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APPENDIX B STATEMENT BY MoRRIS TANENBAUM, GENERAL MANAGER, ENGINEERING DIVISION, WESTERN ELECTRIC A matter of critical significance, but insufficiently examined by the panel, concerns the potential effects of new technology-assessment mechanisms on the fund ing and direction of research and development in the private sector. This constitutes an important weakness in the report. The final recommendation of the panel that new assessment mechanisms be concerned with publicly funded technology relieves this weakness somewhat. Nevertheless, it is a matter of long-range concern since the private sector has been traditionally the principal generator of technological innovation even when that innovation is publicly funded. The support of research and innovation represents the highest risk investment that private enterprise undertakes. The introduction of a new product or the entry into a new area of commerce are perhaps the greatest risk decisions that a private enterprise makes. For this reason, these decisions are extraordinarily sensitive to the risk environment. New technology-assessment mechanisms represent a major change in this environment and the effects of this change are very difficult to predict. Of course, the purpose of new assessment mechanisms is to produce changes which will guide technology in socially desirable directions. However, the assessment mechanisms them- 1 48 Digitized by Goog Ie
selves will have second-order consequences. To the extent that assessment can define the social requirements of new technology at an early stage, this could encourage private investment. However, to the degree that new assessment mechanisms create new uncertainties, this could discourage private investment in areas of tech nology which are at the focus of assessment activity. These may be the areas where innovation is most important and private participation most desirable. The panel's report recognizes these factors (pgs. 87-89) and suggests that there are readily available mechanisms which can counter the changes in the risk environment. Specifically, increased price structures and subsidies are suggested to compensate for increased risk. However, it is not clear that increased prices would be desirable or acceptable in many important areas, especially those most closely associated with socially pressing needs. Subsidies imply the removal of the technological area from the private domain with the concomitant loss of private innovative incentives. The reasonable conclusion is that there are no ready-made cures for the changes in the risk environment suggested above. Indeed, any existing cures may have undesired second-order consequences of their own. These consequences must be examined specifically, and the panel has been unable to do this. These considerations do not negate the panel's general conclusions concerning the growing need for considera tion of the total effects of technological innovation and the panel's recommendations for the study and con sidered implementation of new assessment mechanisms. They cio, however, emphasize that new assessment mechanisms will interact with a highly sensitive and critical part of our present technology- and innovation generating structures. Thus any new assessment efforts must be most carefully considered from the viewpoint 1 49 Digitized by Goog Ie
of these interactions to assure that technology assessment will perform the socially desirable duties for which it is created without irreparably damaging the systems of innovation that it is designed to stimulate and guide. 1 50 Digitized by Goog Ie
