It’s pretty frustrating for libertarians to argue about government investment in science and technology because one is constantly confronted with the problem of the seen and not seen. One is bludgeoned with every government initiative that ever happened to pan out while all the wasted trillions and the private investment therefore foregone is lost to memory.
My position is not that government investment in technology has zero returns. My position is that on average it does worse than returns to private investement. This should not be controversial. It is the consensus view of economists who study innovation and growth. If you think average returns to government-directed investment are higher than average returns to private investment, then you really do believe that the state has special generative powers. And you should formalize your findings, collect your Nobel Prize, and forever change the world. Or you should chill out about how awesome the Internet is.
I do want to distinguish between government spending on the development of particular technologies and government financing of basic scientific research. I’m convinced that a lot of valuable basic research would not be conducted without state subsidies, and that much of this research is the basis for later technological innovation that leads to increased growth. So here’s one area where I think well-conceived government spending can pay its way by boosting growth. Despite ample motivation to be persuaded, I’ve remained unpersuaded by most libertarian arguments to the effect that scientific research without obviously marketable future applications would be sufficiently funded. There is a lot of waste, and some truly objectionable politicization, in government grant-making. But my sense is that, on the whole, much of American science policy is a good deal.
However, I get skeptical pretty quickly as we move downstream toward engineering and the development of technological applications of science. Here’s where I see government subsidies responsible for a huge amount of misallocated human and financial capital. People who think that we will tend to do better rather than worse when the government tries to pick winners in technology really do bear the burden of proof here and should stop simply assuming that landing a man on the moon has made us better rather than worse off.
Last night, Kerry and I were reading Louis Menand’s excellent essay “The Last Emperor: William S. Paley,” about the long-time CBS chief. In the middle of the piece, Menand argues persuasively that almost all of the television technologies that reached American households by 1990, aside from satellite transmission and the VCR, were available in the 1950s, but that regulatory collusion between incumbent businesses and government stifled innovation. “What we might have had for the last forty years is what, almost everywhere we have only had since around 1990: a mixture of local and national programming and commercial-free pay services on a hundred channels — and all in living color,” Menand writes. When government picks winning technologies it creates, as a matter of course, vested interests that will seek to, and often succeed in, creating barriers to further innovation — even if the “winner” the government picked turns out to be a loser. If you generalize the case of the TV lobby — which prevented or delayed innovation at every turn — to hundreds of other heavily regulated industries, one can start to see how government can have a systematically dampening effect on the pace of innovation.
Consider ethanol. Here’s Michael Levi in an excellent article on “green jobs” in Slate:
For many environmental advocates, of course, these discussions [of whether green initiative will on net increase employment] are of secondary importance; what matters most is that green jobs will help the planet. They’d be wise to be careful there, too. Indeed, the most successful green jobs program to date is one that no environmentalist wants to brag about: the conversion to corn-based ethanol. A recent United Nations report estimated that the heavily subsidized U.S. ethanol industry provides employment for 154,000 Americans, about five times as many as the wind power industry and nearly 10 times as many as the solar industry. That goes a long way to explaining why, despite mounting evidence showing that corn ethanol is a failure (some would say a disaster) on the environmental front, U.S. policy appears to be on cruise control. At its base, corn ethanol is not a green policy so much as a jobs policy—and its success in that respect has made it almost impossible for the government to change course.
And this is just the way it works. How much money has been sunk into this? Lots. That’s money that could have been spent more productively, but wasn’t. So we’re poorer. And all the tens of thousands of folks right here in Iowa working in corn ethanol are misallocated human capital. So we’re poorer. These are skilled, hardworking people whose diligence and effort is, thanks to the government, making the world worse. And the case of ethanol is no anomaly. It is completely typical.
