In Ronald Reagan's White House, there was no greater sin than to suggest that America could improve its competitiveness by stoking private industry with federal money. Reagan's free-market economists launched search-and- destroy missions whenever such "industrial policy" proposals were floated in Washington. Never mind that many strategic industries in Japan and Europe, boosted at crucial moments by government support, were winning market share from their American counterparts. Reagan's opposition to industrial policy was so fierce that the expression itself had become politically incorrect by the decade's end. During the 1988 campaign, George Bush derided such policy as a foolish "Democratic" approach that usually resulted in wasted taxpayer money, commercial failure or both.
Today Bush and his aides are singing a much different carol. Industrial- policy initiatives that were being moved almost stealthily through the federal bureaucracy have suddenly been brought front and center, with Bush himself acting as emcee. Last week the President signed the High Performance Computing Act of 1991, which authorizes eight federal agencies to spend $638 million to develop hardware and software for a teraflop computer capable of performing 1 trillion computations a second. The same day, Energy Secretary James Watkins announced that the government's 726 national laboratories -- facilities that spend more than $20 billion annually, mostly on weapons research -- will now be available for joint research projects with private businesses. "U.S. taxpayers made a heavy investment in defense R. and D. during the cold war period," said Watkins. "Now it is time to start paying them economic as well as strategic dividends."
Still defensive about any departure from Reaganite thinking, Bush and his aides deny that the government is meddling in the marketplace. Explained departing White House chief of staff John Sununu: "I don't know what to call it. But there are ways of getting federal support into systems in an efficient way in which financial and technological competitiveness are not stifled." Another Administration official was more direct: "Don't call it 'industrial policy,' " he pleaded. "Call it 'George Bush's Incredibly Forward-Looking Applied Research-and-Development Initiatives.' "
Or just call it pragmatic. As the economy sputters and fears grow that U.S. technological prowess is fading, the President and his advisers seem to have undergone an overnight conversion that was actually about a year in the making. The shift has an unmistakable back-to-the-future quality about it. During Bush's first two years in office, his aides sheltered the free-market flame by batting away several internal proposals to put federal money on the line for emerging technologies. Several senior officials who tried to steer federal help to strategic American industries were quietly relieved of their duties (most notably, former Pentagon technologist Craig Fields). Led by the free-trade triumvirate of Sununu, chief economic adviser Michael Boskin and Budget Director Richard Darman, the White House argued that market forces, rather than government, could best determine which technologies made it from the lab to the shopping mall.