U.S. Technological, Economic, and SocialDevelopment for the 21st Century
the accessof thesesmall finDSto the capitalneededto developnewproducts declinedprecipitouslythrough muchof the seventies.The capitalacquiredin public marketsby finDSwith a net worthof lessthan$5 million is reportedto havedroppedfrom $1.5 billion in 1969to $15 million in 1975,andto havere- mainedata very low levelthrough1978(U.S. Departmenof Commerce,1979, p. 260). Thatmorerisk capitalbecameavailablefollowing the 1978reductionin the maximumcapitalgainstax suggesthat, fromthe viewpointof venturecapi- tal, the tax was too high during mostof the period understudy.
OtherreportedR&D-relatedproblemsrangefrom growing "scientific illiter- acy" among schoolpupils to a shortageof engineersand computerprogram- mers. Eachof thesehas an "on-the-one-hand-but-on-thother"quality. True, schoolchildre shouldknowmoreaboutscience-but theeffectof a lackof such knowledgeonthe nation'sinnovativecapacityandR&D yield is slowandindi- rect. And in thepast,engineeringshortage(andothersuch)soonwerefollowed
All in all, R&D seems(in areasotherthancommunicationandcomputersto haveweakenedoverthe period until recently. In the early 1980stherewas an upturnin R&D expenditure asa percentag of GNP. Muchof this canbeattrib- uted to the military build-up. The future of this program,and particularlythe future of the StrategicDefenseInitiative, are in doubt. Evenif theseprograms arescrappedthe recentupwardtrend in R&D maycontinueonthebasisof in- creasedcivilian R&D expenditures.Political supportfor reinvestingin America is growing. Oneexampleis Sen.Hart's proposedStrategicInvestmenInitiative, aimed at increasinginvestmentsin school, training, and researc laboratories. Thus,while R&D hasweakenedoverthe period,therehasbeena recentupturn which is likely to continue.
Human Capital: Signs of Weakness
Thereis no generalagreementhatthe qualityof humancapitalwaslower at the end of the postwargenerationthan it was at the endof the first centuryof industrialization,buttherearesomesignsof weakeningwithin theperiodunder
One factor was demographic change. The average worker in 1984 was younger than in 1950. There were somewhatmore minority workers in the labor force, and many more women. (Between 1960 and 1984, the proportion of mi- norities among the employed rose from 10.5 percentto 12.3 percent; the propor- tion of women rose from 33.3 percentto 43.7 percent.) (U.S. Bureauof the Cen- sus, 1986, tables 680 and 684).