include knowledge indicators,
contractual agreements like strategic partnerships, IP
licensing, and conditions for innovation, such as economic
demand, public policy environment and infrastructure readiness.
3. Implementing new tax incentives to provide scholarships for
the next generation of scientists, engineers and innovators and
changing immigration policies to attract and retain the
brightest talent from around the world.
4. Accelerating innovation oriented learning environments at
the K-12 level, enhancing careers options and the adaptability
of workers through portable learning benefits.
5. Modifying the long-term Federal R&D investment portfolio by
a new priority on the physical and engineering sciences,
setting aside an increased proportion of research funding to
basic, novel, high-risk and exploratory research, establishing
a research program for the services sciences, encouraging
multi-disciplinary research, and making permanent a
restructured R&D tax credit including university-industry
collaborations.
6. Coordinating and focusing federal economic development
programs on regional innovation hotspots and creating more
dynamic innovative industry clusters.
7. Implementing a legal and regulatory framework that
encourages voluntary and more complete disclosure of business
intellectual (``intangible'') assets and longer-term innovation
strategies.
8. Supporting a new U.S. production capability in emerging
technologies through creation of world class Centers for
Production Excellence, strengthening DOD's historic role in
advanced manufacturing research, reorganizing the Manufacturing
Extension System toward innovation services for small to medium
sized enterprises and supporting an open systems approach to
customer relationship, product design, supply chain,
manufacturing and logistics systems.
9. Capitalizing on innovation opportunities in hydrogen fuel
cells, nanotechnology, new materials, micro-machining, advanced
semi-conductor technology, broadband deployment and
applications, next generation wireless devices, digital medical
records and health care, pervasive computing, modeling and
simulation.
EDUCATION, TRAINING AND WORKFORCE
I will now comment on several areas of education, training and
workforce development which contribute to our nation's innovation
system and competitive position.
Competitive advantage today comes from expertise--and expertise is
not static. The United States needs the world's deepest, most diverse
collection of business and technology innovators, supported by advanced
collaboration systems and a culture that enables continuous learning.
In the Agricultural Age, land and farm production defined competitive
advantage. In the Industrial Age, it was raw materials and
manufacturing capability. Today, it is the ability to create and apply
intellectual capital based on multi-dimensional expertise.
Workforce skills must include both technology and strategic
expertise. An understanding of technology--its current capabilities as
well as its future potential--is now integral to business decision-
making. Business leaders need innovation partners who are at the
frontiers of research and deeply steeped in the issues and dynamics of
specific industries.
To advance strategic expertise, the Nation's structural transition
to a services economy needs to be supported by a deepened understanding
of how services support and interact with manufacturing and other more
traditional activities. In fact, in today's global economy, the
services sector provides the bulk of employment in high-wage economies.
See attached chart:
A wide community is beginning to discuss the technical and social
effects of new developments in global connectivity, automation,
technology integration and Web services and a new scientific discipline
is being opened. Leading universities are beginning to work with IBM to
better understand the social and technical issues involved in
collaborating across global enterprises. For example, the University of
California at Berkeley is considering the implementation of a Services
Science curriculum in conjunction with IBM Research--much in the way
the first Computer Science department was initiated at Columbia
University. Federal research investment and collaboration could
significantly accelerate learning in this area.
To advance technology expertise, I am convinced that education must
be transformed and realigned to prepare students to become innovators.
Reform must start with curriculum. Creative and integrative instruction
can be achieved through the development of Problem-Based Learning
(PBL)--a methodology that is sure to enhance the development of much-
needed skills--especially in the engineering and technical professions.
PBL is specifically helpful in the development of scientific,
mathematical and technical talent. It focuses on ill-structured
problem-solving, and provides deeper meaning, applicability and
relevancy to classroom materials and the development of crucial
analysis skills that are required in the workplace. An education system
designed to support curriculum focused on acquiring discreet skills and
memorizing information will not produce the leaders and innovators the
world needs.
In my own industry, these needs are particularly acute. The
information technology sector is experiencing a pronounced shift in
demand for specialized skills that fuse industry-specific knowledge,
information technology capability and business process expertise. These
skills enable the business transformations described earlier.
Organizations seek more integrated and customized technology and
services solutions that create competitive advantage and enable
innovation. New information technology jobs are mushrooming in areas
like business analysis, security analysis, vendor management, service
management, system integration, and others. IBM's clients seek business
acumen, project management and leadership skills along with specific IT
skills linked to open standards, networking and e-commerce. These
emerging occupations require higher skills and they are well paid.
Finally, we must realize that we benefit greatly from a diversity
of talent, a diversity of culture, a diversity of thought and insight
from all over the world--intra-national and international. Innovation
does not happen in isolation. It happens through collaboration across
the diverse communities required to sustain economic leadership in the
21st century. We need national immigration policies that enable the
United States to attract and retain the best minds in the world.
In an expertise-based, global marketplace, the expansion of
business into more diverse services is forcing us to rethink the types
of skills and educational degrees that are needed to drive America
forward. In fact, the whole services paradigm is enabling us to be more
innovative in our approach to talent development.
Applied more broadly, our experience drives me to conclude that
America needs a culture of learning, skill building and collaboration.
Specifically, it means that technologists and business experts need to
work closely together, not simply to share insights, but to create
entirely new intellectual capital for competitive advantage. We must
build the capacity to apply new intellectual property to nurture and
launch new high-value businesses.
Unlocking innovation also demands that we rethink our ideas about
intellectual property. Some believe the best way to provide incentives
for innovation is by fiercely protecting the inventor's proprietary
interest. Others argue that we should open the doors and give full
access to intellectual assets. I believe we need a new path forward, an
approach that offers a balance of those two extremes.
While IP ownership is an essential driver of innovation,
technological advances are often dependent on shared knowledge,
standards, and collaborative innovation. The IP framework must enable
both. We must protect truly new, novel and useful inventions. And we
need to recognize that open standards can accelerate the inter-
operability and expansion of the global infrastructure. Because
collaborative innovation is relatively new, the structure and processes
to accommodate ownership, openness and access are evolving, and new
creative models are emerging. This is an area of tremendous promise and
is currently being addressed in patent legislation in the Judiciary
Committee.
SUMMARY
Economies around the world are replicating the characteristics that
have given Western nations such an advantage--open markets, R&D
investment and highly-trained workers. Many companies in rapidly
developing nations such as China, India, Brazil and Russia are
leapfrogging to new computing architectures and business designs.
Emerging nations with limited legacy infrastructures are developing
specific innovation strategies. They plan to drive economic growth by
leapfrogging in infrastructure development. These approaches are
creating a highly competitive global economy.
As the United States considers its next steps, I urge that any
dialogue on innovation must be made in the global context. The forces
of global economic integration--and advances in technology--are
presenting complex challenges that can only be addressed by embracing
opportunities for change and future prosperity. The status quo simply
cannot be an option.
Governments, business, academia and labor must work together to
create a climate and a culture that facilitates cross-border, cross-
organizational and cross-disciplinary collaboration. That is the only
environment in which innovation will thrive.
America has a long and proud track record of recognizing when
change is required, and then rising to the challenge. We are at such an
inflection point today. I am very enthusiastic about seizing the
opportunities before us and prospering in the decades ahead.
Thank you for the opportunity to be with you today.
Biography for Nicholas M. Donofrio
Nick Donofrio is the leader of IBM's technology strategy and a
champion for innovation across IBM and its global ecosystem. His
responsibilities include IBM Research, Governmental Programs Quality,
Environmental Health and Product Safety, and Mr. Donofrio is Vice
Chairman of the IBM International Foundation. Also reporting to Mr.
Donofrio are the senior executives responsible for IBM's enterprise on
demand transformation internal information-technology organization and
IBM's initiatives for open industry standards and intellectual
property. He is a member of IBM's Executive Technology and Strategy
teams. In addition to his strategic business mission, Mr. Donofrio
leads the development and retention of IBM's technical population and
strives to enrich that community with a diversity of culture and
thought.
Mr. Donofrio joined IBM in 1967 and spent the early part of his
career in integrated circuit and chip development as a designer of
logic and memory chips. He held numerous technical management positions
and, later, executive positions in several of IBM's product divisions.
He has led many of IBM's major development and manufacturing teams--
from semiconductor and storage technologies, to microprocessors and
personal computers, to IBM's entire family of servers.
He earned a Bachelor of Science degree in Electrical Engineering
from Rensselaer Polytechnic Institute in 1967 and a Master of Science
in the same discipline from Syracuse University in 1971. In 1999 he was
awarded an honorary doctorate in Engineering from Polytechnic
University, in 2002 he received an honorary doctorate in Sciences from
the University of Warwick in the United Kingdom, and in 2005 he was
awarded an honorary doctorate in Technology from Marist College.
Mr. Donofrio is a strong advocate of education and vigorously
promotes mathematics and science as the keys to economic
competitiveness. He is particularly focused on advancing education,
employment and career opportunities for under-represented minorities
and women. He served for many years on the Board of Directors for the
National Action Council for Minorities in Engineering (NACME) and was
NACME's Board Chair from 1997 through 2002. He also serves on the
national Board of Directors for INROADS, a non-profit organization that
trains and develops talented minority youth for professional careers in
business and industry.
He is the holder of seven technology patents and is a member of
numerous technical and science honor societies. He is a Fellow of the
Institute for Electrical and Electronics Engineers, a Fellow of the
U.K.-based Royal Academy of Engineering, a member of the U.S.-based
National Academy of Engineering, a member of the Board of Directors for
the Bank of New York, and he serves on the Board of Trustees at
Rensselaer Polytechnic Institute.
In 2002, Mr. Donofrio was recognized by Europe's Institution of
Electrical Engineers with the Mensforth International Gold Medal for
outstanding contributions to the advancement of manufacturing
engineering. In 2003 he was named Industry Week magazine's Technology
Leader of the Year, the University of Arizona's Technical Executive of
the Year, and was presented with the Rodney D. Chipp Memorial Award by
the Society of Women Engineers for his outstanding contributions to the
advancement of women in the engineering field. In 2005, Mr. Donofrio
was elected a member of the American Academy of Arts and Sciences and
was presented with Syracuse University's highest alumni honor--the
George Arents Pioneer Medal.
Chairman Boehlert. And thank you for that very positive
close. Mr. Morgridge.
STATEMENT OF JOHN P. MORGRIDGE, CHAIRMAN OF THE BOARD, CISCO
SYSTEMS, INC.
Mr. Morgridge. Good morning. I am John Morgridge, Chairman
of Cisco Systems, the worldwide leader in networking for the
Internet. This year, Cisco celebrates its twentieth
anniversary. I am honored to offer this testimony before this
committee.
Today's hearing comes at an important and challenging time
in our country. It is clear that the United States can no
longer take for granted our place as the global economic
technology and innovation leader. There is much that
government, education, and industry can do to address the
challenge, but we cannot be complacent in our response. We must
recognize the challenge, and take it head on, if we hope to be
successful.
Like my colleagues, I will briefly focus on three areas
today: education, the appropriate physical infrastructure, and
the proper legal and policy framework. First, and most
important, is a sound primary and secondary education system,
with a focus on math and science. Education is the foundation.
All innovation comes from it, and it is the engine for economic
growth. We have the finest post-secondary education
institutions in the world, bar none, but we are not producing
anywhere near enough ready high school graduates to capitalize
on this national asset, and particularly in math, science, and
engineering.
There are no easy answers, but technology may help. Ten
years ago, our industry faced a shortage of well-trained,
network savvy technical personnel, people who understood the
fundamentals of networking and could design, install, and
maintain networks. To address the challenge, we launched the
Cisco Networking Academy Program. High schools, community--
technical and community colleges, universities, provided the
teachers, students, and classrooms. Cisco provides the online
curriculum, currently 16 semesters worth, a distribution
network, a teacher training and support system, and in some
cases, equipment. Some eight years later, this partnership of
some 10,000 institutions, in over 160 countries, has provided
basic networking training to 1.2 million individuals.
Currently, almost a half million students are involved in the
programs. If any of you would like to visit an academy, I would
be delighted to join you. There is at least one institution in
each Congressional district who is our partner in this program.
More recently, based on our academy experience, Cisco has
joined others in developing a pilot program in the Kingdom of
Jordan to deliver K-12 math curriculum in this blended
classroom Internet model. If successful, a science curriculum
will follow. We hope to capitalize on this pilot here in the
United States and in other countries as well.
We clearly want to have U.S. students studying and
excelling at the masters and Ph.D. level in math, science, and
engineering, but we must also continue to attract the best and
brightest from around the world to our universities, and
encourage them to stay after their studies. The positive impact
that foreign-born students have had on our innovation economy
cannot be underestimated. Upwards of one third of Cisco's
technical personnel are foreign-born.
Lastly, in the area of education, we must continue to fund
basic research projects in our universities. They are the major
innovation factories. Cisco, like many other countries, was
born and incubated at a great research university. NSF and
other government agency funding is critical to maintaining this
unique U.S. asset.
The second area is having appropriate and proper legal
and--I am sorry. The second area is having the appropriate
physical infrastructure necessary to support the innovation
ecosystem, namely and most specifically, having real,
ubiquitous broadband available to all Americans, either a wire
line or a wireless. I applaud President Bush's stated goal of
having universal broadband connectivity in the United States by
2007, and we are looking forward to the FCC's leadership in
making this goal a reality.
Lastly, we must foster innovation by having proper legal
and policy framework, particularly in the area of intellectual
property and in the patent systems. Patents ensure that
inventors have the incentive to invest in further innovation,
while at the same time, promoting public access to new
inventions. The threat of patent litigation, however, is
becoming a drag on innovation, while the current patent system
is creating incentives for frivolous lawsuits. Legislation is
necessary to reduce the disruptions caused by litigation, and
improve the quality of our patents.
At Cisco, our most important asset walks out the door every
night. We understand the vital importance of intellectual
property to business development, and strong intellectual
property protection is necessary. The most effective role of
government is to ensure adherence to existing laws, and enforce
penalties against transgressors.
In summary, there is a lot that business, government, and
education can do to focus on innovation and our national
overall competitiveness. In order to innovate and remain
competitive in the increasingly global marketplace, we must
have the national trained workforce necessary to produce the
products and services that the global markets require.
A national focus on science, math, and engineering training
is vital for the U.S. to continue leading the innovation
economy. We must have the appropriate physical infrastructure,
in the form of a ubiquitous true broadband. We must have a date
certain for the transition to digital television to free up the
spectrum for public safety uses, as well as rural broadband.
Finally, we must have a legal framework that incents innovation
and a patent system that protects the inventors, while not
creating a system that is overly litigious. Patent legislation
before the Congress should be passed this session.
Thank you. I will be happy to take any questions.
[The prepared statement of Mr. Morgridge follows:]
Prepared Statement of John P. Morgridge
I am John Morgridge, Chairman of the Board of Cisco Systems, the
worldwide leader in networking for the Internet. This year, Cisco
celebrates 20 years of commitment to technology innovation, industry
leadership and corporate social responsibility and I am honored to
offer this testimony on innovation and U.S. competitiveness before this
committee.
Today's hearing comes at an important and challenging time for our
country. It is becoming very clear that the United States can no longer
take for granted our place as the global economic, technology, and
innovation leader. There is much that government and industry can do to
address this challenge, but we cannot be complacent in our response. We
must recognize the challenge and take it head on if we hope to be
successful.
I will focus on three areas today. The first area, and in my mind,
the most important to ensure global competitiveness and continued
innovation is a sound education system, including sufficient basic
research and development funding as well as a focus on science and
math. The second area is having the appropriate physical infrastructure
necessary to support the innovation ecosystem, namely, and most
specifically, having real, ubiquitous broadband available to all
Americans--whether wireline or wireless. Last, we must foster
innovation by having a proper legal and policy framework, particularly
in intellectual property, security and in the patent system.
I. IMPORTANCE OF EDUCATION TO INNOVATION AND U.S. COMPETITIVENESS
Education is the foundation to all innovation and the engine to
economic growth. We must advocate policies that will create an educated
workforce to match America's future employment needs, specifically an
educated workforce trained in math and science which is critical to the
innovation economy. In order for America's high tech industry to stay
competitive throughout the 21st Century and beyond, we need to invest
in our workforce of tomorrow by giving them the tools necessary to
compete for post-secondary education programs or careers in science,
math or engineering. We need to make America's educational system the
best in the world by making math and science teaching a priority for
our children and support efforts on the State and federal levels to
accomplish this objective. I applaud what this committee has done to
recognize the finest math and science teachers in this country--their
work is vital to our future competitiveness.
A domestic workforce educated in science, math or engineering will
ensure that the American high tech industry continues to lead the world
in terms of innovation and entrepreneurship. Moreover, an educated
workforce will enable Cisco and other job producing innovative
companies to meet our human resource needs by attracting domestic
talent, unencumbered by immigration restrictions.
Unfortunately, America's children are not receiving the necessary
training in math and science to compete for high-paying technology jobs
of the future. For example, only 24 states require secondary students
to take at least three years of math, and only 21 states require
students to take at least three years of science.
Because math and science education is lacking, young Americans will
miss out on job opportunities, or will lack the necessary skills for
post-secondary study. Nationally, out of 100 ninth-graders, only 67
will graduate from high school on time, only 38 will directly enter
college, only 26 are still enrolled their sophomore year, and only 18
will end up graduating from college. U.S. 12th graders performed among
the lowest of the 21 countries assessed in both math and science on the
Third International Mathematics and Science Study.
Improving education worldwide is a top goal of Cisco Systems, Inc.
Since 1997, the Cisco Networking Academy Program has leveraged the
Internet to improve education around the world. The Cisco Networking
Academy Program has enabled Cisco to facilitate public and private
partnerships for education and become a leading innovator in e-
learning. Since its inception, over 1.6 million students have enrolled
at more than 10,000 Academies located in high schools, technical
schools, colleges, universities, and community-based organizations in
over 150 countries. For more information on this program, please visit:
www.cisco.com/go/netacad.
We have to be innovative in our approach to education. We are in
the 21st century and must use the tools and methods of today to train
our future workforce. With an e-learning model such as the Cisco
Network Academy Program we have learned that curriculum can be altered
based on how well students are performing on the tests based on that
curriculum. We have also found that students in East Palo Alto,
California, an underprivileged area, perform as well as the richest
school districts in America. Given the opportunity and the tools,
students can perform and become excited about technology. Students in
the Chairman's district are currently becoming certified as Cisco
Network Associates at SUNY Institute of Technology and Mohawk Valley
Community College, as well as at Broome-Tioga Board of Cooperative
Educational Services, serving 15 school districts in Broome and Tioga
counties.
