Investment & Financial Articles
Title: The Wages of Science - Part II
Author: Sam Vaknin
Article:
In the absence of efficient capital markets and adventuresome
capitalists, some developing countries have taken this
propensity to extremes. In the Philippines, close to 100 percent
of all R&D is government-financed. The meltdown of foreign
direct investment flows - they declined by nearly three fifths
since 2000 - only rendered state involvement more indispensable.
But this is not a universal trend. South Korea, for instance,
effected a successful transition to private venture capital
which now - even after the Asian turmoil of 1997 and the global
downturn of 2001 - amounts to four fifths of all spending on R&D.
Thus, supporting ubiquitous government entanglement in science
is overdoing it. Most applied R&D is still conducted by
privately owned industrial outfits. Even "pure" science -
unadulterated by greed and commerce - is sometimes bankrolled by
private endowments and foundations.
Moreover, the conduits of government involvement in research,
the universities, are only weakly correlated with growing
prosperity. As Alison Wolf, professor of education at the
University of London elucidates in her seminal tome "Does
Education Matter? Myths about Education and Economic Growth",
published last year, extra years of schooling and wider access
to university do not necessarily translate to enhanced growth
(though technological innovation clearly does).
Terence Kealey, a clinical biochemist, vice-chancellor of the
University of Buckingham in England and author of "The Economic
Laws of Scientific Research", is one of a growing band of
scholars who dispute the intuitive linkage between state-propped
science and economic progress. In an interview published last
week by Scientific American, he recounted how he discovered that:
"Of all the lead industrial countries, Japan - the country
investing least in science - was growing fastest. Japanese
science grew spectacularly under laissez-faire. Its science was
actually purer than that of the U.K. or the U.S. The countries
with the next least investment were France and Germany, and were
growing next fastest. And the countries with the maximum
investment were the U.S., Canada and U.K., all of which were
doing very badly at the time."
The Economist concurs: "it is hard for governments to pick
winners in technology." Innovation and science sprout in - or
migrate to - locations with tough laws regarding intellectual
property rights, a functioning financial system, a culture of
"
thinking outside the box" and a tradition of excellence.
Government can only remove obstacles - especially red tape and
trade tariffs - and nudge things in the right direction by
investing in infrastructure and institutions. Tax incentives are
essential initially. But if the authorities meddle, they are
bound to ruin science and be rued by scientists.
Still, all forms of science funding - both public and private -
are lacking.
State largesse is ideologically constrained, oft-misallocated,
inefficient and erratic. In the United States, mega projects,
such as the Superconducting Super Collider, with billions
already sunk in, have been abruptly discontinued as were
numerous other defense-related schemes. Additionally, some
knowledge gleaned in government-funded research is barred from
the public domain.
But industrial money can be worse. It comes with strings
attached. The commercially detrimental results of drug studies
have been suppressed by corporate donors on more than one
occasion, for instance. Commercial entities are unlikely to
support basic research as a public good, ultimately made
available to their competitors as a "spillover benefit". This
understandable reluctance stifles innovation.
There is no lack of suggestions on how to square this circle.
Quoted in the Philadelphia Business Journal, Donald Drakeman,
CEO of the Princeton biotech company Medarex, proposed last
month to encourage pharmaceutical companies to shed technologies
they have chosen to shelve: "Just like you see little companies
coming out of the research being conducted at Harvard and MIT in
Massachusetts and Stanford and Berkley in California, we could
do it out of Johnson & Johnson and Merck."
This would be the corporate equivalent of the Bayh-Dole Act of
1980. The statute made both academic institutions and
researchers the owners of inventions or discoveries financed by
government agencies. This unleashed a wave of unprecedented
self-financing entrepreneurship.
In the two decades that followed, the number of patents
registered to universities increased tenfold and they spun off
more than 2200 firms to commercialize the fruits of research. In
the process, they generated $40 billion in gross national
product and created 260,000 jobs.
None of this was government financed - though, according to The
Economist's Technology Quarterly, $1 in research usually
requires up to $10,000 in capital to get to market. This
suggests a clear and mutually profitable division of labor -
governments should picks up the tab for basic research, private
capital should do the rest, stimulated by the transfer of
intellectual property from state to entrepreneurs.
But this raises a host of contentious issues.
Such a scheme may condition industry to depend on the state for
advances in pure science, as a kind of hidden subsidy. Research
priorities are bound to be politicized and lead to massive
misallocation of scarce economic resources through pork barrel
politics and the imposition of "national goals". NASA, with its
"
let's put a man on the moon (before the Soviets do)" and the
inane International Space Station is a sad manifestation of such
dangers.
Science is the only public good that is produced by individuals
rather than collectives. This inner conflict is difficult to
resolve. On the one hand, why should the public purse enrich
entrepreneurs? On the other hand, profit-driven investors seek
temporary monopolies in the form of intellectual property
rights. Why would they share this cornucopia with others, as
pure scientists are compelled to do?
The partnership between basic research and applied science has
always been an uneasy one. It has grown more so as monetary
returns on scientific insight have soared and as capital
available for commercialization multiplied. The future of
science itself is at stake.
Were governments to exit the field, basic research would likely
crumble. Were they to micromanage it - applied science and
entrepreneurship would suffer. It is a fine balancing act and,
judging by the state of both universities and startups, a
precarious one as well.
About the author:
Sam Vaknin is the author of Malignant Self Love - Narcissism
Revisited and After the Rain - How the West Lost the East. He is
a columnist for Central Europe Review, PopMatters, and eBookWeb
, a United Press International (UPI) Senior Business
Correspondent, and the editor of mental health and Central East
Europe categories in The Open Directory Bellaonline, and
Suite101 .
Visit Sam's Web site at http://samvak.tripod.com
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