Hans Mark Interview: Conversations with History; Institute of International Studies, UC Berkeley

    Universities, and the Changing International Environment: Conversation with 
    Hans Mark, Chancellor of the University of Texas System; 3/15/88 by 
    Harry Kreisler

Page 4 of 7

Research and Development

Is the situation changing because of the national concern now about the extent to which our R&D is not being translated into commercially viable products? I guess what I am getting at is, what is the nature of the Japanese challenge, and does it pose any new problems for a great university like Texas?

Well, first of all, the nature of the Japanese challenge is obviously an important one, but it is very, very important to realize that we can't win the economic competition with the Japanese by imitating them. They have strengths which have to do with a disciplined work force, relatively low wage scales, and a very, very tightly managed and controlled society that we can't do and we shouldn't try. I mean, that's just not in the cards. They come to us -- I've met with numerous Japanese delegations -- and what they want to know is, how is it that we can have all the new ideas that they then turn into profitable products, and how do we do that? So we get asked that question. Which of course begs your question, namely, how do we in fact see to it that some of things redound to our economic benefit?

I think to a large extent, one does that in industrial organizations. The fact is that the Japanese do export, say, a lot of electronics components to this country, but quite a few of them are manufactured in Japan by American companies, so there is at least a financial benefit to those corporations, even though the employment benefits in this country are lost. I have a view that the right way to handle this problem, because we are particularly good at developing new technology, is to set up our economy and our procedures in such a way that U.S. manufactures always make the first generation of something that's new. And then when the second and third generations come along, we ought to export it, in fact. It's really to our advantage to have a prosperous world. It doesn't help the United States to have Japan a poor nation or Brazil a poor nation, or Mexico a poor nation, but we've got to do it in such a way that we maintain our own standard of living.

What that requires is that you stay ahead in technology across the board, that in each industry you manufacture the first new product and that you get out of those industries that tend to be stagnating, which is not as easily done as it's said because of the dislocation and employment and so on that results. I'm talking here for instance about something like the steel industry. The demand for steel is going to go down as time goes on, because substitute materials are both better and cheaper, and therefore you have an industry that will never have capacity that it's had in the past. Something has to be done there; you can't easily convert that, nor can you promise people that the steel industry is going to revive. It is not. What's going to happen is that we're going to build new industries that make composite materials or that make other substitutes that create employment elsewhere in the country. So that kind of a political adjustment is important. What's important for the government is to know what to do -- to know that subsidizing an old steel mill is not the right answer -- but that giving tax breaks to an industry making substitute products probably is.

You've been at NASA, you've been Secretary of the Air Force, and so on; what do you make of the arguments that our R&D budgets are too much skewed toward defense and that is one of the reasons that we're falling behind our Japanese and German allies?

First of all, our research and development budget is still by far the largest of any of the nations' in the world. It runs of the order of $90 billion a year. It's about half federal and half private. Of the federal part, about $18 billion to $20 billion is defense; the rest is NASA, Agriculture, NIH, NSF -- a number of other large agencies that have research budgets. In total then, the defense portion of the budget runs of the order of $20 billion. Maybe a little less than a quarter of the money spent on R&D in the country is defense related. I guess I would have to say that I'm comfortable with that. It's smaller today than it was twenty-five years ago, and if it didn't skew things then, why should it skew things now? I'm not afraid of that. If it were 50 percent or 70 percent, one would have to say yes, there's a problem.

Very often, certainly at the basic level, we will have professors, say, in the medical schools, who will have defense money for some project, and then that same projects will also have NIH and NSF and other funding, and a guy puts it together in a pot and does the work. I really don't think that that's a fundamental problem. I think the much more serious problem is that in spite of the very generous funding that exists, there's never quite enough. So it's got to be kept up, and a continuing effort has to made to argue and debate with the legislators and with the Congress that we need to keep that funding going.

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