## Wednesday, August 20, 2008

According to a news article in Nature, there are now only four PhD scientists left at Bell Labs doing basic research. Four. Leaving aside that I know those guys personally, we should all be saddened by this.

I know that in industry there's always a tension between the immediate company bottom line and longer term investment. I can't help but wonder, though, in these days of institutional investors, mutual funds, and huge executive compensation, if we've really screwed up. Let me put it this way.... Once upon a time there were long-term investors who bought, e.g., AT&T, and really cared about whether AT&T was going to be competitive in ten or fifteen or twenty years. Now most stock is held by institutional investors and mutual funds who really don't care whether AT&T exists in ten years - they just care that there's something with a risk/reward profile like that in ten years. Furthermore, the executive compensation system is designed to massively reward short-term results (how much is this quarter's rate of growth greater than last year's? Note that making a big profit isn't enough - you have to be increasing your profit rate, not just the absolute amount of money the company makes.). As far as I can tell, we have effectively removed much of the economic incentive for long-term investment. No wonder any research and development with a 10-year horizon is almost gone from the American technological landscape. The only exceptions, as is often the case, are companies with so much money that a small research investment is negligible and can give decent PR, like Intel, Google, and Microsoft. Yeah, I know that HP Labs still exists, and I know that IBM still has people playing with STM, and I know that Exxon and Dupont and 3M have lots of talented chemists, but it looks like the days are largely gone of having a staff with a critical mass of tens of physics and chemistry PhDs doing cutting edge long-term research in an industrial setting.

R said...

The news is indeed sad, but even worse is the fact that new PhD graduates will have a darker future outside of academia.

That's of course, without considering that academia has its own problems.

ttexas said...

If industry doesn't want PhD's (or maybe... basic science researchers) and Academia is a tight market, is graduate school just a novelty/leisure sport?

Personally, I would not be here if it was. I'm not convinced it will be, for me. But I can certainly see it for many subspecialties. Maybe the key question here is, can science work without its current high student/prof ratios?

Anonymous said...

Its not that industry doesn't want PhDs, its that industry wants its PhDs, but not for basic research. I too think this is a huge mistake, and that eventually this will come around and bite the tech-based companies. There is a huge difference between having 10-20 world class PhDs to throw at a problem, and outsourcing your research dept to 3 famous PIs and their grad students...

Unfortunately, this trend is also occurring in the National and DoD labs, but at a slower rate. It is much harder to get internal funding now if your work won't lead to a prototype widget these days.

Bernard said...

Quoting Doug on armies of basic-reserch PhDs: "but it looks like the days are largely gone..."
To which I would add "... in the States."

Bernard said...

How much of this is a result of relaxing the tax laws on capital gains since the 1970s?

One of the real issues is that the benefits derived from basic research often flow to someone else other than the party that paid for the research in the first place. (Xerox PARC, I'm looking at you...) So a rational business entity might balk at doing research that could enrich its competitors. This is (as far as I can see) the main compelling argument for government funding of basic research.

Uncle Al said...

Google hires the Profoundly Gifted, mandates their eventual boredom, then reaps a rich field of otherworldly invention. Profesaional management detests (and fears) such people. They usually play poorly with others.

Rotate pilot plant gauges so nominal operation has every needle vertical. Deviation is obvious with a glance. Management went ballistic. Gauges have a "proper" orientation. A technician with clipboard again wrote down numbers every 15 minutes.

Even 5 minutes is intolerable to allow bad things to continue. We let disaster propagate by the book lest we be deemed insubordinate.

Don Monroe said...

I'm confused about one implication of your post. Intel certainly makes a lot of money, and their current and future businesses critically depend on advances in physics, chemistry, and materials science, among other things. But do they see fit to do any basic physics research?

Doug Natelson said...

Bernie - From what my European colleagues tell me, the situation isn't that different on their side of the Atlantic. IBM has a bit of basic stuff in Zurich; Phillips is becoming ever more applied in the Netherlands. I think companies viewed the benefits of basic research as the following: (1) Intellectual property; (2) A way to keep a stable of PhD expertise around and in top form, in case of targets of opportunity and to provide a means of seeing new possibilities in advance; (3) Public relations; and (4) A recruiting tool to bring in top-flight people who transition from basic to applied research.

Don - My impression is that Intel does do some basic research, though it's not big and is narrowly focused. They also do more applied research but with a moderately long time horizon - for example, the Si Raman laser stuff, which is potentially useful in the next decade but not in the next 18 months. Perhaps an Intel insider reader (I've no idea if I have any) could offer more insight.

DanM said...

Doug, I think your friend Bernie may have been referring to China. At least, that's what I would have meant if I'd been him. And we both would have been right.

Don Monroe said...

Doug,
Your statement about Intel's research is reasonable, but if the definition of "basic research" includes silicon photonics and similar technologically-motivated projects, than there are a lot more than four basic researchers at Bell Labs. I don't know of any research at Intel that lacks a clear technological niche (maybe I'm uninformed, of course).

The Nature article also almost-explicitly stated that if it wasn't physics, it wasn't basic, which strikes me as very narrowminded.

okham said...

Hey Doug,

I would be interested in your take on this: do you think deregulation of telephony may have something to do with AT&T/Bell Las choice of disengaging from basic research ? I am thinking that in much of the private sector basic research was popular as long as companies enjoyed relatively safe, quasi-monopolistic positions in their respective markets.

CC said...

Doug, I think your friend Bernie may have been referring to China. At least, that's what I would have meant if I'd been him. And we both would have been right.

What Chinese company do you have in mind? I can't think of any.

Okham, at any rate, is completely correct.

Don Monroe said...

Re: competition

It's certainly unlikely that Bell Labs would have become what it was without the monopoly subsidy. But Bell Labs hasn't been part of a monopoly since 1984, almost a quarter century ago.

okham said...

It's certainly unlikely that Bell Labs would have become what it was without the monopoly subsidy. But Bell Labs hasn't been part of a monopoly since 1984, almost a quarter century ago.

And if I remember correctly, life started getting rough for Bell Lab scientists right away.
Indeed, the first mass exodus of which I have memory, of first class Bell Labs researchers who sought refuge in academia, occurred in the early 90s, before the creation of Lucent Technologies.

Don Monroe said...

Of course ending the sheltered monopoly status raised challenges to open-ended research, but it did not kill it. (In contrast, Bellcore, which retained the phone company monopoly status, killed basic research within a couple of years.)

From my biased perspective (as one who was spun off), the 2000 decision to exit the businesses (optical fiber, integrated circuits, optoelectronic components) that directly depend on chemistry, materials, and physics was more profound, in terms of challenging the value of fundamental physics research for the corporation. Oh, and the little matter of not making a profit.

Doug Natelson said...

Yes, there was a big shift from Bell after the breakup of AT&T, including my thesis advisor's move to Stanford. Still, when I started my postdoc there in '98, things were actually looking reasonably decent. Indeed, as long as Lucent was actually making real money (not loaning money to sketchy customers so that those customers could turn around and buy Lucent equipment) and still producing hardware, as Don points out, the situation looked good. Spinning off Agere looked smart when JDS Uniphase was trading at $200/share. Unfortunately the whole thing was a house of cards. It still bothers me that Rich McGinn isn't in jail, given the amount of book-cooking that he and his pals did. Monopolies and quasi-monopolies mean some level of freedom in dealing with shareholders. The central question for me is whether there is anyway to have an equivalent research environment these days given the current economic climate. As I've said, I think that relying on the prevailing model (small groups at best working at universities with decreasing (in real$) federal support plus some industrial grants) has real downsides.