Technological Progress and the Investment Climate - ACS Symposium

8 Technological Progress and the Investment Climate THOMAS A. VANDERSLICE

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Power Systems Sector, General Electric Company, Fairfield, CT 06431

A few years back, many of us grew concerned about the decline in Federal support for R&D that existed for nearly a decade between 1968 and 1976. And we resolved to try to turn this around. Our methods, in the light of the techniques of contemporary protest movements, may seem strangely antiquated. We didn't march, we didn't scale fences or lie down before any gates, and so far as I know none of us got arrested. We just made speeches, held interviews, testified in Washington. But we were, nevertheless, apparently effective. The U.S. is ticketing well over $50 billion for its R&D efforts this year. And in the past two or three years, R&D spending has been pretty much holding its own -even with double-digit inflation. But i t soon became obvious that mere increases in Federal spending for R&D alone were not the total solution for the problems of lagging innovation and productivity in the U.S. The translation of R&D into innovative new products and services is an extremely complex and inherently risky operation. To find answers to why the pace of innovation might be lagging in the U.S., i t was necessary to examine the question of why companies innovate anyway, and what specific actions, or lack of action, might stimulate or impede the process. It was in this perspective, that the Committee for Economic Development, about a year ago, initiated a study of Technology Policy in the U.S. Several task groups, comprised of CED trustees and their advisors, were established to study concurrently the areas of tax policy, patent policy, international technology transfer, regulation, and Federal support of R&D. The Subcommittee itself was comprised of 30 chief executive officers of leading corporations and university presidents. I served as Chairman of the Subcommittee on Technology Policy. Professor Ed Mills, of the Princeton Economics Department, served as project director. On May 16 our chief conclusions and recommendations were presented and approved by CED's Research & Policy Committee. 0-8412-0561-2/80/47-129-103$5.00/0 © 1980 American Chemical Society Smith and Larson; Innovation and U.S. Research ACS Symposium Series; American Chemical Society: Washington, DC, 1980.


104

INNOVATION AND U.S. RESEARCH: PROBLEMS AND RECOMMENDATIONS

Our g e n e r a l c o n c l u s i o n was t h a t the environment needed to encourage adequate longer-term investment has d e t e r i o r a t e d s e r i o u s l y over the past s e v e r a l y e a r s . I won't r e i t e r a t e a l l the f a c t o r s which have c o n t r i b u t e d t o t h i s because you have heard them so many times — but, taken s i n g l y , each one has had i t s own independent negative impact, and, taken together, they c o n s t i t u t e a more s e r i o u s d e t e r r e n t than would be i m p l i e d by the sum o f t h e i r parts. The o v e r r i d i n g concern i s the present lack o f business confidence i n the a b i l i t y and w i l l o f government t o frame and implement p o l i c i e s which c o n s t r u c t i v e l y support the s o l u t i o n to our common problems. H i s t o r i c a l l y , and over the l o n g - t e r m , spending on p h y s i c a l c a p i t a l and on R&D are c l o s e l y l i n k e d , and respond to the same s e t of economic f o r c e s . P l a n t and equipment spending i s a l s o c l o s e l y r e l a t e d to p r o f i t a b i l i t y and cash flow. These f a c t o r s , i n c o n j u n c t i o n with concerns about i n f l a t i o n and lagging p r o d u c t i v i t y , i n the experience o f the 30 c h i e f execut i v e o f f i c e r s , l e d to the c o n c l u s i o n t h a t p o l i c i e s t o r e v e r s e the d e c l i n e i n t e c h n o l o g i c a l i n n o v a t i o n cannot be d i r e c t e d a t research and development alone, but must address the l a r g e r problem o f dec l i n i n g business investment. T e c h n o l o g i c a l progress r e q u i r e s an investment c l i m a t e i n which there i s a f e e l i n g of confidence and reasonable p r e d i c t a b i l i t y o f the long-range f u t u r e . For both l a r g e and s m a l l b u s i n e s s e s , t e c h n o l o g i c a l innovat i o n today i s t r u l y a high-stakes game. When the r i s k / r e w a r d r a t i o changes i n ways t h a t reduce the odds on making a g a i n which r e q u i r e s long-term investments i n the c r e a t i o n and a p p l i c a t i o n o f advanced technology, the r e s p o n s i b l e business executive i s f o r c e d to p u l l back, change s t r a t e g i e s , and s h i f t t o shorter-term g o a l s . And t h a t i s e x a c t l y what has happened. Technology managers t e l l us they are p l a c i n g much more emphasis on e v o l u t i o n a r y f a s t - p a y back improvements, r e g u l a t o r y compliance, e t c . , than on longerterm r e v o l u t i o n a r y o p p o r t u n i t i e s . T h i s i m p l i e s , i n our view, a need to concentrate f i r s t on our economic and r e g u l a t o r y e n v i r o n ment. A system t h a t s t a c k s the odds i n favor of r e f i n i n g and a c q u i r i n g e x i s t i n g b u s i n e s s e s , can h a r d l y be c a l l e d an i n n o v a t i v e one — and c e r t a i n l y t h i s i s not the way to c r e a t e new jobs! Our proposed s t r a t e g y i s t o : •