Additionally, Cisco has helped develop a pilot program in the
Hashemite Kingdom of Jordan to deliver math and science curriculum via
the Internet. Partnering with the government of Jordan, the World
Economic Forum, U.S. Agency for International Development (USAID), and
many other corporate partners, the Jordan Education Initiative (JEI) is
using the Internet to deliver curriculum of math, Information and
Communication Technology (ICT), Arabic and Science (January 2005).
Taking the knowledge from this pilot program, we hope to expand to
other nations and bring this method of curriculum delivery to the
United States as well.
Cisco supports increasing innovation in public schools,
establishing high standards, promoting the use of education technology
in the classroom and ensuring accountability of schools, teachers,
districts and programs. We also support efforts to ensure that all
children--and all Americans--share in the information age through
access to technology and its benefits. However, we also need to put a
renewed focus on math and science in the schools, much like in the
1960's, so that it is the United States producing the innovative
technologies and the job centers of tomorrow, rather then our
counterparts in Europe or Asia.
The positive impact that foreign-born students have had on our
innovation economy cannot be discounted. We clearly want to have U.S.
students studying and excelling at the masters and Ph.D. levels in
math, science and engineering, but we also must continue to attract the
best and the brightest from around the world to our universities and
encourage them to stay in the U.S. after their studies. Foreign-born
math, science and engineering students have been and continue to be a
boon to our economy and we should support their continued success in
academia and industry in this nation.
Recognizing the technology industry's responsibility to contribute
to an improved education system, TechNet has established an Education
Task Force to develop a new private-sector initiative to increase
America's math, science and engineering talent. TechNet is a technology
policy trade association of CEO's of which Cisco is a founder and
active member. The Task Force will examine science and math
preparedness in primary and secondary education as well as barriers to
science and engineering degree attainment in post-secondary and
graduate education. One of the goals of the Task Force is to impact the
goal of doubling the number of STEM (Science, Technology, Engineering
and Math) majors by 2015. I serve on this Task Force and we will be
offering our full report this fall.
Last, but certainly not least, in order to stimulate high-tech
research and give companies certainty, the R&D tax credit should be
updated and expanded to maximize its impact in incentivizing companies
to conduct R&D in the United States. Additionally, funding should be
increased for basic R&D at government, university and private labs. It
pleases me to no end that Chairman Boehlert is a self-professed
``unabashed cheerleader'' for the National Science Foundation (NSF) and
hope that the increased funding for the NSF he and his colleagues were
able to get this year will be built upon.
The House Science Committee, with its deep understanding of the
importance of math and science to our overall standing in the world,
should continue to use its leadership role, with hearings such as this
one, to bring attention to this vital area for U.S. competitiveness and
innovation and press for increased funding for math and science
education, basic R&D and the National Science Foundation.
II. APPROPRIATE PHYSICAL INFRASTRUCTURE FOR INNOVATION
Broadband Deployment
The Internet, as we know it, was developed with government funds
under the direction of the U.S. Advanced Research Projects Agency and,
in 1969, became a reality with the interconnection of four university
computers. From those humble beginnings, the Internet has now become
the basis for efficiencies and productivity never thought possible.
Broadband is always-on, high-speed connectivity to the Internet and
it is the foundation of all future information connectivity. Its import
to innovation, collaboration and a nation's overall competitiveness
cannot be understated. The deployment of broadband infrastructure is a
key measure of success for a country and is crucial to the future
growth of the innovation economy. I applaud President Bush's stated
goal of having universal broadband connectivity in the United States by
2007 and we are looking forward to the FCC's leadership to making this
goal a reality.
Although a few countries such as Korea and Japan have achieved
significant broadband penetration, most countries lag far behind. The
United States has fallen from fourth to 16th in broadband penetration
and stands to fall even further. Moreover, with few exceptions, most of
the broadband infrastructure available today consists of relative slow
connections in the 500kpbs to 3Mbps range, not in the 10Mbps to 100Mbps
that will needed to support the development of future innovative
applications.
Because telecommunications is one of the most intensely regulated
industries and has a legacy of decades of government involvement,
regulatory policy significantly affects broadband infrastructure
investment. Regulators and government can affect investment in myriad
ways, some negative and some positive: through the application of
legacy regulation to new technologies, through attempts to artificially
create competition, through spectrum allocation, through subsidy
systems, and through direct government investment and tax incentives.
Cisco believes that deployment of next generation broadband
infrastructure should take priority over most competing interests when
deciding regulatory policy. In Cisco's opinion, any national broadband
plan should include policies to:
Incent private sector investment in broadband infrastructure
Promote market-driven deployment of new technologies and
applications
Encourage innovation and entrepreneurship through clear,
concise, minimally intrusive rules that create as much market
certainty as is possible
Make spectrum available for wireless broadband services
Key regulatory policies to implement these goals include removing
regulatory requirements to unbundle new networks and new infrastructure
investment; keeping onerous telecommunications regulation from being
imposed on competitive broadband providers such as cable, wireless, and
powerline; avoiding legacy regulation being imposed on new technologies
and applications such as VoIP, IP video, and other Internet
applications; ensuring sufficient spectrum for high speed broadband
access applications; and migrating programs to support infrastructure
investment in low density rural areas from a traditional circuit
switched voice focus to broadband connectivity.
Digital Television Transition
In order for additional wireless spectrum to be made available for
public safety uses, as well as to bring broadband to rural and under-
served areas in the Nation, Cisco has advocated a ``date certain'' to
end analog television broadcasting in the 700 MHz band in the U.S.
Current federal law provides that analog television broadcasting
will cease by the end of 2006 or when 85 percent of households can
receive digital TV signals. It is clear that the 2006 date will not be
met, given projected market conditions. Key officials at the FCC, and
in the U.S. House of Representatives, have indicated an interest in
selecting a date certain of no later than January 1, 2009, and Cisco,
along with other high technology companies, including consumer
electronics companies, rural interests, and the public safety
community, are urging policy-makers to adopt a hard date. Once the
transition is complete, 24 MHz of spectrum will be turned over to
public safety licensees, and the lion's share would be devoted to
commercial wireless service, including broadband access, as the
directed by Congress.
Cisco has no ``technology religion'' with respect to licensed
wireless broadband technology. Cisco is a member of the WiMax inter-
operability forum, and has also closely followed developments around
the 802.20 standard, but we believe it is the market that will best
decide what technologies will flourish. As fits our overall philosophy,
we do not believe that the government should pick technology winners or
losers.
The basic benefits that will be available to the American public as
soon as broadcasters give back their second channel will be numerous.
According to the Information Technology Industry Council (ITI), of
which Cisco is an active member, benefits will include:
1. Public Safety--On 9/11 and every day across the country,
first responders from police and fire departments cannot speak
to each other because their radios operate on different
frequencies. The 9/11 Commission Report recommended in 2004
that Congress approve legislation to clear these channels for
public safety. Congress was aware of this problem in 1997 and
designated more spectrum for use by first responders, but it
can't take effect until broadcasters release their currently
held spectrum.
2. Rural Broadband--Rural areas are one of the major parts of
the country that still lack high-speed broadband Internet
access. Using the additional spectrum, companies would be able
to offer wireless broadband to areas that are not served by
current broadband technologies.
3. Economic Growth--A definitive digital TV transition date
would give high-tech companies enough certainty to invest R&D
into innovative wireless broadband networks for use in the
newly available spectrum. That would in turn spark growth in
the U.S. high-tech sector, provide new high-quality jobs for
American workers, and add to the global competitiveness of U.S.
technology.
4. Telecom Competition--Today, consumers receive most of their
telecommunications services--phone, television, and Internet
service--through either their phone line or their cable line.
Because spectrum in the 700 megahertz band is of high quality
and capable of advanced uses, it could one day become a ``third
pipe'' into consumers' homes that could provide phone,
television and Internet services, which would have the effect
of increasing competition and reducing prices for consumers.
III. PROPER LEGAL AND POLICY FRAMEWORK FOR INNOVATION
Patent Reform
Patents ensure that inventors have the incentive to invest in
further innovation, while at the same time promoting public access to
new inventions. The threat of patent litigation, however, is becoming a
drag on innovation while the current patent system is creating
incentives for frivolous litigation. Legislation is necessary to reduce
the disruptions caused by litigation and improve the quality of
patents.
Certain factors in the current patent system have resulted in
disruptions for Cisco and other leading innovation companies. First,
the playing field in the patent legal system has become increasingly
tilted towards plaintiffs, making even weak claims problematic for
litigation targets. Second, the U.S. Patent and Trademark Office (PTO)
is currently overburdened and lacks procedures necessary to avoid
issuing poor quality patents on which plaintiffs can stake a claim.
Third, some opportunistic trial lawyers and investment funds are buying
up patents to use as offensive litigation tools. These so-called
``patent trolls'' accumulate patent portfolios not to further
innovation and development of new products, but to compel others to
license technologies from them under threat of litigation. In many
instances, these patents are used for strictly tactical purposes, never
intended for commercialization of inventions.
Cisco supports efforts to pass common sense patent reform
legislation to reduce the disruptions caused by litigation and improve
the quality of patents. We are working with other companies and
industry groups to craft legislative recommendations to address this
issue.
Intellectual Property
At Cisco, we believe our most important assets walk out the door
every night. However, as we produce and own intellectual property and
understand the vital importance of intellectual property to business
development, strong intellectual property protection is necessary.
Mandatory or legislated standards are not the answer, however.
Technical standards developed and mandated by the government would
freeze technological innovation and hurt development of digital
technologies. This concept is true for digital rights management,
security and other issues where some have asked government to step in
and mandate a solution. If history and Moore's Law are any indicators,
by the time a technology industry standard is developed and adopted,
there is usually one in the pipeline that is better and in the
marketplace eighteen months later.
The most effective role of government is to ensure adherence to
existing laws and enforce penalties against transgressors.
Security
We all recognize how important security is to our economy, national
security, and national competitiveness. Over the years, this committee
has been a leader in promoting cyber security research and development,
including it's authorship of the 2002 Cyber Security Research and
Development Act (P.L. 107-305), which brought an important focus to the
benefits from additional basic cyber security research at the NSF and
the ongoing security work at the National Institute of Standards and
Technology. The proper policy framework is also vitally important for
continued advances in security.
Innovation sits at the heart of the security challenge. There is
tremendous innovation in security technologies. Information security
systems are moving from passive to active, and from point products to
self-defending networks using an adaptive, and interconnected,
architecture-based approach. We will enhance security through
innovation and effective law enforcement. As the nature of security
continues to change, public policy has to continue recognize the
centrality of innovation, and continue to avoid technology mandates or
regulation, which at the end of the day will always trail innovation,
and make us less, not more, secure.
CONCLUSION
In summary, there is a lot that the government can be doing to
focus on innovation and our national overall competitiveness.
In order to innovate and remain competitive in the increasingly
global marketplace we must have the national, trained workforce
necessary to produce the products and services that the global market
requires. If we do not produce them, they will be produced elsewhere. A
national, laser focus on science, math and engineering training is
vital for the U.S. to continue leading the innovation economy. Further,
we must also have the tools to incent the future workforce to go into
science, math and engineering. The Financial Accounting Standards Board
(FASB), overseen by the Securities and Exchange Commission (SEC), has
issued a final rule to require companies to expense stock options--a
vital component of what helped build Cisco Systems and other innovative
companies around the Nation. Without the appropriate tools to build
companies in the U.S., it becomes increasingly difficult to compete.
We also must have the appropriate physical infrastructure in the
form of ubiquitous, true broadband. We must have a date certain for the
transition to digital television to free up the spectrum for public
safety uses as well as for rural broadband.
Finally, we must have a legal framework that incents innovation and
a patent system that protects the work of inventors while not creating
a system that is so overly litigious to the point of being fruitless to
innovation. Patent legislation before the Congress should be passed
this session.
Thank you.
Biography for John P. Morgridge
John P. Morgridge joined Cisco Systems in 1988 as President and
CEO, and grew the company from $5 million to more than $1 billion in
sales, and from 34 to more than 2,250 employees. In 1990 he took Cisco
public, and in 1995 was appointed Chairman. During his tenure, Cisco
has become the leading supplier of high-performance inter-networking
products, with more than $20 billion in revenues, and some 34,000
employees in 65 countries.
As Chairman, Morgridge continues to champion a range of education,
philanthropy, and corporate citizenship initiatives, and is a guiding
force behind the company's long-term commitment to focusing on basic
human needs, responsible citizenship, and access to education.
Morgridge speaks frequently to audiences worldwide about
productivity, strategic management, entrepreneurialism, and how
education and technology can fuel economic development in developing
nations. He teaches management at Stanford University's Graduate School
of Business, and serves on its School of Business Advisory Council. In
1996, he received Stanford's Arbuckle Award for excellence in
management leadership.
Prior to Cisco, Morgridge was President and CEO of GRiD Systems,
and before that held senior positions with Stratus Computer and
Honeywell Information Systems. He earned a BBA from the University of
Wisconsin and an MBA from Stanford.
Morgridge and his wife, Tashia, actively support a range of
education, conservation, and human services initiatives, and he serves
on the boards of CARE, the Nature Conservancy, Business Executives for
National Security, the Wisconsin Alumni Research Foundation, the Cisco
Foundation, and the Cisco Learning Institute. Morgridge is also a
Trustee of Stanford University.
Chairman Boehlert. I suspected something before I came to
today's hearing, because I knew of the witnesses, and Mr.
Donofrio and Mr. Morgridge, and I suspect and know Dr. Brody
will confirm, this is going to be a love-in. This is people who
agree with each other.
The challenge before us is to get other people to pay
attention when they are dealing with issues of the moment in
other committees, and on the other side of the Capitol, got to
deal with this right now, because the moment is here.
Dr. Brody.
STATEMENT OF DR. WILLIAM R. BRODY, PRESIDENT, THE JOHNS HOPKINS
UNIVERSITY
Dr. Brody. Thank you, Mr. Chairman, and Members of the
Committee. It is a both an honor and a pleasure to be here
today.
Johns Hopkins University, the university of which I am
President, was founded in 1876 as the first research university
in America. Today, Johns Hopkins is the largest university
recipient of research funding from agencies of the Federal
Government, and for 25 years in a row, has been the country's
leading academic institution, in terms of expenditures in
science, medical, and engineering research.
But I am also here today as a member of the Council on
Competitiveness, and now, co-chair of the Committee's National
Innovation Initiative, or NII, which I believe you are all
familiar. The Council, of course, brings together labor,
business, government, and academic leaders to address issues of
importance at this time, of course, being the focus on
innovation.
Since you, Mr. Chairman, said this was a learning
experience, I am going to teach you introductory calculus, and
the calculus is what I call the calculus of innovation, which I
have learned from my role on the NII. And it is very simple,
this is no homework required. Knowledge drives innovation;
innovation drives productivity; productivity drives economic
growth. It couldn't be simpler. It is what made America what it
is today. And in order to do that, as you have heard, we need
talent, we need investment in basic research, and we need
infrastructure in order to enable that to happen. And knowledge
is key.
What I would like to do is to tell a little story, an
example. In the 1960s, I was a graduate student at Stanford
University, studying both medicine and electrical engineering.
And I had the opportunity to work on a computer system--
actually, the computers were made by IBM--on a project to tie
computers together. These computers were--it wasn't clear what
you would do tying computers together, but the Defense
Department, through the Defense Advanced Research Project
Agency, DARPA, funded this project, and it was called the
DARPANet, and my colleague, John Morgridge, knows about this
very well. And of course, in the '60s, we were playing around
with this, doing all sorts of things, none of them particularly
useful at the beginning. It wasn't clear where it ended. Fast
forward 15 years, a graduate student working at Stanford on the
DARPANet makes some small computers that he calls workstations,
and forms a company called Sun Microsystems. Sun, if you don't
know it, stands for Stanford University Network, and is a
multi-billion dollar company today.
Another pair of students, I believe a husband and a wife
team, made little devices that move traffic around on this
network, and that became the foundation for Cisco Systems, and
of course, the DARPANet became the Internet, and not only do we
have Cisco and Sun today, but we have got Yahoo! and Google and
thousands of other companies, hundreds of thousands of jobs,
and tens of billions of dollars.
I use this as an example for two reasons. One, it talks
about the investment in sort of blue sky research that has no
short-term or foreseeable value, but ends up being
extraordinarily valuable. Secondly, it provides a vehicle in
which young, talented students can come to a university and
learn a new field, in the process of undertaking the research.
And also, it illustrates the importance of taking risks, and I
think as a nation, we have become extraordinarily risk averse.
You have heard things about education, and certainly,
access to talent is critical. And although we have had the best
and the brightest coming to the United States, as you know,
that is no longer happening in our universities, and we need, I
think, very quickly to address what has become a global talent
search. In 2002, the House passed the NSF Tech Talent bill,
which created incentives for universities to increase the
fraction of students receiving degrees in science and
engineering majors, but these NSF programs were not funded as
authorized. Scholarship money is a critical choice of majors
for students, and providing incentives, I think, is a way to
fund, to get students, more students into science and
engineering by funding scholarships.
We should also augment programs to reach out to
underserved, especially under-represented populations, women
and minorities, because we are excluding a large potential
fraction of the labor pool to access homegrown talent. And
universities should be encouraged to bolster science and math
teacher training. After all, we have lots of people who are
expert in science and math. We should find ways to leverage our
expertise into the school system.
We have two urgent priorities before us, I think. The first
is to greatly increase government and private funding in basic
research, as opposed to applied research, and emphasize the far
out research, like the DARPANet that was going on. I use DARPA
as an example, because I had a conversation with one of my
computer science faculty who recently was telling me that DARPA
was becoming very short-term focused. I had, then, a
conversation with a president of a major research university,
who told me that the DARPA research now was so short-term
focused that they were no longer accepting DARPA grants in
certain fields, because with a short-term focus, they couldn't
put a graduate student on the project for fear that the project
funding would end before the graduate student completed the
dissertation. This is a huge issue, I think, to turn around,
but take a long-term focus.
And we need to fulfill our commitment to double the
National Science Foundation budget in the next five years,
significantly increasing our basic research efforts in the
physical sciences and mathematics and information sciences, as
we have through the doubling of the NIH budget. The NSF budget
costs $18 per person, scarcely more than a couple of six packs
of your favorite brew or cola, and I think we can't afford not
to make this kind of commitment.
