FC: Feds say nanotech is huge commercial market -- so they must fund it

[Declan McCullagh <declan () well com>]

[Let's get this right. If nanotechnology will be a _$1 trillion_
industry soon (and Bond thinks it might be far more), aren't there
going to be some VCs who want a slice of this? If his statements of
fact are correct, it seems like there are compelling reasons for the
government *not* to be involved: Businesses aren't stupid, and they'll
make the necessary investments to get a leg up on their
competitors. Investors will do the same, in hopes of a wildly
profitable return. More to the point, federal funding relies on the
faulty assumption that Congress can make better choices about where to
spend money than businesses can. Large areas of society are taxed at a
relatively small rate to give relatively large handouts to favored
groups, such as the nanotech folks, who are politically connected
(recall they hired Newt Gingrich). That may be good politics, but it
doesn't make for good science or good economics. --Declan]

---

http://www.ta.doc.gov/Speeches/PJB_030404.htm

                         Technology Administration
                              KEYNOTE ADDRESS
                                      
                             By Phillip J. Bond
                 Undersecretary of Commerce for Technology
                    United States Department of Commerce
                                      
                          Delivered April 4, 2003
               at the National Nanotechnology Initiative 2003
                             in Washington, DC
                                      
   Good morning.
   
   I am honored to be here with all of you -the intrepid men and women
   who are pushing back the frontiers of science and technology at the
   nano-level and working to deliver nano-enabled products and services
   to the market.
   
   I want to begin by thanking those responsible for putting this event
   together. This conference creates a venue where we can come together
   share ideas, learn from each others' successes and failures, identify
   current and future challenges, and build common visions that we can
   all work toward. In particular, I want to join the chorus of those
   expressing appreciation to conference chair Mike Roco of the National
   Science Foundation for his tireless efforts in bringing not only this
   conference, but the National Nanotech Initiative itself to fruition.
   
   It is my honor today to represent the U.S. Department of Commerce and
   its Technology Administration, where the NNI is an important priority.
   In fact, it is so important that Commerce has two unique roles to play
   in this historic initiative.
   
   First, as you know after hearing Dr. Shull's update yesterday, the
   Department plays a role through NIST in the development of the science
   and technology especially in the development of the tools and
   standards that enable researchers to work and accurately measure at
   the nanoscale. We are exceedingly proud of their extraordinary work
   being carried out by NIST researchers, including our Nobel Prize
   winners. This morning, I want to take the opportunity to talk about
   the Commerce Department's second role in the NNI: ensuring that the
   United States maximizes the extraordinary potential of this technology
   to the Nation's economy.
   
   The Commerce Department has an overarching theme for all of our
   activities that I would like to use as the framework for my remarks
   this morning: American Jobs, American Values.
   
   Please note the symbolism present in our thematic logo. "American
   Jobs" rests upon "American Values." Yes, we want to create high wage
   jobs-in fact, we must create high wage jobs to sustain our nation's
   standard of living-but we must build these jobs according to the
   values we hold dear-values such as respecting and protecting the
   health, safety, and fundamental dignity of human beings; respecting
   and protecting and respecting the economic principles that foster
   competition and innovation, such as intellectual property rights, and
   trade policies that ensure a level-playing field.
   
   As everyone hears knows, to say that nanotechnology holds promise for
   future economic growth and job creation is a gross understatement. We
   intend to capitalize on this potential. But with this promise comes
   the need to make sure its development and application are consistent
   with American values. My remarks this morning will address these
   opportunities as well as some of the public policy concerns.
   
   First, the opportunities...and there are many.
   
   As Richard Russell, Mike Roco and others no doubt have explained, the
   federal government will invest more than $700 million this year in the
   NNI, and President Bush has proposed a record $847 million for
   nanotechnology in FY 2004. Like any investor, we hope to reap
   substantial returns. We believe that investing in nanotechnology will
   enable us to maintain American leadership in technology and create
   those high value-added jobs I referred to earlier. And with those jobs
   and growth will come the revenues to do all those things we desire to
   do as Americans:
     * strengthen our national defense,
     * enhance homeland security,
     * finance improvements in our education system,
     * improve out health care system,
     * make us self-reliant in energy,
     * improve our food stocks,
     * pay down our debts,
     * protect our environment. and
     * and last and far from least bolster the commercial competitiveness
       of the United States.
       
   These are big dreams for small science. But, as you know better than
   I, these are realistic dreams.
   
   The broad range of developments we call nanotechnology have moved out
   of the genre of science fiction, into our academic and industrial
   laboratories, and increasingly, into the marketplace.
   
