The big picture.

• Author: Beltz, Cynthia

President Clinton has taken a new approach industrial planning: "accelerating the development of technologies critical for long-term economic growth" and giving "special attention" to those industries that "are going to explode in the 21st century." For these key industries, suggests Laura D'Andrea Tyson, head of the president's Council of Economic Advisers, the government should evaluate "the likely course" of development of critical technologies; compare those baseline projections with visions of what a prosperous national economy should produce; promote domestic development of those industries; and monitor the activities of foreign governments and companies in those fields.

Such plans have long been used to promote American military interests. But improving the competitive performance of American firms is fundamentally a different task. Commercial success does not depend upon linear projections of foreign tank strength but on such intangible and unmanageable factors as consumer tastes for products that don't yet exist the erratic pace of technological change, and corporate development strategies that often transcend national borders and government control.

To understand how poorly industrial planning works in this environment, consider the Japanese and European experience with high-definition television--the next generation of consumer television. (See "The Sharper Image," June 1991.) Just as the Clinton administration argues for special treatment of certain high-tech industries, Japan and Europe promoted HDTV in an effort to gain a competitive foothold in a single industry that many believed would generate benefits throughout the economy. And in the United States the debate over HDTV was driven by a fear that this country would lose its competitive edge unless it kept pace with the spending and planning programs of its trading partners. But with HDTV, planning failed and the market triumphed.

Back in 1989, a parade of industry "experts" testified before Congress that the federal government had to wake up and match the efforts of Japan and Europe in HDTV. Because both regions had already set their HDTV standards and were spending millions to commercialize the technology, such industry heavyweights as Zenith and the American Electronics Association argued that without a comparable program the United States would be left behind in the global high-tech race.

"If the US does not choose to re-enter consumer electronics via HDTV," warned AEA...