I would just like to close by saying that since World War
II, America has led the world in science and technology
innovations, largely because it was willing to make
considerable investments in both its education systems and its
research and development infrastructure, that has enabled
natural creative genius of the American people to flourish. But
today, as at no time in the recent past, we are challenged by
other nations equally determined to succeed. As Americans, we
wish them every success, except the kind that would come at our
own expense. The race belongs to the swiftest, and we must keep
running.
Thank you very much for the opportunity to speak today.
[The prepared statement of Dr. Brody follows:]
Prepared Statement of William R. Brody
Introduction
Mr. Chairman and Members of the Committee, it is a pleasure and an
honor for me to testify before you today regarding U.S. competitiveness
and the innovation challenge we face at home and from abroad. My name
is Bill Brody and I am President of The Johns Hopkins University in
Baltimore, Maryland.
Johns Hopkins was founded in 1876 as the first research university
in America. For more than 125 years the university has committed its
resources and energies to scientific discovery and innovation. Among
the discoveries to come from Johns Hopkins are saccharine and
Mercurochrome, transit satellites and cardiopulmonary resuscitation,
gene splicing and parallel processor technology. Today, Johns Hopkins
is the largest university recipient of research funding from agencies
of the Federal Government, and for 25 years in a row has been the
country's leading academic institution in expenditures in science,
medical and engineering research.
I am also appearing today as a member of the Council on
Competitiveness, and Co-chair of the Committee's National Innovation
Initiative. Members of the Committee are no doubt familiar with the
role the Council plays in shaping the national discourse on business
and economic competitiveness by assembling data, developing
recommendations, and implementing follow-up strategies in every region
of the country.
The Need to Innovate
In my work with the Council on Competitiveness I have been
introduced to a novel concept: the calculus of innovation.
When we talk about competitiveness, what we mean is the capacity to
increase the real income of all Americans by producing high-value
products and services that meet the test of the world markets. It
sounds easy, but of course as we all know, it's not. Competition can be
brutal. The need to be competitive with all comers is not an
abstraction. It's not some future worry we have time to ignore in the
present. American economic competitiveness is a real issue, right now,
one that's tremendously important to us all. In recent years,
productivity gains have accounted for about two-thirds of the annual
growth of our gross domestic product. Much of this gain has come from
innovation in the application of technology to business.
And this is where the calculus of innovation comes in.
The calculus of innovation is really quite simple:
Knowledge drives innovation;
Innovation drives productivity;
Productivity drives our economic growth.
That's all there is to it. In the roaring 1990s, our knowledge
enabled us to innovate, and our innovations increased American
productivity, and hence, American economic growth.
But there is no guarantee that these productivity gains will
continue. And based upon studies I have seen at the Council on
Competitiveness, it looks as though the innovation pipeline is slowly
being squeezed dry. If current trends continue, many of us on the
Council believe there is a good chance that U.S. competitiveness in
vitally important high-tech areas will fall behind that of China,
India, and even a resurgent Western Europe. Here's why:
First, we are losing the skills race. About one-third of all jobs
in the United States require science or technology competency, but
currently only 17 percent of Americans graduate with science or
technology majors. By contrast, the National Science Foundation 2004
Science and Engineering Indicators report shows that the world average
is 27 percent, Korea's average is twice ours, and in China, fully 52
percent of college degrees awarded are in science and technology.
By way of example, when Harvard polled its entering class recently,
it discovered only one percent of their students expressed interest in
studying computer science, yet information technology lies at the heart
of many of our productivity gains.
Today, foreign graduate students studying science and technology in
our universities outnumber their American counterparts. They're
terrific students, but historically about 40 percent have left the
United States after receiving their degrees. Policy changes since 2001
have made it more difficult to come to the United States, and more
difficult to stay. But consider the talent we may be sending away: 35
percent of the doctoral degrees we award in the physical sciences go to
foreign-born students, as do fully 58 percent of the engineering
Ph.D.s.
Europe now produces more than twice the number of scientists and
engineers as the U.S.; and Asia about three times the number. Again
relying on National Science Foundation data, the U.S. share of world
Bachelor's engineering degrees granted dropped in half during the
1990s: from about 12 percent in 1991 to six percent in 2000.
Second, and just as worrisome as losing the skills race, we are
beginning to lose our preeminence in discovery as well. Historically,
innovation in science and technology has been the direct result of
investments in basic research and development. America's longstanding
commitment to generously fund R&D has been a major driver of our
economic competitiveness.
However, as a percentage of our overall gross domestic product,
U.S. federal research and development spending peaked forty years ago--
in 1965, at just under two percent of GDP. Today, it is now down by
more than half, to about 0.8 percent of GDP. And while government
spending for medical research has increased, overall R&D spending,
especially in basic sciences, continues to decline.
As you would expect, these numbers have very real consequences.
Science and technology articles published in Western Europe already
exceed those in the U.S. By 2010, it is anticipated that the emerging
economies of Asia will produce more patents and spend more on R&D than
the United States.
The Washington Post reported last week on the world's most
competitive economy: Finland. It wasn't until Nokia surpassed Motorola
and Japanese competitors to become the leading cell phone maker that
many of us paid much attention to Finland. But we all know now that
Finland is a world-class competitor. Two factors in particular seem to
support their achievements: first, they have what is largely
acknowledged to be the best educational system in Europe. Finnish
students, when tested, are the world's best readers, and among the best
in science and math. The second factor is that the Finns have an
extraordinary commitment to research and development. The Post reports
that through government and private industry, the Finns devote 3.5
percent of their gross domestic product to research and development,
almost a full percentage point more than the total U.S. private and
public research investment (which is 2.6 percent of GDP) and nearly
double the average for Europe as a whole.
The lesson of Finland is the same lesson the United States taught
the rest of the world in the past 50 years: investment in education
combined with investment in research and discovery pay enormous
returns. I believe--and Council of Competitiveness studies show--that
investment in education and R&D is probably the single best way we can
address some of our most persistent and difficult challenges.
For instance, we are all aware that our country has a huge trade
deficit. We have lived with this imbalance for years, driven in part by
our thirst for imported oil. But here too the recent numbers are
worrisome. Since the end of World War II we have always maintained a
positive balance of trade in high-tech exports. It has always been a
source of strength. In 1980, for instance, the U.S. produced 31 percent
of global high-tech exports; Japan produced 15 percent, and emerging
Asia seven percent. But by 2001, those numbers had turned around. Now
the U.S. was producing only 18 percent, Japan 10 percent, and the
emerging nations of Asia fully 25 percent of high-tech exports. Our
once-positive balance of trade for high-tech items is now in deficit,
and continuing to fall rapidly.
Declining leadership in innovation suggests our standard of living
will decline as a result. Some say that has already happened. In fact,
research by the Council of Competitiveness shows that the real income
of many Americans did not improve even during the economic booms of the
1980s and 1990s.
Fueling Innovation
Knowledge drives innovation; innovation drives productivity;
productivity drives our economic growth.
In order to master the calculus of innovation, promote economic
growth, and support the genius for innovation and discovery that has
been the hallmark of American prosperity for two centuries, we must
reaffirm our national belief in the transformative power of knowledge.
To do so, we should rededicate ourselves to both transmitting existing
knowledge to the next generation through the world's best educational
system, and continuing to lead the world in the discovery of new
knowledge by aggressively funding research and development in all areas
of science and technology.
In the remainder of my testimony I am going to draw extensively
(and borrow outright) from the Council on Competitiveness National
Innovation Initiative Report, Innovate America: Thriving in a World of
Challenge and Change, which is one of the most succinct and
prescriptive analyses I have seen of the challenges we face and the
actions that we can take to ensure our future technological leadership
and economic prosperity.
Talent is our nation's most important innovation asset, and so it
is vital that we build the base of scientists and engineers working in
this country at the frontiers of new discovery. Innovation capacity in
a modern technological society depends almost entirely on a broad class
of scientists and engineers who can imagine, and then implement, bold
new ideas. But unless the United States takes action swiftly, the
demand for science and engineering talent will soon outstrip supply.
The number of jobs requiring technical training is growing at five
times the rate of other occupations, yet the average age of our science
and engineering workforce is rising, the number of new entrants into
fields other than the biological and social sciences is static or
falling, and the all-important perception of these jobs as being
remunerative, important and exciting career options is declining.
Many of America's working scientists and engineers are products of
the National Defense Education Act (NDEA) of 1958, passed in the wake
of Sputnik. The NDEA sparked a half-century of remarkable innovation
and wealth creation--and it may help explain why approximately 60
percent of the CEOs of the Fortune 100 have science or engineering
degrees. In the knowledge economy, the ability to understand
technology, and anticipate the technological foundations of growth, is
becoming increasingly critical to every career path.
The trouble is, enrollments are moving in precisely the wrong
direction. A quarter of the current science and engineering workforce
in America is more than 50 years old, and many will retire by the end
of this decade. New entrants into science and engineering fields are
not replacing these retirees in sufficient numbers.
It is clear that the science and engineering problem begins early
in the K-12 educational pipeline. We are losing our future scientists
and engineers around the junior high school level. In the 4th grade,
U.S. students score above the international average in math and near
first in science. At 8th grade, they score below average in math, and
only slightly above average in science. By 12th grade, U.S. students
are near the bottom of a 49-country survey in both math and science,
outscoring only Cyprus and South Africa. Less than 15 percent of U.S.
students have the prerequisites even to pursue scientific or technical
degrees in college. And most have little interest in pursuing
scientific fields. Only 5.5 percent of the 1.1 million high school
seniors who took college entrance exams in 2002 planned to pursue an
engineering degree.
This brings me to the first of two urgent priorities facing our
nation at the start of the 21st century: We need access to the best
tech talent in the world. And to assure that access, we must take
immediate and deliberate steps to expand the pool of technical talent
available in the U.S. This priority has two components.
First, we must nurture, encourage, and greatly expand our home
grown pool of talent. The science and engineering pilot program offered
by Mr. Gordon of Tennessee is an imaginative and innovative approach to
this problem that would establish a regional pilot program to improve
scientific and technological skills of elementary and secondary school
teachers, and to encourage those teachers to directly participate in
ongoing research projects at national laboratories and research
universities. I applaud this effort to bring the excitement and
challenge of scientific research into our elementary and high school
classrooms, to help stimulate a new generation of future scientists and
engineers.
At the undergraduate level, financial incentives matter a great
deal, especially given escalating tuition costs. The Tech Talent Bill,
passed in 2002 by the House and largely incorporated into the 2002
National Science Foundation Authorization Act, addressed this issue by
creating a class of incentives for universities to increase the
fraction of students receiving undergraduate degrees in science and
engineering. However, these NSF-directed programs have not been funded
as authorized, so their potential impact remains unrealized.
The availability of scholarship money is a critical factor in the
choice of majors. Recognizing this, the National Innovation Initiative
proposes the creation of an ``Investing for the Future Fund'' which
would be a national Science and Engineering scholarship fund created
from private sector donations. The fund would create tax incentives for
corporate and individual donors who support the next generation of
innovators. The goal would be to provide a scholarship to any qualified
student majoring in math or science at a four-year college who has an
economic need and who maintains a high level of academic achievement.
Finally, in terms of home grown talent, it is increasingly
important that we reach out to under served and under-represented
students. By 2020, more than 40 percent of college-age students will be
of African, Hispanic, Asian, or other non-European descent. Currently,
African Americans, Hispanics, and other ethnic and racial minorities
account for only six percent of the science and engineering workforce--
a figure far below their demographic presence. Women, who make up
nearly half the total workforce, represent only a quarter of the
science and engineering professions. If America is to strengthen its
base of science and engineering talent, it must perforce rely on these,
the fastest-growing segments of the workforce, to provide significant
numbers of new scientists and engineers.
The second component of this need to access the world's best tech
talent for our science and technology industries concerns foreign-born
students studying in the United States. Two weeks ago I was in
Singapore, meeting with the Nation's senior economic development
leader. In the course of our conversation we touched upon the role of
foreign-born students in Singapore's universities and I was amazed when
this senior official walked over to a blackboard and without notes
wrote out a detailed summary of the numbers and nationalities of
foreign-born students in his country. Singapore actively recruits the
best and brightest students from many countries to attend its world-
class universities. In exchange, they require the students to remain
and work in Singapore for a specified number of years, and encourage
these high-tech workers to stay permanently and contribute to
Singapore's high-tech future.
It is important to recognize that, like Singapore, we are in a
global competition for high-tech talent. Until only recently, there was
very little competition. America didn't need a global recruitment
strategy, because America didn't have to compete for the world's best
and brightest talent. If you wanted to play in the game, you had to
come to America. But today, this is no longer the case. Tens of
thousands of bright students who used to come to America to study
science and engineering now have many other options. In the case of
China, in particular, the Chinese government has been investing heavily
in their research infrastructure within their universities, making it
much more attractive for Chinese nationals to stay home and study.
At Johns Hopkins, for instance, the number of graduate students
enrolled from China has declined from 328 in 2001 to 178 in 2004.
Meanwhile, the number of foreign undergraduate students of all
nationalities has dropped from 381 in 2001 to 257 in 2004.
Consider for a moment how critically important foreign nationals
are to our high-tech industries. Foreign students account for nearly
half of all graduate enrollments in engineering and computer science at
American universities. Foreign scientists comprise more than 35 percent
of engineering and computer science university faculties, and nearly a
third of our entire science and engineering workforce.
There are indications, however, that post 9/11 American visa
policies are reversing decades of openness to foreign scientific
excellence. Delays and difficulties in obtaining visas to the United
States are contributing to a declining in-flow of scientific talent.
Meanwhile, competitor countries are quite naturally taking advantage of
our increasingly cumbersome visa process to lure top talent away. And
with the strengthening of foreign science, there are many attractive
scientific opportunities abroad to substitute for U.S. conferences,
degrees and visiting scholar positions. The number of foreign students
on American campuses declined in 2003-2004 by 2.4 percent, the first
drop in foreign enrollments since the 1971-1972 academic year. This
appears to be a trend. A survey of major graduate institutions
conducted by the Council of Graduate Schools found a six percent
decline in new foreign graduate enrollments in 2004, the third year in
a row with a substantial drop. As one official of the International
Association of Educators remarked: ``The word is out on the street in
China: You can't get a visa to study in the United States.''
In the past two decades American retailers have pursued a policy of
importing the best high-quality products from China and other countries
to the benefit of American consumers. There is something to be learned
in this model. We should have an explicit national focus on importing
the brightest students from China and from countries around the world,
and keeping them here afterwards as part of our high tech workforce.
Make sure it's easy for the best and brightest to come here, to stay
here, and then to find legal residency to work here when their studies
are complete. It is worth remembering that there is not a university in
America that charges tuition at the full cost of educating its
students. Even students paying full fare are heavily subsidized by
endowments from grateful alumni, and from subsidies in many different
forms from the State and Federal governments. It is only fair in return
to ask foreign national students to repay these generous supplements by
asking them to remain and work here in the United States for a set
period of time and contribute to our national economy.
This brings me to the second of the two urgent priorities before
us. We should greatly increase both government and private funding in
research, with a particular emphasis on ``far out'' frontier research
that has the potential of creating new industries and transforming how
we work and live. It's just like Dale Earnhardt Jr. would tell you--
when the race gets tough, step on the gas.
Let me be explicit. I believe we need to fulfill our commitment to
double the National Science Foundation budget to approximately $10
billion by FY 2007, as was previously passed by the House. We must
significantly increase our basic research efforts in the physical
sciences, in mathematics, and in the information sciences. And we
should do this without robbing Peter to pay Paul by reassigning funds
already designated for the life sciences through the National
Institutes of Health and other agencies.
The doubling of the NIH budget has been a tremendous boon to
biomedical research, and tremendous benefits will be seen in our
lifetimes. We should not allow America's real and substantial lead in
these fields begin to erode by slowly whittling away at these gains. In
order to assure our continuing leadership we need to continue to
increase our medical research expenditures at the rate of biomedical
inflation, currently about 3.5 percent a year. Anything less than that
is, effectively, a cut.
At the same time, we need to find ways to encourage private
industry to be more accepting of risks in the form of transformative
business practices and technologies, while removing all incentives to
engage in the short-term, bottom line thinking that has unfortunately
become a hallmark of too many American corporations.
In an innovation economy, intellectual capital is the engine that
drives economic growth and prosperity. Investment risks and rewards are
increasingly built around ideas. It is for this reason in particular
that we need to revitalize frontier and multi-disciplinary research,
the two areas that are most likely to bring about important new
scientific discoveries and technological innovations.
Investment in frontier research has always been the bedrock of
American innovation. Many of the country's most innovative industries
were built on decades of research that had no discernible applications.
The highly theoretical world of quantum mechanics spawned the
semiconductor industry and the IT revolution. Department of Defense
research engineers working on file-sharing techniques invented the
Internet. Scientists researching atomic motion helped create global
positioning devices. But serious flaws have begun to appear in our
current efforts to support American research.
Perhaps most worrisome is the gradual shift that has been occurring
away from bold, transformational discovery to incremental advances and
improvements in current technology. For more than 50 years the United
States has been at the frontiers of discovery, creativity and research
breakthroughs. This kind of research has always been a governmental
function, owing to the long time-frames, inherent risks and the
difficulty of capturing returns on investment. But publicly funded
research has been steadily moving away from the frontiers of knowledge,
heading instead in the direction of application and development. The
federal research commitment has grown conservative--increasingly driven
by precedent, consensus, and incremental thinking. This is especially
true at the Defense Advanced Research Projects Administration, or
DARPA, which during the Cold War contributed research that brought
about or significantly advanced microelectronics, weather and
communications satellites, global positioning systems, passenger jets,
supercomputing, the Internet, robotics, sensor technologies, composite
materials and magnetic resonance imaging, among other advances.
To this end, the National Innovation Initiative supports the goal
set in the 2001 Quadrennial Defense Review and by the Defense Science
Board that at least three percent of the total Department of Defense
budget by allocated for defense science and technology. Within this
amount, the Department of Defense's historic commitment to fundamental
knowledge creation should be restored by directing at least 20 percent
of the total Department of Defense science and technology budget to
long-term, basic research performed at the Nation's universities and
national laboratories.
