Arnold Kling  

Nanotech Research Funding

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Rethinking Keynes... Comment of the Week, 2003-05-0...

Is Federal funding for research in nanotechnology justified? Declan McCullagh raises some doubts.


First, private sources will pay for basic research. It may not be at the level that all researchers would prefer, but if it can lead to applied research results, the private sector will still do some of it. Second, nanotechnology includes a mix of early-stage research and late-stage research. Intel's latest generation of microprocessors likely qualifies as nanotechnology, but should Uncle Sam pay for the development of a hypothetical Pentium VI?

The challenge for government funding for research is to match social benefits with social costs. Economic theory does not justify government funding of research that yields purely private benefits.

For Discussion. Will it be possible to identify nanotechnology research projects that would not receive private funding but nonetheless have large potential social benefits?


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COMMENTS (12 to date)
Eric writes:

The quote "it (nanotech funding) may not be at the level that researchers would prefer (without federal funding)..." is very insightful.

Scientists and engineers at the university level have become just another welfare dependent interest group, no different than seniors, social workers, the AFSCME, etc. We have gotten to the point where federally funded science budgets have no relation to scientific progress, just like pre-1996 welfare budgets had no relation to the unemployment rate. They just keep going up and up, creating a culture of dependence, while creating no net benefit for the greater society.

Yes, by all mean eliminate federal funding of nanotechnology, as well as all federally funded science not directly related to national defense (like missle defense, for example).

David Thomson writes:

“They just keep going up and up, creating a culture of dependence, while creating no net benefit for the greater society.”

I have no doubt that our country benefited greatly from the government’s original financial investment in computer research and other scientific endeavors. However, we indeed might have to worry about a current “culture of dependency” which is akin to a parent funding their spoiled children. Do many of these scientists feel “entitled?”

Bernard Yomtov writes:

My gut answer to your question is no it's not possible to identify them, not in nanotechnology or elsewhere.

At the same time I think that projects with huge social benefits exist and we are wise to fund some level of basic research because some of what we fund will prove enormously beneficial. Am I arguing that we should proceed on faith in scientific progress? Yes, because as David Thomson points out, history has justified this faith.

Nor do see any reason to restrict the activity to defense matters. Potential social benefits go far beyond the realm of national defense.

Eric writes:

David, when you say "I have no doubt that our country benefited greatly from the government’s original financial investment in computer research", you're talking about the Internet. Let's be clear.

I think the government's involvement in the invention of the Internet has been overhyped by guys like Al Gore, who used it for political purposes.

I was on the Internet back in 1990, and let me tell you, it was nothing. All it was good for was e-mail and newsgroups. E-mail was useful, newsgroups were entertaining, but neither was life changing. As a college student, I used it to goof off, not to do real work.

It wasn't before the invention of the browser (what was that, 1994?) that the Internet became useful, and its growth after that was phenominal. The government had nothing to do with it.

Also, the invention with the biggest impact on mankind is/ was the good old IBM PC. Again, the government had almost nothing to do with it.

Also, a great deal of what the government did fund computing wise was done under the Defense Department, which is not an area that I would ever have cut. Back in the early days of mainframes, it was the Feds who got things going, using computers for vital defense purposes like artillery ballistics. There's no argument from me that this kind of funding was neccessary or good, nor that this funding led to technologies that won the Cold War.

But that hardly is an argument for the funding levels of the NIH, or for nanotechnology, or whatever.

David Thomson writes:

“you're talking about the Internet. Let's be clear.”

No, I wasn’t even thinking about the Internet. It was actually the computer programs funded by the defense department. One seriously doubts that the free market could have achieved this feat by itself. An entrepreneur must be concerned with earning a return on their investment. There were no perceived practical benefits to the private sector during this time period to justify the enormous financial investment required to take computers to the next level. And even you seem to concede that our money was well spent.

