The Grand Illusion
With the so-called fiscal financial cliff facing the United States government after December 31st, there are likely to be those in the public calling for cuts in “non-productive” federal spending, and one of the perennial candidates is federal spending on basic research in any number of fields, particularly in areas such as solar power and expensive physics research. Some advocates of such cuts claim that the private sector, and in particular, the corporate world, can take up the slack, and some cite the failures in federal research choices, such as Solyndra, the solar power company that received a $535-million federal loan guarantee as part of the $787 billion economic stimulus package… and then went bankrupt.
In point of fact, there is a real distinction between basic scientific research and the follow-on development of a new scientific breakthrough into a practical product. While the private sector can develop new products far more effectively than government can, the private sector is seldom willing to undertake the basic research necessary to make the breakthroughs from which such developments can be made… and the reason is simple. The vast majority of basic research fails to make such a breakthrough. Estimates of the failure rate range from 80% to 99.99%.
What is also overlooked is that negative results of research are positive. They show approaches that will not work and often point the way to those that will.
Thomas Edison tried over 1,000 different substances before he was able to find one that would serve as the filament for a light bulb… and some sources claim it was closer to ten thousand. Edison is quoted as saying, “I have not failed. I’ve just found 10,000 ways that won’t work.” Octave Chanute, the forgotten mentor of the Wright Brothers, listed hundreds of failed attempts to developed powered flying machines, as well as almost 60 detailed illustrations of different major serious attempts that failed before the Wright Brothers flew. More recently, Bill Gates pointed out that funding basic research naturally has a high failure rate, and that more than 90% of the Energy Department’s Advanced Research Projects Agency’s projects will likely fail. Gates went on to note that the U.S. government’s investment in energy research was woefully underfunded and called for a government investment of $16 billion per year into basic research to deliver energy innovation.
Even the one of the most profitable areas in return on research – the pharmaceutical industry – has staggering costs. According to Francis Collins, the Director of the National Institutes of Health, “The average length of time from target discovery to approval of a new drug currently averages about 13 years, the failure rate exceeds 95 percent, and the cost per successful drug exceeds $1 billion, after adjusting for all of the failures.”
The truth of the matter is that, first, the future economic health and physical well-being of the United States depend on continued extensive scientific research, research that a private sector dependent on short-term profitability largely cannot and will not make, and that, if government does not fund such research [and the education of those who will make the such breakthroughs, from whatever part of the globe they come from to be educated in the United States], scientific breakthroughs will be made in countries whose governments do fund that research… or not made at all.
Yet too many penny-wise and pound foolish politicians fail to see the difference between basic research and the subsequent development and exploitation.
If you look at how the 2012 Federal budget is allocated: http://www.usgovernmentspending.com/budget_pie_gs.php
You will note that defence at 24% outweighs all the major categories : welfare at 12% and pensions at 22% and healthcare at 22%. I presume non-military research sits somewhere under ‘other’ at 5%, unless it is considered part of Education (4%). Research does not have its own category. I wonder where the NASA budget sits.
It is my observation, that polticans and CEO’s do not look any further than their own personal outlook. If it will not benefit them personaly, it is of no use.
I don’t think you can set a base model of operation based on a visionary like Edison. And, It’s easy to say that something is worth the money, you still have to have the money to buy it.
-rehcra
That argument has merit, but it would be a much easier sell if there were high confidence that the funding was being administered competently and with an eye to still making the best possible use of it in terms of eventual results, rather than in terms of basically money laundering to convert government revenue to highly political ends.
At best, even if funding Solyndra wasn’t flat out corrupt, it was incompetent; both the science and the business have to be well understood and constantly monitored to know that the money isn’t going down a sinkhole, and an understanding of the market should take into account that subsidies, esp. when the funds to sustain them just aren’t there, will likely produce fragile rather than agile businesses.
Even if one argues that the harm of an unregulated and unsubsidized market is unacceptable (I don’t, by and large!), one should be aware that the further from that course one tries to take matters, the more unintended consequences there are likely to be.
Socialists priming the pump for businesses is like drug addicts going into the health care profession; it won’t have acceptable results, by and large. Even when it gives the appearance of working, the end will become the entrenchment of their respective power, and any other objectives will remain in name only. That’s enough of a risk with any organization too large for everyone in it to hold each other personally accountable, but it’s a certainty when government and business are close enough to desire favors from one another.
