Author: Will Wilkinson

Vice President for Research at the Niskanen Center

84 thoughts

  1. I guess the best strategy to disprove Will is to point out that the government isn’t too bad at completing incredibly expensive, aesthetically pleasing but relatively unproductive projects. Might as well appeal to the Pyramids to point out the incredible productive power of the state.

      1. Do you play the lottery too, since even though the odds of winning are astronomically low, the payout is pretty good?

      2. I must have forgotten about the rules of justification where a single outlier is sufficient epistemic grounds for a strong induction.

  2. “Why didn’t we think of this before? I know, I know. We did. Bush promised us hydrogen powered cars by yesterday ”
    “New discoveries” and “breakthroughs” are vague and almost inevitable predictions unlike something specific, such as hydrogen powered cars.

    1. You don’t make predictions about basic research, you fund it and see where it takes you.
      You guys can’t possibly be this dumb, and I’m pretty sure you’re not arguing in bad faith. Why are anti-government types putting forward such shoddy arguments? Is it that you want to close your eyes and wish really hard that the set of libertarian “principles” in your head matches up with reality?

      1. The problem is that you do make predictions about basic research. You choose what you research based upon initial research and investigations. Once you have done these, you choose what kind of research you want to do based on 1) likelihood of success, and 2) whether you can get funding for it. If the government decides to fund a certain type of research more effort will be put into that research track than otherwise would be. This is fine if it is a good research track. However, it will likely crowd out other research, and the government may have picked it due to political considerations rather than good science. A la ethanol. If the government decided that hydrogen fuel cells were the way to go, then less research would be done on batteries. And vice versa.

      2. And the government often decides who gets funding based on which group or company has the better hookers (I mean ‘lobbyists’).
        AnotherBen’s point about ethanol undercuts your arguments Steve C with a real-world example of the government royally screwing things up by picking ethanol as a winner. It’s a total loser and has even helped starve children in Africa. Gotta love that government in action.

      3. uknowbetter, are you condemning the idea of basic research based on one (large) failure?
        More to the point, this line of reasoning can be much more powerfully employed to prove the failure of market capitalism as of 2/09. Are you prepared to admit that ethanol, as one example of basic research, and therefore a comprehensive indictment of basic research in general, has an analogue in the MASSIVE WIPEOUT OF CAPITALISM in the last few months?
        Libertarians should simply admit that they have an anti-government taste preference. This is not a set of beliefs that holds up in the messy world of…the real world. It’s not rooted in empiricism.

      4. I think it depends on the belief. Opposition to minimum wage laws, for instance, is firmly backed by lots of empirical evidence. Because of that, libertarians oppose minimum wage laws. Despite that, most modern liberals support minimum wage laws.
        I tend to agree that some of the more radical libertarian philosophy breaks down at the edges, and that foot-stomping, ear-plugging apologetics at those edges is pretty wacky. But most libertarianism isn’t at the edges; it really is a “set of beliefs” designed to solve real problems in the real world. And rooted in a respect for empiricism (e.g., that many government programs leave people worse off than they would be in the absence of those programs, and that markets can outperform governments at most things, but not all).

  3. jrshipley – Husband. Father of two daughters. Tree hugger. Occasional cyclist. Intermittent fitness fanatic. Camper. Hiker. U. Iowa philosophy PhD. VolState Community College professor. Interested in history and philosophy of mathematics, history of analytic philosophy, epistemology, logic, and probability theory.
    jrshipley says:

