Norman Augustine, former CEO of Lockheed Martin and former undersecretary of the Army talks about the report he co-chaired for the American Academy of Arts & Sciences, "Restoring the Foundation: The Vital Role of Research in Preserving the American Dream"
Norman Augustine, former CEO of Lockheed Martin and former undersecretary of the Army talks about the report he co-chaired for the American Academy of Arts & Sciences, "Restoring the Foundation: The Vital Role of Research in Preserving the American Dream"
Steve Mirsky: Welcome to Scientific American Science Talk, posted on June 23, 2015. I'm Steve Mirsky. Earlier today dozens of leaders of American business industry, higher education, science and engineering issued an urgent call to action for stronger federal policies and investment to drive domestic research and development.
Ten CEOs from U.S. corporations and 252 organizations, ranging from the American Association for the Advancement of Science to the Woods Hole Oceanographic Institution, co-signed the document called “Innovation: An American Imperative,” aimed at federal decision makers and legislatures. It underscores the findings and warnings contained in a recent report from the American Academy of Arts and Sciences, that report titled Restoring the Foundation of Vital Role of Research in Preserving the American Dream.
I recently talked by phone to one of the co-chairs who put that report together. Norman Augustine is the retired chair and CEO of Lockheed Martin and a former undersecretary of the Army. So he knows his way around research, business, and government.
Early on you'll hear me mention the OECD. That's the Organization for Economic Cooperation and Development. Here's Norm Augustine.
We'll get to the report in a second. But first I have a question. I just want to ask you for a quick answer, because I think people will be fascinated. I'm under the impression that you have stood on both poles of our planet.
Norman Augustine: I have indeed stood on both poles of our planet. I've been to the South Pole three times and the North Pole once. Got to the North Pole on a Russian nuclear icebreaker. And the South Pole, I was chairing two different commissions for the White House _____. And that gave me the occasion to go there to kind of see what we're doing there and how much we spend there and what we ought to be doing there.
Mirsky: So you're one of the few people I can ask this of. Which pole do you like better?
Augustine: Frankly, there's not much at the North Pole. The only activity while we were there was a baseball game, which we think may have been the first baseball game played at the North Pole. And we set the home plate up such that it was one side of the pole and the pitcher's mound on the other. And we can say the pitchers, the slow ball took 12 hours to get to the plate.
Mirsky: [Laughs] That's great.
Augustine: We set a lot of records. But the South Pole is really more interesting. The North Pole, of course, is just a sheet of ice on water, whereas the South Pole, you've got 9,000 feet of ice and there's a lot of research going on there. Some really quite fascinating research relating to everything from particle physics to weather, and so on. And as you move away from the pole there's some interesting research and biology and the environment that goes on.
It's a marvelous scientific laboratory. It's just very hard to get to and it's quite costly to conduct research there. So one has to be very efficient. And we discovered that one of the studies I shared recently that about 90 percent of the cost of operating at the South Pole is in the form of logistic support, saying that about 10 percent of it is hands-on science.
So if you let the cost of the logistics increase by just 10 percent or thereabouts, there will be no science done at all. And so there's a huge leverage for operating more efficiently from a logistical standpoint.
Mirsky: Right, the big problem there is getting people there and keeping them alive.
Augustine: It's getting there, keeping them alive, and supplying them. And of course you take a gallon of gasoline, which you buy at the corner filling station for a couple of dollars. It costs about $35.00 at the pole. And the reason is you have to buy the gas and ship it to Christchurch, New Zealand, or near to Christchurch, and then ship it to McMurdo. And you can't do that without having an icebreaker break the ice. And then you have to build a pier at McMurdo every year, 'cause the pier is built out of ice. And then in the past you had to fly the fuel to the South Pole. And so by the time you get there—and then you have to store it, of course—then it become very, very expensive.
One good thing that's being done, McMurdo is quite a bit of the energy is they drive from wind now, and they have lots of that.
Mirsky: Well, I can talk to you about the poles all day, but let's talk about restoring the foundation report. We are now in 10th place in the OECD standings of countries of in terms of research investment as a percentage of GDP. What happened? We were as high as second. What happened to drive us down and why is that lower standing an issue?
Augustine: Well, yeah, sure, exactly right, and a troubling factor is we don't seem to be approaching an asymptote. It's been quite linear, our position among nations, from close to the top to 10th. In the area ____ we've fallen from first to seventh during that period of time.
Research as a percentage of GDP turns out to be a very important measure, that it implies impact on the economy and so on. What's really been happening, I think probably the most important thing, is that others are getting better and they're getting a lot faster than we are. In fact, we have been declining in our investment in research for a number of years now.
Even if you take ____, which is some of the most popular research that's conducted, they have seen a 22-percent cut in the last 3 or 4 years after trying to have an increase 7 years ago that is no longer been sustained.
