Does academic research cause economic growth?
lemire.me
lemire.me
Take Lasers for example. The first Laser was made at Bell Labs, a commercial research lab. It would not have been possible without the maser that came before it in academia, or the work done by Einstein, also in academia. Lasers have had an immense economic impact, but do we credit them to academic or commercial research?
The answer is both.
Academic research is less frequently the final link in the long chain to profits than commercial research is. This is only natural since commercial research labs are motivated to invent products that will make money while academics can afford to take a longer view.
Why else might nations that spend a lot on fundamental science benefit? A skilled work-force. Scientists may publish how their experiments work in broad strokes, but the nitty gritty details are often something that can only be learned by working in a lab. If your country has a lot of labs, you have a workforce that commercial enterprise can draw upon to bring products to market based on research. A country can always lure immigrants, but having a home-field advantage is more cost effective.
Another example of government research being very beneficial in an indirect manner is in things like mental illness research. Little is done privately outside of pharmaceutics, yet improved treatment of mental illness significantly improves the economy - workers are more productive, more people participate in the workforce (and subsequently fewer crimes), and of course there are a ton of non-economic benefits.
Similarly, the US saw a massive economic growth from its early days all the way to WWII
The US is an incredibly wealthy landscape, in terms of mineral wealth, agricultural wealth, and temperate weather. Throw in a massive population increase, successful wars of conquest, and a productive temperate climate, and the author is pushing shit uphill with a pointed stick if he's trying to make the argument against publicly-funded R&D this way.
"I have never done anything 'useful'. No discovery of mine has made, or is likely to make, directly or indirectly, for good or ill, the least difference to the amenity of the world... Judged by all practical standards, the value of my mathematical life is nil; and outside mathematics it is trivial anyhow. I have just one chance of escaping a verdict of complete triviality, that I may be judged to have created something worth creating. And that I have created something is undeniable: the question is about its value."
And I can't find a quote, but I think I remember reading that he viewed his mathematical research as consistent with his pacifism, because nothing he developed could be used for military purposes.
Of course, now that we have computers...
But, given the different channels that research can become commercially viable, and given the long and uncertain time lags before new developments in research show up in GDP, a statistical analysis based on aggregate data is going to be absurdly difficult. And there are other reasons to expect that private companies will underspend (from a societal-benefit point of view) on research that has positive spillovers/externalities (really quickly: they're only going to want to spend to the extent that they directly benefit. If there are benefits that they can't profit from, as a society we'd want them to pay for the research anyway, but they'd be crazy to). So funding as much research as possible seems like a decent approach.
Incidentally, this is the first time I've seen someone claim that the US or Canada governments have massive research expenditures. Does anyone have a link for good numbers?
I completely disagree with the Author's implicit assertion that the U.S. government should spend less money funding scientific research. Private industry did not discover the importance of DNA, nor was it responsible for determining the chemical structure of this nucleic acid. Many fundamental discoveries would never have occurred in private industry simply because private industry cannot afford to heavily fund basic science.
The value of basic science is not felt within a decade or two. It takes a lifetime to appreciate.
They can, but the reality is very few are really prepared to do a good job of it and even fewer have the resources to really fund the portfolios relevant to them in the same way other institutions (gov, some large corps, etc) do.
The non-profit sector has a bunch of hard working folks with great goals and there's a bunch of good uses for them to put money toward, but frankly I'm not sure R&D is the one that makes the best impact. I think if a non-profit is going to fund R&D they need to be really really smart, innovative and/or creative to make their money get the type of impact they could get on spending it in critical areas outside of R&D.
This changes depending on the field though. In some areas of the arts and humanities, non-profit funding is a huge and valuable source of funding.
But in tech/sci/eng? Not so much.
The reality is that companies don't do anything with academic discoveries until they are shovel-ready. Translational research is critical and horribly underfunded.
Most industries aren't like this, of course; I doubt my barber or my accountant have much use for academic research output.
Private companies don't fund fundamental/basic research, unless we have semi-monopolistic situation like with AT&T Bell Labs before breakup, and Microsoft Research today. If you're in highly competitive market, you simply can't fund things which don't improve your bottom line in foreseeable future.
Academic institutions provide highly trained employees for industry, without funding of academic research, quality of teaching will decrease significantly. Even if there is a problem in finding correlation between funding of public research and economic growth (which I find highly dubious, it goes against intuition and lots of examples) it definitely helps humanity as a whole, because knowledge is not locked up in borders. Although people who go with commercialization of an invention they've come up with while in academia, most commonly do it in their home country.
Once the regression hits a dead end (as it doesn't distinguish the causal factors), we jump straight to anecdotes - the Industrial Revolution, and the USA. Both of these are probably outliers.
It may be that the we should fund scientific research because it benefits everyone rather than because it gives us an advantage over other nations.
Taxes in the US are actually very high, plus the government takes a lot of money via inflation of the money supply.
It seems likely to me that government-funded research is a "local maximum."
If we were to massively shift the backbone of the economy from consumption to production (i.e., letting people and companies keep more of their money), we would certainly see much more private research.
In fact, we could potentially have a "research economy," if the intellectual property issues were sorted out. In this system, research institutes would take over a lot of functionality from academic departments (including training new researchers). Such an institute my employ tenured academicians who make lower, fixed wages (as with current academicians) but are free to do basic research, plus applied people try to market the results and are paid competitively (as with current industry people).
There is also a high level of regulatory capture in most industries that punishes any attempt to transition research results into a marketable product.