Judging from some of my comments, one would think all the government ever does is land men on the moon and invent the Internet, and therefore libertarians are blinkered idiots. Now, I truly don’t see the point of the moon landing, which strikes me as nothing more than a 20th-century version of grotesque pyramid-building waste. The Internet, like many other things based initially in government projects, probably helps account for the fact that returns to government investment are above zero. But it is truly hard to honestly identify the relevant comparison when trying to tote up the net benefits of government investment. What has been foregone in the process? (And don’t forget to include the casualties of regulatory sclerosis that so often accompanies winner-picking.)
We cannot glimpse the nearby possible worlds in which the government did not for many decades help incumbents in telephony and television block basically every new innovation. Could we have had something like the Internet earlier had regulation not so effectively locked out any new thing that threatened well-connected interests dependent on the status quo regulatory dispensation? Menand writes that “[t]here were subscriber-supported cable systems for radio as early as 1923, and television networks have always used coaxial cable, leased from phone companies, to transmit their pictures to broadcasting stations.” I don’t know if this is true, but I have no reason to doubt it. A well-developed early cable infrastructure might have been able to interface with emerging computer technology in inventive ways that we simply cannot imagine. Who knows what the present might have been had government gotten out of the way? I don’t and neither do you. To simply assume that the value of the seen is greater than the value of the foregone unseen is a most elementary intellectual error. Yet some of you seem very proud of yourselves when you make it.
Now, if you think Obama’s centralized push toward a “green economy” doesn’t assume one or two great leaps forward, then you should be clear about the fact that the very considerable centralized pushing up until now has taken us to a point where the cost of a unit of energy produced by “alternative” sources is still remarkably high relative to the cost of a unit produced by a carbon-based source. And it looks like this is going to be the case for a good while into the future. The green transition will either require a massive temporary increase in the cost of energy through some combination of taxes and subsidies, or some major leaps in green energy generation that swiftly brings prices in line with prices of energy from coal, natural gas, oil, and so forth. Subsidies may accelerate breakthroughs, but they can just as easily draw a huge amount of money and talent into dead ends, such as ethanol, and create heavily-invested corporate interest groups who will seek to block more promising breakthoughs in areas the government overlooked when first passing out the lucre.
Also, if advocates of a centralized push toward a green economy (which you have to admit is a pretty radical and romantic thing to even think plausible) aren’t counting on big technological leaps borne of subsidies, then they should be more open about the fact that their plan is really just to make energy incredibly expensive until incrementally developing green energy sources finally become competitive with carbon-based sources. Ten years? Twenty years? Thirty? And they need to explain why they think government winner-picking in green technology is likely to have a better record than government winner-picking generally.
I predict green energy will pan out and that we’ll have incredibly cheap, clean energy within my lifetime. And I think we’ll get there faster, with much smaller costs to growth and human welfare, if the government continues to subsidize basic scientific research, but stays out of subsidizing technologies. I sincerely wonder why it is so clear to so many people that the big government push is the less risky path.
You're right about a lot in this post… but while you're slamming public over-investment in ethanol, you might also pause to note that the private sector has vastly over-invested in polluting fossil fuels. You don't seem to want to count externalities when assessing the costs of those, however. Sure they're a lot “cheaper” when they receive a massive subsidy of free waste disposal. I'm for the invisible hand, only gently guided to correct for misallocations due to externalities positive and negative.
Microsoft subsidizes basic research too.
Also, no one invented the internet as we know it today: it's the result of the aggregate effort of generations of people who have incrementally improved or just provided feed-back that enabled the evolution to arrive at what we have today.
And yes.. I freely admit to being a bit obsessed on externalities.
Returns to private investment are a -50% this year.
“Now, I truly don’t see the point of the moon landing, which strikes me as nothing more than a 20th-century version of grotesque pyramid-building waste.”
The same money that went to the moon landings also gave us communications and weather satellites (plus small computers).
Well put! I hadn't thought of that.
Well said Will, well said. Gov't involvement in the telcom and television industries seems to have been a net negative. The liberals would be hard pressed to present evidence to the contrary. Great Job!
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I have the feeling we're in more or less violent agreement, but I have meta-beefs:
“To simply assume that the value of the seen is greater than the value of the foregone unseen is a most elementary intellectual error. Yet some of you seem very proud of yourselves when you make it.”