    Government investment in science and technology does in fact lead to breakthroughs. Publicly funded pure research in logic around the turn of the 20th century, for example, laid the conceptual foundations for modern computer science; these concepts were applied by governments in building the first computers. A ton of basic research had to occur before the (ahem) romantic stories of “guys in garages” starting billion-dollar companies could happen. Alternatively, consider spinoffs from NASA research, or the predominance of start-ups in biotech that have grown out of research taking place in labs at publicly funded universities.
    For a concrete,specific example in the area of energy and efficiency, consider the case of low-e windows. This is a technology that was further developed and commercialized as a direct result of Carter’s energy policy; a policy to which the glass towers now seen in most American cities ought to be seen as a monument, not only in the sense of the pyramid; the passive solar heating of these buildings has saved a great deal of energy, lowering CO2 pollution. We were, unfortunately, significantly set back by ideological opposition to government involvement in promoting efficiency and clean energy. We cannot afford to lose another two decades in the effort to stop changing the climate.
    We should not fetishize either government or the private sector as the sole font of innovation. The link on low-e windows provides an excellent case study in how partnership works best, but the principle is illustrated throughout our economy. Basic research is an economic activity that generates positive externalities. Under a hypothetical pure libertarian system of only private funding for research, John might pay Sally to do some basic research in quantum physics. Now there are two options: (1) Sally’s findings will be made public, or (2) John will own and keep secret Sally’s findings.
    If (1), then maybe Phyllis gets a hold of Sally’s findings and builds a quantum computer. Phyllis benefits without having put in, a positive externality. This is great, but it shows how the market can undervalue activities that create positive externalities. Private investors have an incentive to put in in proportion to what they expect to get out, so the market based investment in activities with positive externalities will not be in proportion to the benefits.
    One expects libertarians to plump for (2). If (2), however, then the flow of basic scientific knowledge to innovators like Sally is blocked, stifling innovation. We cannot have an innovating economy if we have knowledge hoarding. Maybe the libertarian will reply based on some pure economic theory that knowledge hoarding will not occur, that perhaps John will license access to his proprietary basic knowledge to people like Phyllis, but shall we risk testing this speculative theory or continue and intensify the public-private partnership that made America a leading innovator in the 20th century?
    Furthermore, knowledge tends to get around to those, like Phyllis, who are intelligent and driven. For this reason, option (2) may not even be feasible and we are stuck with (1). The solution, of course, is public subsidy of economic activities, such as basic research, that are undervalued by the market because the benefits are disperse. Finally, the trouble with the Randian fantasy of all the innovators running off to some island or whatever is that many of the innovators are too busy writing grant proposals to read the fantasies of third rate philosophers.

    1. jrshipley – Husband. Father of two daughters. Tree hugger. Occasional cyclist. Intermittent fitness fanatic. Camper. Hiker. U. Iowa philosophy PhD. VolState Community College professor. Interested in history and philosophy of mathematics, history of analytic philosophy, epistemology, logic, and probability theory.
      jrshipley says:

      5th paragraph, 1st sentence should read “One expects libertarians to plump for (2). If (2), however, then the flow of basic scientific knowledge from researchers like Sally to innovators like Phyllis is blocked, stifling innovation.”

    2. “Finally, the trouble with the Randian fantasy of all the innovators running off to some island or whatever”
      If your theory of public goods is correct, then wouldn’t all the innovators run off to some island in a _libertarian_ society, not in a statist one?

  4. Suggestion. Quit apologizing for liberals and Obama. We can observe that they are promoting reckless policies that are destroying our economic prosperity and liberty. I will go a step further and suggest that you are acting immature by your comments.
    Obama and those who are advocating his policies are destructive. Please stop suggesting we should not question their motives. Their motives are irrelevant. We are talking policies and should evaluate them on their outcomes or potential outcomes.

  5. “an investment that will spur not only new discoveries in energy, but breakthroughs in medicine and science and technology.”
    I’m not an Obama supporter, but to play devil’s advocate here, hasn’t government investment in basic research (e.g., through NIH or Defense Department grants) led to breakthroughs in these areas already (e.g., the Internet, advances in robotic medicine technology, etc.)?
    In your previous post on Atlas Shrugged, you claimed that you were afraid of too much government investment in “Project Xes” stifling innovation. It seems to me that the larger threat to innovation would be President Obama’s plans to nationalize health care, which would invariably lead to de jure or de facto price controls, thus reducing funds for private sector medical R&D.

    1. There is no doubt that government investment in basic research facilitates research breakthroughs but the question is how much society benefits. After all, Soviet Union government investment in space exploration was very successful but few (I hope) would argue that its citizens benefited much. As NIH-funded researcher myself, I often wonder how much the NIH funding benefits the society. One needs to realize that the NIH mission is to improve public health care in the US, not to find out what particular biochemical pathway is involved in cancer. By most estimates, it costs anywhere between $250 and $800 million to develop a new drug and introduce it to market. The NIH annual budget is over $30 billion. That means we should be eventually getting 40-120 new drugs from each year’s NIH funding at the current level. One look at the anemic list of recently FDA approved drugs and what is in the clinical trials will tell you that we are far from those numbers even now. What I’m trying to say is that a lot of governments around the world support science but what this country has always going for it was the ability to make the research breakthroughs into things that benefit everyone. My worry is that the Obama administration will severely damage this system by crowding out private investment.