Begin by improving the environment f o r new p r o d u c t i v e facilities. I f we can r a i s e the l e v e l o f investment i n p l a n t and equipment, we w i l l i n c r e a s e immediately the r a t e o f d i f f u s i o n o f new technology i n t o the economy and improve the r a t e o f p r o d u c t i v i t y growth.

•

Our f i r s t p r i o r i t y approach to accomplish t h i s o b j e c t i v e i s to reduce e x i s t i n g tax d i s i n c e n t i v e s to p r o d u c t i v e investment, and to reduce n o n ^ o s t - e f f e c t i v e r e g u l a t o r y c o n s t r a i n t s and u n c e r t a i n t i e s .

Smith and Larson; Innovation and U.S. Research ACS Symposium Series; American Chemical Society: Washington, DC, 1980.


VANDERSLICE

Technological Progress and Investment

60

'65

70

75

(Index: 1967 = 100) Source: U.S. Dept.of Commerce Figure 1.

Industry investment and cash flow. Research and development ( plant and equipment ( ); cash flow (- • -).


)

INNOVATION AND U.S. RESEARCH:

106

PROBLEMS AND RECOMMENDATIONS

This would provide the s t r u c t u r a l changes necessary f o r a l a s t i n g improvement i n p r o d u c t i v i t y and, thereby, on the c o n t r o l of i n f l a t i o n . In conjunction with the improved economic p e r f o r mance and increased demand f o r advanced technology that would r e s u l t from a higher l e v e l o f investment, the removal o f these d e t e r r e n t s would help c r e a t e a c l i m a t e i n which investments i n a l l phases o f t e c h n o l o g i c a l i n n o v a t i o n would be increased as a n a t u r a l r e s u l t o f the e n t r e p r e n e u r i a l process.


•

We a l s o recommend p o l i c y changes a f f e c t i n g patents, and d i r e c t F e d e r a l support o f R&D, which we b e l i e v e w i l l complement these high p r i o r i t y i n i t i a t i v e s .

Our r a t e o f p r o d u c t i v i t y growth has been much slower r e l a t i v e t o our major i n t e r n a t i o n a l competitors. Recent p r o d u c t i v i t y improvements have been unable to o f f s e t nominal wage i n c r e a s e s by a wide margin. The r e s u l t i s r a p i d l y r i s i n g labor c o s t s which contribute to e x i s t i n g i n f l a t i o n a r y pressures. Investment i n new p l a n t s and equipment — necessary t o embody the r e s u l t s of s u c c e s s f u l research and development e f f o r t s — has been extremely d i s c o u r a g i n g . The U.S. now l a g s behind other major i n d u s t r i a l c o u n t r i e s i n c a p i t a l investment as a p r o p o r t i o n o f gross domestic product. T h i s d e c l i n e has a redoubled impact s i n c e investment i n c a p i t a l equipment not only improves p r o d u c t i v i t y and s t i m u l a t e s employment o p p o r t u n i t i e s , but a l s o encourages investment i n r e search and development. Our l e a d i n g competitors have increased t h e i r e f f o r t s i n R&D much more than we have. While our R&D expenditures are much l a r g e r than any other n a t i o n ' s , a very l a r g e p o r t i o n o f the U.S. e f f o r t i s d i r e c t e d toward defense and other objectives. The Committee f i n d s the risk/reward r e l a t i o n s h i p f o r longterm, h i g h - r i s k investments c u r r e n t l y out o f balance. Disincent i v e s have been introduced i n terms o f i n c r e a s e d r i s k and reduced p o t e n t i a l rewards. Increased r i s k has r e s u l t e d from the expans i o n and sometimes i n j u d i c i o u s a d m i n i s t r a t i o n o f government regul a t o r y a c t i v i t i e s , and u n c e r t a i n energy and economic p o l i c i e s . Reduced p o t e n t i a l rewards have r e s u l t e d from c u r r e n t tax p o l i c i e s i n combination with the i n a b i l i t y t o c o n t r o l i n f l a t i o n . The r e s u l t i s investment funds are being channeled away from the more i n n o v a t i v e longer-term o p p o r t u n i t i e s toward consumption-oriented and hedging types o f investments. We b e l i e v e t h a t unless there i s speedy c o r r e c t i o n and e l i m i n a t i o n o f these d e t e r r e n t s , the n a t i o n w i l l f i n d i t i n c r e a s i n g l y d i f f i c u l t t o achieve i t s economic goals and probably impossible to achieve i t s s o c i a l o b j e c t i v e s . On the b a s i s of the Committee's a n a l y s i s o f the causes o f the d e c l i n e i n t e c h n o l o g i c a l i n n o v a t i o n i n the U.S., we recommend the f o l l o w i n g changes:


