Slip in US Productivity Raises Questions on Government's Role Even as the United States Is Engaged in a Struggle to Keep Up with Its Global Business Competitors, There Is a Battle within US Borders over the Proper Role of Government in Keeping American Workers Productive Series: NATIONAL ISSUES FORUM. Part 2 of a 3-Part Series. First of Two Articles Appearing Today

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WORDS, words, words. For a decade, politicians, corporate executives, and academics have expressed varying degrees of alarm about the international competitiveness of United States industry.

The litany is familiar. Productivity gains are too small. Savings are inadequate. US business investment lags behind that of Japan. There's not enough civilian research and development. Too many youths are functionally illiterate and perform poorly in mathematics and science. As a result, the American dream of ever-increasing prosperity for succeeding generations has turned into a delusion of grandeur.

"Things are getting worse daily," says Fred Branfman, director of Rebuild America, a Washington think tank, and one of the most pessimistic commentators on America's competitive prospects. "It's midnight for America."

But have companies, governmental programs, and individuals moved beyond the countless lectures, books, and studies to actual action?

Yes, says Richard Lester, executive director of the Massachusetts Institute of Technology's Commission on Industrial Productivity. "It is possible to see things at the firm level which you would not have seen three or four years ago - and certainly not at the beginning of the 1980s when this debate on competitiveness began. Things that have happened, particularly in manufacturing, are in the right direction."

Mr. Lester cautioned, however: "At the level of government, it is hard to be as positive."

That view is shared by some other academic experts.

William Pierskalla, director of the Huntsmen Center for Global Competition and Leadership at the Wharton School of the University of Pennsylvania, says, "Some firms are becoming very good competitors. Others are a little slower."

He sees progress in quality control at all levels of some major companies, from helping suppliers provide quality parts and services, to improved the manufacturing processes, to better design for manufacturing and service.

But in regard to the advancement of education, necessary to provide the United States with a competent labor force, Professor Pierskalla comments: "There is a lot of rhetoric, but I don't think much is being done."

David Teece, a professor of international business and finance at the University of California at Berkley's business school, finds a greater awareness in Washington of the competitive challenge. "But it hasn't translated into change at the policy level."

In fact, Congress did appropriate more money to make US industry competitive than the Bush administration requested in the massive budget package passed last month. Congress provided $36 million for the Advanced Technology Program of the Commerce Department. President Bush had asked for $10 million for the program, aimed at assisting research consortia find commercial applications for advanced technologies.

The Defense Advanced Research Projects Agency of the Department of Defense got $100 million for new programs, a substantial increase. The money is to be used for research with both military and commercial potential, with half going to develop manufacturing technology and the other half for five consortia doing "pre-competitive" research. By administration definition that is research "which occurs prior to the development of application-specific commercial prototypes." Such research results "can be shared among potential competitors without reducing the financial incentives for individual firms to develop and market commercial products and processes based upon the results."

Congress also appropriated research money for robotics, high-performance computing, semiconductors, superconductivity, and advanced imaging technologies (including doubling the money for high-definition TV). …


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