  6. There’s too much heat in these comments.
    The question of government’s proper role in research funding cannot be settled by referencing one’s ideological commitments, nor even an economic theory. Ultimately, like almost all questions, it comes down to empirical comparison.
    There are reasonable a priori arguments on both sides, namely:
    1) Pro-government-funding: basic research will be undersupplied without government funding, because knowledge spillovers from basic research are a positive externality (future entrepreneurs can capture profits based on the ideas that come from research). Thus, government should provide sufficient incentive (subsidy) to restore efficiency to the market. Sounds plausible!
    2) Anti-government-funding: In practice, government funders do not focus on the right problems as efficiently as do private research firms. Large, long-standing companies do have sufficient incentive to perform long-term research, because they can capture the entrepreneurial gains of this research through novel product development. Also plausible!
    What do you do when you have two plausible theories that lead to disagreeing conclusions? You test the theories! I don’t have the answer to this question, but I just want to point out that the truth is likely somewhere in between, and ideology is too simplistic to furnish a guaranteed-correct answer. Isn’t this obvious?

  7. Is it really possible that someone writing on the internet (descended from ARPANET, invented by a government-funded program), using the protocol html (invented at CERN, funded by European governments), and being read on a web browser (invented at the NCSA, again funded by the government) believes that government funding won’t spur “new discoveries” and “breakthroughs”! Really!?!?!

    1. However, incrementalism, which Will was talking about has been entirely provided by the private sector: AJAX technology (MS), Flash (Macromedia), High speed internet (Cable and Telcos), Internet search (Google), CDN (Akami/Limelight), Mobile internet devices (various companies), Auction Marketplaces (ebay), free personal ads (craigslist), etc. Additionally, many of the communication access points can be attributed to deregulation of the telcos. I doubt individual ISPs could have cracked the market prior to telco deregulation. The same deregulation brought us: cell phones, cheap long distance, cable modems, call waiting/forwarding, etc. While the gov’t can bring about research breakthroughs, the private sector eats its lunch regarding incrementalism. To deny that is to be a free market hating socialist 😛
      From my understanding, many of the NASA breakthroughs were actually developed in the private sector: Teflon (DuPont), microwave ovens (Raytheon), Velcro (Georges de Mestral), Integrated Circuit (Texas Insrument/Fairchild Semiconductor), Tang (General Foods)! Landing on the moon is something else, but I prefer little things that make my life easier everyday.

      1. No, what Will was doing was saying that statement: “We’ve also made the largest investment in basic research funding in American history — an investment that will spur not only new discoveries in energy, but breakthroughs in medicine and science and technology” was “adolescent faith.” I was just pointing out that Obama’s statement is true—government spending on science has in fact, on this very planet, spurred new discoveries and breakthroughs. That’s a totally separate question from whether or how the private sector improves on those discoveries and breakthroughs.

      2. Well, in part it is “adolescent faith” because you cannot throw money at something and expect breakthroughs. If that were the case we’d have super incredible solar power by now. Look at how many dollars were thrown at that problem, and how little we’ve gained by it.

      3. And yet government spending on basic research funding resulted in the fundamental discoveries and breakthroughs that made this very conversation possible. It’s a quandary!

      4. It’s just a fact of history. Many useful discoveries are by-products of wars. That doesn’t mean that war is a good thing.
        A libertarian can’t avoid using government-provided services just as an environmentalist can’t avoid using environmentally harmful products. Our society is structured in a certain way and we just have to adjust to it even while we struggle to change it.

    2. If government took half the taxes it does, you might have discoveries and breakthroughs that far surpass any of those.
      The argument is not that nothing comes from the government. It is that what comes from the government, in general, is going to be less than if you left the money in private hands. There might be a few exceptions to this, but they serve to prove the rule.