You can use that to argue for anything, the elementary error in thinking is yours.
“I predict green energy will pan out and that we’ll have incredibly cheap, clean energy within my lifetime. And I think we’ll get there faster, with much smaller costs to growth and human welfare, if the government continues to subsidize basic scientific research, but stays out of subsidizing technologies. I sincerely wonder why it is so clear to so many people that the big government push is the less risky path.”
I'll play statist for the moment: Will would like us to accept the following ground rules:
1) Statists must accept unfalsifiable arguments about hypotheticals (not even articulated! just imagine what the hypotheticals might be!) maximally skewed in the libertarian's favor
2) The libertarian gets to define success: so, no moon for you, statists (make me wonder how Will feels about the Olympics)
3) Statist successes are anomalies. So when I say “internet and nuclear power”, you get to say “that's just two examples, can't you think of anything more important than the internet or nuclear power? Geez, you are lame”.
4) < 1.000 govt technology investment batting average = govt failure
5) If private enterprise fails to come through on green energy in 10 years, that's no argument for government investment. Repeat argument 10 years later. Repeat. Repeat.
I get the feeling that no matter what the government is involved in doing, especially if it's about targetting specific outcomes, no matter whether it's successful or not libertarians will figure out a way to claim failure. Statists have to make it through a marathon and several circles of hell before we can even get close to questioning private industry as a winner-finder.
Maybe if the government had landed a man on the moon using a front corporation called something like Gazprom, Will would be citing this as a grand success for private enterprise. Or, had Gazprom conducted a massive agricultural experiment with ethanol, Will would talk about the magic of creative destruction and aren't we lucky the market just naturally takes out the garbage.
So let's all agree that the government is ineffective at investing in technology, except when it is, and that government action doesn't really help create new technologies, except when it does.
Also, the internet is totally awesome.
Communications and weather satellites preceded the moon landing by many years. I checked Wikipedia! I'll give you Apollo's embedded computer systems, but there's no reason to think they wouldn't have developed otherwise. So how rich do you think we'd be by now if we'd already spent a trillion dollars going to Mars, or tunneling through the Earth, or something else equally pointless?
Liberals don't need to defend terrible regulation. That's for the corporate lobbyists!
Too the same point, another uncomfortable fact: a great portion of the technologies we all have come to rely on derive from military research. Like they say, in the best case we take the shiny new plane, throw it in a hole, and never use it. In that sense, it's unmitigated waste. On the other hand, the military is the only body that can muster the political argument for sinking the money into minitaurizing electronics or [insert technology of choice], which just so happen to be the same breakthroughs that give us cell phones 30 years later. Another example: the army's medical advances during our most recent wars. I suppose the other way the government spurs innovation is by creating demand. They can pay for solutions to technological problems that are far to expensive for the consumer market at first. Racing serves the same function on a smaller scale.
That;'s true because Kennedy asked for the money to build communications and weather satellites in the same speech he asked Congress to fund the Manned moon missions. They were a little easier than the Moon shots.
Oh, and VCR's were available in the 50's, they just cost $50,000 a pop.
And cable TV has been around a lot longer than the 90s.
I enjoy Louis Menand's stuff in the New Yorker, but I wouldn't use him for any factual arguments, he's a fluff guy.
Coal was massively subsidized with projects like the TVA, the entire gasoline industry is predicated on government subsidies to car users, and the heating fuels and AC electricity that we use to heat/cool our massive houses are due to zoning and parking policy that encourages low-density sprawl (which, even if the livable space isn't any bigger than in a city apartment, uses more energy due to the fact that it has more of its surface area exposed to the elements, and thus loses heat/cool air at a quicker pace).
As for your obsession with externalities, all of these things (ESPECIALLY zoning) was meant to “fix” some sort of externality, so be careful when you go trying to compensate for what you perceive as negative externalities, 'cause it can often bite you in the ass.
…not to mention the entire commodity agriculture industry in America, which is massively subsidized to the detriment of the environment.