So part of it is lack of investment. This country, part of it is greater investment and elsewhere. And one of the things one finds is that the role of Federal government is terribly important in the funding research. And there have been studies conducted of I think it's 93 different nations, to rank them according to what percent of the research conducted in that nation is funded by the national government of that nation. We were at 29th on that list.
So either we're going to have to find others to fund research, or the Federal government's gonna have to pick up a greater share, or we continue to decline—and those are about the only choices I think we have.
Mirsky: Let me channel comments that I know are going to come in from listeners and readers of the magazine. Certain listeners and readers who will always say why not just let the private sector do it? It's always more efficient than the government. Let me do all this research?
Augustine: It's a terrific question, actually. And another aspect of the question is the private section is of course one of the beneficiaries of research, and so why shouldn't it pay for it? The problem is that it won't and it can't, under today's economic circumstances. The reason for that is the demands of the marketplace on the private sector, meaning business in this case, are such that there is very little patient money available. And the average shareholder today owns their share four months, the average shareholders owns a share on the New York Stock Exchange. It was 18 months not too many long ago, not too many years ago. And it was much longer than that back in the '50s and '60s.
And so when you propose doing research to a group of shareholders, they don't want to have anything to do it, because they won't own your stock four months from now. And so in that scenario—and I think there are ways to change it, but not likely to happen—no firm can really afford to do basic research.
Now, the firms do do development. And when the Federal government over the years has cut back its share of research and development from two-thirds down to one-third, industry picked up most of the other part. It's now industry does two-thirds and the Federal government one-third. The problem is industry, I've noted, is doing D, not R. And that's the reason that great places like the iconic Bell Labs are really a shadow of themselves, if they're around at all.
Mirsky: Yeah, this issue of, as you called it, patient money, I think is really crucial, because if you are going to do—for example, let's just say the Manhattan project. This was obviously going to be a long-term program and you kind of need this gigantic backer to swallow the risk for anything like that.
Augustine: That's true. I think that any time that you are talking about a large program, a long-time program, a high-risk program, those are the things that just don't fit industry investment. And one might also say perhaps our universities should share a greater percentage of the investment and research.
But the fact is that our universities, particularly our great state research universities, are in no position today, given the enormous budget cuts they've taken from their states, to underwrite research. And so the question is, or it really boils down to the fact that the Federal government is the last resort. And if the Federal government continues to cut research spending, or even if it holds it flat, the United States investment and research will continue to decline.
And if one believes, as I do—and I think there's ample evidence; there's a strong correlation between investment and research and the well-being of a nation's citizens—we can expect our standard of living to decline.
Mirsky: Let's talk about some of the key recommendations of the report. One of the big ones is that the president and Congress should commit to a real growth rate of at least four percent in Federal investment and basic research. Why is that so important?
Augustine: This comes back to just a broader question of why is basic research or research so important? And I would just quickly offer the few arguments that I've used during Congressional testimony.
One argument is that it really does drive the economy. There have been surveys conducted around the world where they asked people of various countries what is it that's the most important single factor in determining your well-being? And all, almost everywhere, the majority, the overwhelming majority, says to have a good job.
And by my own calculations, which I think are generally in the ballpark, that if you want to add one percentage point to the number of jobs in a country, you have to add 1.7 percentage points to the GDP in our country. And there have been a number of other studies, one of which was the basis of a Nobel Prize, who shown that between 50 and 85 percent of the increase in GDP in America over various segments of the past half century to be attributed to advancements in just two fields—research and technology. So there's a huge coupling between investment and research and tech and the well-being of the citizenry.
And so those are the reasons why we think it's important. Now, why the four percent? If one looks ahead to the year that a child born today will be graduating from high school, if we were to invest four percent a year in real dollars increase in research spending, we would be back on the track we were on for a number of years during the decades, two or three decades ago. And so we sort of arbitrarily picked that as a point to recover to where we feel we should be.
And the bad news is that in the case of basic research, that will require 50 percent in basic research spending. The good news is that basic research spending is so small relative to the nation's GDP or the Federal budget, that it can be done with little impact in the grand scheme of things. s the quote I always use in testimony is that Americans spend I think it's seven times as much on legal tobacco products and store-bought alcoholic beverages as they spend on basic research. And if one believes basic research is important, then the issue isn't do we have enough money, it's what's our priority?
Mirsky: Right. Can we talk a little bit—the patient money comes back for these next two points I wanted to bring up. The report recommends that we have these rolling long-term Federal commitments to R&D funding. And why is that important?
Augustine: The basis behind the recommendations that relate to that is the disruptive effect of the government's annual budgeting process when dealing with long-term undertakings like research. And if you have a research project that lasts 20 years, you have to keep it alive through 10 different Congresses and, what, 5 different administrations perhaps? And you have to live through 20 Federal budgets. And it's just so inefficient and so disruptive that what we need is some stability. And there are reasons, some of them constitutional, that make it difficult to allocate money as some countries do for the entire duration of a project. But I think we could at least move things if we could have a reviewing of the fifth year of the out year, and at least provide some sense of where we're going.
