America, We Have A Problem

Forbes.com, Norman R. Augustine 03.24.08, 6:00 AM ET

Congress recently scrambled to place a $152 billion band-aid on the nation's economy, but left untreated the underlying problems are likely to require such fixes with increasing frequency in the future.

These problems were brought to the fore three years ago when the National Academy of Sciences, the National Academy of Engineering and the Institute of Medicine--organizations that count 195 Nobel Laureates among their membership--conducted a study on America's ability to compete for jobs in an emerging global economy where five chemists in China or 20 assembly workers in Vietnam can be hired for the cost of one of these workers in America, and where physicians in India now read the CAT scans of patients in American hospitals.

 The resulting report, titled Rising Above the Gathering Storm, concluded that without both a dramatic increase in investment in basic research and reform of the nation's K-12 educational system, America's children are likely to have a lower standard of living than their parents.

The report's warning did not go unheeded.

A new research university is scheduled to launch soon with a day-one endowment of $10 billion, equal to what it took MIT 142 years to accumulate. Next year, over 200,000 students will study abroad, mostly in the fields of science and engineering, often under government-provided scholarships. Government investment in nondefense R&D is set to increase by 25% over the next few years. 

A multi-year initiative is under way to make the country a global nanotechnology hub. The world's most powerful particle accelerator will begin operation this year. And a high-level commission will conduct a followup to the Gathering Storm study with the objective of creating more jobs at home. 

The problem is that these actions were taken by Saudi Arabia, China, the U.K., India, Switzerland and Australia, respectively. As chair of the committee that wrote Gathering Storm, I have been asked to speak about its findings from Japan to Canada and from Australia to Europe. But what about America? 

Since the report was issued, the world-renowned Fermilab in Illinois responded to reductions in government research funding with layoffs and mandatory two-day-a-month unpaid "holidays" for its research staff. The U.S. portion of the international program to develop plentiful energy through nuclear fusion is being reduced to "survival mode." 

The U.S. trade deficit in high-technology goods further increased. Nearly all major U.S. high-tech firms now have research laboratories outside the country and are poised to expand them. American companies spent three times more on litigation than on research. 

Eighty percent of American CFOs surveyed said they would curtail R&D in order to meet short-term profit projections. The latest international standardized test for high school seniors in 30 nations revealed that students in only four nations performed significantly worse than U.S. students in science, and only five rated worse in math. Two-thirds of the Ph.D.s in engineering awarded by U.S. universities went to non-U.S. citizens. And U.S. K-12 teachers were reported to have worked 43 hours to earn $1,000, while Kobe Bryant earned that amount in five minutes and 30 seconds, and Howard Stern in only 24 seconds. 

Industrial firms in the U.S. and elsewhere have found an answer to these problems. 

Howard High, spokesman for Intel (nasdaq: INTC - news - people ) prior to his retirement, explains, "We go where the smart people are. Now our business operations are two-thirds in the U.S. and one-third overseas. But that ratio will flip over in the next 10 years." General Motors (nyse: GM - news - people ) spokesman Greg Martin put it: "We're a global car company that happens to be based in the U.S." Addressing root causes, Bill Gates observed, "When I compare our high schools with what I see when I'm traveling abroad, I'm terrified for our workforce of tomorrow." 

The irony is that America's leaders seem convinced of the importance of fixing K-12 math and science education and increasing government investment in basic research. In fact, the president made specific proposals to those ends in his 2006 State of the Union address, and the resulting authorization passed in the House 397-20 and the Senate by unanimous consent. However, due to an avalanche of 12,000 earmarks (Stanislaw Lee observed that "each snowflake in an avalanche pleads 'not guilty' "), and exacerbated by what can perhaps best be characterized as a system failure, the omnibus budget act that actually provides the funds to implement the government's programs failed to address America's competitiveness in any meaningful way. 

Churchill said that you can always count on the Americans to do the right thing after they have tried everything else. Our nation's leaders need to succeed in their bipartisan efforts to help Americans compete in a job market increasingly dominated by 3 billion would-be capitalists who entered the workplace after many of the world's political systems were restructured at the end of the last century. Otherwise, our nation's greatest export is likely to be our jobs and our standard of living. 

Norman Augustine is retired chairman of Lockheed Martin, former under secretary of the Army and past chair of the National Academy of Engineering.

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