The Wages of Science

In the United States, Congress approved, last month, increases in the 2003 budgets of both the National Institutes of Health and National Science Foundation. America is not alone in - vainly - trying to compensate for imploding capital markets and risk-averse financiers.

In 1999, chancellor Gordon Brown inaugurated a $1.6 billion program of "upgrading British science" and commercializing its products. This was on top of $1 billion invested between 1998-2002. The budgets of the Medical Research Council and the Biotechnology and Biological Sciences Research Council were quadrupled overnight.

The University Challenge Fund was set to provide $100 million in seed money to cover costs related to the hiring of managerial skills, securing intellectual property, constructing a prototype or preparing a business plan. Another $30 million went to start-up funding of high-tech, high-risk companies in the UK.

According to the United Nations Development Programme (UNDP), the top 29 industrialized nations invest in R&D more than $600 billion a year. The bulk of this capital is provided by the private sector. In the United Kingdom, for instance, government funds are dwarfed by private financing, according to the British Venture Capital Association. More than $80 billion have been ploughed into 23,000 companies since 1983, about half of them in the hi-tech sector. Three million people are employed in these firms. Investments surged by 36 percent in 2001 to $18 billion.

But this British exuberance is a global exception.

Even the - white hot - life sciences field suffered an 11 percent drop in venture capital investments last year, reports the MoneyTree Survey. According to the Ernst & Young 2002 Alberta Technology Report released on Wednesday, the Canadian hi-tech sector is languishing with less than $3 billion invested in 2002 in seed capital - this despite generous matching funds and tax credits proffered by many of the provinces as well as the federal government.

In Israel, venture capital plunged to $600 million last year - one fifth its level in 2000. Aware of this cataclysmic reversal in investor sentiment, the Israeli government set up 24 hi-tech incubators. But these are able merely to partly cater to the pecuniary needs of less than 20 percent of the projects submitted.

As governments pick up the monumental slack created by the withdrawal of private funding, they attempt to rationalize and economize.

The New Jersey Commission of Health Science Education and Training recently proposed to merge the state's three public research universities. Soaring federal and state budget deficits are likely to exert added pressure on the already strained relationship between academe and state - especially with regards to research priorities and the allocation of ever-scarcer resources.

This friction is inevitable because the interaction between technology and science is complex and ill-understood. Some technological advances spawn new scientific fields - the steel industry gave birth to metallurgy, computers to computer science and the transistor to solid state physics. The discoveries of science also lead, though usually circuitously, to technological breakthroughs - consider the examples of semiconductors and biotechnology.

Thus, it is safe to generalize and say that the technology sector is only the more visible and alluring tip of the drabber iceberg of research and development. The military, universities, institutes and industry all over the world plough hundreds of billions annually into both basic and applied studies. But governments are the most important sponsors of pure scientific pursuits by a long shot.

Science is widely perceived as a public good - its benefits are shared. Rational individuals would do well to sit back and copy the outcomes of research - rather than produce widely replicated discoveries themselves. The government has to step in to provide them with incentives to innovate.

Thus, in the minds of most laymen and many economists, science is associated exclusively with publicly-funded universities and the defense establishment. Inventions such as the jet aircraft and the Internet are often touted as examples of the civilian benefits of publicly funded military research. The pharmaceutical, biomedical, information technology and space industries, for instance - though largely private - rely heavily on the fruits of nonrivalrous (i.e. public domain) science sponsored by the state.

The majority of 501 corporations surveyed by the Department of Finance and Revenue Canada in 1995-6 reported that government funding improved their internal cash flow - an important consideration in the decision to undertake research and development. Most beneficiaries claimed the tax incentives for seven years and recorded employment growth.

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 .

Until recently, he served as the Economic Advisor to the Government of Macedonia.

Visit Sam's Web site at http://samvak.tripod.com; palma@unet.com.mk

---

Brain Waves Activating to the Tune of a Different Drummer?

Well, here is a most interesting thought. There are many... Read More

Issues with Aerial Fire Fighting

A few years ago I visited the Wyoming Contractor, which... Read More

A Unique History of the Light Bulb

Most people assume that Thomas Edison invented the light bulb.... Read More

Composite Materials in Ships, Pipelines, Liners and Aircraft

One future problem, which has not sufficiently been addressed, is... Read More

June 2005: Weather Forecasts for Vacationers

If Johannes Kepler, the renowned 17th century astronomer and discoverer... Read More

Mini-Robots, Motherships, Swarm Strategies, Wasps, Ants, Organization and Delivery

Robots are for every one. Tech TV now host Battle... Read More

Institute of Noetic Sciences

The possibility of sentient beings on earlier solar systems said... Read More

Transfer Technologies and Advances in Future Combat

Transfer Technologies and Advances in Future CombatThe human visual ability... Read More

Aerodynamics and Hydrodynamics of the Marine Life and Uses for AI, UAVs, Robotics, and the Future

Air has 750 times less density as the oceans, yet... Read More

Weather Control and Creation to Use as a Screen for Troop Advancement

Creating a Hurricane using a Space based laser array to... Read More

The Valuable Individual

How can we, as individuals, participate in waste management? Because... Read More

Why Dont Moths Fly to the Moon?

Surely, in the days before man invented artificial light, moths... Read More

UAV Mini - Torpedo Bombers for Eliminating Hydro Cushioned Water Craft

UAVs can carry cargo, some of the very tiny UAV... Read More

Does the Earth Have Hollow Areas Inside it?

Some skeptics of the geology text books we had in... Read More

DNA Testing Breaks Down Barriers in the Court Room

DNA testing has three major applications for forensic studies: identification... Read More

The Future Enhancements of Tele-Robotics

Today we have already available UAVs, which will soon have... Read More

Big Bang or Lots of Big Fire Crackers?

There are many who talk about the Big Bang Theory.... Read More

Increasing Human Brain Power, Concept

Is it possible to increase the human brainpower? Not just... Read More

The Joy of Recycling

I have always been an advocate of recycling. Even though... Read More

Medical Miracle or Mistake?

Fundamental elements of life and the aspects of cloning bring... Read More

Electromagnetic Energy in Space

Tesla was always looking for a way to harvest electromagnetic... Read More

What are the Biggest Solar Projects?

Solar power will be necessary for space exploration and off... Read More

Surgical Biomaterials and Tissue Regeneration Technologies

Plants, invertebrate animals, amphibians and even reptiles have the ability... Read More

Free Energy from Space

Tesla was always looking for a way to harvest electromagnetic... Read More

Micro Blimps Cleaning the Air in Buildings to Eliminate Anthrax spores

Presently mini-blimps are being deployed in government leadership buildings as... Read More

Remote Control Bacteria; We Can Not Allow That.

Remote Control Bacteria. Why not, we have remote control everything.... Read More

DNA Profiling: Its Uses In Court

DNA Profiling and Its Uses in CourtStronger evidence in courtrooms-it's... Read More

Down Scrolling Text to Find Patterns

I believe a program can be written to scan text... Read More

Hibernating Humans for Space Flight

Can we hibernate humans using hydrogen sulfide gas for long-term... Read More

Preventing Flooding on Individual Farmers Fields to Save Crops

I propose permits be given to farmers to they can... Read More

Planet Hugging

Tree hugging is a thing of the past. It is... Read More

The Harmonic

The HarmonicIn a good history book by a leading light... Read More

Surround Panoramic Night Vision is Possible

Modern night vision equipment is state of the art for... Read More