  8. Government or Private Sector: Which does a better job providing goods and services?
    For those in government, survival depends upon re-election which in turn depends upon buying votes and returning favors of powerful donors.
    However, in the private sector, survival depends upon providing the best goods and services at the lowest cost to the most consumers.
    Government services are funded by coercive taxation, whereas private sector goods and services are purchased voluntarily.
    Government functioning requires central planning by a handful of politicians. The private sector is driven by millions of minds motivated to earn a profit by responding to human needs in real time.
    Theory is confirmed in practice as we observe the hundreds of consistent economic failures every time government tries to centrally plan an economy as was done in the Soviet Union, Cuba and France.
    Until Obama was elected, we had centuries of enormous wealth creation, prosperity and personal freedom in the U.S. which remained true to free market principles and liberty.

  9. Will, I’m a big admirer of your work, but I just don’t see what you’re getting at here. I mean, do you honestly disagree that investment in science and medical research can lead to “new discoveries” and “breakthroughs” — meaning, as Merriam-Webster’s helpfully tells us, “a sudden advance especially in knowledge or technique”? If you do disagree with this, do you know anything about the science funding systems in place in this country, and how and when they’ve succeeded or failed?
    This post is really quite bizarre. You’re skewering a straw man here, and not the rather unremarkable, more-or-less obviously true line from Obama’s speech.

  10. Why do liberals (non-economists) never defend business, capitalism and markets? They could use many libertarianish arguments without advocating laissez-faire or contradicting liberalism.

    1. Well we’re constantly on the defense against libertarians and conservatives who trot out literally stupid Galt arguments, or who have religious hangups like tax-cut Reagan religion.
      Some of us just want to fix the damn healthcare system, for example, given the realm of what’s politically possible (not entertaining fantastic options that are the equivalent of privatizing the police force – i.e. nice theory, go try it somewhere else). We’re totally open to markets and innovation – we all fundamentally agree in an American sort of way on this, but unlike libertarians we recognize that collective action problems exist, market failure exists, and that it’s often worth trading in some economic liberty to maximize welfare (well-being).
      Some of us have been standing in the same place and the borders have been redrawn such that now we’re liberals. For me personally, when I see what’s left on the other side of the border these days, I don’t mind the label anymore.

  11. Of course, Will ignores the substance of Hilzoy’s comment. So here it is:
    “To be fair, Wilkinson does not seem to mean that Obama is a closet Objectivist. He means that Obama, like Rand, believes in “saltative, game-changing, lone-genius invention” rather than “an accumulation of tiny productivity-enhancing innovations” as the driver of economic growth, and hopes to achieve it via government intervention. I don’t see that at all: I think Obama’s economic policy is driven not by a particular view of the specific types of technological change that drive growth, mainly by quite different ideas: that we need to replace demand to get out of the recession, that we cannot defer dealing with energy and health care without doing lasting damage to the economy, and that we have underinvested in public goods and infrastructure in ways that we cannot afford to continue.
    But insofar as I can discern a position on the question “saltative invention vs. an accumulation of tiny enhancements?”, I would have put Obama in the second camp. He is, after all, known to be a fan of behavioral economics, with its many tiny tweaks, and his whole history as a Senator is full of small legislative improvements of the sort that no one who cared only for game-changing leaps would have bothered with. But I can’t think of a single analog to Galt’s amazing static-powered engine in Obama’s entire set of beliefs. In any case, I’d be interested to hear Wilkinson’s reasons for thinking as he does.”

    Well, I would be interested in hearing Wilkinson’s reasons as well. He’s ignored Hilzoy’s argument and focused on his made up straw man.

    1. Well, I would be interested in hearing Wilkinson’s reasons as well. He’s ignored Hilzoy’s argument and focused on his made up straw man.
      It’s a blog-eat-blog world! I dunno if you’re ever going to get anyone to actually address someone else’s argument.