VANDERSLICE

Technological

Progress and Investment


200 • 190 •

1967 '68 '69 70 71 72 73 74 75 76 77 (Index: 1960 = 100) Source: Bureau of Labor Statistics Figure 2.

Change in GDP per employee

% Output 1960-76 17.2 13.4 19.1 19.7 19.6 28.6

U.S. U.K. France* Canada Germany* Japan * For total economy Source: Bureau of Labor Statistics

Figure 3.

Capital investment


108 I.


Changes i n Tax

Policy:

The primary r o l e o f tax p o l i c y i n s t i m u l a t i n g investment i s i l l u s t r a t e d by the apparent response o f venture c a p i t a l t o l a s t y e a r s r e d u c t i o n i n the c a p i t a l gains tax. The a v a i l a b i l i t y of new venture c a p i t a l i s p a r t i c u l a r l y c r u c i a l to the formation of new, high-technology businesses. During the f i r s t quarter of 1978, the amount of venture c a p i t a l r a i s e d by independent venture c a p i t a l companies was zero. By the second q u a r t e r , when i t became apparent t h a t enough votes had been accumulated t o push the S t e i g e r Amendment through Congress, the p i c t u r e began to change. And by the end of 1978, 13 management groups had been formed, and $215 m i l l i o n i n new venture c a p i t a l had been r a i s e d . An important r e s u l t of i n f l a t i o n i s t h a t the e f f e c t i v e c o r ^ porate tax r a t e i s considerably higher than the reported r a t e because of such things as phantom inventory p r o f i t s . The book value of i n v e n t o r i e s r e f l e c t s a c a p i t a l gain which i s not a r e a l gain. As a r e s u l t , taxable p r o f i t s are higher than a c t u a l p r o fits. More important f o r the r a t e of i n d u s t r i a l i n n o v a t i o n i s the impact of allowed c a p i t a l recovery r a t e s i n our tax system. D e p r e c i a t i o n o f e x i s t i n g p l a n t and equipment i s based on h i s t o r i c a l c o s t s , which i n an i n f l a t i o n a r y p e r i o d , are much lower than replacement c o s t s . This means t h a t r e a l cash flow i s e f f e c t i v e l y h e l d down w h i l e r e a l costs of new p l a n t and equipment are going up. The Committee b e l i e v e s t h a t an improved c a p i t a l recovery allowance should be enacted immediately to s t i m u l a t e investment i n new p l a n t and equipment. We support current l e g i s l a t i v e proposals to separate the c a p i t a l recovery p e r i o d from the t r a d i t i o n a l concept of permitt i n g d e p r e c i a t i o n over the u s e f u l l i f e of the a s s e t . In order to i n c r e a s e investment i n new p l a n t and equipment, i t i s necessary to permit a w r i t e - o f f more i n keeping with replacement c o s t s . Our a n a l y s i s of the impact o f tax p o l i c i e s on t e c h n o l o g i c a l innovation a l s o leads us to conclude that c o n s i d e r a t i o n would be given to s p e c i a l measures to encourage investment i n research and development. The complexity and s o p h i s t i c a t i o n of modern research f a c i l i t i e s and equipment are i n c r e a s i n g much more r a p i d l y than i s recognized by the present tax system. To help maintain an e f f i c i e n t and e f f e c t i v e i n d u s t r i a l R&D resource, we recommend the dep r e c i a t i o n p r o v i s i o n s of the Tax Code be amended to allow "Flexi b l e d e p r e c i a t i o n " of a l l such f i x e d a s s e t s . Under such a system, the taxpayer would have the o p t i o n of d e p r e c i a t i n g these assets f u l l y i n the f i r s t year of t h e i r l i f e , or to adopt any other time p e r i o d d e s i r e d , w h i l e at the same time r e t a i n i n g the b e n e f i t s of the allowable investment tax c r e d i t .


f

II.