In the 21st century, scientific advancement has blurred the lines
between scientific disciplines, so that advancement in one area is
furthered by development in others. For example, future products in
life sciences are very likely to result from a combination of modern
biology, nanotechnology, information sciences and the physical sciences
and engineering. Over the past half century the United States has
invested considerable sums in life sciences research and development,
with remarkable results. But the rate of increase in R&D in other
sciences has not been as robust. Although federal funding for the life
sciences has increased four-fold since the 1980s, growth in the
physical sciences, engineering and mathematics has been stagnant.
It is important we increase research and development investment
across disciplines, because scientific advancement today is
interdependent and collaborative. Research and development funding
should not be a zero-sum game that simply shifts investment from one
area to another as public fashion dictates. Rather, we need a
comprehensive philosophy that brings investment in other disciplines up
to the level at which the life sciences have thrived.
Federal spending on scientific and technological research is
profoundly important. It is the bedrock upon which the structure of
American innovation rests. But it is not the only component of our past
and future achievements. Private industry too has a crucial role to
play, and perhaps at no other time has the need for American business
leadership and vision been more acute. But here too there are trends at
work that should concern us deeply.
Norm Augustine, now retired CEO of defense giant Lockheed Martin,
told me that when he was the CEO of Martin Marietta, the precursor to
Lockheed Martin, he one day called in the analysts to announce a series
of investments in research that he felt would propel the company way
ahead of its competition. Much to his surprise, as soon as he had
finished his presentation, the analysts ran out of the room, sold the
stock and the price plummeted--and continued to drop over the next 18
months. Puzzled about the negative reaction to this news, Norm asked
one of the mutual fund analysts why the stock had dropped. He was told:
``Everyone knows it takes eight to 10 years for research to pay off.
But our shareholders only hold stock less than one year. Our fund
doesn't invest in companies like yours that have this kind of
management.''
The drum beat of quarterly results are driving business decisions
and drowning out long-term management, investment and innovation
strategies. Today, investor patience is in short supply, and the
traditional ``buy and hold'' approach to equity investments is being
abandoned by the professionals. U.S. mutual funds are holding stocks
for an average of just ten months, a record low, and annual turnover
rates are 118 percent, a record high. As Norm Augustine discovered,
these short investment horizons pressure CEOs to focus on near-term
results. Not long ago, a survey of chief executives by Burson
Marstellar found that their number one business priority was
shareholder return. The category ``Most Innovative'' ranked eighth on
the CEO's list, and was a priority for only 23 percent of the
respondents. Another survey of financial executives found that fully 78
percent would give up long-term value creation in the company in
exchange for smooth earnings. More than half--55 percent--said they
would avoid long-term investments that might result in falling short of
the current quarterly targets.
Admittedly, it will be difficult to change Wall Street's attitudes
and habits. But it is terribly important to this country that we begin
to try to do so. We can use the tax code to reward the behavior of
companies that make significant research investments and take
significant risks, just as we can find disincentives to short-term,
bottom-line-only thinking. In doing so, we will make holding stock of
innovative companies over the long-term a more desirable investment,
and our national economy more competitive.
Conclusion
The legacy America bequeaths to its children will depend on the
creativity and commitment of our nation to build a new era of
prosperity at home and abroad. The generation of new knowledge through
research, and the transmission of existing knowledge in a world-leading
educational system are the two essential elements of a productive and
innovative society. Since World War II America has led the world in
science and technology innovations largely because it was willing to
make the considerable investments in both its educational systems and
its research and development infrastructure that have enabled the
natural creative genius of the American people (and visitors to our
shores from all over the world) to flourish. If imitation is the
sincerest form of flattery, we should be very, very flattered that so
many other nations seek to emulate the methods of our success. But we
also must be aware that today, as in no other time in our recent past,
we are challenged by other nations equally determined to succeed. As
Americans, we wish them ever success--except the kind that would come
at our own expense. The race belongs to the swiftest. We must keep
running. Thank you for giving me this opportunity to appear before you.
Biography for William R. Brody
William R. Brody became the 13th President of The Johns Hopkins
University on September 1, 1996. Immediately prior to assuming the
position, Dr. Brody was the Provost of the Academic Health Center at
the University of Minnesota. From 1987 to 1994, he was the Martin
Donner Professor and Director of the Department of Radiology, Professor
of Electrical and Computer Engineering, and Professor of Biomedical
Engineering at Johns Hopkins, and Radiologist-in-Chief of The Johns
Hopkins Hospital.
A native of Stockton, California, Dr. Brody received his B.S. and
M.S. degrees in electrical engineering from the Massachusetts Institute
of Technology, and his M.D. and Ph.D., also in electrical engineering,
from Stanford University. Following postgraduate training in
cardiovascular surgery and radiology at Stanford, the National
Institutes of Health and the University of California, San Francisco,
Dr. Brody was professor of radiology and electrical engineering at
Stanford University (1977-1986). He has been a co-founder of three
medical device companies, and served as the President and Chief
Executive Officer of Resonex, Inc. from 1984 to 1987. He has over 100
publications and one U.S. patent in the field of medical imaging and
has made contributions in medical acoustics, computed tomography,
digital radiography and magnetic resonance imaging.
Dr. Brody serves as a trustee of The Commonwealth Fund and of the
Baltimore Community Foundation, and sits on the governing committee of
the Whitaker Foundation. He serves on the Board of Directors of the
following public companies: Medtronic Inc. and Mercantile Bankshares.
He is a member of the executive committee of the Council on
Competitiveness; the International Academic Advisory Committee,
Singapore; and the selection committee of the Goldseker Foundation. He
formerly served on the President's Foreign Intelligence Advisory Board,
on the Board of the Minnesota Orchestra Association, and on the
Corporation of the Massachusetts Institute of Technology. Dr. Brody is
a member of the Institute of Medicine, and a fellow of the Institute of
Electrical and Electronic Engineers, the American College of Radiology,
the American College of Cardiology, the American Heart Association, the
International Society of Magnetic Resonance in Medicine, the American
Institute of Biomedical Engineering, and the American Academy of Arts
and Sciences.
Dr. Brody and his wife, Wendy, have two grown children and reside
at Nichols House on the Johns Hopkins Homewood campus.
Discussion
Chairman Boehlert. I liked the statement in your testimony
when you refer to a great American, Dale Earnhardt, Jr.
Dr. Brody. Yeah.
Chairman Boehlert.--and you say his quote, ``When the race
gets tough, you step on the gas.''
Dr. Brody. Yes.
Chairman Boehlert. So, we have got to step on the gas.
Speaking about stepping on the gas, a guy that has already got
his foot on the pedal, we are pleased to invite him, and to
participate in today's deliberations, our distinguished
colleague, Mr. Culberson, from Texas, who is a member of the
Appropriations Committee, and I want more people to have the
same insight that he has, who are appropriators.
Mr. Culberson, I ask unanimous consent that you be
permitted to participate in today's proceedings, and welcome.
And thank you for your interest. You are sitting, on your
right, next to two very distinguished scientists in their own
right, Dr. Ehlers, Vern Ehlers, and Dr. Bartlett, Roscoe
Bartlett, two very distinguished scientists.
Let me tell you something. Once again, it is music to our
ears what you are telling us. Our challenge is how do we get
the other Members of Congress to focus more on this, and how do
we get people to say you know, that is right. We should invest
more in the National Science Foundation, and you know, it is
just--they have more money in the coffee fund over at the
Pentagon across the river----
Dr. Brody. Yeah.
Chairman Boehlert.--than we have in the annual budget for
the National Science Foundation, and it is----
Dr. Brody. Yeah.
Chairman Boehlert.--so vitally important, not just to our
present, to our future. And you are so right when you mention
DARPA, and we have had Tony Tether over here before us, and say
hey, look, you are getting too short-term in your thinking. You
have got to think about the immediate problems, but you can't
abandon the long range thinking.
But one of the things I say to all the captains of
industry, when they come before us, you have got to step up the
lobbying effort. When a budget comes out, I don't care if it is
this Administration or the previous Administration, and you see
the figures for the National Science Foundation or the Office
of Science in the Department of Energy, or the National
Institute of Standards and Technology, and you shake your head
and say, gee, that is not adequate, but your lobbyists don't
come up and beat on the doors of all the Congresspeople, and
say that is not adequate, and for Cisco and for IBM, you have
got to invest more, and that is a message from IBM and Cisco,
you have got to invest more in this, because your lobbyists
come up, and talk to us about the most current tweaking of
trade policy, or the necessity for adjusting tax policy to
encourage innovation, and there is nothing wrong with that, but
they never get to the rest of the story, and the rest of the
story deals with adequate funding for science on the part of
the Federal Government.
And we wouldn't have the Internet today if it weren't for
DARPA and NSF, and the Internet has changed the world. And so
people who say, but too many people expect from us, you know,
when we invest in research, they expect guaranteed results. You
don't have guaranteed results with research. You are going to
have more failures than successes, and you hope and pray that
you get one out of a hundred ideas that you can follow through
to a logical conclusion. But if we don't do a better job of
building the foundation to the structure, and Mr. Morgridge,
you are so right, and I praise Cisco for what you are doing
with the academies and the thousands of people you are
introducing to the new technology. But if we don't do a better
job of K-12 science and math education, that is a national
security issue. That is not just a bunch of people who agree
that we all want better education for our kids and grandkids.
It is a national security issue, and we are failing.
In international comparisons, with youngsters around the
world, our kids in K-12 don't measure up. By the fourth grade,
they are about on par. By the eighth grade, they are slightly
behind, and by the twelfth grade, they are way behind. Boy,
that doesn't guarantee us anything in the future but more
agita. You know, I get all exercised about this, but I just
hope that other companies in corporate America will follow the
lead of your two great institutions, and I am not just, you
know, currying favor with you because you are here. But I know
the IBM record. I know the Cisco record. But I would like every
company to replicate that.
I have got a company in my district, a small company,
called Dolphin Technology. They have got 100 employees. You
know what the president of that company, a guy named Mike
Miravalle, who I wish I could clone. I don't believe in human
cloning, but I wish I could clone this guy. If I--he takes
promising high school sophomores and juniors. He goes to the
schools and gets the recommendation of their teachers, and then
he employs them in the summer at his company, pays them 10
bucks an hour. Can you imagine a 15-year-old kid getting 10
bucks an hour? And assigns them to a mentor, and the mentor
works with that kid, and they are only there for 10 or 12
weeks, and they get a few bucks in their pocket. They get some
discipline in the job market, and they get excited about the
promise of their future, and he called me up one day this
spring, and he was so proud. One of the kids that participated
in this mentoring program was from the inner city. He happened
to be a star athlete, a great quarterback, and he called me up,
and he said hey, remember the kid I told you about? He just got
a full scholarship, full scholarship, to a very distinguished
university. Guess what? It was an academic scholarship, not a
sports scholarship. He had a lot of offers, so when I speak to
the NAM or the Chamber of Commerce, and all the businesspeople
start complaining to me, you know, these high school graduates,
we have to retrain them. We can't even employ them right away.
We have got to retrain them. I listen to them. I say quit
moaning and groaning and start doing something about it. Go
back and survey your company, and then come back and report to
me, how many of your employees have run for school board.
Everybody says education should operate like a business. How
many businesspeople do we have on boards of education? Oh, I
can't get involved. I am too busy in my business. You better
damn well get involved, because there is a lot at stake.
So, excuse this monologue, but in the form of thanking for
you for what you are doing, it reminds me of my parish priest.
Once a year, I am convinced from on high the bishop sends down
an order, and he says I want you to give your homily this week
on a sense of reverence and church attendance, and boy, he is
good at it. And he gets wound up, and about halfway through, I
feel like saying time out, but Father, we are here. So, you are
here, and just thank you so much for what you are doing. And I
want, and I know I can expect a renewed commitment for you to
continue that.
I have got some very specific questions, but the red light
is on for me, so I will go to Mr. Costello, and I will be at
the end. Mr. Costello.
Mr. Costello. Mr. Chairman, thank you, and I would like to
associate myself with your remarks concerning the innovations
that both IBM and Cisco have made, and contributions that they
have made not only to the economy here in the United States,
but the global economy as well. Also with your remarks to
encourage those who are here today and others in the private
sector to become engaged and do a better job of lobbying on
behalf of research and development, and lobbying both the White
House and the Congress. We need your help. You are kind of
singing to the choir here. We are all in this together, and we
understand the importance of R&D and investment, unfortunately,
as the Chairman pointed out, there are others, other
challenges, and because of budget deficits, but we need you to
help us convince our colleagues, and those in the
Administration that we need to make those investments.
I think we can all agree, as the Chairman pointed out, and
I think the three of you pointed out, the importance of
education, in particular K-12 in math and science. I think we
can all agree that we have a responsibility, and that we should
aggressively be investing more in research and development.
My concern, frankly, and the reason that we held the
roundtable discussion, and the reason that I have brought up
the issue several times in various hearings of this committee,
is the issue of outsourcing. I think, Dr. Brody, in particular,
in your testimony, you point out the discrepancy between the
percentage of U.S. college graduates obtaining degrees in
science and engineering, and in comparison to the world
average, and especially, relative to the percentages in Korea
and China. And you point out that the quality of the graduates,
essentially is equivalent to us here in the United States in
U.S. institutions. In fact, many of our institutions are
affiliating with educational institutions in China, Asia, and
other parts of the world. You point out that high speed
communications now link us together, where you are based is
really not an issue any longer, and as a result, many of the
U.S. companies are outsourcing, and we are competing with low
wages.
So, I guess my question to you is, in particular, is the--
if we simply just increase the number of U.S. science and
engineering graduates, how does that address the problem of
outsourcing, number one. Number two, what do we tell young
people today that are in K-12, that we need more engineers, we
need more scientists, but the prospects of you entering these
careers, if you in fact become graduates, and you become a
scientist or an engineer, that the wages that you are looking
at today have not increased in several years in the United
States, and number two, that many U.S. companies are now,
because of the low wages, and the quality of education, as you
point out in your testimony, is equivalent to U.S. graduates.
How does that all shake out?
Dr. Brody. Congressman Costello, you ask a question that
probably exceeds my capability to answer in components. I would
like just to address one issue. One critical factor that nobody
seems to be talking about, one reason that the United States
needs to train more scientists and engineers, is we have a
large number of jobs in the defense and security infrastructure
that require security clearances. And for example, we at the
Applied Physics Lab, it is in Congressman Bartlett's district,
2000 scientists and engineers. They need clearance. If we bring
students from other parts of the world in, it is very hard to
get clearance. And we have a large number on that workforce
that is going to be retiring, and we do not have the people
coming up to replace them. So, this is a critical security
issue, irrespective of anything else that we have talked about.
I will leave the outsourcing question to my colleagues. I think
they are more expert. But I suspect that one of the things that
is happening is the wages may come down a little bit in the
U.S., but my prediction is that the wages for scientists and
engineers in other countries are going to rise much more
rapidly and equilibrate, that you know, there are still only a
number of really exceedingly bright people, and they are going
to command a premium in the workforce.
And the other thing that we need to do that we haven't
done, and I think this is a university responsibility, is to
sell why careers in science and engineering are useful. A
technical background, even if you go off and become a manager,
you move into other fields, a technical background is really
important, and I think we need to sell those careers, not just
an issue of well, if I go to work for IBM as an engineer, I am
going to make, you know, less than if I go to Wall Street and
work for Goldman Sachs.
Mr. Costello. Mr. Morgridge.
Mr. Morgridge. Over the past year, Cisco has added about
3,000 positions. Currently, about two-thirds of our employees,
and we have about 37,000, 38,000, are in the United States. The
positions that we have added have been principally in
engineering and sales, and sales support. From an engineering
standpoint, the vast majority of those jobs are here, either in
San Jose, California, which is our headquarters, or in one of
our three other campuses. The sales jobs, as you might expect,
are all over the globe, because only 45 percent of our total
revenue is generated here in the U.S., so a large portion of
our business is outside the United States, and the technical
support for that business, and the sales, of course, are
located in country.
So, as long as we are able to get the best and the
brightest, our real preference is to hire at these campuses. We
have invested a lot of money in developing them. That is, the
Internet is a powerful collaboration tool, but it is not the
same, it is not the same as being geographically and physically
related. There is magic to that that you don't quite get in the
Internet.
Mr. Costello. When you mention that as long as we can get
the best and the brightest, our preference, and of course, we
understand that, but you have a responsibility to stockholders,
you have a responsibility to others, as far as from a
competitiveness standpoint. And if you have an equivalent
elsewhere, an engineer or scientist that is making one third of
the wages of someone in the United States that can perform the
job, don't you have a responsibility to take a look at that,
and isn't that what is going on in manufacturing today in other
sectors, because there is an equivalent, where the only call is
money? Many of the jobs are being outsourced.
Mr. Morgridge. Well, it actually goes beyond money. You
know, it is yet to be demonstrated conclusively that creativity
is going to be as transferable geographically as some would
think. And certainly, our experience to date is that the best
work, the most creative work, is to get the best and the
brightest, and situate them in our environment here in the
United States, and certainly, I see that continuing. The only
exception to that rule is that all markets don't develop at the
same pace, and some of them differentiate themselves, and to be
successful in those markets, you have to have on the ground
contact to understand, and I think we are seeing some of that.
That is not a zero sum game. That is, we would hope that there
is actual considerable upside, and I would cite just the use of
the cell phone as a kind of a broad base platform. That is
different around the world. And it is important to be in those
countries where they have used it differently, and understand
why and how, so that we can develop those solutions.
Mr. Costello. Briefly, Mr. Donofrio.
Mr. Donofrio. Thank you. Thank you, Congressman. It is a
complex problem. It is a complex situation. I will try to
simply my views on this, IBM's views on this.
Everything is changing, and we are naive to think that it
is not. It is not just technology. It is the entire business
environment. Value is migrating. That is the fundamental issue.
Value that creates real wealth. Everything will flow from that.
For us, we had a near death experience in order to appreciate
and understand that value had migrated. In our business, there
are systems, there is software, and there is services. And they
always existed, it is interesting, for 100 years more or less
that we have been around as the wonderful IBM company, but what
customers want, what clients want, and what they are willing to
pay you for changes. It changes because of market forces. This
is where we need to look. This is where we need to start, as we
have these discussions and these debates, about what innovation
is like in the 21st century. What is the role of science,
engineering, technology, and mathematics?