We are #7 on the Global Competitive Index, behind Switzerland (29.4% TTR), Singapore (14.2% TTR), Finland (43.6% TTR), Sweden (47.9% TTR), Netherlands (39.8% TTR), and Germany (40.6% TTR) [3].
Sweden, the Netherlands, Finland and other countries that are close below the US have socialist governments. As much as hip, intellectual go-getters who read Ayn Rand would love there to be no government, it's simply not feasible. It may be great in theory, but it's not great in practice. However, I do not know much about the Ayn Rand's entire philosophy, so I wont comment on it further. I do know that most people who blindly latch on to some of her ideas don't truly understand her philosophy.
Half of that 'regulatory capture' you refer to is because of private interests lobbying for government restrictions. The will of the free market may drive such anti-competitive practices by private interests out of business eventually, but humans do not operate on the long term.
Regardless, the point of this post is that even if you thought you opened up your eyes before to the realities of the world and exactly how it should work, I invite you to take a step back every now and then and reevaluate your philosophies.
[0]http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenu... [1]http://www.taxpolicycenter.org/briefing-book/background/numb... [3]http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport...
So, 27% of the economy is shifted towards government, which is almost entirely consumption, not production... that's a massive amount of waste. I mean, it's 27% of the entire US economy! Of course, you probably interpret the utility of this shift differently than I do. No need to argue ideology here.
> As much as hip, intellectual go-getters who read Ayn Rand would love there to be no government, it's simply not feasible.
As an Objectivist (i.e. I agree with Ayn Rand's formal philosophy), it is not "hip." It's incredibly painful to be a small minority that is treated with disgust by people who can't even state what they actually disagree with. This is my experience living in a college town in the US. It's a perfect way to be ostracized. Even, say, Paul Ryan Republicans who claim to like Ayn Rand will tend to personally reject me, since I'm an atheist.
> read Ayn Rand would love there to be no government
This is just technically incorrect. Ayn Rand was actually a very strong defender of government over anarchy. You clearly have no idea what you're talking about.
> I do know that most people who blindly latch on to some of her ideas don't truly understand her philosophy.
It's true that this is a problem. But it's a problem with those people, not with her philosophy.
> Half of that 'regulatory capture' you refer to is because of private interests lobbying for government restrictions.
Yes, there are lots of evil businessmen who seek regulatory capture. In fact, a main character of Atlas Shrugged was one such. That's why we need to keep government out of the business of business.
> I invite you to take a step back every now and then and reevaluate your philosophies.
This is an intellectually irrelevant pretension on your part. I've spent ten years actively obsessed with figuring out philosophy.
27% of the entire economy shifted entirely to government consumption? That's a humongous amount of the economy. It's almost 1/3.
And...our government consumes less than 1/3rd of the GDP when social spending in other developed countries is at 1/2 or more! Libertarians would have us be like Somalia.
It's important to realize that that's not actually true. I think we should have a small government that protects citizens from force and violence. That still includes all the core functions of government (e.g. police, courts, military, I don't care if you throw in basics like roads).
That is a world apart from Somalia, or anarchism. It's actually just a return to earlier ideas of American government that served us well at the time.
To be clear, I'm not a libertarian, for reasons that aren't relevant here.
How about protecting us from peasant revolts when our social services suck so much that people lose hope and take advantage of their second amendment rights? Or how about just avoiding the revolts in the first place by having a decent moral government that evens the playing field between rich and poor?
> It's actually just a return to earlier ideas of American government that served us well at the time.
This is BS rosy-tinted glasses revisionism that has no grounding in real history. Like how everything was better in the 50s if you just ignored segregation and the 90% tax rate we had on the rich. Did isolationalism serve us well before WWI and II? Did our hands off approach prevent the dishonest greed and speculation that led to the depression? The 1800s weren't that much better, just look at all the crashes and war that went on then.
> To be clear, I'm not a libertarian, for reasons that aren't relevant here.
Good, because libertarians tend to be bad historians and have a poor understanding of human nature.
For example, our current economic model is completely unsustainable. It's not going to prevent the "peasant revolts" you talk about. It's going to guarantee them. Yet you seem to be calling for more of the same.
I wasn't talking about the 1950s, but pre-WWI. And, yes, isolationism did serve us well pre-WWI, though I am not an advocate of isolationism at all, as a principle.
Now, to get to the interesting bit.
> having a decent moral government that evens the playing field between rich and poor
Pray, tell me where you have found a rational, reason-based morality that makes you so certain that the rich need to be punished and sacrificed to the poor? Where have you found a rational, reason-based economic philosophy that can prove that doing so will be good for the economy, instead of furthering its destruction?
So is private research.
Yes, academic research causes economic growth. So does eating and sleeping. Everything on the planet affects trade.
I wonder if the programming community relies on academia as much as for example the medical industry or the aeronautical industry.
The computer programming community has the advantage that its technologies and best practices are ubiquitous throughout the industry and academia (??). This may facilitate an easy transition from industry to academia and vice-versa.
Indeed, I think there is a language barrier between CS academia and CS industry that doesn't exist between AE academia and AE industry. In aerospace, everyone speaks the language of differential equations, finite element analysis, computational fluid dynamics, etc. But CS academia is deeply steeped in type theory, automated proofs, etc, while CS industry talks about object orientation and test frameworks, etc.
My research as a CS grad student is very much motivated by interactions with industry people, and very much is intended to facilitate things they need.
So, yes, mixing in the computer science/software engineering field is very useful for both academia and industry.
I must stop winding up my sarcasm chip - just unbelievably stupid article.