I think the key thing here is the “on average” part, which a lot of folks seems to overlook. The crucial question is, I think Will is saying here (and I agree), does government investment pay off on average? Will says that economists agree that it doesn't, and it occurs to me another way of saying that is that if they thought otherwise, they would all be socialists. After all, if you think the government is such an efficient provider of goods and innovation, why not just have the government provide ALL of it?
Since most people don't want to go there. The question to answer is that of what the exceptions are. A lot of progressives make such cases. Ones I've heard include that the government can act as a “patient investor”, and that the government can take greater account of externalities (seems unlikely to me, but its an argument I take seriously).
Those arguments ought to be debated, but that is certainly different from saying that it's obvious because of the internet etc. that we can obviously trust the government to guide us into a greener future, and anyone who disagrees is obviously dense. That approach, as Will persuasively argues, just really seems to overlook a lot.
Steve C, I think you're mischaracterizing Will's argument by ignoring the “on average” part. And Will even accepts cases where government funding works well, so clearly this isn't a case of
“…no matter what the government is involved in doing, especially if it's about targetting specific outcomes, no matter whether it's successful or not libertarians will figure out a way to claim failure.”
I agree that a lot of libertarians are guilty of this, even though I suspect they're right. The point is, you have to make a rigourous argument that can show that government involvement in beneficial or not in a certain case. It seems to me like Will's making a pretty careful argument that in this case, we shouldn't expect a benefit.
Also, he doesn't mention it by name, but a key part to this sort of argument is opportunity cost, which is indeed often overlooked.
Finally, since I've been praising and defending himso far, I will say that Will could do a bit of a better job of presenting his arfuments in a way that's more generous to his intellectual opponents. Saying someone is making a “basic intellectual error” does kinda suggest that they're either dumb or deluded, and it's just not necessary. Demonstrating the error, whether basic or not, should be enough. I find I am loads more convincing when I refrain from this kind of talk (having often engaged in much worse). That said, Will is miles above average in this respect. I just think, given that he's so often right on, he could be even more convincing to sceptics.
I appreciate Will's skepticism. Social democracy needs auditors.
Note that Will isn't arguing that the government should do nothing about our energy technology, but that we should do smart things and not dumb things. I wish Will would be a little more specific about exactly which new policies he's against, but on the whole I'm glad he's on the side of progress.
Anyway, this is obviously an excellent area for liberaltarian program. Death to ethanol!
Frankly, my understanding of the “technology” in “green technology” is that, quite to the contrary of Will's beliefs, it's mostly very, very “low tech”. The first 80% of the improvement will come at 20% of the cost, and won't require any great technological leaps forward.
It's stuff like installing a short coil of pipe between where the plumbing comes out of the ground and the top of the water heater (or better yet, a small tank). Why? Because the energy used to heat water to hot from air temperature is almost always a lot less than what it takes to heat water from ground temperature. The point is that there are an enormous number of these small, simple, even primitive design changes that will end up contributing the bulk of the difference. Historically, the price of energy has always been very low, so the capital cost these kinds of designs implied didn't pay off. Now they will.
If we get a carbon tax, you'll begin to see a lot more, really, really boring things like home insulation, replacing antiquated civic water supply systems, putting solar panels on roof to supplement (not replace) centralized power generation, public transportation, bike lanes, and so on. Most of these changes will take the form of new goods and services supplied by the private sector. Some will involve public funding.
At least, that's my prediction. But I'm a boring engineer – not a philosopher.
“My position is not that government investment in technology has zero returns. My position is that on average it does worse than returns to private investement. This should not be controversial. It is the consensus view of economists who study innovation and growth.”
On behalf of the non-economists who read your blog, a few charts and graphs bearing out these views would be nice…
I confused if Will's beef is with government interference with innovation or only with the way it does so. Given the negative externalities associated with carbon-based energy sources, a social policy of “going green” is a no-brainer. The issue is with how to implement such a policy. I think everyone can agree that picking winners is the wrong way to go about it, but that is not the only policy instrument available (e.g. Pigovian taxes).
