Innovation in Transportation Proceedings of a Workshop, September 24-26, 1979, National Academy of Sciences, Washington, D.C. (1980) / Chapter Skim
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Pages 11-44
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From page 13... ...
Studies show that over a wide range of incomes, a full factor of l0, the average individual spends about one-fifth of his disposable income on transportation. So not only is it big in the GNP, it is big in the personal disposable product, too.
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From page 14... ...
The mistake that the designers and the experts have made has been to underestimate the price people have been willing to pay, and will be willing to pay in the future, for mobility, for the convenience of going from point to point at a time of their own choosing. Underestimated also has been people's willingness to vote for people who propose projects that make very little economic sense to the transportation experts, but which are brought into being by the mass of public majority opinion.
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From page 15... ...
That is the only sound basis for supplying transportation services. That kind of thinking necessarily leads me to comment that there already is an excess of government activity in the transportation sector.
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From page 16... ...
Given that much of the transportation sector is regulated in one way or another, there is an inevitable relationship between the modally oriented industry and the regulatory agency with which it interfaces. Now, if one were to ask that industry to supply new services, to create new products, or to deliver services and products packaged in new ways, then there must be as a minimum concurrence and ideally outright encouragement and support for such changes within the government agencies related to that industry.
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From page 17... ...
And so in a regulated industry, one of the things that the government has to do if it is serious about promoting innovation is to find a way to reward its own people for promoting and participating in successful innovation, instead of penalizing them for failures. Government people do not now receive any of the direct rewards that those in the industrial sector do.
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From page 18... ...
The members of the public are in favor of urban mass transit for all the public except themselves, and they do not patronize it even though they claim to believe in it and want more of it. One of our difficulties is that we do not know how to translate apparent opinion into reliable predictions of public response.
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From page 19... ...
That sounds like a lot of money, but it is peanuts in this game, and I have a lot of confidence that the Department of Transportation can manage a contest that rewards innovation somewhat better than it manage innovation directly. So I would be willing to advocate such a contest.
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From page 20... ...
I hope that government decides it is not going to be in the innovation business itself, and I hope it decides that it is possible to create useful incentives and opportunities that will cause innovation to progress through conventional channels -- tax incentives, national competitions, and others. Finally, I would hope that government would continue, and much more vigorously than DOT has in the past, to encourage imaginative research in our universities that might lead to the definition of new innovation opportunities or to the prescription of useful innovations themselves.
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From page 21... ...
Originally organized in l938, the IRI has as its main purpose the promotion of cooperative endeavors to improve all aspects of industrial research operations. Company representatives in the institute are invariably senior R§D managers, who are all too aware that R§D that does not culminate at some point in successful innovation is of no value to their firm.
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From page 23... ...
Numerous examples and historical studies have shown that the Pull factors are much more important than the Push factors in actually making innovation and change take place. In addition, there is one other extremely important feature of technological innovation.
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From page 25... ...
Reluctantly, but obediently, the Navy finally changed over, but of course even Roosevelt could not save the officer's career. This anecdote also illustrates a final point about the innovation process that must be kept in mind.
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From page 26... ...
" This latter firm had a bigger and better basic research organization than Pfizer at the time, but only l0 years later it was quietly acquired by another company while Pfizer continued to grow and expand. In fact, the IRI study group taking a look at this aspect of innovation management felt that both the business schools, at one end of the management development process, and the corporate boards of directors, at the other, could productively devote more time and attention to training and directing senior management to be innovation conscious.
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From page 27... ...
The sensitivity of the innovation process to this kind of change is well illustrated by the rejuvenation of the venture capital markets in the United States since the "capital gains" tax rate was changed back to have some preference over other forms of again "so-called" nonearned income.
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From page 28... ...
and others have emphasized, capital availability for any project, no matter how large, would not be a problem if financial markets were in adequate shape and if the rate of formation of capital was sufficient to keep its price within reason for the risks involved in the project. Our final economic recommendation was that the federal government, instead of providing subsidies, should take an active and proper role in the stimulation of socially important innovation by, as Henry Eschwege said in an earlier paper, aggregating markets and setting performance standards through the procurement process.
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From page 29... ...
Now all of these "costs" are particularly pernicious because they delay innovation by, and therefore effectively deny market entry to, the smaller entrepreneurial new venture which has historically been responsible for much, if not most, of the true technological innovation in the United States. Against this rather bleak picture, we then come to hopefully appropriate recommendations.
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From page 30... ...
There is obviously some price for a private car medallion that would adjust the demand for automobile traffic space on Manhattan Island to the available supply, which is equally obviously a very limited economic good. This price is probably 30
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From page 31... ...
In other words, as I commented earlier about private sector firms, we should create within the agencies the advocates or innovation champions whom we know are necessary for the innovation process. Finally, our IRI study reviewed actions we felt would be important to increasing the new knowledge or R§D part (the initial Push factor)
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From page 32... ...
This paper will start off with the same statement I made earlier that what the country does not need is government actions to stimulate innovation. On the contrary, what is needed is to replace to the maximum extent possible, the dead hand of government with the invisible hand of the free market economy.
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From page 33... ...
"Technology, Economic Growth, and International Competitiveness," a report for the use of the Subcommittee on Economic Growth of the Joint Economic Committee of Congress. Washington, D.C.: Government Printing Office, July 9, l975.
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From page 35... ...
Legislation and public understandings about policy in the country lead to a whole series of national goals that any senator or congressman will tell you about. They may include things like the Humphrey-Hawkins full employment criteria, equal employment opportunity, environmental considerations, national defense, and so on.
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From page 36... ...
What I am suggesting is that all these negotiations and trade-offs be handled through the Congress rather than in technical committees that are going to review individual projects. If the Congress appropriates money for a program, that will be the best way to see that the various interests 36
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From page 37... ...
On the other hand, it is fair to say that the political process sometimes gives us funny results. We now have a National Highway Traffic Safety Administration.
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From page 38... ...
I was delighted to see the August report of the Joint Economic Committee, which places very heavy stress on productivity. They say it is the linchpin for our economic progress.
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From page 39... ...
That decision may not be the best from the standpoint of increasing transport productivity, but it does fit a broad political objective. Looking at that from an American point of view, I would be concerned about letting the Department of Commerce, Economic Development Administration, decide that we ought to be doing research on some kind of a project in transportation that would benefit, say, Appalachia, because that should not be the criterion for optimizing the use of the limited budget that we have to put into transportation.
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From page 40... ...
If the pilots accounted for a large proportion of total cost, that process could not have worked as effectively as it has in aviation. The longshoremen fought the container movement bitterly.
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From page 41... ...
We are all tangled up in administrative agencies that do not necessarily have the political stature of the independent special commission. The findings of an administrative law judge represent a technical decision rather than one of broad public policy.
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From page 42... ...
They tend to operate on the basis of profit centers, which is, a perfectly normal business practice. It makes sense in most industries.
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From page 43... ...
I think we have tended to concentrate so much on "labor productivity" that we have lost sight of the very difficult and very real problem of total factor productivity -- labor, capital, and materials. Politically, it is important to begin to stress total factor productivity -- because only in that way will we be able to see the true advantages and disadvantages of management decisions on innovation.
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From page 44... ...
I would suggest, then, that we look at R§D expenditures, for example, expressed per dollar of total capital investment, not just those of the company but the total committed to the industry; likewise, we ought to be looking at R§D expenditures in relation to the current year's capital outlays. Why do I make the distinction?
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