It is critically important, but it is not the necessary and
sufficient condition. It is critically important that we build
on the bona fides that we have established here in the United
States, and that we continue to worry about why we are not
producing more science, scientists, technologists, engineers,
and mathematicians. And what is wrong with the K-12 education
system, and why have we left behind an incredible percentage of
the population, the Hispanic population. I mean, if you really
want to worry, look at the number of Hispanics in terms of how
many of them are entering the STEM disciplines. They are the
fundamental reason this country is growing. They will be 25 if
not 30 percent of the population in the next foreseeable
future.
That aside, will not get us to where we want to be, a
leader in the world economy. We will not be the leader by sheer
numbers. That is probably a preordained and destined fact in
the next 10 or 15 years, but that does not mean that the United
States of America cannot lead the world from an economic
perspective. It needs to lead it from an innovation
perspective. We have always thought better than anyone else in
the world. We have always found value. That is how John created
Cisco, that value. All of the examples that Bill talked about.
They are all innovative examples that found real business value
or societal value, based on technology.
This is the fundamental issue. We need to educate
ourselves, and we need to make this a national platform. We
need to find a way to rally around this, not just government,
but we need you leading us too. Us, the academic institutions,
labor, this is the only way that real leadership is going to be
found on this topic.
So, you worry about the whole issue of outsourcing and
globalization. We are in 174 countries around the world. It is
a simple thought for us. The right task, with the right skills,
in the right place. That is what determines where things get
moved. But in the end, we have more employment in the United
States for the last year, for the year before, and for this
year, than we have had before.
So, our employment is not going down. It is the kind of
people that we are employing. It is the thought process that we
are employing. It is this whole idea of services that we keep
forgetting about. We have 195,000, 195,000 engineers,
scientists, technologists, and mathematicians in the IBM
company, Congressman, around the world. Half of them are in
services. Half of them are applying all of that incredible
educational capability at this whole issue of what is the
business issue, what is the societal issue, and how do I put
technology to work to solve that problem faster.
That is the key for our success.
Chairman Boehlert. The gentleman's time has expired. Dr.
Bartlett.
Mr. Bartlett. Thank you, Doctor. I feel very comfortable at
this hearing, having spent 24 years in a former life teaching,
five years working for Johns Hopkins University Applied Physics
Lab and eight years working for IBM. Gentlemen, thank you very
much.
Chairman Boehlert. Is that a commercial?
Mr. Bartlett. Yeah, I have a longer view of life than most
Members of Congress, having been born in 1926. Mr. Donofrio,
you mentioned that 90--I am sorry, that 75 percent of our
economy was service-based. Now, if you push this service-based
economy to an absurdity, if all we do is cut each other's hair
and take in each other's laundry, that is clearly not a very
good prescription for prosperity, is it? Do you think this may
have something to do with the fact that we had last year, about
a $700 billion trade deficit?
Mr. Donofrio. Well, Congressman, that is part of the
problem, is we actually don't understand what the metrics are
that should lead us in the 21st century. We continue to apply,
in all due respect, Industrial Age views to the evolving
economies of the 21st century. Services, for instance, that
category, it includes all of the things you just said, and it
includes about 90,000 of our wonderful engineers and scientists
from around the world working in our services sector as well.
We need a better understanding of what the real value driver is
in services, instead of just homogenizing everything.
I would argue that yes, our services-based people and
others, you know, others in the industry, the communications
industry and the IT industry, they are generating real value.
They are generating real wealth. They are generating real jobs,
but most importantly, they are creating real business and
societal value. We need to start to understand, how do we
educate people to do that? So, let us take services apart into
its various categories and constituencies, let us start
treating at least services in information technology and
communications technology, let us start treating it with a
different thought process. Let us treat it as a science, as an
engineering discipline.
You do remember, it wasn't so long ago, you could not get a
computer science degree. In fact, when I went to school, 41
years ago, when I graduated from school, I had to hide away in
the EE department, take as many computer courses as I could,
and then came out to go to work for a computer company. It is
only 25 or 30 years that we have reformed our view of yeah,
these computers will be around for a while. They are not going
to go away. I think we are at a very similar tipping point on
this whole issue of services. It is a science. It is a
discipline. It may be where the real value is, and it is not
just cutting your hair, polishing your shoes, and changing your
oil.
Mr. Bartlett. Mr. Donofrio, don't you think that maybe this
information technology is to the world of economy,
manufacturing, mining, and agriculture, like mathematics is to
science and engineering? If all you trained were
mathematicians, and they never applied their skills to
manufacturing and science and so forth, you know, I think we
are kind of obsessed with moving these little electrons around
and storing them and coughing them up and doing it faster and
faster.
Mr. Morgridge, you mentioned that we needed to attract the
best and the brightest from around the world. Don't you think
this is a cop-out, because we aren't able to turn out good
graduates from our secondary schools?
Mr. Morgridge. In a global, competitive world, I don't
think so.
Mr. Bartlett. But you know, if we are going to do this, and
if every country is going to do that, you know, why should we
have to drain brains from other countries? Don't you think we
have enough in our country, if we shaped up our secondary
education system, so that we were turning out adequate numbers
of prepared young people to enter our graduate schools?
Mr. Morgridge. I think that is an awfully broad assumption,
but I still think that----
Mr. Bartlett. Do you think that the students from other
parts of the world are inherently brighter than ours, that we
have to go there?
Mr. Morgridge. No.
Mr. Bartlett. I don't for a minute think that. I think you
are going there because we are failing at K-12. Mr. Donofrio
mentioned that our graduate schools were the envy of the world.
But they are having some pretty darn good ones other places in
the world, and we are now having trouble attracting the
brightest and the best in the world. But that is only a very
recent phenomenon.
Mr. Morgridge. Right.
Mr. Bartlett. And I just don't think we need to go outside
our country, if we had adequate K-12 education. I think that is
where the challenge is. Mr. Chairman, if you would indulge me
just one quick question to Dr. Brody.
Dr. Brody, I think that our intense focus on this
information technology is a bit like gilding the lily. It is
already pretty darn good, thank you. And I wonder if we
shouldn't now be using the skills that we have developed there
to apply to some real world challenges, like maybe energy.
Dr. Brody. Well, I am not an expert. Clearly, energy is
going to be the looming issue for all of us, and if we don't
get on that, as a critical number one priority for our country,
we are all going to be reading with the lights out, and that is
probably not a good way to read. It might be good for the
Hopkins Ophthalmology Clinic, but otherwise--I will go back,
just if I might, the other--we are in a global competition for
talent, and I use the analogy of the NBA. You know, for many
years, the NBA had only American players. Now, you look at the
NBA roster, it is worldwide, including Yao Ming from China. It
is a global search for talent, and wherever the best and
brightest are, if there is a large talent pool, you know,
companies and universities are going to want to get the very
best and brightest.
That does not forgive us for failing at K-12, which is
failing, and we need to do something about that, as a major
priority as well.
Mr. Bartlett. Thank you for recognizing that. Thank you,
Mr. Chairman.
Chairman Boehlert. The gentleman's time has expired. But
what I am hearing the panel say is that we don't have to just
serve as a magnet to attract the brightest minds from all
around the world. We have got to do both. We have got to
produce them here, but we have got to attract them from
wherever we can attract them. In other words, we need a good
mix. That is the greatness of America.
Mr. Lipinski.
Mr. Lipinski. Thank you, Mr. Chairman. I can't really top
Dr. Bartlett there, or we also--with his background, but I do
have a unique background, in that I am an engineer. I have a
background in engineering, and one of only 11 Members of the
House and Senate, I am told, that does. But then again, you
could say that I got a couple degrees in engineering, then I
went and got a Ph.D. in political science, so I am not sure
what that says, and I am not sure. I was sitting here thinking
about how do we encourage people to go in for these higher
degrees in engineering, and I think well, what happened to me.
But I also, you know, share something with Mr. Morgridge and
Brody, that I have a degree from Stanford also. So, I do have
that going.
I look at this from many different angles, as someone who
taught political science at a university, someone with an
engineering background. But it really, to me, comes down to how
do we do the best job we can here in Washington, so that we can
employ more Americans? And that is where I am coming at this
from, and I realize that if you are running a company, though,
you need to take care of the stockholders, and--that is an
inherent tension there that I think we don't deal with, we
don't talk about enough, but I think we need to work together
as the government, companies, to help try and employ more
Americans. So, we talk about a lot of different things here,
and I sort of wonder, I know they are all important, but I want
to know, what do you think is most important? We see these
other countries producing more Ph.D.s in science and
engineering. We see students doing better, say, at eighth grade
level, or the eighth grade level here, students are doing
better in science and math in other countries.
We also talk about the problem with short-term, too much
short-term emphasis on research and development. What is most
important? Is it most important that we bring all our students
up, or is it more important that we have a select few that are
really interested in going for advanced degrees, science,
engineering, other fields where we can innovate, and then, that
will create the jobs? Or is it the focus of our companies in
being too short-term, or having too much of a short-term focus?
Well, that doesn't seem to make a difference there. Why are
other countries doing better than we are doing?
So, what is the one step each of you would say that we
should take here in Washington to help have a brighter future
to employ more Americans? Nice easy question, right?
Dr. Brody. I don't want to disagree with you, but I don't
think there is one step. I think a better way to think about it
is there are some things you can do over the short-term that
will have a short-term impact. There are some things over the
intermediate-term, and there are longer-term things. The short-
term, we can increase funding for basic research in math and
physical sciences, through the NSF budget, as we have with the
NIH. Clearly, I think, in time, DARPA, hopefully, will get back
to their original longer focus mission.
I think K-12, our educational system, didn't get into the
state it is in overnight, and it is not going to get out of the
state it is overnight. So, although we can do individual things
to help individual students, turning around the system has to
be viewed as an important priority, but one that will take
probably many, many years to turn around.
Mr. Lipinski. Do you think, is it in the system, or is it
in society?
Dr. Brody. It is both. It is both. Turn on the television
and see what we value. That is part of it. But also, then,
you--and the way we manifest that is the way we invest in our
local school boards. It is about nobody taking the time to join
the school boards. It is, it is society's values, and we will
have to turn that around over time. But there are things that
we can do. Incentives always work, if you get the right
incentives in there, if we could incent some students into
science and engineering careers, one way or another, through
scholarships and the like, it will have an impact over the
short-term.
Mr. Lipinski. Well, what do you think those incentives,
good incentives would be from the government?
Dr. Brody. Well, I think scholarships, forgiving loans, for
example, for students who go on to college and major in science
and engineering. Loans are a huge burden for college students,
and that would be a big incentive for students, to think about
it. The fact that you went on to get a Ph.D. in another field
is not a bad thing. I think these cross-disciplinary people who
become leaders in whatever field, including Congress, who have
the broad disciplines, including a scientific training or
engineering, is a good thing. So, the fact that we lose people
is not bad, but getting more people trained. You go to other
countries in Asia, and most of the senior government officials
all have technical training at their undergraduate level. Some
of them then have Ph.D.s. Some of them go to business school or
law school. But it is amazing how many of the leaders of those
countries have engineering or science training.
Chairman Boehlert. The gentleman's time has expired, and we
go to a Ph.D., a very distinguished one in his own right, Dr.
Vern Ehlers.
Mr. Ehlers. Thank you, Mr. Chairman, and thank you for the
monologue you gave. I am going to do something, and not just
because you did, but I will copy you in one respect. That is
quoting a racing figure. I am reminded of Mario Andretti's
comment that if you are in control, you are going too slow.
That, in a sense, describes the creative process as well. I
believe that the most important phrase in science is not
``Eureka, I found it,'' but ``that is funny, I never saw that
before. I wonder what is causing it?''
The creative process is hard to--for us to control, but we
have to plough the ground and provide the fertilizer for it to
take place, and we are not doing that. I think--I believe this
is the most important hearing on the Hill this week, maybe this
year. And that may seem like an outrageous statement, in view
of the lack of extensive media coverage and so forth, but just
think back 30, 35 years. This committee was talking about the
DARPANet, and look what happened. What happened, what came out
of that, has affected the world much more than anything that
happened in the Defense Committee or other major committees.
When Alan Greenspan comes and testifies, all the media are
there. What we are talking about here today is going to have a
greater effect on the economy of this nation than anything that
the Fed decides this week, and we have to get that word out. We
have to emphasize how important it is for the future of this
country that the ideas you are presenting are the basis for our
next 30 to 40 years of success as a nation. And that is our
job, but it is also your job, as the chairman said. We have to
get the scientific and engineering community out there helping
us and lobbying. We have to improve our educational system.
Just one bright spot you can go home with. Today, I am on
the Education and Workforce Committee. Right now, we are
marking up the Higher Education Bill, and Congressman McKeon
and I are offering a scholarship amendment to offer 1,000
scholarships each year to the 1,000 brightest students we
identify, to go forward and study in the sciences, engineering,
mathematics, and so forth. And the problem is going to be
getting funding for it. I think we will get it passed. I
suspect the House will pass it, and you can help us get the
Senate to pass it, but then, where is the money coming from?
And that is where you and your colleagues are going to have to
lobby every year to get sufficient funds to keep that program
going.
Also, there is a cultural attitude that I am very concerned
about, a cultural attitude that says women are no good at
science and math. It is unique to this nation. I believe we
have to reverse that. It is happening, but we have to work more
diligently at that. I give many speeches in the schools, and I
always tell the students in high schools. I said when you get
out of this place, you are either going to be a nerd or be
working for a nerd, and the choices you make now in high school
are going to determine which. And I also assure them that I am
a nerd, and they never believe it until I show them my plastic
pocket protector. That is my badge of my identity.
A few questions. First of all, Mr. Donofrio, I appreciate
your comments about intellectual property protection. I have
been pushing that really hard with--especially with respect to
China, and just yesterday, talked to both our trade
representative and our Secretary of Treasury on that issue, and
encouraged them, once again, to pursue it. But you made an
interesting comment, Mr. Donofrio, not in your spoken
testimony, but in your written testimony. You called for new
performance metrics to measure innovation. I think that is very
important, but I wonder if you could expand on that, as to just
how you would do that. We are planning, by the way, an
important conference in October on innovation and creativity. I
see Deborah Wince-Smith in the audience. She is part of the
planning group as well. And I think that is one issue we have
to work on, and how we can apply this to manufacturing. So, I
am interested in your detailed thoughts on that.
Mr. Donofrio. It would be good, by the way, I thank you for
the comments and for the question, maybe that conference that
you are going to hold in October, maybe we can do more on this
whole issue of the right performance metrics for innovation in
the 21st century.
I think most of you recognize that the current system we
have, the current view we have of innovation, is fundamentally
determined by the Industrial Revolution, and I mean, I am not
saying there is anything wrong with that, but it is 20th, at
best, 20th century thought. We are in a 21st century
environment, and again, I will sound a little repetitive here,
things are moving. Value is moving one more time. And if you
are not watching value, you end up, as we did, in an almost
near death experience.
So, the way you look at innovation in the 21st century, and
these metrics that you are looking for, it is a very complex
set of issues. You can measure piece parts. You can measure
things that will contribute, and we have described an
environment, for instance, in the NII report, that we think
make sense, to support an innovative economy and an innovative
growth opportunity for the United States of America. And look,
we are all Americans here, so I mean, we would like the United
States of America to continue to succeed and lead, but to your
point, if we don't, someone else will. You know, it is a very
interesting world that we live in, and by the way, the United
States isn't the only country that doesn't do so well with
women in STEM disciplines. Almost every other country, with the
notable exception of China. China does incredibly well with
women in the STEM disciplines. Just another reason to worry
about whether or not we can continue to lead here if we leave
half the population behind, more or less.
So, to your point, specifically, we could do a better job
of looking at how research and development is funded. The
reports suggest we should be doing a better job of more
complete research and development funding, not piece by piece,
not a piece of a solution, but the totality of a solution.
President Brody has already indicated we should be doing a
better job of funding the physical sciences. I mean, this is on
the government side. Not take away from the life sciences, but
I mean, have you seen the budgets for physical sciences over
the last 25 years? They are flatlined. They are flatlined. I
mean, we are, thank God, they are at least flat, but that is
not the way you get ahead in the physical sciences. We could do
a lot more on education. We agree with you, curriculum reform
at the higher education level, as well as a more concentrated
set of thoughts on K-12. Outcomes and the value migration is a
very complex issue that we do need to find a set of metrics to
work on. We are committed to do that, by the way, with the
National Innovation Initiative and the follow-on work. We would
welcome the opportunity to either participate in your
conference in October, or perhaps we should have another
hearing on this very topic, because I will tell you, no one
else in the world has figured this out either. So, we are not--
it is not like we are being way left behind here. If we can get
it right, if we can find the measurements, and then from the
measurements, we can therefore find the right things to incent,
to get the right behavior, to be the leader in innovation in
the 21st century. It is in front of us, to be able to see, to
understand, and to grab.
I hope that helps you a bit.
Mr. Ehlers. Thank you. And Mr. Chairman, if I may have just
15 seconds, I want to compliment Mr. Morgridge on his statement
that creativity is not necessarily geographically transferable,
and I criticized American culture vis a vis science and math
education, but I will compliment American culture on the
creativity that is intrinsic to the thinking of this nation,
and that is one of our biggest aces in the hole to overcome the
advantage other countries have in wages.
Thank you.
Chairman Boehlert. Thank you, Dr. Ehlers. Mr. Carnahan.
Mr. Carnahan. Thank you, Mr. Chairman, and I want to say,
in particular, to you that I agree with you, that K-12
education is a national security issue. I also want to thank
the panel, and also, specifically, mention to Mr. Morgridge,
your comment about education being the foundation for
innovation, absolutely is true. I agree wholeheartedly. The
quandary that I think I see here is that we have seen education
policy, at the Federal Government level, and then many states,
has really been one of devolution of education funding. At the
Federal Government level, we have seen, you know, arguments
over whether we can fully fund No Child Left Behind. Many state
governments, from elementary and secondary and higher
education, they have been cutting those budgets, where most of
our state education funding comes from. In particular, higher
education. We have seen those costs passed on to students in
higher tuition. Students are racking up higher debt than ever
before.
When I was in the state legislature and served on our
Education Appropriations Committee, the one thing that struck
me is we didn't have business leaders showing up at our
hearings, and none of them were weighing in on the questions of
how important the funding of education was. That is why I am so
heartened to see you here today engaged in that discussion. We
have also seen, at the local level, the burden land on these
local school boards with regard to how to properly fund their
schools.
