We are living in "an entirely new world economy" and we are "not
going to go back to the way it was," said Denis Fred Simon of the Rensselaer
Polytechnic Institute in an April 26 presentation. The new economy will be "increasingly
dominated by countries other than the U.S.," he warned. Simon was one
of six speakers addressing various aspects of economic globalization and
the offshoring of jobs at the 29th Annual AAAS Science and Technology Policy
Forum. The speakers agreed with moderator Ira Shapiro of Greenberg Traurig,
LLP, that the technological growth of developing countries presented both "enormous
opportunities and significant challenges." Rather than arguing that
the federal government should act to prevent companies from sending jobs
overseas, panel members instead called for comprehensive policies to stimulate
R&D and innovation in this country to maintain U.S. S&T leadership,
and to mitigate the negative impacts on workers.
Shapiro described how policies to develop S&T talent and encourage
foreign R&D investment have led to rapid change in China and India.
Diana Hicks of the Georgia Institute of Technology, citing data on
S&T degrees, publications, patents and citation rates, highlighted
the "quickly strengthening S&T systems" in many Asian
countries. She remarked that "the U.S. may no longer have a monopoly
on leading-edge S&T and will have to compete harder to maintain
its current position."
Ron Hira of the Rochester Institute of Technology pointed out that
companies choose to send work overseas for many reasons, including
low wages, low costs, intellectual talent, access to local markets
and tax incentives. He called the free trade versus protectionism debate "misguided," saying
that "global sourcing has good and bad effects." The real
issue, he said, is determining how to mitigate the potential negative
consequences such as job dislocation. He recommended better data collection
to ascertain how much work is being sent offshore and how many jobs
are being lost as a result.
Electronic Industries Alliance President Dave McCurdy agreed that
it is simplistic and "polarizing" to portray the situation
as "trade versus jobs." Instead, he said that the U.S., to
retain its leadership in science and technology, must be able to "invent
and perfect" new technologies, and manufacture them wherever it
is most efficient. "In the past, developing nations followed the
U.S.'s lead," he said. "Now those same nations are aspiring
to lead.... The U.S. must create an environment that ensures the next
big thing is developed here."
Panelists pointed to a series of indicators that the U.S.'s global
position in S&T could be imperiled. These included the U.S.'s declining
federal R&D investment, particularly in the physical sciences,
as a fraction of GDP; the numbers of U.S. citizens pursuing degrees
in science and engineering; and the impact of post-9/11 visa and immigration
policies on foreign students. The government's R&D funding capacity
is threatened by budget pressures, budget discipline is gone, and the
appropriations process is in jeopardy, stated Bill Bonvillian, Legislative
Director for Senator Joseph Lieberman (D-CT). Bonvillian said that "the
congressional process to cope with fiscal realities is broken," and
warned that in the future, the nation may not be able to fund R&D
across a broad spectrum of fields, but may be forced instead into the
risky strategy of "niche funding" for targeted areas.
A number of policy suggestions were offered for maintaining U.S. leadership
in innovation. Common themes included stronger R&D investment;
improvement of K-12 science and math education; lifetime worker training
and assistance for displaced workers; incentives to attract and retain
U.S. and foreign students in science and engineering; enforcement of
intellectual property rights; reform of tax, trade and regulatory policies,
and increased broadband access.
Among other recommendations, the Institute for International Economics'
Catherine Mann suggested wage insurance and a Human-Capitol Investment
Tax Credit to encourage worker training. Hira called for reform of
H-1B and L-1 visa policies to discourage displacement of American workers
with foreign workers. Bonvillian pointed out that the U.S. S&T
enterprise is based on linear model that does not take into account
cross-disciplinary, cross-agency, and cross-sector R&D, and needs
to be revised. McCurdy stated that the post-9/11 security environment
was deterring foreign students from coming to the U.S., and that other
countries were finding ways to attract those students. "We can't
continue this policy if we want to continue to grow," he said.
The speakers' presentations can be found on the web site for the AAAS
S&T Policy Forum at: http://www.aaas.org/spp/rd/forum.htm
A number of bills have been introduced in Congress, sponsored primarily
by Democrats, that address aspects of the offshoring issue. A bill
introduced by Senate Minority Leader Tom Daschle (D-SD) (S. 2090) would
amend the Worker Adjustment and Retraining Notification Act to require
companies to give three months' advance notice when laying off a specified
number of employees due to offshoring, and to notify the Department
of Labor and state and local employment agencies. Legislation has also
been introduced in both houses (S. 2157, H.R. 3881) that would broaden
the categories of workers who are eligible to receive financial assistance
through the Trade Adjustment Assistance Program. Additional bills (S.
2094, H.R. 3820, H.R. 3888, H.R. 3911) would ban companies that engage
in certain offshoring activities from receiving some federal assistance
or federal and state contracts. Yet another bill, H.R. 2849, is intended
to ensure that recipients of H-1B and L-1 visas do not beat out qualified
American workers for jobs.
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