Back to Basics

Given the recent economic climate in the US and much of the world, the subject of job creation is one that has been on many people’s minds.  Business Week recently carried an article by Adrian Slywotzky, a partner at management consultants Oliver Wyman, on the enormous decline in basic research activity in the US. Slywotzky argues that this does not bode well for future job creation in the US:

Name an industry that can produce 1 million new, high-paying jobs over the next three years. You can’t, because there isn’t one. And that’s the problem.

Even 10-20 years ago there was a substantial effort by US corporations in basic scientific research, as exemplified by organizations such as Xerox PARC, RCA Sarnoff Labs, and Bell Labs.  By now, though, that effort has been largely gutted, and what remains is almost entirely devoted to product-specific research.  Bell Laboratories, for example,  was founded in 1925.  Its scientists have won six Nobel prizes in Physics, and, as Slywotsky points out, it was responsible for numerous significant innovations:

• The first public demonstration of fax transmission (1925)
• First long-distance TV transmission (1927)
• Invention of the transistor (1947)
• Invention of photovoltaic cell (1954)
• Creation of the UNIX operating system (1969)
• Technology for cellular telephony (1978)

The Sarnoff labs produced innovations in radar, color television, and lasers, just to pick a few examples.  Xerox PARC was, of course, the original home of the graphical user interface (GUI), the computer mouse, and Ethernet. Government organizations, such as NASA and DARPA, also made notable contributions.

The magnitude of the change has been striking.  In 2001, Bell Labs employed about 30,000 people; today, it employs about 1,000, and its small remaining basic research effort is being wound down:

In 2008, parent Alcatel-Lucent announced it would be pulling out of its last remaining areas of basic science—material physics and semiconductor research—to focus on projects that promise more immediate payoffs. The legendary Bell Labs, an engine of scientific discovery and industry creation for more than 80 years, is essentially gone.

Until the onset of the current recession, some of the effects of this change were masked by the apparent success of service industries, most notably financial services.  It is perhaps fair to say that recent events have cast some doubt on the sustainability of this as a basis for prosperity.  One can look at the US patent system for some evidence of the nature of this change: whereas in the late 1940s Bardeen et al and Shockley would be granted US patents (numbers 2524035 and 2569347) for the invention of the transistor (in 1956 Bardeen, Brattain, and Shockley would win the Nobel Prize in Physics for their work), on September 1, 2009, Google would be granted US design patent D599372S for their basic search page design.  (I believe that the current patent system itself is to a significant degree dysfunctional, but that’s a subject for another time.)

Slywotszky argues that we are facing a fundamental choice that will have serious implications for the future of our economy:

The choice facing the country is to do nothing and risk the inevitable decline of innovation, which will weaken an already sputtering demand engine, or act boldly by reasserting its faith in scientific inquiry and discovery. That will give the U.S. a shot at holding or increasing market share of the highest-value jobs in the world in electronics, biotech, aerospace, energy, nanotechnology, and materials—and at creating 15 to 17 million high-paying new jobs over the next decade.

Personally, I think he is largely right.  I really don’t think that we can continue to maintain the sort of society and living standards that we would all like if our only significant export products are motion pictures, financial gimmicks, and lawsuits.   Certainly there are areas of promise – among them cleaner energy, biotechnology, and nanomaterials – that are promising, if we can muster the will to address them.

Update Friday, 4 September, 20:21

The Business Week site has another, very similar article by Mr. Slywotzky, called “How Science Can Create Millions of New Jobs”.

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