…and I'd be interested in knowing how the amorphous “private investment” is accounted for in comparison to what I assume is a pretty straightforward accounting of “government investment”
“I have the feeling we're in more or less violent agreement, but I have meta-beefs:
“To simply assume that the value of the seen is greater than the value of the foregone unseen is a most elementary intellectual error. Yet some of you seem very proud of yourselves when you make it.”
You can use that to argue for anything, the elementary error in thinking is yours.”
No, really, it is yours.
The problem with ethanol (and early wind power) was not so much that they funded research, but that they funded production. Production subsidies rapidly swell beyond reason, and beyond any authentic research budget.
Actually, examples are wall to wall. Look at the hydrogen car fiasco. Some small amounts went to research, but some much larger amount went to “premature infrastructure” and a “hydrogen highway.”
We can also note that “hydrogen highway” attempts are more about value-group self-promotion than advancing the science. They were $100B for a photo-op, literally.
So I agree with Will. Keep the research “pre-commercial” and let the IP run free. Keep production subsidies out of it. I guarantee with those two rules you'd slash your cash flows 10:1.
(I don't object to “green jobs” only because some good projects fall under that umbrella – projects that fit my (and Will's) criteria. It is most often a slur, by people who say “I can't tell you what 'green jobs' are, but I'm again' them!)
Rob Metcalfe is still alive.
That's the “beauty” of progressive regulation. They only need to get it enacted, and it creates its own constituency that will fight to preserve it no matter how damaging. (corn ethanol is just one of the latest)
I like NASA, and just think it should be smaller, but it seems obvious that most of their work passes our test: it is basic science, and pre-commercial development.
I think the 1958-1968 push did spin off lots and lots of tech. (A tech writer told me about they day they threw newly invented zip-lock bags around the room, filled with oatmeal and peanut butter, to make sure they wouldn't break. They were invented to poop-in-space bags, it seems.)
NASA should never have been a patent factory, of course. It should have been policed to generate public knowledge.
BTW, If I got the chance to name one rule, it would be this:
Any patent funded by 60% or greater public funds is invalid, and reverts to the public domain.
And you know … I think there would be a stimulus effect there.
Will, have you read Terence Kealey's excellent book 'The Economic Laws of Scientific Research'? If it doesn't convince you that governments have no place funding even 'pure' research, I don't think anything will.
We don't have any test cases for that suggestion though, do we? Every large nation funds research, at least to the university level. Smaller nations (without public universities) free ride.
Without having read the book
, I'll say Mr. Kealey makes a classically non-scientific claim. It is a naked assertion, unprovable by any planet not foolish enough to try it. (Any political sub-division smaller than “planet” would just free ride off other countries' scientific research.)
BTW Dan, I think a better argument for libertarians is how to “right-size” pure science.
There are some things, like finding new moth species in the amazon, that maybe should be given back to rich amateurs. I mean, why not leave that to Microsoft alumni?
At least force the moth-discoverers to prove that their particular project is important in this time and place.
I quite agree. It is only private private-directed investment that has magical powers.
Yes, because that's what “higher average return” implies: magic!
I assume that the unseen includes irradiation of the major lakes in the US by private corporations trying to come up with said technologies, so I win.
“So how rich do you think we'd be by now if we'd already spent a trillion dollars going to Mars, or tunneling through the Earth, or something else equally pointless?”
So for Will, the Apollo program was the rough equivalent of taking, say, a region's worth of plant equipment and melting it down.
Is this the kind of thought process you go through when you watch the Olympics?
Maybe we'd all be better off had the colonists not upset the apple cart with their rebellion. If, as required, I'm supposed to assume the most libertarian-friendly counterfactual possible, we'd all have many more pounds in our pockets right now. Which means we'd be better off.
Slight of invisible hand?
