TRANSFORMING ENTERPRISE
The Economic and Social Implications of Information Technology
U.S. Department of Commerce Auditorium
January 27-28, 2003
Keynote Address
John Marburger
Director, Office of Science and Technology Policy
Executive Office of the President
I am delighted to have this opportunity to speak at a conference which in other circumstances might have seemed too academic to excite much interest among practical folk. The very fact that this meeting is sponsored by the U.S. Department of Commerce, and that outstanding representatives from industry, government, and academia are participating, speaks to the widespread recognition that the explosive growth in information technology is a truly revolutionary phenomenon that is transforming our way of life.
Last weekend my wife and I visited Harpers Ferry just up the Potomac River in West Virginia. Even in the bitter cold, Civil War buffs were seeking out the famous battle sites, or John Brown's fort, or the remains of Lock 33 on the C&O Canal across the river. For me, however, the most important thing that happened at Harpers Ferry was John Hall's early 19th century introduction of methods that later came to be called "the American system of manufacture". His factory along the Shenandoah River was the first place in the world where machinery was employed to produce rifles whose parts were so identical they could be interchanged freely among different units. It led to an international market for American manufactured products and precision machinery early in the industrial revolution.
Harpers Ferry manufacturing was destroyed during the Civil War and never recovered. But the ideas it generated influenced industry throughout the world. What has always impressed me about this story is that no special scientific breakthrough made it possible. The machinery was made of wood and iron and was powered by water, all ancient technologies. What made the difference were ideas. As the ideas spread, they transformed how things were made, and at the same time they transformed the things themselves, and the behavior of the people who used the things. John Hall knew at the time that he was doing something important, but he could not have foreseen the impact his ideas would have upon the future,. Nor can we foresee how the ideas driving today's information technology will affect the future, but we know something important is happening, and that it will make enormous and permanent changes in our way of life.
Like the use of machinery to increase the precision of manufacturing, the use of electronic circuits to store and process information simply allows us "to find better ways to do the same things" as the author Michael Lewis put it. At some point, however, the improvements make a qualitative change in how we do things, and the economy shifts massively, and the world changes. Having Google on your desktop, as Secretary of State Colin Powell does, changes how you learn about the world, and cuts the time needed to make informed decisions. Being able to search large data bases quickly reduces the risk of credit card transactions, the expense of airline reservations, and the time to recognize trends in retailing, crime, or public health. Computing power replaces wind tunnels with workstations, model shops with monitors, experimental trials with simulations. Much of business, especially in a service economy, offers customers a way to cut costs of processes that are intermediate steps on the way to a final product. Advances in computing and communication have removed some of these steps entirely, and redefined the economics of business transactions. Today the information technology industry, which represents only eight percent of all enterprises in our economy, produces 29 percent of U.S. exports.
John Hall's rifle factory at Harpers Ferry was located around the corner from the Federal Armory on the Potomac River side of town. One was a private enterprise, funded through government contracts. The other was publicly owned and operated. It was John Hall, the private entrepreneur, who introduced the novel machinery and transformed manufacturing. The Federal Armory, according to MIT historian Merritt Roe Smith, lagged in implementing the new technology. Today too, the private sector forges ahead of government agencies in using the Internet and related information technologies, despite the fact that government funds supported the research upon which the new technology is based, either directly or through procurements.
President Bush would like to close that gap. He wants to "expand the use of the Internet to empower citizens, allowing them to request customized information from Washington when they need it, not just when Washington wants to give it to them." OMB's e-government czar Mark Forman will speak to this effort in one of tomorrow's panels. And OSTP Associate Director for Technology Richard Russell will speak tomorrow on this administration's policy of investment to keep up the momentum of change in information technology.
Of course the growing complexity of the systems we use in everyday life presents unprecedented challenges. New technologies bring new problems and create new vulnerabilities. Last weekend's "SQL worm" virus demonstrated once again the vulnerability of the Internet to deliberate disruption. The means to prevent and remediate such disruption were readily available in this case, but had not been implemented uniformly by system administrators for the Internet servers that spread the virus. This situation dramatizes how difficult it is to maintain the integrity of systems whose very ownership is distributed, and not only the physical system itself. Many of the challenges that Homeland Security Secretary Tom Ridge must address share this feature of wide distribution and fragmented ownership Whatever the solution, most of us believe that information technology will play a key role.
Congress has already mandated improved technology for increasing awareness at our borders. The Enhanced Border Security Act requires the establishment of a border entry-exit system with biometric authentication of all aliens entering the United States at any of the 422 Ports of Entry by October 2004. OSTP is working closely with the Office of Homeland Security and the transition team for the new Department to identify and evaluate information technology responsive to this mandate. Air travelers have seen a rapid increase in the use of electronic ticketing and more sophisticated information technology associated with post 9/11 security measures. Geo-positioning devices linked to geographical databases are being used by fleet managers to increase security and improve management of commercial vehicles and rental cars. Nearly all plans to improve first responder capabilities include upgrades in speed and capability of data communication and information processing, and new tools that permit sharing among diverse data bases.
Speakers at this conference will consider a wide spectrum of implications that the revolution in information technology holds for our society. On balance, these implications are positive, but they do entail change. Perhaps the greatest changes will be a shrinking of distances and times, so global transactions are accomplished as easily and as inexpensively as local conversations. Globalization, so closely tied with telecommunications and bandwidth improvements, brings unprecedented challenges. It is here that the social sciences have much to offer, and I am delighted that one of today's panels focuses on social transformation.
In meeting these challenges, whether of national or homeland security or maintaining economic competitiveness in a globalizing marketplace, there is a clear role for federal government. Federal funds have supported much of the basic research upon which information technology rests. In a deregulated environment, the private sector is unlikely to invest heavily in long lead time, high risk research. Even John Hall's experiments with high precision machinery were included in the costs of his contracts for supplying breech-loading rifles to the federal government, and it is clear from the records that the procurement officials were aware of this aspect of his work.
President Bush's budget request for Fiscal Year 2003, not yet implemented by Congress, advances federal R&D funding beyond $100 billion for the first time in history. And last year the President signed into law funding increases for science and technology at the National Institutes of Health, the National Science Foundation, the Environmental Protection Agency, and the U.S. Departments of Energy, Agriculture, Interior, Commerce, and Transportation.
The multi-agency Networking and Information technology R&D program (called NITRD) is one of the nation's priority R&D initiatives. This effort coordinates activities within federal agencies engaged in fundamental research and development in all aspects of large scale and broadband networking, advanced computing, software, and information management technologies. NITRD's aim is to provide the base technologies necessary for the U.S. to maintain its leadership position in the application of information technology to critical national defense and national security needs, as well as scientific research, education, and economic innovation. The program includes a broad range of interdisciplinary technical activities cutting across twelve agencies. In the President's 2003 budget, NITRD increased by 3%, bringing the overall investment to $1.9 billion in this mature, but still critically important area.
Our nation played a significant role in the industrial revolution, and in the subsequent evolutions that have led to the modern information-oriented society. Now we are poised again at the threshold of another vista, barely discernable, but rich with promise. I look forward to working with you and your colleagues on behalf of this administration, not only to exploit, but to lead the transformations that will be necessary to reap the rewards of this revolutionary technology.
Thank you.