  12. There’s a tremendous deal of libertarian/ Rand bashing so as a libertarian myself I must speak up.
    Markets (when left unfettered) do not fail. This does not mean that failures do not occur in an unfettered market.
    Government does NOT permit us to exist, but rather we permit it to exist. If economic transactions stopped and there was nothing left to tax, the government would have no income left to finance itself with. We the People created government, not the other way around.
    If you beleive that certain areas (ie alternative energy) should be researched by the government then you have the right to contribute your own earnings to the endeavor at your own will. Shouldn’t I and anyone else then have the right not to contribute?
    Libertarians beleive in the courts, military, and police b/c they protect our rights to life, liberty, and property when acting within the constraints of the Constitution.
    I do not live for the sake of anyone else and I will not ask you to live for the sake of my life.

    1. Bastiat,
      You accept the role for government for police and the military. But why? Why is the government the best entity to supply protection? It’s because in the absence of coercion to pay for these things, the free rider problem would make them impossible. Isn’t it?
      And if so, why aren’t you open to the idea that other, similar market failures could exist and need collective action to correct?

      1. Thats a good question.
        The answer goes way back to the foundation of government in the first place. I’m about to get a tad philosophical so I apologize in advance. Imagine that no countries, governing bodies, or official societies exist ie there are no formal laws. Would you agree that each of us has a natural right to defend our life. liberty, and property? (I’ll assume you do since I’m sure you wouldn’t take a person harming your family or your property without a fight).
        Life, liberty, and property are the three basic requirements of life, and the preservation of any one of them is completely dependent upon the preservation of the other two.
        If every person has the right to defend – even by force – his person, his liberty, and his property, then it follows that a group of men have a right to organize and support a common force to protect these rights constantly.
        Here is the kicker: The collective right of a group of men (aka government) to defend each person’s life, liberty and property is derived from the individual’s right to defend. And since an individual cannot justly use force to infringe on the life, liberty, and property of others, logically the government cannot justly use force to seize/ destroy life, liberty, property of an individual.
        This is the exact reason why the U.S. Constitution is so extremely limiting on what it allows the government to do and why libertarians reject the notion that government can do anything but protect our rights; to do otherwise would inherently be an infringement on our natural rights.

      2. Boy, you have read your Bastiat, haven’t you? Problem is, not all of us libertarians recognize the validity of “natural rights,” or at least think that rights can solve all the tough cases out there. Rather than rehearse the old arguments here, I’ll point you to David Friedman’s discussion of the problems of deriving libertarianism from simple principles: I think he does a nice job showing why rights theory isn’t enough by itself to solve some thorny problems at the edges of libertarianism, and you’ll probably find it an interesting read.

    2. “Markets (when left unfettered) do not fail.”
      This is a near-perfect example of why I no longer identify as libertarian. Your “market” exists in carefully contrived circumstances in economics textbooks (the authors of the textbooks even know this – they’re trying to simplify so they can teach). It’s a concept that, the way you think about it, is so divorced from reality as to approach meaninglessness.
      People are irrational in all sorts of ways. They don’t save adequately for retirement and then they end up poor. In a democracy they have political power, and thus in sufficient numbers can shift their problems on to others (it’s happening right as we speak).
      Credit markets are sophisticated and weird, and when they fail they pull down your beloved perfectly-competitive fish seller – no matter how good this person is at his job. Insurance is sophisticated and weird. Economies of scale exist and winners sometimes take all, they use money to buy political influence and change the rules. No market will get people to be vaccinated against TB – governments must use force to make public health work (in Bastiat’s world, everyone’s dead). Specialists have information other market participants don’t and you better believe they take advantage of it as much as the law and ethics allow.
      Any usage of “market” in actual policy discussions that’s divorced from realities like the above is useless. Just because you wish elegant, unfettered markets existed and correlated 100% with that which is good and true doesn’t change reality at all.

      1. Steve-
        “People are irrational in all sorts of ways. They don’t save adequately for retirement and then they end up poor. In a democracy they have political power, and thus in sufficient numbers can shift their problems on to others (it’s happening right as we speak).”
        -The U.S. Constitution protects us from them shifting their problems to others, however, that document seems to have been thrown out along with reason a few decades ago by our leaders.
        “No market will get people to be vaccinated against TB – governments must use force to make public health work”
        -Do you value your health? Would you get a Tb vaccination? If you value your health and would get a vaccination is it hard to imagine that others would to?
        If you accept that the government must provide us with healthcare because we are too irrational to provide it for ourselves then you probably accept that we are too irrational to provide ourselves with an agricultural industry to feed us, and a construction industry to provide us with shelter, and clothing manufacturers to provide us with clothing. The vast majority of people have all of the above mentioned items, not because government provided them, but because the vast majority of people are rational.
        If people are not rational then we should not elect people to govern us.

