Are We Losing Our Edge?

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There's much more to it, though. "Imagine," says Stanford University president John Hennessy, "that the next round of innovations in networking is done in India or China. How many years is it before either Cisco relocates to India or China and grows most of its new jobs there or the next Cisco is actually created there?" That's not so farfetched, says Du Pont CEO Chad Holliday: "If the U.S. doesn't get its act together, Du Pont is going to go to the countries that do, and so are IBM and Intel. We'd much rather be here, but we have an obligation to our employees and shareholders to bring value where we can."

That means not only that Americans have to be better than the rest of the world at inventing things but also that we have to be better at the basic research that precedes invention. Back in the 19th and early 20th centuries, people like Edison, Morse and the Wright brothers proved that Americans were pretty good at creating useful technology. But all of it was based on fundamental science done in places like Britain, Germany and France, where the true intellectual action was.

If not for Hitler, it might still be, but his aggression drove scientists out of Europe, and the desperate need to defeat him galvanized the U.S. and Britain into pouring money into defense research, creating powerful new technologies--radar, sonar, the atom bomb. U.S. leaders learned that pure research like atomic and electromagnetic physics, combined with massive government funding, could lead to dramatic breakthroughs in military technology. Because the Soviet Union almost immediately became just as ominous a threat as Nazi Germany had been, Congress created the National Science Foundation in 1950 to fund basic and applied science, mostly at universities, "to promote the progress of science; to advance the national health, prosperity, and welfare; to secure the national defense ..." In 1958 it founded NASA in response to renewed fears of Soviet technical competition ignited by the launch of Sputnik the previous year. Also in 1957 and for the same reason, the Department of Defense started the Advanced Research Projects Agency (ARPA). And it established or beefed up national laboratories in New Mexico, California, Illinois, Washington and New York.

All those organizations focused in varying degrees on applied science--attempts to invent useful new technologies--but all of them put money into pure science as well. So did private corporations, including AT&T, IBM and Xerox, which hired not just engineers but also mathematicians, physicists, biologists and even astronomers and gave them free rein. The strategy led to utterly impractical but revolutionary discoveries. The Big Bang theory of the cosmos, to name just one example, got its first experimental proof at AT&T's Bell Labs.

But the strategy paid off in an avalanche of astonishing and profitable technologies as well, from computer chips to fiber-optic cables to lasers to gene splicing and more. According to a 2003 National Academies report, no fewer than 19 multibillion-dollar industries resulted from fundamental research in information technology alone. Yet, says David Patterson, president of the Association for Computing Machinery, "people have this idea of academic research as this fuzzy, ivory-tower stuff that probably doesn't pay off."