The point of pricing the externality isn't to “go green” it is to internalize the externality. If the change in relative prices to to a pigouvian tax helps alternative energy sources, then great! But I don't think the AIM should be to indirectly subsidize technology through the carbon tax, but simply to get the prices right and then leave things alone.I happen to think the net negative externality is at the very low end of estimates, so my optimal pigouvian tax wouldn't be much a humdinger, and wouldn't do all that much to bring carbon and non-carbon prices toward convergence. But nobody listens to anyone who doesn't want to include the unbearable ESSENTIAL EVIL of CO2 into its price.
What card am I holding? Yes.Wily capitalist tricks such as making investment decisions on the basis of expected returns rather than on the pull of political constituencies; or tricks like abandoning sunk costs when its looks like things aren't going to pan out after all, rather than vested interests bullying the government into doubling down. There are a multitude of ways in which personal skin in the game can be expected to lead magically to more efficient capital allocation.
I don't see why if the taxpayers fund basic research, they shouldn't have a chance to profit from it, too.
Government should license its tech discoveries to the highest bidder, or get a nice chunk of any companies set up to exploit its discoveries.
How are we doing with the returns to the bailouts so far?
If the government wanted to promote green technologies, wouldn't a prize be better than subsidies anyway? It seems like many (but not all) of your concerns would be allayed if the government set a cost target for ANY clean energy to hit, and then committed to giving x number of dollars to whoever hit it. This seems like an obvious area where PRIZE beats SUBSIDY.
The argument for the legitimacy of taxpayer funded research is that it leads to growth-enhancing innovation that improve standards of living. This is MOST LIKELY when taxpayer research remains in the commons as a free resource for entrepreneurial refinement and recombination. I agree with Odograph. Government should listen nothing, but make it as easy as possible for anyone to access and use tax-financed discovery.
Chris, I can be pretty specific. I'm against all subsidies for wind, solar, etc. generation. (That's winner picking.) But I'm happy if the NSF keeps giving out research grants for work in physics or chemistry or materials engineering that may pertain to the development of, say, better battery technology, as long as that research is left in the public domain for anyone to use.
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Then all the profits from government research goes to the insiders who were funded to do the research in the first place…in essence, the government is already funding tech start-ups…they just don't get any shares in them.
You make some good points here. Despite the fact that I think I was one of the people who annoyed you so much, I agree with much of what you wrote.
I especially agree with the idea that while certain high-risk, long-term basic research is subject to the traditional Arrow/Nelson economic argument for public research subsidy, as the technology gets more “applied” one should be progressively more skeptical of government's role.
But how quickly should we become more skeptical? Hard to know. Where should we draw the line between “research that is long-term and/or risky and/or high-spillover enough to merit subsidy” and “research best left to private industry?” I would again postulate that any ideology (libertarianism, liberalism, conservatism, whatever) is too impoverished to supply a reliable answer to such a messy real-world problem.
I'll admit to not being deeply acquainted with the literature, and I was intrigued by your comment:
My position is that on average [gov't investment] does worse than returns to private investement. This should not be controversial. It is the consensus view of economists who study innovation and growth.
First, I heartily endorse your empiricism. Second, can you be more specific, or provide pointers to the literature in question? For what levels of “applied-ness” have growth economists come to a settled consensus that government R&D funding is inefficient? Or, when you say “investment” do you just mean things like “building a windmill?” Unfortunately the word “investment” has many meanings depending on the context, and I'm not sure which one you mean here.
Whoops, I didn't close that link, sorry
Spurious argument at best. As Will pointed out, you are supposed to consider that we would be better off. Of course, you comparison of wasteful government spending to colonist breaking away from the very government that was overtaxing and over regulating them only provides support for the libertarian stance.
Your house is heated by… heat. As an engineer you should know energy is not free. Heating your house to heat some pipes to heat some water before you heat it in a big tank is not any better than sucking it directly out of the ground and heating it in the tank.
More accurately the water heater should be the only source of heat in your home. The larger a hot water heater the more efficient it is at storage. Surface area to volume goes down as size increases.
If you were to suggest a catch basin for warm waste water that incoming water was piped through you might be onto something with the 80/20 argument.
