Dazzling Knowledge

Wednesday, May 21, 2008

Do we need public finance of science?

As a scientist who wants to see the size of government reduced, I have maintained that we can and should cut public investment in science, as long as we cut almost everything else first. A new book, provocatively titled Sex, Science and Profits: How people evolved to make money, argues that public finance of science has been unnecessary in fueling technological progress and development, and that the government may be doing more harm than good (color me shocked!). Ron Bailey reviews:

Does government funding of scientific research speed technological progress and spur economic growth?

…in nearly every case the crucial inventions of the past two and half centuries were called forth by markets, not invented by scientists working from ivory towers. These include the steam engine, cotton gin, textile mills, railroad engines, the revolver, the
electric motor, telegraph, telephone, incandescent light bulb, radio, the airplane—the list is nearly endless.

The story of the airplane is instructive. After the Spanish-American War, the federal government supplied a grant of $73,000 to the director of the Smithsonian Institution, Samuel Pierpont Langley to develop heavier-than-air craft. All six of Langley's prototypes crashed, the last one on October 7, 1903. Two months later, Ohio bicycle mechanics, Orville and Wilbur Wright, launched their first successful flight at Kitty Hawk, N.C. Their R&D budget? About $1,000.

…government funded civilian research didn't appear to hurt the private sector but there was not much evidence that it helped, at least in the short term. The report concluded, "Research and development (R&D) activities undertaken by the business sector seem to have high social returns, while no clear-cut relationship could be established between non-business-oriented R&D activities and growth." Economic growth associated with R&D was linked almost entirely to private sector research
funding. The OECD report did allow that perhaps publicly funded research might eventually result in long-term technology spillovers, but that contention was hard to evaluate. The 2003 OECD study also noted, "Taken at face value they suggest publicly-performed R&D crowds out resources that could be alternatively used by the private sector, including private R&D."

A 1995 analysis done by American University economist Walter Parker also finds that government funding crowds out private research. "Once private research is
explicitly controlled for, the direct effect of public research is weakly negative, as might be the case if public research has crowding-out effects which adversely affect private output growth," concludes Parker. Weakly negative? Government funding may retard technological progress? Is it possible that the funding for NASA has
crowded out
private space transport research and development? Or more currently, that private companies are not investing in carbon capture and sequestration research as a way to mitigate man-made global warming because they are waiting
for the federal government
to fund such research?


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