      2. “The U.S. Constitution protects us from them shifting their problems to others, however, that document seems to have been thrown out along with reason a few decades ago by our leaders.”
        We got a live one! Hey Bastiat, what’s your view on the constitutionality of the income tax?
        “Do you value your health? Would you get a Tb vaccination? If you value your health and would get a vaccination is it hard to imagine that others would to?”
        Oh dear, hasn’t made it to prisoner’s dilemmas yet.
        And as for rest of the hyperbolic slippery slope stuff, I simply point to every other western-style democracy in the world. Ever visited one? The toilets flush and people have iPods.

      3. and WRT: “If people are not rational then we should not elect people to govern us”
        so wait, let’s say we prove to you beyond a shadow of a doubt that people are irrational in many respects. you can run experiments over and over and see that people act clearly irrationally.
        Bastiat’s answer is we throw up our hands on the whole human-progress endeavor, once it gets the slightest bit complex or muddled, and punish ourselves with – what, anarchy? A nuclear exchange?

      4. My answer is not to “throw our hands up.” You say people are irrational so the government should take care of them. That sounds like the blind leading the blind to me. I don’t care what political platform you stand on, but both of the mainstream sides have been atrociously irrational.
        You seem to be however a rational person, or at least someone who is capable of taking care of yourself. Do you think you should have the option of opting out of Social Security or other government “safety nets?”
        Thats my biggest issue with government. People do not have the choice of being more personally responsible for their own well-being. This is an option I would like to have.

      5. Wow thats a great counter, “everyone other country does it, so should we.”
        I have visited several western european countries. The plumbing in the U.S. has better water pressure and more people per capita have iPods.

      6. “You can enslave some of the people all of the time, and all of the people some of the time, but you can not enslave all of the people all of the time.” The middle clause is what makes government a government, versus, say, a group of people who joined, remained and obey the group’s rules by choice. All the weight of all the best policy studies can only say “This is what you should agree to, for the reasons given.” They cannot say that you can be made to comply by right of the government at hand.

  13. libertarians throw around the word “government” as an epithet. they are childish to believe that government is inherently bad. of course there is nothing inherently wrong with government or with markets for that matter. government is simply a contract between us. i’ll pitch in and you pitch in and so will others, and collectively we will do things that we could not have done alone. we can establish rules, and protect ourselves, and connect ourselves and more. the extent and content of this contract is negotiable and constantly changing. markets in and of themselves are a beautiful thing and are innovative and creative. its just that markets and corporations only have an obligation to the shareholders and are not moral or immoral, but rather amoral. there is some recourse with government and it can be held accountable to the general public. and although what UPS and Fed Ex do is impressive, only the USPS will hand deliver a letter for under 50 cents. libertarians never bring this into the equation. of course government is less efficient, it has other considerations aside from just the bottom line, which is important for the actual human beings that make up these systems. i think sometimes people forget that we are more than numbers or concepts.
    the essence of the libertarian worldview is that man is an island. it doesnt take into account the helplessness of all humans at the beginning of our lives and generally at the ends too. as much as we fetishize the idea of the “self made, bootstraps man or woman, in reality life on earth depends to a large degree on communality, brotherhood, and relationships. this is not only true socially, politically, and economically, but spiritually as well. which is why this idea is so potent. the undercurrent is the fundamental connectivity of the human race.
    libertarianism many times assumes an arrogance and a “the world and government are holding me back” type attitude. its the man at the pinnacle of his powers and flush with hubris declaring that “these parasites and underlings are chains around my spirit.” most humans have learned the hard way that there is no doing this on our own, and the reason most victory speeches include thanks all around for aid is because very little is accomplished in this world in a vacuum by oneself. the john galt illusion tries to build a real person out of 2 dimensions, and 3rd rate philosophy and fails.
    ultimately, libertarianism is not only more cruel and selfish than other ideologies, but it is less effective, which is the most important point. my neighbor doing well helps me do well. win-win is the real win. there is no win-lose. because we all lose together.

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