You have a good hand, Will, though you've palmed at least a couple of facts. One, the card sharps of private enterprise have butter fingers too. (Examples can be multiplied.) And two, government has it all over private enterprise when it comes to building the really big apparatus needed by smaller concerns to do some of their magic.
By the by, new Energy Secretary Stephen Chu has stated that he is, indeed, counting on scientific breakthroughs, not incremental progress.
http://www.latimes.com/news/custom/scimedemail/…
First of all, why is picking winners at the basic research level philosophically any better than picking winners further downstream? Secondly, aren't we already doing this? Don't moth discoverers have to prove the value of their research in order to get grants now? I don't think there's a compelling case to be made that shrinking current research funding to a level such that “unimportant” moth discovery is defunded but “important” something else discovery is funded would result in much greater savings or efficiencies versus changes in other forms of government spending (can you say f-22?). This is especially true given that it's hard to know in advance what the future holds for the relative importance of current research projects. I thought that the recent McCain/Palin brand of know-nothing demagoguery (grizzly genetics/beaver management/cricket control) had highlighted the flaws of this kind of thinking
I say getting the prices right is “going green”. Is the normative fight about words alone?
Steve C-
The Olympics, last year in China especially, are a tremendous waste of resources. I've seen estimates that put the poverty rate in China in the hundreds of millions. Remember, the entire U.S. population is 300 million. Yet, they have the gall to spend $100 million dollars on what amounted to a giant theatrical performance. I'm skeptical that the “feel good” aspect of the opening ceremony was worth $100 million dollars.
Then we move on to the Bird's Nest itself. A nifty $400 million-plus project. The latest I've read is that they're turning it into a shopping mall because they don't have any other events that are appropriate fora building of that size.
Come on, Steve. Are you going to defend these expenditures?
Huh? Researchers publish, and you go to the library to read their work … though you can also use the internets.
If those profs want to consult after hours, or on sabbatical, that's good too. The main point is that the mission of researchers, especially at our public-funded universities should be education in the broad sense. As soon as they start creating intellectual property they have conflicting goals.
Do I just say this at a conference? Do I tell a visiting grad student? Or do I wait for my patent to clear?
Call it “going green” if you want. Indeed, let's just say that we've already gone green since we pay a lot of taxes on gas and subsidize windmills. We're there!
Thanks! Blogged it.
I like small science, many bets spread broadly. With that kind of thing I don't think we would be really picking winners. If we think battery tech will be big in the future, then we should spread small on battery related chemistry and physics. (When I was a student in the chem department (80's) a small grant was $40K, but that's probably gone up a bit)
On the moths I'm sure someone is deciding at the national academy of sciences what fraction goes to moths … but I think DOE and DOD fund a lot of the battery stuff currently.
I am neither a grant maker nor a grant receiver, but I suspect that we could trim without eliminating all valuable research.
The point isn't that private investment is all good and public investment is all bad. The point is that private investment will be more efficient on average.
I find this to be true simply by looking at incentives. What's the profit motive for each actor? Private business makes money by finding the most efficient investment. Politicians profit by providing favors to special interests, who in turn give campaign donations to help politicians win elections. Public choice theory FTW.
So what if they were being overtaxed and overregulated, are you saying the cost of a war comes anywhere close to winning the economic efficiency calculation here?
After all, economic efficiency is the virtue algorithm. It tells us what's good and right.
Sure, though I can't possibly win on bean-counting.
I can't win an argument in favor of WW2 or the American Revolution on bean counting, same with an argument for the rationality of building nuclear weapons. Nobody ever engages in a nuclear exchange, and the benefits of deterrence are only theoretical.
Again, libertarians want to jam everything in life into a profit/loss framing – they would like to pretend that because one can count money – see it on a page in black and white – that it's the only calculation that therefore matters. You're letting theory dictate reality to you, which is why nobody takes robust libertarianism seriously.
What did the US government spend on the fireworks celebration of the 200th anniversary of the Constitution? I don't know, but it was worth every penny.