We can't pass everything down, and pass everything off to
the local school boards. I guess you can tell from the nature
of my comments that I would like to know what you think about
that--our overall education policy in the country, and what you
are doing, or can do, to really weigh in on that debate as we
have it here, and as we have it at the state level. And--well,
I would ask that of the panel.
Mr. Morgridge. Well, certainly in California, and
particularly in Silicon Valley, there have been kind of
continuous efforts focused on primary and secondary education.
Currently, TechNet, which is a collaboration of high tech
companies in Silicon Valley, is putting forth a proposal on
education, primary and secondary education, and on post-
secondary education. So, there is not only an increased
awareness, but also, increased activity, in terms of carrying
that forward.
You know, one of the things we forget, we do have excellent
elementary and secondary schools. I am very proud of the high
school that I went to. I have gone back and visited it numerous
times. I would love to go back there and go to school. And I am
sure in your districts, there are outstanding primary and
secondary schools. The key is, we don't have enough of them.
And more critically, we have a third of them that are almost
total failures, and that third is addressing a very important
piece of our future population and of our national asset. And
we can't afford to have two thirds of them not participate and
develop. And you know, to your question, we have got to solve
that problem if, indeed, we want some level of independence,
relative to the source of key technical and engineering
personnel.
So, I think there certainly has been an ongoing interest on
the part of business. I think it has heightened--I think there
is greater recognition, as there is in this body, of the
criticality of it, and so, I think that business is prepared to
work collaboratively, and to push State governments and local
governments on the issue of education funding.
Mr. Carnahan. Thank you.
Mr. Donofrio. Could I add something to that, if there is
time.
Mr. Boehlert. By all means, yes, please.
Mr. Donofrio. So, I agree with everything John said. I
would just simply add, the real issue here that I think you are
trying to talk about and deal with is math and science, and why
are we forsaking ourselves here. You realize this problem that
we are talking about starts in the third, the fourth, and the
fifth grade. This problem is too late by the time we get to
high school, let alone college.
There is enough research done on this matter that suggests
that the problem lies with the fact that we don't have
adequately capable teachers. It is true that in the fourth and
the fifth grade, young women get deprogrammed from math and
science. They get frustrated. Under-represented minorities get
frustrated, and they become channeled to go do other things.
So, if you were really looking for one thing to do, from my
perspective, having spent 20 years trying to figure out this
problem, it is teachers. We need better math and science
teachers. That is how we will get more and more people through
the system into our college programs, because the other
countries that we are all worried about, it is what they do. It
is how they major in this stuff.
Chairman Boehlert. The gentleman's time has expired. To
follow through on that, just let me point out--the reality of
something. About half of the kids in K-12 in America are taking
science and math courses from teachers who didn't major in a
science or math discipline. That doesn't mean they are not
dedicated educators, but quite frankly, I don't want a French
major teaching my grandkids calculus, because they will end up
with the same result, where their grandfather still doesn't
understand it, but that is part of the problem.
And then secondly, they will say, well, why don't we get
the best and the brightest in science and math majors to go
into teaching? Because we are stupid about the way we do it.
Here is what happens. You got people in undergraduate work
majoring in science and math, excelling, and they say, you know
what? I would love to teach. What a rewarding profession that
is. But then they graduate, and it is gee, I got $28,000 in
student loans to pay back, and Johnny and Susie want to get
married, and begin to start their family, and they say, boy,
IBM and Cisco, they have got this offer to me for double what
the local high school or grade school is offering, and I really
want to teach, but I can't afford to teach. I will do it later,
and later never comes about. So they make a practical decision.
So, one of the things this committee has done is start out
the Science and Math Scholarship Program. And it took us five
years after we got it authorized to get a buck for it, and we
give stipends, $10,000, to juniors and seniors in college,
science, math, or engineering majors, who will agree, for each
year of the stipend, to teach two years in public education,
help solve their problem of income, and it helps solve our
problem of getting them in the classroom. But I don't want
anyone to go from this hearing to think that America's schools,
even the ones that are failing, aren't peopled by dedicated
educators. There is a lot to be lacking in the administrators,
quite frankly, and the fact of the matter is, the most
dedicated French major or history major is probably not going
to be the best calculus teacher or chemistry teacher,
understandably, but they have to take their assignment. So, we
are getting on with the job, but help us lobbying for more
money for the scholarship programs.
And I want to welcome, to show you the interest we have,
another appropriator--we like to curry favor with
appropriators, you know--Todd Tiahrt. He is an individual who
is vitally interested in innovation and what we are discussing
here today. And in his busy schedule, he is not on this
committee, but he wants to be here. So, without objection, I
ask unanimous consent that he be allowed to sit in on the
proceedings, and we welcome you, Mr. Tiahrt.
Mr. Tiahrt. Thank you, Mr. Chairman, and let me thank you
for having this hearing. This is a real challenge that we are
facing. How do we prepare for the future economy? What do we
need to do in our government to assist that, and I think your
vision with the scholarship program and with this hearing is
commendable, and I am glad you are going down that path. I have
a statement I would like to include in the record of this
hearing.
Chairman Boehlert. Without objection, so ordered.
[The prepared statement of Mr. Tiahrt follows:]
Prepared Statement of Representative Todd Tiahrt
First, I thank Chairman Boehlert for inviting me to this hearing. I
commend the Chairman for his hard work on this committee and especially
his foresight in focusing the Committee's work not only on the
immediate needs of our nation but also on long-term goals and finding
the steps to reach those goals. I am especially interested in the topic
of today's hearing ``U.S. Competitiveness: The Innovation Challenge.''
The innovation challenge is one of the most important ones for us to
meet in order to ensure America's economic competitiveness--however it
is also one of the hardest to define. I am pleased that Chairman
Boehlert has assembled these witnesses from various backgrounds to help
Congress better define the innovation challenge and propose solutions.
As you may know, for the last two years I have been working with my
colleagues to address the issue of economic competitiveness. The United
States has the #1 economy in the world. For almost two centuries, we
have been the envy of the world--a dynamic economy, a hardworking,
motivated workforce, truly the land of opportunity where innovation has
thrived. That status is changing, however. We are running a $670
billion annual trade deficit, that is contributing to our budget
deficit and slowed economy over the past few years.
This development is not a temporary blip on the radar screen. It is
the culmination of a generation of increased regulation, unsound tax
policies, languishing emphasis on math and science education, unchecked
health care costs, rampant lawsuit abuse, unfocused research and
development funds, and weak trade policy enforcement. In short, our
government has made it difficult and undesirable to do business in the
United States. We have put up roadblocks to keeping and creating jobs
in the America. And we have done this to ourselves. If these current
trends continue, our economy will continue to lag and we will no longer
remain the most dynamic economy in the world.
Meanwhile, China, India and other nations are preparing for the
future. They are educating their students in math, science and
technology and pumping out record numbers of engineers. They are
reducing tax rates and other economic barriers to entice investment in
their nation. They are pursuing aggressive trade policies to reduce
America's dominance in world trade.
Without attention to these matters, the United States is headed
towards a third rate economy.
That is why we need to take this issue seriously. Last year we
began the competitiveness legislative agenda on the Floor and over a
period of eight weeks discussed and voted on issues relating to keeping
and creating jobs in America. Beginning last week the Jobs Action Team
is again bringing legislation to the floor to combat this problem. But
we need to take a longer-term vision. For this reason, I have
established the House Economic Competitiveness Caucus. The Caucus will
carefully examine the issues facing our ability to compete economically
in the coming years. We will work to focus Congressional efforts on
removing the barriers to American economic competitiveness, and develop
economic goals for the future and find the paths to get there.
I am most interested in hearing the testimony of the witnesses. I
am especially interested in the first two questions they will address:
What role does innovation play in bolstering U.S.
competitiveness?
What principal innovation challenges do your company
and its industry sector face in terms of competing in the
global economy?
Americans are known for their ingenuity, a trait fostered by our
society since the Pilgrims found a way to survive the harsh New England
winter and develop into a thriving community that eventually became a
great nation. Knowledge and ideas are our most important raw materials.
The American economy has led the world because our system rewards
innovation. From Benjamin Franklin through Eli Whitney, Thomas Edison,
George Washington Carver, the Wright Brothers, Henry Ford, Jonas Salk,
and Spaceship One promoter Burt Rutan, our entrepreneurs, scientists
and skilled workers create and apply the technologies that have changed
and will continue to change our world.
Our leaders have realized that while they shouldn't tell people
what to think or how to do things, there is a vital national interest
in helping the best ideas come forward. America's strength has been in
encouraging thought and exploration, and providing the resources to
bringing those dreams to life.
The Republican Congress has made great strides in funding research
and development. We have met and exceeded our goal of doubling the
National Institutes of Health (NIH) medical research funding, we have
made necessary reforms to streamline the Patent and Trademark Office
and FDA processes, and we have promoted nanotechnology, broadband
dissemination, and a myriad of other important high tech investment.
Similarly President Bush has focused on evaluating the scale, quality,
and effectiveness of the federal effort in science and technology.
Research and development investments are still the keys to our
nation's future competitiveness, and thus we must increase our efforts
to spur innovation. I look forward to working with my colleagues to
find ways to guarantee a vibrant, internationally competitive American
economy now, five, 10, 15, and 20 years down the road.
Chairman Boehlert. Just let me tell you, this has been a
love-in so far, because we are on the same wavelength. What we
are trying to do is overcome the obstacles out there, and try
to figure out how we can, you know, serve as collective
missionaries, and convince other people in this Congress not to
be just concerned with CAFTA or who our Supreme Court nominee
is going to be, and all of that. Those are all important, but
be concerned with this, too. This is very important.
And speaking about something very important, it is very
important that I recognize Mr. Rohrabacher.
Mr. Rohrabacher. Thank you, Mr. Chairman. I certainly agree
with the idea of providing scholarships for our young people.
Chairman Boehlert. And you have been a leader in that
regard, and we have the Scholarship for Service program. Give
scholarships, and for a scholarship, you serve.
Mr. Rohrabacher. Okay. I--let me note also, perhaps, just
taking care of the college funds for students might not be
enough. Maybe we need to pay, if we are going to get the best,
or at least some very adequate teachers in science and
mathematics, because of the competition with the private
sector, maybe we need to pay those teachers more money, as
compared to teachers who teach poetry or more of the other
things that, perhaps, aren't involved with competitiveness but
involved with happiness. And so, I think that is a major
problem, that all teachers in high school have to be paid the
same amount of money. We don't differentiate that, and I think
that differentiation is needed if we are going to remain
competitive.
However, I have another line of questioning, that I would
like to go into, and very quickly, I would like to ask each
member of the panel, in just one or two words, literally, one
or two words, how much credit would you give to the federal
spending on long-term research to the success of America's high
tech industries? What would you say, a lot, medium, or not very
much credit?
Dr. Brody. A lot.
Mr. Morgridge. The same.
Mr. Donofrio. A lot.
Mr. Rohrabacher. Okay. And I take it from our industrial
leaders that that means that in their own companies, they have
taken advantage of this long-term research, the product of
long-term research. Now, I want to ask something a little bit
more aggressively, and that is what should we expect from
American companies, if they are the recipients of such
largesse? IBM, for example, just sold off, I don't know, I
think that the deal was consummated, selling off a major
division to America's greatest economic adversary. Should we
expect that America's long-term research that we invest so much
money in should be going to help you create companies like your
companies, set up manufacturing units in China, to put our
people out of work? Where does the benefit of the American
people who pay for those tax dollars play a role in the
decision-making of American industrialists like yourself?
Mr. Donofrio. Well, Congressman, in order for IBM to be the
asset you would like it to be here in the United States and the
world, of course, it needs to be competitive. The government
does, indeed, help us with certain research, but I would remind
you that we probably have the world's largest and singularly
distinguished private research laboratory in the world. Our
research division, headquartered in the T.J. Watson Research
Center. We have over 3,000 researchers, 2,000 of them here in
the United States, and 1,000 of them spread across the globe.
That research organization is what is the spark plug for IBM's
growth. So, nobody invests more in science and technology----
Mr. Rohrabacher. Right.
Mr. Donofrio.--on their own than the IBM company does.
Mr. Rohrabacher. Right. But you just gave a lot of credit
to the American taxpayer for your success.
Mr. Donofrio. Doesn't necessarily mean--no, I--you said
overall success when you asked that question.
Mr. Rohrabacher. Of America's high tech industries.
Mr. Donofrio. Right. That may not be----
Mr. Rohrabacher. IBM is different than that, I think.
Mr. Donofrio. Well, a little bit----
Mr. Rohrabacher. You have done it on your own.
Mr. Donofrio. Not completely on our own, and we participate
now in these programs much more aggressively, and we have also
provided a considerable amount of technological prowess and
capability to the United States of America, and we continue to
do that, in the defense industry, as well as in the
intelligence community.
Mr. Rohrabacher. And that is an excuse for going overseas
to America's greatest potential enemy and investing in their
country?
Mr. Donofrio. That is not an excuse for doing anything of
that matter at all. This is all about being globally
competitive.
Mr. Rohrabacher. That is right. It is not all about
globally competitive. It is about what this gentleman down here
said, it is about the benefit and the wellness of the American
people.
Mr. Donofrio. How can we----
Mr. Rohrabacher. You can divorce yourself about what the
benefit to the American people are all you want, but the fact
is, we represent the people of this country. We don't represent
a global interest, especially if that global interest puts our
people out of work.
Mr. Donofrio. A healthy IBM helps us become healthy in the
United States. It is what has allowed us to continue to
increase our employment in this country for the last three to
four years. Without that, you are faced with the near death
experience that IBM went through at the end of the '80s and the
beginning of the '90s. So, the consequences are severe, and
they are important to the United States of America, for us to
be globally competitive.
Mr. Rohrabacher. I guess, does Cisco go along with this? Is
that----
Mr. Morgridge. Cisco does 55 percent of its business
outside the United States. We employ over two-thirds of our
people in the United States. We spend a billion, over a billion
dollars a year on research. The vast majority of that is done
here. This past year, we increased our employment from about
35,000----
Mr. Rohrabacher. If the Chairman would indulge me just one
more minute to follow up, because I know this is----
Chairman Boehlert. Is this going to be poetry or prose?
Mr. Rohrabacher. It is not part of the love fest, anyway,
let me put it that way. Is Cisco----
Mr. Morgridge. So, I think we are----
Mr. Rohrabacher. Have you----
Mr. Morgridge. We are returning----
Mr. Rohrabacher. Have you invested--yeah, certainly you are
returning jobs to the United States, but have you also invested
dramatically in China?
Mr. Morgridge. We have not invested----
Mr. Rohrabacher. Okay.
Mr. Morgridge. Most of our investment----
Mr. Rohrabacher. So----
Mr. Morgridge.--in China has been in sales and marketing,
in order----
Mr. Rohrabacher. Okay. Right, but----
Mr. Morgridge.--to get share of that market.
Mr. Rohrabacher.--not in manufacturing. But not in
manufacturing.
Mr. Morgridge. We are not an integrated----
Mr. Rohrabacher. And not----
Mr. Morgridge.--manufacturer.
Mr. Rohrabacher.--in transferring technology that was
developed here over to our greatest potential enemy.
Mr. Morgridge. If you mean from a research standpoint, no.
Mr. Rohrabacher. Right. So, you are competitiveness in your
company wasn't dependent on that, but the IBM company was, huh?
Mr. Morgridge. I can't----
Mr. Rohrabacher. Totally confuse----
Mr. Morgridge. I can't answer for the IBM company.
Chairman Boehlert. In all fairness, let us have----
Mr. Rohrabacher. All right.
Chairman Boehlert.--the witness from IBM, Mr. Donofrio,
respond to that.
Mr. Rohrabacher. Sure.
Mr. Donofrio. The technology that you are referring to and
I didn't know this was going to be this type of a hearing, but
that is fine, you know, that PC technology, have you been
studying it? I mean, do you understand how much value there is
in that technology? There are no secrets there. There is
nothing at risk in being able to transfer this around the
world. And by the way, do you realize that 90 percent of most
of the insides of all of those computers come from somewhere
else other than the United States already today, and that the
real value is in the way you apply these things? This is the
whole----
Mr. Rohrabacher. Do you differentiate----
Mr. Donofrio.--issue that we have been talking about.
Mr. Rohrabacher. Do you differentiate in something--other
than the United States versus some country like Red China, that
might be an enemy of the United States----
Mr. Donofrio. We comply with every rule, law, and
enforcement in the United States of America----
Mr. Rohrabacher. But your company also participates in
helping us create that law, create those regulations. I am
sorry, Mr. Chairman, if I have to be the skunk at the lawn
party, but I find the globalist view of big business not to be
comforting to someone who is basically looking out for the
interests of the American people, and not some global concept
of the future.
If IBM isn't healthy, we are talking about U.S.
competitiveness here. We are not talking about, you know, IBM's
health, if it not basically an American company.
Mr. Donofrio. Mr. Rohrabacher, we co-chaired this report.
That is how much we care about the competitiveness of the
United States of America.
Chairman Boehlert. Thank you very much. The gentleman's
time has expired, and thank you for that report.
Mr. Green.
Mr. Green. Thank you, Mr. Chairman. Mr. Chairman, if I may,
I would like to thank you for the wonderful sermon that you
gave us earlier. I think those of us who did not have religion
acquired it, and quite frankly, we were ready to pass the
collection plate. Thank you so much.
I would like to talk just a little bit, if I may, friends,
about the problem. There is an indication that the problem
starts in the fourth grade, thereabout. I think there is some
truth to this. However, I contend that it really starts in the
home. I really do think that we do have some cultural attitudes
that we have to adjust. I have actually witnessed persons pay
good money to go and sit in the rain and watch a football game,
while missing an opportunity to attend a PTA or PTO meeting
that was free.
It has been my experience that we seem to be placing
athletics above and beyond academics, and that attitude has got
to change, because as long as we are willing to pay athletes
millions to play, and have millions of teachers underpaid, we
have a problem. I think that teachers are the molders and
sculptors of humankind, and that they mold and shape the human
mind. They take the essence of mental clay, and they mold it
and shape it into the quintessential manifestation of
intellectual cloisonne.
We have got to have the best and brightest teachers, and
one of the ways that you get the best and brightest teachers is
to pay them more. Teachers are underpaid. We pay athletes
hundreds of millions in their profession, and teachers are
making thousands in their professions. Friends, and some don't
make thousands, one of my colleagues has commented. So, I am
appealing to us to understand that if we truly want to leave no
child behind, we ought to leave no teacher behind, and we ought
to pay them more.