   More than ever before, those nations which are among the first to
   harness the potential of new technology will be the one's that reap
   their rewards. I'm here this morning in large part to assure you that
   the leaders of the Department of Commerce-Secretary Don Evans and
   Deputy Secretary Sam Bodman-understand this. They understand
   nanotechnology-especially its convergence with information technology,
   biotechnology and cognitive research at the nanoscale-represents the
   next revolution. A revolution that will impact nearly every industry
   and unleash heretofore unknown human potential.
   
   This is not hyperbole.
   
   When we talk about revolutionizing industry, we mean of course that
   companies embracing nano-based manufacturing -whether creating new
   products or making existing ones-will require different equipment and
   processes, different safety protocols and environmental control
   approaches, different suppliers, and workers with different knowledge
   and skills. New industries will arise, existing ones may be
   transformed, and yes some will disappear altogether as their products
   are supplanted by those of new nano-enabled industries, much the same
   as horse-and-buggy makers were largely replaced by automobile
   manufacturers.
   
   Of course as it already evident from the first commercial nano
   products-most of the first applications of nanotechnology will be more
   incremental than revolutionary. You know what I mean.
     * The most well known commercial application of nanotechnology is
       probably the use of nanowhiskers by Nano-Tex to produce the stain
       resistant fabric used in Lee Performance Khakis and other clothing
       products.
     * Also well known is Advanced Powder Technologies' ZinClear, a
       transparent sunscreen with UV protection superior to zinc oxide.
     * Nanocomposites in the running boards in SUVs
     * NanoBio, with products like NanoDefend which can be used to
       de-contaminate clothes and surfaces, and NanoGreen, which can be
       used on skin. Pretty timely watching the news from Iraq.
     * Finally, two nano products are making an impact on the sport of
       tennis. Nanotechnology is being applied to tennis balls to double
       their useful life, and to tennis rackets to reduce torsion.
       
   At first blush, these may not strike John Q. Public as revolutionary,
   but John Q. Public would be missing the deeper point.
   
   First, French manufacturer Babolat is using carbon nanotubes to
   rigidify its rackets, improving torsion resistance by 50 percent. To
   date, the company has introduced four rackets incorporating this
   technology. Of particular interest is how quickly Babolat has
   penetrated a mature market. While the company only began selling its
   line of rackets in the United States in 2000, they have already
   captured 5 to 10 percent of the U.S. market.
   
   Second, is the case of Inmat's Air D-Fense, the tennis balls with the
   nano-clay composite to slow the escape of air. This is what gives
   Wilson's Double Core tennis balls twice the life of standard tennis
   balls. Inmat believes its material can be used to coat the inside of
   automotive tires, a billion dollar market. Compared to current tire
   sealants, Inmat's nano-clay is much thinner and lighter. So in
   addition to the better sealant properties, it could potentially reduce
   material costs and reduce tire weight-which in turn would improve fuel
   economy. An added benefit claimed by Inmat would be easier and more
   environmentally-friendly recycling of tires.
   
   Today it is NanoDefend, tomorrow it's everything else in national
   security.
   
   "Nanotechnology is going to revolutionize everything we do" in the
   military, Gen. Les Lyles, Commander of Air Force Materiel Command,
   told the Armed Services Emerging Threat and Capabilities Subcommittee
   this past Monday. Rapid growth in market share...environment...energy
   efficiency...national security...government operations...sounds like
   the beginnings of a revolution.
   
   That is why the National Science Foundation, in consultation with a
   wide array of experts, has projected that the global market for nano
   products could reach $1 trillion by 2015. By comparison, total U.S.
   GDP is approximately $10.4 trillion. So we're talking about a market
   for nanotech products equal to about 10 percent of the entire U.S.
   economy today. And I for one would bet this is an underestimation. The
   accelerating rate of the accumulation of knowledge fueled by IT and
   the collaborative engine of the Internet lead me to conclude that
   models of the past cannot predict the rate of future advances.
   
   But set aside my irrational exuberance. Let's assume a $1 trillion
   dollar market within a dozen years, what would this mean in terms of
   jobs? If we look to IT-producing industries for guidance-and I think
   this is appropriate since IT-producing industries provide an average
   wage more than twice that of all private sector workers-and if the $1
   trillion estimate holds true, we could estimate the number of jobs
   created by nanotech products to be approximately 7 million.
   
   To get there it would take a revolution that touches every industry
   and that stretches toward the most fantastic possibilities that are so
   amazing and alluring.
     * Nanocomputers smaller than a bacterium.
     * Data storage devices with memory densities sufficient to store the
       entire collection of the Library of Congress on a device the size
       of a sugar cube.
     * Wearable digital systems that serve as personal brokers-
       interacting with our surroundings, anticipating our information
       needs, seeking it out, and delivering it as needed.
     * Materials up to 100 times stronger than steel, at a fraction of
       the weight.
     * "Clean" manufacturing processes that build from the atom up,
       reducing or eliminating or re-cycling material waste, energy waste
       and other of today's by-products.
     * Advanced educational technologies that adapt to our learning
       styles, employ personal avatars, use immersive environments that
       tap all of our senses, and deliver knowledge on a just-in-time
       basis.
     * Medical technologies that provide early detection and
       characterization of diseases or illnesses and enable targeted
       delivery of pharmaceuticals, nutraceuticals, gene therapy, and
       sensors; and
     * Bioengineered tissues to replace damaged or diseased tissues.
       