Mirsky: And we also, in the reports, see that it would be advantageous to have longer-term funding for agencies that support research and graduate stem education. That's got to be big.
Augustine: Yeah, that's very important. And to come back to the point you raised earlier, 'cause it bears on this, a proposal I've been making, goodness knows, 25 years probably, and it's never got any traction at all, but I think would solve much of this problem, would be if we would change the capital gains tax in this country so that the gains on an asset that's held one day are taxed at a 99 percent rate and gains that are held 10 years are taxed at a 1 percent rate, then you could draw whatever curve between those 2 points to produce whatever revenues you want.
And all of a sudden corporations and members of Congress would behave very, very differently, I believe. And there would suddenly be a premium on investing in the longer term.
Mirsky: And we'll make some of those people have who were maybe hoping for the private sector taking over everything by talking about regulation streamlining.
Augustine: Well, that's another factor. There's so many regulations that affect research, which is mostly performed in our universities, and particularly basic research, which was the focus of our report. And they produce great inefficiencies. I'll just cite one, which happens to be a regulation that's more at the state level, but it is still is a factor, and that is in most states when an university is given a grant by the Federal government, they're required to abide the state's own procurement rules, rather than the kind of rules that are generally practices in the private sector. And some of these are extremely complex. And if one changes that approach, things could just be done much more efficiently.
I've seen reports that have shown that about half the time of researchers is spent not doing hands-on research. And that's a tragic waste of talent and money, in my view.
Mirsky: Yeah, one of my points here to discuss is we need to reduce the time researchers spent trying to get funding. I think the average academic researcher, next to a member of Congress, they probably spend the biggest percentage of their time just trying to get money from people.
Augustine: [Laughs] I think that's a damning comment that is certainly probably true. If you look at, for example, the NIH were, I believe right now, 17 percent of their grants are funded and it takes, most cases, close to a year to determine whether or not you're going to be funded.
Just think of the amount of time that's devoted to what are, in most cases, dead end in undertakings. There are certainly more streamlined ways to deal with that kind of thing. And similarly, there's an issue for the leadership that our universities and our Federal laboratories and our Federal funding institutions for research that is just devoted to chasing money as much as politicians do, I'm afraid. It's quite wasteful and it could be streamlined, I believe.
But all these things that are kind of built into the bureaucracy and they become particularly painful when you're looking at budget cuts, as we have been the last few years in research.
Mirsky: Any quick points about how that system could be streamlined so that researchers can spend more time doing research?
Augustine: Well, it's interesting, I was involved just recently in a study for the National Institute of Health to address the question of awarding grants and how could they be streamlined. And there were a number of suggestions that came up. In fact, there's a good report at NIH that I recommend people read.
But they include such ideas as doing an initial filtering so you don't carry so many projects all the way through to the last day of the assessment. And where one can go back very quickly and say, "Thank you very much, but this just isn't gonna fit." And rather than as we do today, we would ask for an streamlined initial submittal, not a full proposal, so that there wouldn't be so much time spent on things that just didn't have a chance.
Mirsky: So there's more filtering right up front.
Mirsky: How can we make it easier for industry and academia to work together?
Augustine: That's a big problem today. In most countries, industry, government, and academia work hand in hand. And in this country we don't do that. There are certain suspicions. There are certain cultural things. There are conflict of interest issues that we take very seriously, and indeed we should, but I'm afraid we take them to an extreme.
And as a consequence, I think that there's a great deal of quality research that's conducted in universities and in Federal laboratories that don't get out in a reasonable period of time, if at all, to impact the average person—for example, helping them have a job. And I'll share just a recent experience. I've been chairing a commission for the state in which I live, which is Maryland.
And one of the things we discovered is that Maryland ranks about first in the nation among the 50 states in the dollar value of research that's performed within its boundaries. It ranks number two in the fraction of its population that have advanced degrees. It ranks number 26 at starting new companies, and number 37 in creating jobs.
And politicians and other leaders are beginning to notice things, saying, "Why are we investing all this money in research when it doesn't seem to be helping the average person?" Well, of course it does help the average person, but not anywhere near to the extent it could. And so I think we'll see more and more efforts to try to get industry and academia and government to work hand in glove. And that's going to involve some serious looking at such things as conflict of interest rules.
And I cite that in particular because in my experience the best way to do technology transfer is to transfer the people. And we make it extremely difficult to do that today.
Mirsky: Right, the rules are not quite as Byzantine as the NCAA, but they're still pretty tough.
Augustine: [Laughs] Well, the NCAA could put CalTech on suspension for their basketball program. You got to ask what's going on.