Having said this, how do you propose that we deal with this
vote that is coming up, and continue this hearing.
But we do have, we do have this problem of adjusting our
attitudes about academics versus athletics, and I would just
like to, given that you have studied so many things, get some
of your comments about how we will make this cultural change. I
heard on the news this morning there is some game out, Mr.
Chairman, called Grand Theft Auto, has some sort of sexually
explicit scene in it. There is a cultural problem here that is
deeply rooted that we have got to deal with, and I am
interested in your comments on how do we deal with the culture
that promulgates a lot of what we are seeing at the fourth
grade, fifth grade, sixth grade levels and above, and I also
would, as I close, Mr. Chairman, like to thank my good
colleague and friend, Mr. Culberson from Texas. I would like to
extend a personal welcome to you to our committee.
Thank you so much, my good friend. And I welcome your
comments.
Dr. Brody. I do, Mr. Chairman, I don't have an answer,
Congressman Green. I do believe that this is--there are
manifest problems, obviously, and money drives a lot of what is
going on in our society, but nonetheless, universities of the
margin can make a difference through outreach to schools, and
providing role models, and I think of my distinguished faculty
member, a famous neurosurgeon, world famous neurosurgeon, Ben
Carson, who grew up in the projects and became a world famous
neurosurgeon. He volunteers his time, has created a foundation
to mentor young kids in the inner cities, and to teach them
about role models----
Mr. Green. Would you yield for just a moment? We don't ask
the CEOs of, oh, well, shouldn't use Enron, of IBM, major
corporations, to volunteer their time, to run these
corporations. They do it for money, and they do a good job. Why
do we tend to assume that if you are an educator, you do it
simply because you love it? I think they do. They do. They love
it, but you can do what you love, and still be properly
compensated. That is my point.
Dr. Brody. You certainly have no objection from me on that
topic.
Mr. Donofrio. No, so I would agree with that, Congressman.
And I think you are right. We do need to find a way to pay
teachers more, because that is what will get the better and the
brighter teachers to show up, and that will help this whole
issue of math and science, which we spoke about earlier. And
your comments are also very well made about the home and the
environment and the culture that our young are exposed to. And
it is complementary. I mean, you can get both of these things
to synergistically work together. There have been many
attempts, and we need to continue to work on improving our
education system's efficiency, to deliver more taxpayer
dollars, you know, to the classroom, to the teacher, to allow
what you are talking about to occur, because it is always hard
to generate new funds to be able to do this.
And on top of that, I do think that Dr. Brody has a good
idea. We do volunteerism, more outreach, a mixture of that
could help take off some of the burden of the cost of the
education system. There are many wonderful efforts that go on
around the calendar year. One that I know of, that I
participate in, is this National Engineers Week effort that
many of us are all founders, if not sponsors of, where
thousands and thousands and thousands of engineers and
scientists show up in the fourth or fifth or sixth grades, so
that hundreds of thousands, if not millions of children
actually get to understand what an engineer or scientist or a
mathematician or a technologist do. They don't know what they
do. They have never even heard of it, because of their
background, their home life, their at-risk, you know,
environment. And it is just powerful to see their eyes lighten
up, and to see their whole thought process start to change
about what could be possible.
Chairman Boehlert. Here is the problem. You see, we have
got bells. We are going to have a series of two votes. That
means about a half-hour. So, Mr. Reichert next, and we are not
going to ask you to hang around here, while we go over and play
Congresspeople.
So, Mr. Reichert.
Mr. Reichert. Yes, sir. Thank you, Mr. Chairman. I am one
of the few Members that don't have a doctorate, and/or an
engineering degree. I come from a law enforcement background. I
was the sheriff in Seattle, and as we sit here and talk about
technology and science, I think back to my days as a homicide
detective, and I made a list of, you know, innovative
technology that has come along. DNA, when I was a homicide
detective, archaeology, anthropology, entomology, all of those
things come together in the world that I worked in. We need
scientists in those areas, too. So, I also am a member of the
Jobs Action Team. It is a team here put together, in Congress,
to focus on jobs, and so, I kind of want to follow up on some
questioning that came earlier, and a little bit, as was
described, a hostile way, but coming from a jobs point of view.
Just one question. What factors do IBM and Cisco consider
when locating a major manufacturing facility in another
country? What are the major factors that you consider?
Mr. Morgridge. We have a virtual manufacturing model, which
means that we really don't have a large number of factories. We
have a large number of factories that support our products, but
we don't choose those locations. They are chosen by our
suppliers. The factories, the few factories that we do have are
in San Jose, California, and we use them principally to do
early prototype and first run, before we have someone else
actually build the product.
What I would say is that all of our major research
facilities, which is really the value add of our company, are
located here in the United States, with the exception of one in
Canada and one in Israel.
Mr. Donofrio. So, Congressman, the way we do it is quite
straightforward. Number one, of course, we have a history,
given we have been around for almost 100 years, but we have an
integrated supply chain, meaning everything that deals with the
whole issue of building something is handled by the same group,
whether we are building it ourselves, or whether we are taking
parts from other people, and adding value to them, and putting
them together. But for the pieces where we actually have
factories, and we have many of them around the world, I would
have to simply say it is the right tasks, the right skills, and
the right places, and we let that determine in the bottom line,
in the final analysis, you know, where we have to put a
factory, or where a manufacturing facility should be, as part
of the whole global, you know, integrated supply chain network
that we build.
Mr. Reichert. Thank you, Mr. Chairman. I yield the balance
of my time, and request that my other questions be submitted.
Chairman Boehlert. They will be, as will others, be
submitted to the witnesses, and we would ask for a response in
a timely fashion.
Here is what we are going to do. Ms. Eddie Bernice Johnson,
who has been so faithful, for a minute, and then Mr. Davis for
a minute, and then we have got to run over to the floor, and
get your running shoes on.
Ms. Johnson.
Ms. Johnson. Thank you, Mr. Chairman, and our Ranking
Member. I won't, hopefully, take the whole minute. I just want
to say that this is my 13th year on this committee, and this
has been my great passion, of trying to get information out, so
that young people can become more interested. And we are having
a little headway in Dallas, Texas, because we are in the midst
of TI and EDS, but I want to involve Cisco and IBM as well, so
I will be in touch with you. I am chair of the science and tech
brain trust for the Congressional Black Caucus, and we have a
meeting coming up in September. Thank you.
Chairman Boehlert. Thank you. Mr. Davis.
Mr. Davis. I will be very brief as well, and I will also
have a copy that I leave for the record. I want to make a
pretty brief comment. Number one, some of the Members here are
saying in K-12, we have a failed educational system, and then
others are saying we can't get good math teachers or science
teachers. Let us make a comparison as to what we spend on
education and national defense.
National defense is extremely important, and we should
spend what we are spending there. But yes, in reality, you are
looking at about $500 billion for national defense, and about
$50 billion for education, one out of ten dollars. So, if
someone goes to work for a defense contractor for $150,000,
either a scientist or a mathematician, why in the heck would
they go to work teaching school for $45,000 a year? Until we
get our head screwed on right, education is just as important
of a defense mechanism for our nation as what we are spending
in many other areas. That is part of our national defense, and
for some reason, we can't get that through the heads of a lot
of folks who serve in Congress. We are failing at that as well,
but I do have a deep and abiding concern that when a company is
bought by a Chinese company, like Murray, Inc., and they take
bankruptcy after giving all the research and technology, all
the patents that they own, that Murray, Inc. has, and then they
shut the plants down, and take that technology to China, and
then start shipping them back over here under some other name.
We have got to also take a serious look at corporate
America. A lot of it is driven by greed and profit, and the
patriotism of the American corporate structure is not like it
used to be. If they were as patriotic as our troops, who are
offering their lives up for sacrifice in Iraq and in
Afghanistan, if corporate America was that patriotic, we would
be a whole lot better shape in our jobs in this country.
Chairman Boehlert. Thank you very much, and Mr. Donofrio,
Mr. Morgridge, Dr. Brody, thank you. I think we have had a
spirited and intriguing exchange of views and ideas. We have
covered poetry and prose. Thank you for being facilitators, and
we will continue this, and keep up the good work. I just wish
we could have more act responsibly like your institutions are,
Johns Hopkins, what a wonderful, great place that is, and
Cisco, and IBM.
Thank you very much. This hearing is adjourned.
[Whereupon, at 12:00 p.m., the Committee was adjourned.]
Appendix 1:
----------
Answers to Post-Hearing Questions
Answers to Post-Hearing Questions
Responses by Nicholas M. Donofrio, Executive Vice President for
Innovation and Technology, IBM Corporation
Questions submitted by Representative Lincoln Davis
Q1. What is the most important point in the education system for
children to be encouraged in math and science? If the Federal
Government was to strengthen its education investments in math and
science, at what age should the focus be?
A1. Although it's important to focus on the quality of math and science
programs at the college and university level, this will impact the
near-term preparedness for innovation within the current scope of
opportunity. We also need substantial increases in the number and
proportion of students in colleges and universities who are well-
grounded in math and science and are prepared to enter science,
technology, engineering and mathematics (STEM) careers.
In fact, we must expand the pipeline for STEM careers and ensure
that young people are well-equipped to participate in a society that is
increasingly characterized by math, science and technology. In this
regard, grades 4-8 are critical, as students prepare to move from basic
computation and simple scientific concepts to master higher level math
and science concepts. Students who complete the middle school years
with a solid grounding in math and science will be successful in high
school. Mastery encourages interest and commitment.
A focus on grades 4-8 requires well prepared teachers. The Federal
Government can offer new incentives to attract college students to
teaching and encourage second-career teachers in math and science.
Succeeding in grades 4-8 also requires an ongoing review of standards,
assessments and curriculum to ensure that all students will be exposed
to math and science and the curriculum will be of the highest quality.
This means an emphasis on hands-on learning, problem-solving and best
practices. The new requirement for a science assessment is a good first
step. Federal investment in curriculum development and evaluation in
these areas is also important. The recent loan forgiveness program for
math and science teachers is another good beginning that needs to be
evaluated for effectiveness and, if appropriate, expanded.
Q2. How can rural areas uniquely cope with the loss of U.S.
competitiveness?
A2. First it should be noted that the U.S. remains competitive by many
measures. But America cannot be complacent as many nations become more
competitive by opening their economies, educating their citizens, and
investing in modern infrastructures.
In today's global economy, a region's capacity to innovate will
determine whether it competes in commoditized, low-margin markets or
whether it will participate in the high-margin, rapid growth markets
driven by innovative goods and services.
Rural areas in the U.S. should evaluate how well they are preparing
their citizens to compete by examining the policies and resources
offered to support innovation. Many U.S. locales are pursuing
strategies that include components such as:
Cyber infrastructure--including high-speed Internet
availability and networks to enable collaboration, such as
computer ``grids'' that also expand processing capacity for
advanced tasks.
Education reform--including business-academia
partnerships to: establish new curriculums and research across
traditional scientific disciplines; teach students
entrepreneurship and how to commercialize new ideas; and train
students in the rapidly growing field of business services.
Risk Capital--including incentives for early stage
investors in qualified start-ups and regional networks to
increase awareness of investment opportunities.
Regional innovation strategies also rely on collaboration between
business, government, and academic institutions. Each plays a role in
the innovation ecosystem that determines how attractive and productive
a region will be for innovators.
Q3. How can U.S. industry partner with schools and universities more
to help encourage technology competitiveness? Can government help
facilitate that partnership, and how?
A3. U.S. industry can partner with state education departments and
school districts to improve technology competitiveness. Businesses
input and consultation is essential to a regular review of academic
standards to ensure that elementary and secondary schools are
encouraging innovation and supporting students in their efforts to
master math and science. This should be built into the process for
developing all state standards.
Industry can be a co-sponsor in programs to provide high quality
math and science instructional content (like IBM's TryScience
initiative), provide mentors to individual students--even e-mentors--
and provide opportunities for young people to learn about math, science
and engineering first-hand (as they do in IBM's EXITS camps each
summer). Each year, more than 3000 IBMers visit schools in the United
States and encourage young people to explore math, science and
engineering with hands on activities and personal mentoring during
National Engineers Week (recently renamed EWeek). Businesses throughout
the Nation can join, support and help EWeek grow until we can reach
every middle and high school student.
Businesses also can share their experience using data for decision-
making and other business approaches that can help education leaders
improve school operations and outcomes (e.g., IBM's Change Toolkit).
The Federal Government can work with business and education leaders to
launch a major national campaign to raise the status of math, science
and engineering careers and provide young people with information to
make good career choices.
Answers to Post-Hearing Questions
Responses by John P. Morgridge, Chairman of the Board, Cisco Systems,
Inc.
Questions submitted by Representative Lincoln Davis
Q1. What is the most important point in the education system for
children to be encouraged in math and science? If the Federal
Government were to strengthen its education investments in math and
science, at what age should the focus be?
A1. I'm not an education expert and have not studied this issue
extensively, but anecdotal evidence seems to point to early education
as when students are most susceptible to gaining an aptitude for math
and science. Early encouragement in any discipline, as you know, can
have an enormous impact on a child. If math and science were more
squarely focused on in K-5, I think it would have an enormous impact in
later educational years, especially if math and science were made to be
as ``matter-of-fact'' as spelling and reading, i.e., nothing to fear
and in the normal course of business. Math and science can have a
stigma attached to them as too hard or not easily grasped and that
``culture'' also needs to be changed.
Q2. How can rural areas uniquely cope with the loss of U.S.
competitiveness?
A2. Broadband can have an enormous impact on rural areas to help with
competitiveness. If you think of broadband as the always-on, high-speed
connection to the world, then location becomes more and more
irrelevant. With energy costs rising and telecommuting more acceptable
in the private and public sectors, rural areas have the decided
advantage of being more cost effective places for people to locate,
live, work, learn and play. An affordable cost of living while being
connected to the world through broadband, can be an actual advantage of
being located in a rural area for a knowledge worker.
Q3. How can U.S. industry partner with schools and universities more
to help encourage technology competitiveness? Can government help
facilitate that partnership, and how?
A3. Industry can help colleges and universities identify the jobs of
the future by placing bets on where technology is going. Clearly, basic
training in math and the sciences is a good start, but, as we know, it
is the engineering specialists and technology programmers who will help
determine the next innovative new technologies. We need to work hand in
glove with universities to determine where some of the new technologies
will be coming from and help shape the curriculum and training in these
areas. This includes offering internships, job offers to new college
grads, endowing professorships in advanced technologies and helping
fund the research and development at universities. I would like to note
that Stanford University was the genesis of Sun Microsystems, Cisco
Systems, and Google to name a few success stories out of university/
industry cooperation. (As of this writing, these companies employ
72,434 people.)
Answers to Post-Hearing Questions
Responses by William R. Brody, President, The Johns Hopkins University
Questions submitted by Representative Lincoln Davis
Q1. What is the most important point in the education system for
children to be encouraged in math and science? If the Federal
Government were to strengthen its education investments in math and
science, at what age should the focus be?
A1. While it is never too early to encourage children to excel in math
and science, I would say we ought to be increasing our focus on the
middle school years. Increasing the emphasis on middle school prepares
students to succeed at higher-level math courses in high school arid
encourages them by strengthening their skills in the fundamentals. The
2004 NAEPP ``Nation's Report Card'' for mathematics education indicates
some improvement in scores since 1999, however, we still see evidence
that indicators such as poverty level and parents' educational
attainment have a significant negative impact on achievement.
International rankings of achievement in schools offer another
indicator of declining U.S. scholastic standing and competitiveness.
Among 15-year-olds, U.S., students declined to 28th place, behind
China, Japan, Korea, Finland, Canada, France and the Czech Republic,
among others, according to the Program for International Student
Assessment (PISA, 2003).
The U.S. educational system is falling behind that of other
advanced countries just as the Nation's scientific and technical
workforce is about to experience a high rate of retirement. One quarter
of current workers in science and engineering are older than 50 years.
At the same time, the U.S. Department of Labor projects that new jobs
requiring science, engineering, and technical training will increase at
a rate four times higher than the average national job growth.
The relatively poor achievement of U.S. school children in math and
science--particularly in secondary school--is well-documented. The
problem begins early in the K-12 pipeline. Survey results indicate that
the United States is losing its potential science and engineering
majors around the middle school level, In the 2000 NAEP Science test
(the most recent one available), there was virtually no change in
performance between 4th and 8th grade. But the significant decline for
12th grade indicates that we are losing the battle by high school.
To me, this raises other questions: Are today's school teachers
qualified to teach math and science? What are we doing to provide math
and science teachers in mile schools and high schools with the proper
training, support, and curricula to reach their students? How do we
recruit to the teaching profession those college students with an
interest in math and science, especially when the job market for people
with technical skills is so competitive and pays so much better? These
questions are a critical part of the solution.
Teaching jobs still are not well-compensated, especially in
comparison to technical jobs in the private sector. Then factor in
these impediments: Teaching adolescents is especially challenging
today. Teachers are overburdened with classroom management. New
teachers often do not receive support from their more experienced
colleagues.
One solution already exists, but awaits full funding by Congress.
To ensure that every student is able to learn from a teacher who is
fully qualified in math and science, Congress created the Robert Noyce
Scholarship Program. It offers incentives for talented college students
in science, math, engineering, and technology to enter the teaching
profession. Each Noyce Scholar is eligible to receive a $10,000
scholarship in exchange for a two-year commitment to teach math or
science in elementary or secondary school. While this program has the
potential to provide our schools with desperately needed teachers who
are highly qualified in these fields, finding has hovered only around
the $8 million mark. This program should be expanded to $20 trillion,
the level authorized by Congress.
U.S. universities and colleges need to do more to partner with
their local K-12 institutions to train teachers, revamp science and
math curriculum, and mentor students. These are just a few programs
underway at Johns Hopkins and many of its sister institutions. We do
much to advance that state of K-12 education, but we can clearly must
and should do more.
We also need to do a better job of tailoring science and math
education to attract minorities and women into middle and upper-level
classes. For example, many women avoid computer and science classes
because of social views of the field as limiting and unwelcoming. But
that impression may be more based on how we present the goals and
requirements of science education. These stereotypes then are
reinforced by the limited pool of students who self-select to go into
these fields.
If we are to make science, math, and technology education more
inclusive, we need to recognize that girls and boys may go into a field
for different reasons, If educators are not able to communicate how
scientists and innovators contribute to the greater good, to the social
good, we will not be able to break that stereotype.