   This audience knows these are no longer like the pie-in-the-sky
   fantasies of some wild-eyed science fiction writer. And maybe once
   they were. But, in fact there are scientists and engineers here in
   this room and elsewhere in the United States and around the world
   working to make each of these visions a reality. And some may be
   closer to realization than you might imagine. You are involved in the
   ultimate disruptive technology. Disruptive on a scale larger, I submit
   than mass production and digital technology...and that's saying
   something.
   
   Now we are committed to American leadership. As we know from history,
   disruptive technologies can rapidly shift the global balance of
   economic and military power-a fact recognized and appreciated by
   nations around the world...and they are investing accordingly. For
   example:
     * The government of Japan regards nano as a key to the "restoration
       of the Japanese economy" and anticipates nano spending to reach
       about $1 billion in 2003.
     * The People's Republic of China expects central government spending
       on nano to be approximately $240 million over the next five years,
       and that local governments in China will spend an addition $240 to
       $360 million.
     * Annual nanotech investments in Korea are expected to be about $145
       million, in Taiwan about $112 million; and in Singapore about $37
       million.
     * In Israel, there is a growing appreciation of the importance of
       nanotechnology to the country's future. Ben-Gurion University, Tel
       Aviv University, the Hebrew University and the Technion have
       announced major investments in the areas of nanoscience and
       nanotechnology totaling over $100 million. The Israeli
       NanoBusiness Alliance is developing a proposal for an Israel
       National Nanotechnology Initiative modeled on the U.S initiative.
     * And in Europe, the EU Research Commissioner estimates nanotech
       funding under the Sixth Framework to be about $750 million per
       year; other estimates range as high as $ 915 million. Counting
       both national and EU-level investments in nano research, some
       estimate that total European investments in 2003 could be twice
       that of the United States, or perhaps even more!
       
   The European NanoBusiness Association even asserts that leadership in
   nanotechnology belongs to the EU in its report "It's Ours to Lose."
   While I am quite confident of the United States' leadership position
   in nanotechnology, companies will establish R&D and manufacturing
   operations wherever the leading edge research is being conducted.
   
   The good news is the United States is uniquely positioned to reap the
   potential of nanotechnology.
   
   Not only has President Bush has proposed record levels of Federal
   support for nanotechnology through the NNI, but state governments are
   spending additional millions to create and support nanotechnology
   centers at universities around the country. Our institutions of higher
   education are unparalleled in their ability to educate students and to
   conduct cutting edge research. Nano business and professional
   associations are forming faster than self-replicating nanobots. And we
   have an entrepreneurial culture and business climate that is the envy
   of the world.
   
   We are just now beginning to see the fruits of the investments made in
   nanoscience and nanotools over the past few years. The potential is
   beginning to emerge:
     * We are seeing today the seriousness with which major corporations
       are exploring the potential of nanotechnology to improve their
       products and processes.
       I tend to see this first and foremost among the IT companies-such
       as IBM, HP, Intel-where there is strong potential for
       breakthroughs and commercial products in the mid-term.
     * We are seeing increased interest among a once-burned, twice-shy
       venture capital community looking for the next big thing- -or
       little thing. Much of the venture money is sitting on the
       sidelines right now-wary of being sold a bill of goods after the
       dot-com bubble burst-but it is ready to move rapidly into nano
       applications as the technical risks fall.
     * We are watching entrepreneurs take the science and technology out
       of academic environments and working to build commercial products
       and companies around them.
     * We are seeing the blossoming of a network of
       organizations-professional, business, academic-designed to share
       information, facilitate relationships, and advance the application
       of nanotechnology.
     * We are seeing America's leading universities embrace
       nanotechnology as a principal field of research, and gearing up to
       educate America's future nano-engineers, nano-scientists, and
       nano-technicians for the jobs of the future.
     * And recognizing the potential of nanotechnology to spur economic
       growth and create jobs, we are seeing state governments, cities,
       and regions around the country seeking to become a nanotechnology
       hub of the future-a Silicon Valley of the 21st century-by
       investing in their universities' research activities, business
       incubators, and other infrastructure.
       
   All of these developments from tennis balls to new nano-clusters...all
   add up to a promising future of American jobs. And, as I said before,
   those jobs always ultimately must rest on American Values. And one key
   public value today is that we don't rapidly commercialize something
   that is widely perceived as dangerous.
   