Changes i n Regulatory P o l i c y :

Restoring the r e l a t i v e a t t r a c t i v e n e s s of investment i n t e c h n o l o g i c a l i n n o v a t i o n a l s o w i l l r e q u i r e changes i n the c u r r e n t r e g ulatory climate.



8.

VANDERSLICE

109


'60

'65

791Q

75

70

Source: U.S. Dept. of Commerce Figure 4. Impact of inflation on corporate tax. Effective rate ( rate ( ).

); reported

Percent

nl 60

i

i

i

•

i

i

• • i

65

I

i

l—I—I—I—l—l—I

70

75

78

Source: U.S. Department of Commerce Figure 5. Return on capital investment. Original cost (

); replacement cost



110


While r e c o g n i z i n g t h a t some government r e g u l a t i o n i s necessary, our Committee found t h a t i n many cases compliance c o s t s are not i n keeping with apparent l o s t b e n e f i t s , reducing the resources a v a i l a b l e f o r t e c h n o l o g i c a l i n n o v a t i o n . "Zero r i s k " g o a l s , r e quirements f o r "best a v a i l a b l e technology," and the frequent changes i n p r o d u c t i o n standards sometimes r e q u i r e d , has a l l l e d to compliance c o s t e s c a l a t i o n . The accompanying u n c e r t a i n t y about the a c c e p t a b i l i t y o f advanced technology a p p l i c a t i o n s has f u r t h e r thrown out o f balance the r i s k / r e w a r d r a t i o f o r i n n o v a t i v e i n v e s t ments . In c a r r y i n g out r e g u l a t o r y p o l i c i e s there i s f r e q u e n t l y exc e s s i v e use o f d e t a i l e d r u l e s and s p e c i f i c a t i o n s . We b e l i e v e r e a l i s t i c standards should be s e t , but t h a t businesses seeking the most c o s t - e f f e c t i v e method o f p r o d u c t i o n should be allowed the freedom t o meet these standards i n t h e i r own way. CED's recent p o l i c y statement, Redefining Government's Role i n the Market System, contains an extensive a n a l y s i s o f r e g u l a t o r y p o l i c i e s and the need to assess t h e i r impact on the economy. On the b a s i s of t h i s a n a l y s i s , the Committee p l a c e s a h i g h p r i o r i t y on the need t o consider the impact o f r e g u l a t i o n on t e c h n o l o g i c a l i n n o v a t i o n as a means f o r a c h i e v i n g our economic o b j e c t i v e s . We, t h e r e f o r e , support the e f f o r t s of the A d m i n i s t r a t i o n and Congress t o achieve r e g u l a t o r y reform, as an important step towards these g o a l s . We e s p e c i a l l y encourage the development of g u i d e l i n e s f o r determining whether o r not new o r e x i s t i n g r e g u l a t i o n s are needed, and a process f o r p e r i o d i c a l l y reviewing both the e f f e c t i v e n e s s and economic impact of s o c i a l as w e l l as economic r e g u l a t i o n s . III.

Changes i n the U.S.

Patent System:

The U.S. patent system has served us long and w e l l as a stimulus to i n d u s t r i a l i n n o v a t i o n . The p r o t e c t i o n p r o v i d e d by patents encourages the investment of funds not only i n r e s e a r c h and development, but a l s o i n f a c i l i t i e s to commercialize the R&D output. However, we would propose a number of changes i n the system to i n c r e a s e i t s e f f e c t i v e n e s s and strengthen i t s r o l e i n the i n novation p r o c e s s . One key area o f needed improvement i s the r e s o l u t i o n o f d i s putes over i s s u e d p a t e n t s . The time and c o s t c u r r e n t l y r e q u i r e d to r e s o l v e contested s i t u a t i o n s s e r i o u s l y d e t r a c t from the e f f e c t i v e f u n c t i o n i n g o f the system. Three changes are needed: F i r s t , a r b i t r a t i o n should be endorsed by s t a t u t e as an acceptable way of s e t t l i n g patent c o n t r o versies , Second, a s i n g l e c o u r t of appeals f o r patent cases should be


8.

