A right wing defence of pure science funding by governments

Recently the Canadian National Research Council has, unfortunately, drastically changed course and abandoned pure science research unless it has clear economic benefits.

Many people have written eloquent criticisms of this move by the Canadian government. Phil Plait (at the above link) does a good job of explaining the why the move away from pure science funding is a bad idea from a scientific perspective (we don’t know ahead of time what research will yield economic benefits), but I find that Andrew Coyne (a right leaning commentator writing in a right leaning newspaper) does an excellent job of demonstrating why this is a bad idea from an economic perspective:

The redirection of public funds from basic to applied research may be bad science, but it is even worse economics. Whatever the distortion of the NRC’s raison d’etre is implied, it is nothing compared to the distortion of the economy. Far from a pragmatic matching of public research dollars to the real-word needs of industry, it reveals a basic confusion about the appropriate public and private roles in funding research.

Let’s start from the beginning. To understand what governments should or should not do in the economy, you have first to understand what markets can and cannot do. Governments, that is, should do what markets cannot. They should not try to do what markets can. This is a matter of scarce resources, if nothing else: the more government spends in areas where it is not needed, the less it will have left to spend in areas where it is essential. As a maxim, government should only do what only government can do.

Basic science, the kind of blue-sky research with no immediate commercial application, is an example of something the market cannot do, or not at a level that is optimal for society. Not only is there little obvious incentive for a private firm to spend money on research that does not pay off in new products or better processes, but so far as such research can be adapted to commercial uses it could as well benefit its competitors as itself: so the sharing of research that is a critical part of scientific progress is discouraged.

Hence it is well-established economic principle that basic research is the sort of thing governments should fund. By the same token, however, government should not be in the business of funding applied research, that is research directed to commercial uses. Not only is this unnecessary — business can perfectly well fund this sort of thing on its own — but it inevitably tilts the pitch in favour of certain activities over others: some technologies, innovations, products, firms and industries will be funded, at the expense of the rest.

Or in other words, “picking winners,” with all of the misallocation of resources that term implies. (If a product, firm or industry is really a “winner,” it shouldn’t need a subsidy. If it isn’t, all the more reason it shouldn’t get it.) What the government’s supporters might think is hard-headed realism is in fact simply central planning by another name — an illustration, once gain, of the difference between being “pro-business” and “pro-market.”

Comments:

  1. Yeees, but you've missed a trick, which you'd have noticed had you paid attention to Timmy. This is "public goods": things that the market doesn't want to do and the govt should (e.g. http://timworstall.com/2010/06/30/public-funding-of-science/). I'm coming round to the view that this is what govts should do, and nothing but. It sounds neat.

  2. "Sounding neat" is indeed what market determinists are good at. Boundaries are rarely as neat as they suggest.

    And following up on Worstall's point, I think the issue he raises is another argument in favor of a strictly limited but not toothless global government layer. As indeed I mentioned at the first link.

    So this time I agree with him, and yet I am guessing he will not agree with me.

  3. I can't really make sense of Tim Worstall's point when he says So, you can either argue that science should be British, because we can make money from it, which has the side effect of destroying the argument for tax subsidy, or you can say that science is a public good and should have a tax subsidy….but you cannot then argue that science must be British.

    My unsophisticated reading of this is either that Worstall is making an argument equivalent to the 'the UK only produces a tiny fraction of global emissions so we shouldn't take action if we don't know that others are taking action too', or ... well, no - I don't really know what the 'or' is. I thought I did, but not any more. Can anyone clarify it for me?

    I suspect there is just a disjoint in our ways of looking at the world. I remember a similar sense of dislocation when reading Worstall arguing that recycling was not economically sensible because he was accounting for my time spent recycling as though it were economic activity. But the time I spend recycling, as I suspect is true for most people, is generally pottering around the kitchen or walking to the park with my children (where throwing bottles into the skip is a highlight). He just seems to be measuring things in the world in a way that doesn't make sense to me, and if he is doing so with small-scale examples such as this is he also doing so on the large-scale examples like justifications for funding of science?

  4. He says either science is a public good (benefit cannot be captured, so must be done by the public or not at all) in which case why not free ride on the Swiss or the Chinese or whoever else seems to be; or the benefit can be captured, in which case those doing the capturing ought to be motivated to pay for it.

    Of course, in his world all benefits are economic, i.e., dollar- (or euro- or UKP- etc.) denominated. I agree with your implication that he is quite insane in this way. Mad as a hatter. Many economists are, in just this way.

    William, on the other hand, is someone that I can attest to being smart, pleasant, sane, well-intentioned and even on occasion self-sacrificing. How he has fallen into taking this stuff seriously thoroughly escapes me.

  5. Well, I'm glad you're not seeing any particular subtlety in Worstall's argument which is hidden from me.

    As to William Connolley's stance, I could be wrong but I see it more as a challenge to 'our side' to put together better and more persuasive arguments. He's found in 'Timmy' a reasonably credible 'sceptic', possibly even something approaching a sceptic. Worstall is perhaps worth engaging with.


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