I am going to begin with a story which appears to make me its hero. And, yes, I admit, I made a difference. But the real heroes of the story are those who are not at the center of it, some not even mentioned. The result is a moral for our times.
In the early 80s, Japan was resurgent as its Ministry of International Trade and Industry (MITI) guided its economic development. America feared in economic emergence, even its eventual ascendency, as a major economic power and competitor. To meet this perceived threat, the Reagan administration proposed moving the nation’s energy laboratories from the Department of Energy to the Department of Commerce.
At the time, I was consulting to the Energy Research Advisory Board under the Assistant Secretary of Energy with the quasi-Dickensian name of Alvin Trivelpiece. Al and I knew each other from his days as a Senior Vice President at Science Applications International Corporation and my continuing time as a consultant, eventually to become its longest-ever consultant.
One day, Al sought me out in the ERAB office to ask my opinion of the Administration’s proposal. I gave it, and he asked me to accompany him to a meeting with the Secretary of Commerce Malcolm Baldrige the next morning. I expected to be a back-bencher supporting Al. Instead, Al gave me a battlefield promotion by introducing me as “Dr. Hays,” “an expert on the national labs.” The Secretary and I shook hands, he invited me to sit across the desk from him, and he grilled me. Most meetings with Secretaries are 5-, maybe 10-, minute affairs; ours went on for 30 minutes, with his chief of staff, Clyde Prestowitz, taking notes. When the meeting ended, Clyde asked me to stay on for a further confab, which lasted an hour. (BTW, Clyde went on to a notable career as the founder and president of the Economic Strategy Institute.)
My objections to the transfer were three quite simple ones. One, if the transfer were to occur to make them more responsive to industrial needs, the labs would shift their focus from basic research, which no companies did or would do, to applied research and thereby eliminate our “seed corn.” Two, we had no reason to fear the Japanese economy because its emergence reflected the temporary greater efficiencies of new plants built after the war and its production of conventional products. Three, MITI’s control of this Japanese economy would come to a bad end which economies controlled by oligarchies, regardless of ideology, come to: rigid, unimaginative, resistant to technological change.
Two days later, Al sought me out in the ERAB office once again, this time to tell me in Washington’s oblique way of sparing praise that the proposal had been withdrawn. Later, under MITI’s guidance, Japan lagged technological development, and plateaued into stagflation. It retains a solid economy, but it conquers no worlds, old or new.
I tell this long story for two reasons. First, I think that we perceive China now as we perceived Japan 40 years ago. There are differences. China has the world’s largest population, which can give a China-based industry a large market and the resources to grow it larger. It also has invested heavily in education, especially at the university level. And the flows of information make isolation from technological development elsewhere readily available. At the same time, recent events show that the Chinese government increasingly emphasizes politics more than economics as it increases controls on existing and emerging economic giants within its borders. In the long run, if its policy continues, China will realize the conditions which stifled Japan. In addition, China’s foreign policy, by making its economic power a weapon of diplomacy, is generating resistance to its economic imperialism. Growth will continue but at a reduced scale. Although those who prosper under China’s current policies will abide government control for a time, that time will not be forever. As the government encounters difficulties, even reverses, and struggles with them, as struggle it will, larger companies, especially those increasingly reliant on international markets, will demand a sharing of power, which will be liberating in many ways. At the same time, its foreign policy will have to moderate to maintain those international markets. Willy-nilly, China will bring itself to heel.
This no doubt bold prediction is a comforting ointment which has a fly in it. If America continues to disrupt and damage itself by divisive politics, it will fail to adopt policies with commensurate budgets necessary to invest in education, research and development, and the technical infrastructure to facilitate domestic and foreign trade. Attacks on expertise make war against America and its survival except as an impoverished apartheid state. The fact-, truth-, and reason-defying propensities of the Right—I include the Republican Party, the Proud Boys, and the other what-nots or what-nuts—, if ascendant and dominant politically, mean that America will be unable to maximize its human resources to make adaptive, informed responses to changing economic, environmental, and technological circumstances. Even military advantage will erode if the civilian-industrial complex loses its strengths in innovation and enterprise.
The second reason for telling this story follows upon this comment. I appear to be the hero. But the real heroes are Baldrige, Prestowitz, officials in the White House, and President Reagan himself. They listened to someone who disagreed with their proposal, cared not about his politics (I am not now and never have been a Republican), and regarded his facts and arguments without questioning his motives. The question is not one of “national unity”; it is a question of common sense and a shared commitment to the public good, which, as in any society, requires some sacrifice of individual autonomy. Otherwise, there is no America.
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