Q2. How can rural areas uniquely cope with the loss of U.S.
competitiveness?
A2. The most obvious solution is to attract more business by upgrading
our country's electronic infrastructure. By giving rural locations
better access to broadband and satellite communications, workers in
remote areas can easily access jobs that might otherwise be outsourced
overseas. American companies should look first to America's rural labor
force, where everyone speaks English, educational went for at least the
high school level can be certified, and states want and need jobs to
revitalize their communities. In fact, this is how the U.S. call center
business first expanded during the dot-com boom, when these facilities
sprouting in small Midwestern towns to support businesses around the
country.
A federal investment to expand broadband and satellite
communications to under-served communities--both in rural areas and in
inner cities--would provide a boost comparable to the Rural
Electrification Act of 1936. This expansion would also give companies
additional opportunities to invest.
To build the capacity to handle technology jobs, the Nation's
investment in rural communities would require job training and support,
retraining, and continuous learning opportunities, especially in
computer skills. With the expansion of distance learning and satellite
hookups, college classes can be delivered anywhere, anytime. At the
same time, expanding the investment in community colleges would enable
these locally based schools to reach more people in rural areas. In
both cases, scholarships and financial aid, as well as company-funded
training, could expand the opportunities.
Q3. How can U.S. industry partner with schools and universities more
to help encourage technology competitiveness? Can government facilitate
that partnership, and how?
A3. Corporate partners could make it easier for their scientific and
technical employees to lend their skills and time to further technology
training and teaching. A number of companies offer technology programs
and support to schools nationwide; among them are Intel, Hewlett-
Packard, Microsoft, IBM, and Apple. Some companies, including 3M, IBM,
DuPont, and General Electric, already encourage their employees to
volunteer in science and math classrooms, as well as in other K-12
classes in their communities. The MCI Foundation, through its
innovative Marco Polo Web portal, sponsors teacher support and
curriculum enhancement in science, math, and economics education; this
is a partnership with government and non-profit organizations.
The social investment in education being made by these companies is
both altruistic and mission critical. These companies, while serving
their communities and employees, recognize that their future success
depends upon a large talent pool to recruit for the next generations of
employees. Without the trained technical and scientific workforce of
tomorrow, their businesses would not be able to continue to innovate
and compete successfully in an increasingly competitive global arena.
Company leaders also act as role models. They could reach out to
schools and youth groups through community forums, through the media
(including new media such as Web, podcasting, instant messaging, and
blogs), through sponsoring sports teams and after-school clubs, and
through internships and exchange programs to excite youth about the
opportunities for careers in math and science. This corporate
commitment might include special outreach efforts to minority
communities and women.
In addition, there are other very active national and regional
initiatives that involve business leaders in addressing education
issues. These include the Council on Competitiveness, the Business
Roundtable, the Business-Higher Education Forum, Chambers of Commerce.
the Maryland Business Roundtable on Education, and local business
groups. These groups do not work in a vacuum; they include educators
and education organizations as partners and advocates for their
experience and expertise in the classroom.
Leaders in higher education also play an important role in
improving the level of math, science and technical teaching, as well as
offering pre-college programs for children, often as young as those at
the elementary school level.
We, at Johns Hopkins University, take our own commitment to
providing opportunities for K-12 learning in math, science and
technology very seriously. Just recently, I addressed the members of
the Johns Hopkins K-12 Council, a collaborative coalition drawn from
the University, Baltimore City and the Maryland K-12 community. The
Council's goal is to catalyze research-driven collaborations between
Johns Hopkins and schools throughout Maryland. Though it has no five-
standing school of education, Hopkins is considered a path breaker in
education research and reform among national and local education
policy-makers.
Johns Hopkins effort through the Council are geared towards sharing
what we know as educators and scientists or mathematicians and
engineers, what school teachers and administrators have learned, and
what we think children need to know to succeed beyond high school.
While the Council's efforts are geared to improving our schools,
generally, and to students overall, it pays particular attention to
providing opportunities for under-represented students to advance their
knowledge in math and science.
To mention just a few examples, in the sciences, the Johns Hopkins
University Applied Physics Laboratory (JHU/APL) has a wide range of
programs for young explorers. Our Education and Public Outreach (E/PO)
office strives to excite and inspire the next generation of explorers
by creating hands-on, interactive learning experiences for students.
educators and the general public. Our civilian space education and
public outreach office provides unique opportunities for students,
educators, museums, science centers and the general public to share in
the excitement of APL's current endeavors--from landing on an asteroid
to looking for water on Mars.
The Maryland Mathematics, Engineering, Science Achievement Program
(MESA) is a statewide pre-college program sponsored by JHU/APL. Morgan
State University, The University of Maryland, Towson University, local
school systems, and businesses throughout Maryland. Maryland MESA works
directly with schools and educators to support and develop the
interests, skills, and abilities of K-12 students in science,
technology, engineering, and mathematics. The program also serves as a
driving force in encouraging and assisting minorities and females in
achieving academic and professional success in these fields.
In an effort to boost middle school math achievement, Johns Hopkins
University researchers are spending a great deal of time in a magical,
pixilated place called Descartes' CoVE. This innovative CD-ROM learning
environment helps youngsters develop higher-level math skills including
geometry, logic, and number theory. It is a collaborative virtual
space, accessible via the Web and CD-ROM, where students can explore
the farthest reaches of their mathematical reasoning by solving real-
world puzzles and problems. Development of Descartes' CoVE is funded by
corporate grants from AT&T and the Toyota USA Foundation.
In cooperation with the Johns Hopkins Center for Talented Youth,
the Materials Research Science and Engineering Center (MRSEC) at The
Johns Hopkins University offers paid summer internships in JHU
materials research laboratories to six qualified and under-represented
high school students from the greater metropolitan Baltimore area and
surrounding counties. In addition, seven teachers, nominated by their
schools and selected by MRSEC and CTY, participate in a four-day
program designed to introduce them to the research and the scientists
of MRSEC.
Appendix 2:
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Additional Material for the Record
Statement of The Institute of Electrical and Electronics Engineers--
United States of America (IEEE-USA)
IEEE-USA appreciates the opportunity to submit comments for
inclusion in the record of House Science Committee hearings on the
innovation challenges facing the United States. These comments address
the question posed by the Committee on what the Federal Government
should be doing to strengthen the Nation's innovation system, with
special emphasis on federal programs of support for research and
technical workforce development.
IEEE-USA was established in 1973 to advance the public good and
promote the professional careers and public policy interests of the
more than 220,000 electrical, electronics and computer engineers who
are U.S. members of the Institute of Electrical and Electronics
Engineers (IEEE), one of the world's largest technical-professional
societies. Our members have been present at the creation of electro-
technological innovations that have fueled more than a century of
remarkable growth in American industry sectors, ranging from aerospace
and defense, computers and telecommunications, electrical power
generation and robotics to new and emerging fields including biomedical
devices and nanotechnology.
At the dawn of the 21st Century, America desperately needs a new
national competitiveness strategy. After a decade of economic
prosperity in the 1990's, the Nation was buffeted by recession in 2001
and by a prolonged jobless recovery marked by unprecedented levels of
unemployment in high technology fields. Today we face a new, more rough
and tumble form of global economic competition, especially in science,
engineering and technology-based sectors that have fueled U.S.
prosperity since World War II.
China's emergence as a manufacturing superpower, India's strength
as a leading provider of business process out-sourcing services and the
collapse of the former Soviet Union have added at least 2.5 billion
people to world labor markets already awash in talented, highly
motivated people. Continuing advances in digital technologies and the
inexorable spread of the Internet have added a whole new dimension to
America's competitiveness challenge. Any task that can be digitized--
from chip design to financial analysis to sophisticated pharmaceutical
research--can now be performed in many less developed countries at
prices developed countries just can't match.
Key Elements of a National Competitiveness Strategy
Twenty years ago, U.S. policy-makers faced a different
competitiveness challenge driven by the aggressive expansion of the
Japanese and European economies. In response to pressure from business,
educational, labor and professional leaders, Congress enacted and
federal agencies implemented fiscal and monetary initiatives that
helped to stimulate public and private investments. To an existing
commitment to basic research, they added a new emphasis on applied
research and technology transfer to accelerate commercialization of new
ideas and inventions. Public sector investments in education and
training were expanded to include a new focus on lifelong learning to
help incumbent workers acquire knowledge and skills needed to master
newly emerging and rapidly changing technologies. And trade policy
initiatives were expanded to include a greater emphasis on export
promotion and open access to overseas markets. As a result, the United
States was able to maintain its global economic, military and
technological preeminence and continue to provide its residents with
individual opportunities and living standards unmatched anywhere else
in the world.
To help maintain America's economic, military and homeland security
in increasingly interdependent, technology-driven global markets,
public and private policy-makers must work together to forge a new
National Competitiveness Strategy for the 21st Century. Key policy
objectives ought to be:
To improve the Nation's education system from pre-
school to graduate school and beyond, with special emphasis on
improving math, science and communications skills in grades K-
12;
To increase systemic incentives for individuals to
pursue education and careers in Science, Math, Engineering and
Technical fields and promote more effective utilization of SMET
personnel by public and private sector employers; and
To strengthen the Federal Government's commitment to
basic research and enhance its ability to encourage public and
private sector investments leading to the development and
application of innovative processes, products and services.
Implications for the SMET Workforce--Labor Market Supply and Demand
Considerations
Innovation is ultimately about people, their knowledge and their
creativity. The S&T workforce challenge, therefore, is to create and
sustain an environment that will attract the best and brightest minds
and enable them to innovate. A workplace in which creative people at
all levels share in the rewards--as well as the risks--associated with
innovative behavior is essential to meet changing labor market needs.
Much of the advice directed at Congress on S&T workforce issues is
predicated upon looming shortages of scientists and engineers. Such
speculative claims were used in the 1980's and '90's to justify
immigration policy interventions that worsened rather than eased
prevailing labor market imbalances. This year, proponents of ``Increase
the Supply'' policies are using the coming retirement of the baby-boom
generation, the Nation's growing dependence on foreign-born graduate
students and researchers and statistics comparing science and
engineering degree production in China, India and the United States to
justify similar policy interventions. Business groups are calling on
Congress to fill America's S&T educational pipeline with a younger,
more diverse--and less expensive--crop of future S&T workers.
The Business Roundtable's recent call for a doubling of U.S.
science and engineering degree awards by 2015 is an example of just
such an appeal.
IEEE-USA believes that policy-makers should distinguish between the
important societal need to increase the technological literacy of all
Americans from narrowly focused calls to increase the supply (and
reduce the cost) of science and engineering graduates. Effective
solutions to the broader societal problem will help to ensure the ready
availability of people with the knowledge and skills needed to meet
constantly changing labor market demands.
A policy of pushing or pulling more Americans into science and
engineering educational pipelines--in the absence of reasonable
assurances of rewarding job and career prospects--is unlikely to
succeed. Students don't major in difficult fields just to get
scholarships or help employers meet hiring targets. They major in
difficult fields to get jobs--preferably professionally challenging and
financially rewarding jobs.
As history has shown, Congressional decisions to address
anticipated labor market imbalances by raising temporary H-1B work visa
ceilings created serious over-supplies of scientists and engineers in
the 1990's, led to prolonged periods of unemployment for substantial
numbers of U.S. and foreign workers and probably helped to dissuade
many of the best and brightest U.S. students from pursuing technical
careers.
Improving SMET Labor Market Incentives and Rewards
As Harvard labor economist Richard Freeman has observed, the
marketplace reality is that U.S. scientists and engineers rank low in
terms of wages compared with income earned by other highly skilled
professionals and lag significantly behind doctors, lawyers and
business executives in terms of income earned over the course of their
careers. When coupled with the length of time it takes to earn post-
graduate degrees--two to four years in engineering and up to eight
additional years in some scientific fields--and the challenge of
maintaining technical proficiency over a 30- to 40-year career, it
should come as no surprise that many Americans perceive science and
engineering as an unattractive career choice. The growing reliance of
U.S. employers on temporary foreign workers and their ability to
transfer high tech jobs to lower cost overseas locations are making
such choices even more difficult for many of America's best and
brightest young students.
The challenge for policy-makers, then, is to find policies that
improve opportunities for America's best and brightest students to
pursue educations and careers in science and engineering fields. Trying
to attract more students into the education pipeline without improving
attendant incentives and rewards won't solve America's high tech
workforce challenge. Such an approach will only increase hardships and
disappointment when newly minted scientists and engineers find limited
job opportunities, lagging financial rewards, job insecurity and
uncertain career prospects when they receive their degrees.
Workforce Policy Objectives
As part of a comprehensive national innovation strategy, IEEE-USA
believes that workforce-related policies and investments should be
directed at the following objectives:
Strengthen the Nation's education system from pre-
school to graduate school and beyond, with special emphasis on
improving math, science and communications capabilities in
grades K-12 and promoting greater flexibility in undergraduate
and graduate degree programs in science and engineering.
Improve incentives for individuals to pursue
education and careers in science, math, engineering and
technical fields and promote more effective utilization of
graduates by public and private sector employers. This
objective can best be accomplished by establishing federal
scholarships for service incentive programs in technology
intensive agencies; enacting additional tax incentives for
continuing education and training (lifelong learning); and
expanding eligibility for Trade Adjustment Assistance to
dislocated service sector workers.
Promote balanced reforms in America's permanent,
employment-based immigration system and reduce the Nation's
growing dependence on temporary visa programs.
Critical Importance of Federal Investments in Research and Development
Substantial and sustained public and private investments in
research over the past 50 years have spawned an abundance of
technological breakthroughs, transformed American society and helped
the United States to become the world's preeminent economy. Some
economists estimate that as much as half of all recorded growth in
Gross Domestic Product (GDP) over this period is attributable to
technological advances.
While the U.S. continues to lead the world in its capacity to
innovate--to convert ideas and inventions to useful and affordable
products, services and processes--overall federal spending on research
and development as a percentage of GDP has declined significantly since
1965. The focus of federally-funded R&D has also changed. It has
shifted away from long-term investments in basic research--the kind of
research that has done the most to spur innovation and economic
growth--into much shorter-term investments in applied research and
development.
Increases in spending on weapons-related research and development
at the Department of Defense have accounted for 70 percent of all
federally funded R&D increases in recent years. Of the remainder, 75
percent has gone to the National Institutes of Health (NIH) and the
Department of Homeland Security (DHS). At $71 billion and $29 billion
respectively, the R&D budgets at DOD and NIH now account for over 75
percent of all federal spending on research and development. Federal
funding for R&D in the physical sciences and engineering, on the other
hand, has been flat or declining for over 30 years. To be optimally
successful, the Nation's investments in research must be balanced
across science and engineering disciplines and between short-term needs
for practical applications of state-of-the-art technologies and the
longer-term search for promising technologies of the future.
The Federal Government has long played a critical role in helping
to strengthen the Nation's innovation system by sponsoring basic and
applied research at universities, government laboratories, and not-for-
profit research laboratories. The Federal Government invests $132.3
billion in R&D, about one-third of the Nation's total investment. It
funds long-term basic research, whereas industry-sponsored R&D
investments are much more narrowly focused on near-term product and
process improvements. Thus, federal support continues to be crucial to
the discovery and early stage development of basic knowledge that the
U.S. needs to maintain its position of preeminence in technological
innovation.
Sustained national investment in research and development will be
necessary, but is not going to be sufficient to ensure continuing
economic and technological preeminence. We must also be able to capture
and commercialize the outcomes of such research in ways that will allow
us to continue to produce goods and services that meet the test of
international markets while simultaneously improving the living
standards of our citizens. While the Federal Government's funding
priority should be basic research--where industry under-invests--there
needs to be a renewed focus on bridging the ``valley of death'' between
basic research and the commercialization of technology, as well as
funding the applied research that leads to generic and enabling
technologies that can be commercialized by private industry.
Policy-makers must also understand that research and development is
only one component of the ``commercialization'' challenge. An even
bigger obstacle to technology innovation than limited federal R&D
dollars may be the Wall Street business imperative to return short-term
profits each quarter, which discourages long-term, high-risk
investments in innovation and technology commercialization. Other key
components of a new National Competitiveness Strategy--impacting tax,
trade, intellectual property and immigration policy--are beyond the
scope of this particular statement.
R&D Policy Objectives
IEEE-USA believes that federal research and development policies
and investments should be redirected as recommended by the Council on
Competitiveness in its Innovate America report in order to:
Stimulate high-risk research through ``Innovation
Acceleration'' grants that re-allocate three percent of agency
R&D budgets,
Restore DOD's historic commitment to basic research
by redirecting 20 percent of the S&T budget to long-term
research,
Intensify support for research in the physical
sciences and engineering to achieve a more robust national R&D
portfolio, and
Enact a permanent, restructured research and
experimentation tax credit and extend the credit to research
conducted in university-industry research consortia.
In addition, we endorse related Council on Competitiveness
recommendations, including:
Stimulate greater workforce skills enhancement
through the creation of tax-favored, life-long learning
accounts,
Enhance workforce flexibility and facilitate mobility
by increasing the portability of health care and pension
benefits,
Expand programs of assistance to service sector and
other workers who are dislocated by technology and trade,
Build 10 Innovation Hot Spots over the next five
years to capitalize on regional assets and leverage public and
private sector investments.
In closing, we would also recommend the timely enactment of
legislation to:
Increase National Science Foundation funding in line
with the previous Congressional authorization in Public Law
107-368 that its budget be doubled,
Fully fund the FY 2002 commitment to expand
incentives for NSF's science and engineering education
initiatives,
Maintain the long-term basic research focus in other
science and technology programs, including those administered
by the Defense Advanced Research Projects Administration
(DARPA) and the Department of Homeland Security (DHS), and
Increase high performance supercomputing research and
development funding, revitalize manufacturing technology in the
United States by enacting the Manufacturing Technology
Competitiveness Act (H.R. 250) and support funding for the
National Nanotechnology Initiative at levels recommended in the
21st Century Nanotechnology Act (Public Law 108-153).
Conclusion
This statement focuses on two important components of a national
innovation strategy, and therefore presents only a partial picture of
what needs to be done to ensure the ability of the United States to
maintain its technological competitiveness in the global economy.
IEEE-USA appreciate the enormity of the many interrelated tasks
facing Congress and the Administration and remains committed to working
with all interested parties to help identify and implement policy
options that will help sustain the prosperity, security and quality of
life that we associate with a strong and competitive America.