Chinese politicians – and politicians around the world – obviously have a better sense of the political and the cultural than your average libertarian-rationalist-utilitarian-whatever. Thank god they're the ones running things, and that libertarian fantasy scenarios are confined to science fiction novels.
Since that's annoying to read here's the same comment with link fixed:
—-
You make some good points here. Despite the fact that I think I was one of the people who annoyed you so much, I agree with much of what you wrote.
I especially agree with the idea that while certain high-risk, long-term basic research is subject to the traditional Arrow/Nelson economic argument for public research subsidy, as the technology gets more “applied” one should be progressively more skeptical of government's role.
But how quickly should we become more skeptical? Hard to know. Where should we draw the line between “research that is long-term and/or risky and/or high-spillover enough to merit subsidy” and “research best left to private industry?” I would again postulate that any ideology (libertarianism, liberalism, conservatism, whatever) is too impoverished to supply a reliable answer to such a messy real-world problem.
I'll admit to not being deeply acquainted with the literature, and I was intrigued by your comment:
My position is that on average [gov't investment] does worse than returns to private investement. This should not be controversial. It is the consensus view of economists who study innovation and growth.
First, I heartily endorse your empiricism. Second, can you be more specific, or provide pointers to the literature in question? For what levels of “applied-ness” have growth economists come to a settled consensus that government R&D funding is inefficient? Or, when you say “investment” do you just mean things like “building a windmill?” Unfortunately the word “investment” has many meanings depending on the context, and I'm not sure which one you mean here.
Dan, I completely agree that private businesses on average are more efficient than government. But then I think the (very simplified and subject to caveats, etc., etc.) thing to say is that (1) government shouldn't occupy the investment space in which private firms dare to tread, and (2) private firms generally leave empty the space of private goods. (And I think this space includes the vast transformative shifts in infrastructure needed to implement a “greener” economy.)
Will,
Would it make sense to have no subsidies for wind, solar, etc., but have a modest carbon tax to make the playing field a little easier for alternative energy?
Tom
History has shown the long run cost of the revolutionary war were positive, and as time passes even more so.
History, and what is virtuous are written by those left over. Societies with memes that hamper and destroy economic efficiency ultimately succumb to history. You make an excellent point despite the sarcastic tone; in the long run virtue is indeed determined by the most economically efficient society.
Yes, but I wouldn't put it that way. The reason to have a carbon tax is not to level the playing field, but simply to account for the negative effects of carbon emissions in its price. Depending on the estimate of the size of the negative externality from a certain amount of carbon emissions, the optimal tax could be zero or a lot. But the important thing is to internalize the externality because it's the most efficient thing to do. Alternative energy sources will get a boost as a matter of course, and that's part of the improvement in efficiency.
Nested sarcasm after an accusation of sarcasm – I salute you fine sir!
It's no wonder libertarians are so impotent on questions of military force: war by its nature is economically disastrous, any short-term economic efficiency calculation would argue heavily against it. Peace with Hitler and solidarity with the King are natural libertarian positions.
Well said
Once you open the pandora's box of strings-attached to tax-payer funded research, you'll never get out of it. Question: what if some crucial research will only be pursued by people who are confident that they can keep their findings secret?
You don't even understand what money is. It is pointless to engage in discussions with someone who doesn't get something so basic.
Kealey also wrote a Cato opinion on the subject in 97:
http://www.cato.org/pub_display.php?pub_id=6168
I think the case against government funding of even basic (non-defense) research is very strong.
As you complained elsewhere in regard to government projects and private investment, we don't know what happened in the other universes where there was no bailout. If a high enough percent of those contain total financial armageddon, then I like where we are.
I assume Will is against the abolition of all oil and gas subsidies then?
For their abolition, I mean?
As you complained elsewhere in regard to government projects and private investment, we don't know what happened in the other universes where there was no bailout. If a high enough percent of those contain total financial armageddon, then I like where we are.
I assume Will is against the abolition of all oil and gas subsidies then?
For their abolition, I mean?