NOW that President-elect Clinton has selected his senior
economic advisers, led by highly regarded Sen. Lloyd Bentsen of
Texas and New York investment banker Robert Rubin, he must turn to
the difficult task of implementing an economic plan for American
renewal and growth. In doing so, Mr. Clinton must choose between a
highly centralized economic strategy driven by Washington agency
bureaucrats and federal categorical programs or a locally based
strategy that empowers communities and local decisionmakers across
The Clinton administration should resist the mistaken but
beguiling notion that America can be rebuilt from Washington.
Pressure for a centrally managed industrial policy will come from
many sources, including congressional leaders, federal policy
experts looking for new programs to run, and big business. These
forces were evident this year when Congress, confronted with large
losses of jobs and industrial capacity due to a declining defense
budget, took its first step toward an industrial strategy by
providing $1.6 billion in transitional assistance to defense firms
and workers. But what began as a promising endeavor resulted in 26
separate categorical programs. Several new programs will take more
than a year to put into operation, long after many defense firms
cease to exist.
This cumbersome, fragmented, and ineffective approach reflects a
well-intended but counterproductive disposition to address every
challenge with a separate program.
In fashioning a new industrial strategy, federal lawmakers
should consider the advantages of decentralizing management and
streamlining administration to foster grass-roots economic
First, states have working relationships with the private sector
and have proven programs in place, run by seasoned professionals
who know how to use government resources to leverage private
investment. Federal initiatives to bolster existing state and local
programs would build an industrial strategy from the bottom up.
Building a dual system with centralized decisionmaking in
Washington would be wasteful and time-consuming.
Second, technology transfer between public research institutions
and the private sector does not generally take place in Washington.
Technology transfer is a labor-intensive, locally originated
endeavor. Creating new commercial research authorities in
Washington is not as productive as building thousands of local
bridges between public research and private interests across the
Congress already spends $76 billion annually on research and
development - four times its annual investment in highways and mass
transit. While this funding supports more than 700 federal
laboratories and research at hundreds of universities, virtually
none of it is spent on technology transfer.
Before we create new federal research authorities in Washington,
let's focus on commercializing existing technology. …