[tt] IHE: Real-Dollar Decline for Academic R&D

[Premise Checker]

Again, it matters very little and I append my review of Kealey.

Real-Dollar Decline for Academic R&D
http://www.insidehighered.com/news/2007/09/28/nsf
7.9.28

Federal spending on university research and development declined in
real dollars in 2006 for the first time in nearly 25 years, the
National Science Foundation said in a report Thursday.
Looking for a job?

An estimate released by the foundation in April had anticipated
a 6.0 rise in federal support for academic R&D, well above the
rate of inflation. But the report released Thursday, which
represents much firmer and near final numbers, finds instead
that funds increased by 2.9 percent, to $30.03 billion, which
represented a 0.1 percent decline in inflation-adjusted
dollars. The last such decrease occurred in 1982,
the report said.
NSF officials attributed the leveling off of federal support to
the end of many years of massive increases in financing from
the National Institutes of Health.
Over all, though, colleges and universities reported a 4.3
percent increase in research and development expenditures in
science and engineering in 2006, to $47.8 billion. That
increase, which represented a rise of 1.2 percent after
inflation, was driven particularly by hefty growth in the
institutions' own spending, which climbed to $9.062 billion
from $8.258 billion in 2005, an uptick of about 10 percent.
The report also provided a look at top institutions' individual
spending, as seen in the table below. A few changes occurred in
the top 20, with the University of Arizona moving into the list
and Columbia University, which had been found there for the
first time in 2005, leaving it again. The University of Florida
may have experienced the most growth in recent years, rising 10
spots since 2004, the NSF said.

Top 20 Institutions in Research and Development Expenditures,
2005 and 2006

Institution
2005 (millions)
2006 (millions)
1
Johns Hopkins U.
1,444
1,500
2
U. of Wisconsin at Madison
798
832
3
U. of California at Los Angeles
786
811
4
U. of Michigan campuses
809
800
5
U. of California at San Francisco
754
796
6
U. of Washington
708
778
7
U. of California at San Diego
721
755
8
Stanford U.
715
679
9
U. of Pennsylvania
655
676
10
Duke U.
631
657
11
Ohio State U.
609
652
12
Cornell U.
607
649
13
Pennsylvania State U.
626
644
14
Mass. Institute of Technology
581
601
15
U. of Minnesota
549
595
16
U. of California at Davis
547
573
17
U. of Florida
531
565
18
Washington U. in St. Louis
532
548
19
U. of California at Berkeley
555
546
20
U. of Arizona
530
536
-- Doug Lederman
Comments

Real-Dollar Decline for Academic R&D
In june of 2004, I subscribed the mailing list provided by the
U.S. government (grant.gov) that announces grant opportunities.
It reports information on all federally supported grant
programs as they become available.
When I first subscribed the reports were issued daily. Today I
received such a list. It contained 4 opportunities from 2
agencies and was the first since September 16, 2007.
I have archived these reports for the last year. A cursory
examination suggests that not only is the adjusted dollars and
volume down but the diversity of disciplines is similarly
effected.
IMHO, the lack of diversity is more troubling than the nominal
decrease in inflation adjusted dollars.
Reid Cornwell, Director at The Center for Internet Research, at
12:10 pm EDT on September 28, 2007

Out of the top 20
I note that Colombia is ranked 23 on this measure, Harvard 26,
Chicago 54 and Caltech 56. These are rather lower than I would
expect from their historical performance. Are my expectations
wrong, or is there another explanation for these science
research heavyweights being out of the top 20 on science and
engineering research expenditure?
Gavin, Principal Policy Adviser at Griffith University,
Australia, at 9:30 pm EDT on September 28, 2007


+++++++++++++


The Case against Government Science
Book Review by Frank Forman

Terence Kealey, The Economic Laws of Scientific Research (St. Martin's,
New York, 1997, xii, 382 pp, paper, $19.95, ISBN 0-312-17306-7).

   Ayn Rand dramatized the case against government funding of
science in Atlas Shrugged, but a dramatization is not evidence. The
problem is that, according
to standard economic theory, research is almost a perfect example
of a "pure public good," a good that once produced can be
consumed by all without any possibility of exclusion by way of
property-rights delimitation. Such goods will be underproduced in
the market, since the producers can capture only the benefits of
the research that they themselves use. Rational citizens, all of
them, might very well empower the state to provide for the
provision of research and other public goods. Not every citizen
would actually benefit from each good so provided, but under a
well-designed constitution, each citizen would presumably be
better off as a result of constitutionally limited state
provision of public goods than without it. This would mean
unanimity of agreement--a social contract--and hence no
initiation of force.

