Government Science vs. Economic Growth

Wednesday, February 27, 2013

Daniel Lemire takes a look at an argument that leftists and conservatives like to pitch at each other when he questions whether government funding of academic research fuels economic growth. He cites several recent studies, but I find the historical evidence to be both the most interesting and the most convincing.

In the 17th century, France had the best funded intellectuals in the world. Meanwhile, the British government did not subsidize science and scholarship. Yet it is in Britain that we saw the rise of the industrial evolution and of modern science.

Similarly, the US saw a massive economic growth from its early days all the way to WWII… without any public funding for R&D. While other countries like France kept on subsidizing scholarship, it did not keep them ahead economically.
I agree with Lemire, although, to make an ironclad case, I think he would need to delve further into causes and account for the fact that highly theoretical advances might quite frequently take some time to cause economic growth as their practical applications only slowly become evident.

That is, practical application  drives economic growth in the short-term, and it is quite possible that politicians and voters will take the wrong lesson, and simply misdirect research funding into areas that almost anyone can see could lead to new technology. (It may, for a time, spur some economic growth, but in terms of fostering the Next Big Advance, this is already too late!)

Lemire's question also should not be asked apart from other considerations, such as the fact that central planning (either in the form of actively encouraging economic growth or of directing scientific research) is not a proper function of government. As corollaries to this fact (as well as positive feedback to the lack of economic growth Lemire sees with government-funded science), this inappropriate use of government also results in the misallocation of funds that could be used for other purposes, a lowering of standards, distortions of risk assessment, and even outright politicization of science. These things are all in addition to the violation of individual rights that both confiscation of wealth and central planning represent.

Central planning, in whatever guise, is immoral and impractical.

-- CAV

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