I thought this oped about the role of government support of science provides an excellent complement to this commentary from yesterday.
…it is astonishing that Mr. Romney talks about economic growth while planning deep cuts in investment in science, technology and education. They are among the discretionary items for which spending could be cut 22 percent or more under the Republican budget plan…
…the plan, which Mr. Romney has endorsed, could cut overall nondefense science, engineering, biomedical and technology research by a quarter over the next decade, and energy research by two-thirds.
Mr. Romney seems to have lost sight of the critical role of research investments not only in developing new medicines and cleaner energy sources but also in creating higher-skilled jobs.
The private sector can’t do it alone. We rely on companies to translate scientific discoveries into products. But federal investment in research and development, especially basic research, is critical to their success. Just look at Google, which was started by two graduate students working on a project supported by the National Science Foundation and today employs 54,000 people.
Richard K. Templeton, chief executive of Texas Instruments, put it this way in 2009: “Research conducted at universities and national labs underpins the new innovations that drive economic growth.”
Note also how federal support leverages up private investment:
…In 2010, the federal government invested about $26.6 billion in N.I.H. research; those investments led to $69 billion in economic activity and supported 485,000 jobs across the country…
Moreover, the $3.8 billion taxpayers invested in the Human Genome Project between 1988 and 2003 helped create and drive $796 billion in economic activity by industries that now depend on the advances achieved in genetics…
So science investments not only created jobs in new industries of the time, like the Internet and nanotechnology, but also the rising tax revenues that made budget surpluses possible.
One could easily trace this history back to advances in machine tools, transistor technology, lasers, GPS, and much more. In fact, it’s actually hard to find a job-and-growth-creating innovation that did not involve some government support (this book provides an excellent history in support of that claim). Yet, as the figure below reveals, federally supported R&D has been stagnant as a share of GDP for decades.
Not really. The growth sector for the US economy is finance, and none of the above fields are really necessary for the finance industry.
Maybe you ought to send a copy of that graph to Tyler Cowen the next time he growls about economic stagnation since 1972.
I’ve got to add, however, that I think economists bear some of the blame for this. Back in 1970-1972 when the government started cutting back on R&D in a big way (particularly at NASA and the “non-military-specific” research at DoD), economists didn’t really step up and protest those cuts. My impression is that R&D was generally seen as a good thing, but economists didn’t see it as needing encouragement; R&D was supposed to appear sort of automatically as the economy moved along, and precisely who paid for it or which sectors of the economy got the advantage of that spending were sort of trivial concerns — those factors didn’t appear in the equations.
And enough time has passed now that most economists can’t remember, or even conceive of, an era when the federal government funded most R&D.
All of us in Australia hope that there will not be any more damage to lives and properties from Hurricane Sandy. Regards.