The High-Tech Challenge

By John S. DeMott

There is nothing like an old idea whose time has come again. The Federal Government's agricultural Extension Service, set up in 1914, is one of the most successful programs Washington has ever developed. It helped spread new technologies and made American farms the most efficient in the world. John Zysman, 38, codirector of the University of California's Berkeley Roundtable on the International Economy and a guest at the meeting of TIME'S Board of Economists, believes the U.S. can use a similar service for high technology.

Advanced technology is not the province of just a few way-out industries. Zysman, who studies the exotic fields from the outskirts of California's Silicon Valley, maintains that the frontier industries are changing the way other, more commonplace businesses are conducted. These technologies, he says, are "transforming the whole economy." Textiles and apparel making, for example, are usually considered labor-intensive, backward industries. But instead of being displaced by that technology, contends Zysman, textile manufacturing is part of the new industrial revolution. Cloth can be cut by laser beams, and looms are driven by computers programmed, ironically in some cases, to duplicate the irregularities of hand weaving. Insurance companies offer a variety of policies that would not have been possible before the arrival of computers. Even salami is cut precisely with equipment guided by microprocessors.

International competition, however, is fierce, and Zysman argues that American policymakers should create a climate in which companies can prepare to face the onslaught from abroad, especially from the Japanese. He advocates a three-pronged program to help American high-technology firms compete better in world trade. One step would be an industrial extension service to ensure that advances spread quickly throughout the economy. Simply developing new techniques is not enough. The Government should help disseminate those concepts to companies large and small, just as agricultural breakthroughs were diffused earlier. Zysman supports the idea of more basic research by Government to help smaller firms that cannot do it themselves. Finally, he argues that the U.S. should adopt a firmer trade policy so that its products can get into closed foreign markets, especially Japan. Too often, in fields like telecommunications and electronics, the Japanese make it difficult for foreign companies to sell their products.

The use of advanced technologies in the U.S. has been retarded, Zysman contends, because makers of automated equipment initially were encouraged by the Government to sell their products to the defense and aerospace markets, instead of to other companies in many industries. These technologies should be applied to the making of automobiles, pens, washing machines and other consumer goods. It is precisely in these areas that foreign competition is stiffest.

Several members of the TIME board disagreed with Zysman's approach, which seemed to them to be heading toward a national industrial policy. Alan Greenspan said it would lead inevitably to establishment of a Government board that would be making investment decisions more properly left to the market. Said he: "Those kinds of boards have 20-20 hindsight and extraordinarily inept foresight. Putting investment incentives in technologically advanced products is fine, but what are they? Who knows?" Zysman nonetheless believes that companies competing on the frontiers of high technology will need considerable help as they battle the Japanese and other foreign competitors. --By John S. DeMott