In many respects, I am something of a Neo-Liberal who believes that perhaps the government was needed in the early stages of our national evolution. For instance, I strongly contend that our founding fathers were right to start the post office system. Moreover, I even suspect that protectionism was initially beneficially to protect American industries. But that was yesterday! We are now at the stage that the government can probably cause far more harm than good. It is best that the public sector get out of the postal business---and this is likely also true regarding medical research. Can someone convincingly argue that the pharmaceutical companies need the government’s help? I doubt this very much.

Eric writes:

At what point did the development of the computer reach the point that it no longer needed DOD subsidies?

1958. Or thereabouts, whenever IBM invented COBOL.

COBOL was a business oriented computing langauge, much different than the science/ math/ engineering oriented FORTRAN.

So I will give you your point about the government and computers right up to 1958.

On your other points, I'm probably on the same page as you. I'm no libertarian, and I like your term neo-liberal. A liberal in the classical, Jeffersonian sense.

I think that there is a real story as to how the scientific community in this country has become welfareized. It is a scary story, and no journalist in America will touch it.

David Thomson writes:

“I'm no libertarian, and I like your term neo-liberal. A liberal in the classical, Jeffersonian sense.”

The Neo-Liberalism that I speak of has to do with folks like Gary Hart and James Fallows. I suspect, however, that their era has ceased to be relevant in the America of today. Please note that I argue the United States Postal Service was originally a great idea. I am now convinced that the private sector should take over our mail delivery as quickly as possible.

The previously mentioned Mr. Fallows long ago converted me to the economic projectionist theories of Friedrich List. Still, I am adamantly convinced that List’s ideas would now currently cause enormous harm. Our companies should not be protected from competition by a paternalist public sector bureaucracy.

The United States is no longer the new kid on the block. We are the adults of Western Civilization while the Old Europeans like France and Germany are the petulant and immature children.

Eric writes:

"Our companies should not be protected from competition by a paternalist public sector bureaucracy"

I think that you can find plenty of countries around the world (India and France?) that have such a policy, with disasterous results.

America didn't get to its position of world domination by accident of history. We got there because our very nature (federalism, a tendency towards markets and away from statism, etc.) makes us naturally competitive. The question we should be asking is why more countries don't follow our example.

David Thomson writes:

“I think that you can find plenty of countries around the world (India and France?) that have such a policy, with disasterous results.”

America did embrace projectionist policies during its nascent beginnings. Indeed, I do believe that Friedrich List made a good argument for trade restriction measures---for that era. What has changed? I contend that today’s immediacy of information dooms such policies. No longer does it take at least two weeks to carry information over the ocean. It is now virtually instantaneous. On top of that, we can move goods a lot faster than before. Lastly, there is far less risk of boats sinking and theft occurring.

David Thomson writes:

“The question we should be asking is why more countries don't follow our example.”

Free markets disempower elected officials and bureaucrats. It is human nature to initially react viscerally and negatively toward those who wish to take away our authority. Only mature populations can handle a democratic culture. Sadly, some parents and national leaders have a very difficult time following advice that it’s often better for them to stay out of the way and do nothing.

Eric writes:

An interesting point about our past protectionist policies is that perhaps the US prospered despite them. After all, the US was and is a vast country, a huge market that perhaps provided "enough" competition internally to prevent the economic stagnation that smaller protectionist countries experience.

Or maybe not. Again, look at India. Talk about a huge market, yet protectionism has utterly failed. But then again, they're a heck of a lot more statist than the 19th century US was.

Matt Young writes:

I went back for a quick review of the history of computing to regain my perspective on the role government played. There were a few moments, which I list:

Code breaking in WW2.

The Von Neumann archicecture which was theorized by Von Neumann after tackling the computational problems in the Atom Bomb project.

And there is some reference to Cobol development.

Otherwise, the Internet road map was well established by the private sector in two companies, Tymnet and Telenet.

The Von Neumann contribution was stored programming, however I believe that programming languages in general would be a natural outcome of Algebra and needed no government encouragement. Algol comes to mind.

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