VANDERSLICE


111

e s t a b l i s h e d to provide nationwide u n i f o r m i t y i n the patent law. A n d t h i r d , a s t a t u t o r y r e e x a m i n a t i o n p r o c e d u r e s h o u l d be i n s t i t u t e d t o e n a b l e t h e P a t e n t and T r a d e m a r k O f f i c e t o s t r i k e o b v i o u s l y i n v a l i d p a t e n t s from the r o l l s . A second major a r e a o f needed improvement l i e s i n t h e t i m i n g o f t h e p a t e n t g r a n t and t h e r e b y i t s r e l i a b i l i t y i n b u s i n e s s p l a n ning. H e r e two c h a n g e s a r e recommended:


1.

To p r o t e c t i n n o v a t i o n a d e q u a t e l y i n f i e l d s s u b j e c t t o government r e g u l a t i o n , a p r o c e d u r e s h o u l d be e s t a b l i s h e d p r o v i d i n g f o r an a p p r o p r i a t e a d j u s t m e n t i n t h e p a t e n t t e r m when c o m m e r c i a l i z a t i o n i s h e l d up due t o r e g u l a t o r y delay.

2 . To p r e v e n t e x t e n d e d c o n t r o v e r s i e s and l o n g d e l a y s i n t h e i s s u a n c e o f p a t e n t s when two o r more i n v e n t o r s a r e c l a i m i n g t h e same i m p r o v e m e n t , t h e n a t i o n s h o u l d change t o a f i r s t - t o - f i l e s y s t e m , whereby the f i r s t i n v e n t o r t o f i l e h i s patent a p p l i c a t i o n would r e c e i v e the p a t e n t . (A p e r s o n a l r i g h t o f u s e w o u l d b e p r e s e r v e d f o r anyone f i l i n g l a t e r w h o , i n f a c t , i n v e n t e d f i r s t and t o o k s t e p s leading to commercialization). W i t h t h i s s y s t e m , t h e o w n e r s h i p o f p a t e n t s w o u l d be d e t e r m i n e d p r o m p t l y , and t h e p u b l i c w o u l d b e n e f i t f r o m e a r l y p u b l i c a n t i o n o f the patent d i s c l o s u r e . T h e s e and o t h e r c h a n g e s recommended i n t h e f u l l r e p o r t w o u l d i m p r o v e t h e f u n c t i o n i n g o f t h e p a t e n t s y s t e m and s t r e n g t h e n its s u p p o r t i n g r o l e i n U . S . i n n o v a t i o n , and a r e a n i m p o r t a n t c o m p l e x ment t o t h e p o l i c y c h a n g e s i n o t h e r a r e a s w h i c h we b e l i e v e s h o u l d be i m p l e m e n t e d w i t h h i g h e s t p r i o r i t y . IV.

F e d e r a l S u p p o r t o f R&D;

The v e r y l a r g e p r o g r a m o f f e d e r a l l y s u p p o r t e d R&D i s s e e n a s extremely important to i n d u s t r i a l i n n o v a t i o n . The C o m m i t t e e s u p p o r t s moves t o w a r d s i n c r e a s e d p u b l i c s u p p o r t f o r b a s i c r e s e a r c h , b u t recommends t h a t F e d e r a l i n v o l v e m e n t i n t h e s e l e c t i o n a n d management o f t e c h n o l o g y d e v e l o p m e n t a i m e d a t commercial a p p l i c a t i o n s h o u l d be u n d e r t a k e n o n l y under e x t r e m e l y l i m i t e d circumstances. S p e c i f i c c r i t e r i a f o r such decision-making are suggested i n the f u l l r e p o r t . V.

Summary and C o n c l u s i o n :

The CED S u b c o m m i t t e e o n T e c h n o l o g y P o l i c y c o n c l u d e s t h a t an i m p r o v e d r a t e o f t e c h n o l o g i c a l change i n i n d u s t r y i s e s s e n t i a l t o a c h i e v i n g n a t i o n a l economic and s o c i a l o b j e c t i v e s . But w h i l e t e c h n o l o g i c a l i n n o v a t i o n can c o n t r i b u t e b r o a d l y t o f u t u r e economic s t r e n g t h , b u s i n e s s c o n f i d e n c e i n t h e f u t u r e o f t h e economy i s a n e c e s s a r y c o n d i t i o n f o r an adequate l e v e l o f p r i v a t e i n v e s t m e n t i n