Mirsky: [Laughs] That's a really good point. So there's one other point I wanted to bring up about the report and that is that we need to make it easier for foreign-born researchers to come here. And there have always been obstacles, but I think since 9/11 the obstacles have really increased. And for legitimate reasons people have been much more careful since then. But we are putting up barriers to bringing real talent here.
Augustine: Yeah, it's much like the conflict of interest rules that they're well-meaning, well-intended, and necessary, but they come with a price. It's like the food and drug administration. If they turn everything down, no one will ever die from a drug that slipped through the system. There may be a lot of people who died from the lack of drugs. And I think that analogy is probably not a bad one here in terms of what we face.
I would argue that America's scientific and engineering enterprise would barely have functioned in recent decades were it not for foreign-born individuals who came to this country, usually for their education and stayed here. Today we make it very hard for them to come here and we make it even harder for them to stay here.
And while my background is in national security and I strongly believe we should do a very careful investigation of people who do come to the country, but most of the great citizens—that's an overstatement—many of the great citizens in this country, many of the people that have started the great corporations in recent years, have come from abroad. My wife came from abroad. And if we shut those people out of the country, I'm afraid we'll pay a serious price, particularly given the state of science and engineering and math education in our K through 12 system in this country, which on average I emphasize is probably somewhere between terrible and abysmal by international standards.
Mirsky: And not to mention all the winners of our national spelling bees would probably not be ___.
Augustine: The national spelling bees, if you could imagine that. I noticed a few years ago the U.S. math team had finally won first place in an international math contest. And almost every name was an Asian name. They were Asian-Americans and thank goodness were on our team.
Mirsky: Absolutely. I just want to point out to everybody that as big a supporter of stem and research as you are, you are also a big supporter of the humanities, with a previous report, The Heart of the Matter report.
Augustine: Yeah, that was also put out by the American Academy of Arts and Sciences. It was put together by a large group of people with backgrounds in, frankly, just about every field you could think of, from music to engineering. And the conclusion of that report was that the humanities were being neglected in this country and in fact most universities in this country, you can get a degree in English without ever taking a course in Shakespeare, which is kind of stunning.
And I happen to have studied engineering at a school that's probably better known for liberal arts. I went to Princeton. And I just discovered not only a great deal of pleasure, but also I think I benefitted from my exposure to courses I took in everything from Shakespeare to Greek art.
And one of the points we've tried to make in this report is while the push for stem is extremely important—and I certainly would be one of those who's been pushing hard—we don't want to do it at the expense of studies of the liberal arts.
Mirsky: No Shakespeare. What fools these mortals be?
Augustine: [Laughs] I love it. Very good. As a matter of fact, I co-authored a book on Shakespeare on management that teaches all kinds of good lessons, that Shakespeare, he really knew more about people than I guess anybody who's ever written. And management is all about people. And so I found many lessons, such as the great one you just quotes, that relate to Shakespeare's advice.
Mirsky: Well, I guess the key lesson from Shakespeare in management is don't let your underlings kill you.
Augustine: [Laughs] At least one person is—one of his characters, if not more, could concur to that view.
Mirsky: [Laughs] Right. Well, Mr. Augustine, a pleasure to speak to you. Thank you so much for calling and we look forward to these recommendations being made real.
Augustine: Well, see, we're still working at it and I've been testifying a lot and speaking a lot and writing a lot on the subject, as has my co-author, co-chairman, Neal Lane. And I think we're gradually getting the message across. And if you have one more minute, I'll just share this story. It ended one of my hearings recently on this subject.
One of the members asked me—I guess he grew impatient with me and asked did I not know that there was a budget problem in this country, because I was always over there seeking more money for research and for education. And on the spur of the moment I answered by saying that I was aware of that, that I'm trained as an aeronautical engineer and in my career I've worked on many airplanes that during the development period were too heavy to fly. And never once did we solve the problem by taking off one of the engines.
And needless to say, the audience laughed at that. And I think I made my point. And I went on to say that obviously the engines of our economy, of our quality of life, are I think demonstrably research, technology, and education.
So Steve, thank you very much. It's a privilege to be with you and your audience.
Mirsky: Oh, thank you. You remind me of the old joke, the punch line of which is "If that last engine goes, we're gonna be up here all day."
Augustine: [Laughs] That's right. I remember that one. That's a good one, too.
Mirsky: That's it for this episode. Get your science news at our website, www.scientificamerican.com, where you can also check out the just-released July issue of the magazine. On the cover, Mystery of the Hidden Cosmos: The Invisible Dark Matter Particles that Dominate the Universe May Come in Strange and Varied Forms.
And follow us on Twitter, where you'll get a tweet whenever a new item hits the Web site. Our Twitter name is @sciam. For Scientific American Science talk, I'm Steve Mirsky. Thanks for clicking on us.