General Petraeus apparently wrote in his dissertation “What policymakers believe to have taken place in any particular case is what matters — more than what actually occurred”. This goes a long way towards explaining the last decade of fruitless wars.
A similar policy reigns in terms of science. Know-nothings who “prove” their views with rhetorical tricks are vying to run the House Science Committee, when science is not about out-arguing your “opponent” but submitting your opinions to the test of reality.
http://arstechnica.com/science/2012/11/three-climate-contrarians-vie-to-lead-house-science-committee/
Solyndra is a red herring. The DOE’s batting average on investing in risky technology is better than any venture capitalist firm. Therefore they are more competent and less corrupt than the private sector. You only need to look at Britain, the country that invented the industrial revolution to see what trusting your economy to the private financial sector does for you. Its industry is gutted, those that stay cannot get funding from banks even when they have a proven track record of success. Most of the best and brightest moved to the US. Most of the rest work for banks.
@joe. To bring you up to date on Britain, the banks are in trouble due to various legal issues and so shedding jobs as they rebuild their reserves. “Most of the rest” are increasingly working for the service industry.
For the record, Britain’s industrial revolution on the 19th century was not strictly state sponsored. It depended largely on the private sector such as the railway and steam ship companies. Many of the former went under.
@Tim: I did not mean to imply that the industrial revolution was only state sponsored. However I must point out that the boundaries between the aristocracy and corporations were somewhat muddy (royal charters, etc). Furthermore, British entrepreneurs had the backing of the British legal system and the enforcement of the Crown. While it is true that mechanization helped Britain dominate the manufacture of textiles, so did the enforced deindustrialization of India…
I recently learnt that Britain and the Netherlands benefited from the Spanish looting of South American silver and gold. Britain gained silver both from piracy and from selling stuff to newly rich Spaniards.
Another difference at the time of the industrial revolution was that private capital was interested in making bets on risky technology. That is something that has sadly disappeared from Britain, and banks there are extremely “conservative” preferring bets on the market to bets on new technologies. In the US, venture capital makes many things possible.
While I rejoice at the suffering of banks, London is still the capital of world finance. This is not an asset: more often than not, recent British (physics/math/computer science) PhD graduates whose theses had some impact are now either working for banks or have moved to the US. The same phenomenon blights other European nations, although to a lesser degree. (By “Most of the rest” I meant the rest of the best and brightest).
I believe there is a big role for government financing. Governments and private concerns jointly financed the “discovery” of the Americas. They financed the first men on the moon. Hopefully they will finance the first people on Mars. These are such long term propositions that one cannot realistically expect private ventures to fund them.
@joe. A good response. One small correction : that of piracy against the Spanish. I believe the correct term is privateering as it was essentially legalised. I believe the US used this policy as well in its war with, well, us.
IF the US were to redirect some of its funding of foreign governments, the 16 billion USD called for by Gates could be easily met, BUT that would leave us with fewer allies when we need all that we can get.
Perhaps the US gov’t should charge for licensing any patents gained when using its funding for research, basic science or otherwise. Right now, all those patents are given away for free – if they required an equal % of the patent as it supplied funding, perhaps this could create a self-sustaining program.
The tricks would be #1 – keeping the companies honest. Their track record does not fill me with confidence. #2 – keep the gov’t using the licensing fees to return to funding more basic research. Politicians’ track records are worse than private companies’. #3 Get kids interested in doing scientific research by changing national and state-level educational policy. Right now, education is about passing basic exams to prove that the kids meet minimums. This needs to change.
It would be interesting to see the results if we could directly assign how our tax dollars are to be spent when we fill out our returns:). Support for basic research would be high on my list of funded categories.
I also agree with Wine Guy on the point that the results of publicly funded research should be publically owned, not thrown into the public domain.
As to the mechanics, the current grant model should be workable. Mr. Modessit covered a lot of this in ‘The Silent Warrior’ and though that was a private foundation, not government, the key remains getting dedicated people needed to sit the boards and review the grant applications whether from individual researchers, educational institutions, or private industry.