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longer-term, h i g h - r i s k ventures which lead to s i g n i f i c a n t innovations . High and u n c e r t a i n r a t e s of i n f l a t i o n have become one of the most severe c o n s t r a i n t s on the nation's f u t u r e economic growth. One of the underlying causes of i n f l a t i o n i s our low r a t e of prod u c t i v i t y improvement. P r o d u c t i v i t y can be s i g n i f i c a n t l y i n c r e a s ed through the a p p l i c a t i o n of advanced technology i n our i n d u s t r y processes — microprocessor and computer technology i s a case i n point. In our view, and supported by the s t u d i e s of such noted economists as Edward Denison, s t i m u l a t i o n of a higher r a t e of investment i n the productive base of our economy w i l l create more r a p i d t e c h n o l o g i c a l advances and a t the same time have a g r e a t e r leverage on p r o d u c t i v i t y and i n f l a t i o n c o n t r o l than many o f our present p o l i c i e s . We recommend t h a t t h i s be accomplished by taking s t e p s , beginning immediately, to r a i s e the l e v e l of investment i n p l a n t and equipment. T h i s , i n t u r n , would i n c r e a s e the r a t e of d i f f u s i o n of new technology i n t o i n d u s t r i a l processes, impact f a v o r a b l y on our p r o d u c t i v i t y , and reduce i n f l a t i o n . And we recommend the r e d u c t i o n and e l i m i n a t i o n of unessent i a l r e g u l a t o r y c o n s t r a i n t s and u n c e r t a i n t i e s on p r o d u c t i v e i n vestments. In conjunction with the improved economic performance that would r e s u l t from f a s t e r growth, t h i s would create the essent i a l climate i n which investment i n a l l phases o f t e c h n o l o g i c a l innovation would be i n c r e a s e d as a n a t u r a l response to the e n t r e p r e n e u r i a l process. And, f i n a l l y , although i t does not come w i t h i n the purview of the CED study, a personal o b s e r v a t i o n : There are those who maintain t h a t the growth era i s over f o r the U.S. Those who h o l d these views, whether i n glee o r i n g r i e f , c i t e the profound changes i n American l i f e introduced by the c o u n t e r c u l t u r e movement i n the '60s. David Riesman, the Harvard s o c i o l o g i s t , declares t h a t "the counterculture has triumped" and f e e l s t h a t the movement has " s e r i o u s l y damaged" American i n t e l l e c t u r a l and c u l t u r a l l i f e , and n a t i o n a l p r o d u c t i v i t y . I b e l i e v e the problems of d e c l i n i n g p r o d u c t i v i t y are s t r u c t u r a l not c u l t u r a l — and are rooted i n the s p e c i f i c s we have d i s cussed here. One b a s i s f o r t h i s i s the r e v i v a l i n venture c a p i t a l we have seen f o l l o w i n g the r e d u c t i o n l a s t year i n c a p i t a l gains tax r a t e s . To be sure, these are very few straws i n the wind, but they do i n d i c a t e t h a t the economy s t i l l responds to i n c e n t i v e s and i s not i n the c l u t c h e s of some inexorable process. I am a l s o convinced t h a t given the a l t e r n a t i v e s , the great m a j o r i t y of Americans would opt f o r growth over non-growth and recession. These a l t e r n a t i v e s were c l e a r l y l a i d out r e c e n t l y by the J o i n t Economic Committee, which warned that a c o n t i n u a t i o n of the present r a t e of d e c l i n e i n U.S. p r o d u c t i v i t y i n t o the 1980s could mean t h a t by 1988, a g a l l o n of gas would c o s t $5,80, a l o a f of bread $2.06, and an average house $151,200. They p o i n t e d out t h a t such a slow-down i n p r o d u c t i v i t y , "the economic l i n c h p i n , "


8.

VANDERSLICE


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would result i n special hardships for a l l disadvantaged minorities. The restoration of that confidence which would contribute to economic vigor w i l l not occur simply because we are exhorted to become more confident, but only through specific steps to remove the disincentives that prevent the U.S. economy from performing as i t should. Once the steps are made plain, and the alternatives are made clear, I am convinced we w i l l once more be well on the way i n America not only to a restoration of our confidence, but also to an augmentation of our long-term economic gains and social progress.


RECEIVED April 29, 1980.


Technological Progress and the Investment Climate - ACS Symposium

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