   But what about government funding of science? Nearly every
scientific paper, it is true, seems to conclude with an appeal
for funds for "further research," but even so the case for public
funding is accepted by nearly everyone except a few ideological
extremists. Along comes a bombshell of a book by Terence Kealey,
The Economic Laws of Scientific Research, that argues that
government funding of science at best displaces private funding
and in fact diverts research into less productive channels. I am
surprised that this book has not gotten much more attention from
the free-market community.

   The book is essentially a history of science and its funding,
with the number of pages per century increasing up to the
present. The author argues that technology drives science, even
basic science, just as much as the reverse, which is awfully
reminiscent of John Galt and his motor. Kealey describes the work
of several engineers and other practical men turned scientists,
such as Carnot, Torricelli, Joule, Pasteur, and Mendel. He argues
that most new technology comes from old technology. The book is
highly instructive on matters of history and greatly entertaining
to read. To wit:

   "Laissez-faire works. The historical (and contemporary)
evidence is compelling: the freer the markets and the lower the
taxes, the richer the country grows. But laissez-faire fails to
satisfy certain human needs. It fails the politician, who craves
for power; it fails the socialist, who craves to impose equality
on others; it fails the businessman, who craves for security; and
it fails the anally fixated, who craves for order. It also fails
the idle, the greedy, and the sluttish, who crave for a political
system that allows them to acquire others' wealth under the due
process of law. This dreadful collection of inadequates,
therefore, will coalesce on dirigisme, high taxes and a strong
state" (p. 260).

   Here are the three Laws of Funding for Civil R&D, based upon
comparing different countries and across time:

1. "The percentage of national GDP spent increases with national
GDP per capita.
2. "Public and private funding displace each other.
3. "Public and private displacements are not equal: public funds
displace more than they do themselves provide" (p. 245).

   But it is not just the funds that are displaced; so is their
effectiveness, as a rule, from projects that have a promise to
become useful to those that only keep scientists busy.
Furthermore, many wealthy men generously fund science and are
free to choose genuine innovators and not those merely expert in
filling out grant applications. Kealey describes many gentleman
amateurs, the greatest being Darwin. And he compares the quality
of private and public medical research in England during this
century in detail, with the advantage going to the former.

   Kealey also notes that businesses have to fund their own
science deparments even if they would rather let other businesses
perform the reseach and free-ride off it: it takes pretty good
scientists to be able to understand what the really good ones are
up to. And those that have an talent for science will demand at
least a small lab as part of the perks of the job.

   The Economic Laws of Scientific Research belongs on a growing
shelf of books about the general futility and perversity of
government activity. The perversity is better known: we all know
about Charles Murray's thesis on the perversity of poverty
programs from his Losing Ground (New York: Basic Books, 1984).
What is less known is the futility of such trying to increase
redistribution though government. Gordon Tullock, in Economics of
Income Redistribution (Boston: Kluwer-Nijhof, 1983), argued that
men are naturally moderately charitable and will give up five
percent of their income to help the poor and will do so whether
organized privately or collectively. Public poverty programs are
perverse, since public programs (esp. federal ones) must operate
under bureaucratic rules and cannot distinguish the deserving
from the undeserving poor.

   There is a similar constant in health care. The percentage of
GDP devoted to health care in countries around the world is
solely a function of GDP per capita and is independent of its
organization, privately or publicly. (See the last chapter of
Charles E. Phelps, Health Economics (New York: HarperCollins,
1992).) Public provision of health care is futile, in that it
does not increase the amount of GDP devoted to it. It is
perverse, since publicly funded health care suffers from the
usual problems. And now Kealey has shown the same thing for
science. Perversity, yes, but futility, much more so.

----

Frank Forman is the author of The Metaphysics of Liberty
(Dordrecht, Holland: Kluwer Academic, 1989) and reviewed George
Reisman's Capitalism in the December issue of Full Context. This review
was submitted to that publication but rejected on grounds of insufficient
interest to Objectivists.