Where Have You Gone, Bell Labs?

Really interesting article in Business Week that I just caught wind of by Adrian Slywotzky talking about how the importance of public/private research labs for America’s economic recovery.

He estimates that due to the Recession and outsourcing, we need to create 6.7 million jobs, and then to spark demand to truly “recover”, we need to create another 10 million. He says this isn’t impossible, because in the 1990′s the U.S. economy generated 22 million jobs (2.2 million a year), but between 2000-2007 (before the Recession), the economy only generated 900,000 a year.

In addition, as he says,

Of the roughly 130 million jobs in the U.S., only 20% (26 million) pay more than $60,000 a year. The other 80% pay an average of $33,000. That ratio is not a good foundation for a strong middle class and a prosperous society. Rather than a demand engine, it’s a decay curve.

His argument is that basic scientific research by both government and private labs has fueled the various “blockbuster” economies over the past hundred something years:

Cars and petroleum in the 1920s, movies and radio in the 1930s, defense in the 1940s, appliances and television in the 1950s, pharmaceuticals in the 1960s, aerospace in the 1970s, PCs in the 1980s, the Internet and cellular telephony in the 1990s.

He observes that all of these industries grew out of basic research conducted either at private research labs like Bell Labs or government labs like DARPA.

What he sees as a problem is that unlike in previous recessions, the funding for basic research has dwindled over the past decade. He cites Bell Labs as an example where as recently as 2001, there were 30,000 scientists employed and now there are only 1,000.

Underlying much of this, of course, is the oft-observed truth that I can certainly confirm personally, that most of the smart technical people (especially the ones I graduated with at Harvard) have been going into finance over the 10 years. As he says,

Science has lost its allure as the domain for our best and brightest. Much of the best technical talent has been drawn to the promise of riches from Wall Street and financial engineering. We need to reestablish a culture that rewards and celebrates the scientist who is willing to work on tough problems even if the commercial return is less certain.

He fundamentally calls for greater investment in labs and R&D in the United States.  His three recommendations for how to get back on track are:

• Clear national goals in two or three key areas, such as carbon-free energy and preventive medicine.
• Government commitment of $10 billion a year above and beyond spending for national agencies to jump-start new industrial research labs
• Government tax credits for corporations that commit to spending 5% to 10% (or more) of R&D on basic research

Incidentally, I saw a while ago, that the third point sounds like something President Obama is proposing as part of his general tax reforms – namely a $74.5 billion tax cut over 10 years for R&D.

Having worked at a government research lab over the past 3 years, I can’t comment much on what it used to be like pre-2000. But I know that the people working there are brilliant.  And I also know that the finance sector is not going to create 17 million jobs over the next 10 years. What’s wrong with giving scientists some love, for the good of the country?