Not long ago, U.S. high-tech industries were sagging. The market share of U.S. companies was declining dramatically in everything from semiconductors to consumer electronics to machine tools. The situation was so dire that in April 1991 Intel CEO Andy Grove warned that the United States was in danger of becoming a "technological colony."

Three years later, the situation had brightened measurably. For example, U.S. companies dominated the markets for microprocessors and for cellular phones. The Council on Competitiveness-a nonpartisan forum of chief executives-issued a report in 1994 identifying 22 technologies where the U.S. position had improved, including structural ceramics, display materials, and photonics. Our renewed ability to compete arose from some subtle changes during the early 1990s that made our innovation system much more effective. Unfortunately, the 104th Congress lost sight of this bigger picture and even seemed intent on undermining this progress.

The House, for example, tried to eliminate the National Institute of Standards and Technology (NIST), which has the responsibility of maintaining the nation's physical standards, such as our units of length and time. While the private sector is a beneficiary of standards, industry cannot maintain something as fundamental as the second or the meter. The 104th Congress also discouraged cooperative projects between industry and the national laboratories-collaborations that have helped move the fruits of publicly funded R&D into the commercial sector.

This strategy is counterproductive. After all, much of the recent good news on the rebound of U.S. industry stems from the federally lubricated interaction among the key players in the innovation process-companies and universities. A good example is the manufacture of hard disks for computer data storage, today a $50 billion industry. In the late 1980s, Japan was poised to dominate this market. But in 1990, specifically in response to the opportunity to receive funding from the Department of Commerce, U.S. participants in this industry formed the National Storage Industry Consortium. At the same time, the National Science Foundation established an engineering research center on data storage. This center, at Carnegie Mellon University, has produced more than 100 scientists and engineers with advanced degrees and has pointed the way toward new technologies. The result is that storage densities (the number of digital bits that can be crammed onto each square millimeter of disk) have over the past five years been growing at 60 percent annually-twice the rate of progress the industry considered normal in the pre-consortium era.