   The hard truth is, despite all these encouraging activities
   surrounding the development and commercialization of nanotechnology,
   many Americans' understanding of nanotechnology are being shaped by
   Michael Crichton's new book, Prey. In a theater soon near you.
   
   This creates a challenge for policy makers and nanotech industry
   leaders....If we are to successfully commercialize nanotechnology in
   the United States, we must proactively address legitimate societal and
   ethical concerns, and ensure that nanotechnology development and
   applications are undertaken in accordance with American values.
   
   All disruptive technologies face some level of social resistance.
   During the Industrial Revolution, workers in Holland fearful for their
   jobs threw their wooden shoes-sabots-into the machinery, delivering
   the term "sabotage" to our vocabulary. At the end of the 19th century,
   Thomas Edison attempted to demonstrate the dangers of alternating
   current by electrocuting animals. While his interest was economic-he
   had a strong financial interest in direct current-he attempted to
   manipulate the public's fear of the unknown that accompanies a new
   technology.
   
   In the past, some of these fears have been well-founded and rational,
   it seems to me that most of them have not been well-founded. As we
   have seen in the early days of biotechnology, the more revolutionary a
   technology is, the more likely it is to face public resistance in its
   development and application. Already there are groups advocating a
   preemptive ban on nanotechnology research until any potential downside
   can be assessed. I submit that we need not sacrifice jobs on the alter
   of values, nor values on the alter of jobs. We can walk and chew gum
   at the same time.
   
   We know full well that the public at-large, and the body politic in
   particular, are highly susceptible to the virus of fear. So, we must
   act today to inoculate the public and the body politic against the
   virus of irrational fear, by studying and addressing legitimate
   concerns in this arena in advance. An ounce of prevention is worth a
   pound of cure. Neither an ounce nor a pound is very nano, but you get
   my point...We cannot afford to wait until irrational fears take hold.
   When Prey hits your neighborhood theater, it would be best if it was
   seen by a public that understands that it is, in fact, science fiction
   and that serious people are thinking about how to address any
   reasonable concerns. Make no mistake, there is strong bipartisan
   support for nanotechnology now and we want to protect that. We can and
   we have to.
   
   Throughout history, we have successfully managed the downsides of
   technology-though often through great effort. Addressing these
   potential barriers has enabled America to remain at the vanguard of
   technological innovation-leading the Industrial Revolution,
   revolutionizing agriculture, building horseless carriages, inventing
   and commercializing powered-flight, generating and transmitting
   electric power, splitting the atom, creating global communications
   networks, rocketing to the moon and back, and unleashing the power of
   semiconductors to bring about the Information Age. As a result, we
   have reaped the extraordinary economic and social benefits that
   technology yields.
   
   Nanotechnology should be no exception to this record of technological
   achievement, though this will require an informed and dedicated
   approach by all of us here today-scientists and engineers, business
   leaders and policy makers. Each of us must reach beyond our own
   immediate sphere of knowledge and interest-our comfort zones-to
   identify and overcome challenges so that we can bring to the world all
   that nanotechnology has to offer.
   
   Now unlike many of you, I am not a scientist or engineer, so I don't
   bring great technical knowledge to my work in this arena. But I do
   bring three important tools: passion, position and politics.
   
   Passion-because I believe fervently in the economic potential and
   social advances that nanotechnology can bring to the citizens of the
   United States and the rest of the world;
   
   Position-as Under Secretary of Commerce for Technology I can guarantee
   that the opportunities and challenges of nanotechnology are brought to
   the attention of Commerce Secretary Don Evans and other senior
   Administration officials in the White House and other Federal
   agencies; and
   
   Politics-the necessary evil. Nanotechnology's future runs through the
   nation's capital. The federal government plays an important role in
   funding fundamental, high-risk research. To borrow a line from BASF
   ads: We don't make nanotechnology products, but we fund the science
   and technology that makes nanotechnology products and processes
   possible. In addition, many of the societal and ethical concerns about
   nanotechnology research and products will be debated and addressed
   here in Washington. Whether that's for the good or detriment of
   society depends on each of us.
   
   I promise to work with you to bring my knowledge of this town's
   culture, institutions, and processes to bear in advancing our common
   nanotechnology agenda. But I also need your help....for years many in
   the technology sector shunned Washington....that is not the right
   approach...you need to be involved, helping educate elected officials,
   opinion leaders...about the true benefits and promise of
   nanotechnology. This is more important than ever given that
   nanotechnology bills have been introduced in both the Senate and House
   of Representatives that could shape the federal government's
   involvement in this field for years to come.
   
   In closing, I want to congratulate you on your successes to-date, to
   encourage your continued efforts in advancing nanoscale science and
   technology, and to urge you to engage in the societal, ethical and
   political discussions that will shape the future of nanotechnology.
   
   Thank you.
   
                        Date created: April 8, 2003
                                      



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