The Role of the Government in Research - A Response.

A few days ago, Timothy Sandefur posted his second entry in our ongoing debate on the benefits and pitfalls of government funding for the sciences. I've been a bit busy, and I'm just finding time to respond now - I apologize for the delay. While I was doing other things over the weekend, he also posted a response to an article by Steven Quake that I blogged about earlier. This is my response to his rebuttal to my earlier post. I may or may not find the time to reply to his examination of the Quake article later on.

The Internets:

In my first post in the debate, I pointed out that this debate is taking place on the internet. I mentioned that because I thought - and still think - that the internet represents a fantastic example of why it can be really good to fund scientific research. Sandefur disagrees on both philosophical and pragmatic grounds.

Philosophically, he points to the issue of choice:

To assess the costs and benefits of a government subsidy, it's necessary to keep in mind the unseen costs: that is, the things that might have been created if the money had not been taken out of the hands of private individuals and spent on things that they actually wanted. Sure, military research created Arpanet in the 1960s. But if that money had been left in the hands of private investors, what would they have done with it? Maybe they would have created a super-duper Arpanet that would have been far cooler and we would have had Wikipedia twenty years earlier. Or maybe they would have wasted it on weekend trips to Vegas. Nobody knows, and nobody can know. But the one thing we can be sure of: taxpayers in the 1960s got Arpanet instead of what they would have spent that money on if they had had the choice. That means that they were forced to pay for something they didn't want--and by definition, that means it was economically inefficient. Now, maybe we think that it was still wiser for the government to deprive people of their freedom of choice in this way--but it's not logically possible to say that people benefited from this, when they were deprived of any say in the matter.

I find it difficult to agree that it is not logically possible to say that people benefit from something if they have no say over the matter. Education, for example, strikes me as a clear benefit - both to the individuals concerned and society as a whole. Parents are required to provide their children with an education, and the government (using taxpayer dollars) ensures that they will be able to provide their children with at least a certain minimum level of knowledge and skills. Children receive a certain level of training in a range of basic skills regardless of the means or inclination of their parents, which provides them with more employment opportunities than they would have if not educated. Because all children are receiving at least a certain amount of education, employers have a larger pool of qualified potential employees to draw from. Even the parents might benefit - there's probably a greater chance that their kids will be able to provide for them in their old age if they're educated.

I may well be missing Tim's basic point here, and if so I'd welcome a better explanation, but at the moment it looks to me like it is possible for people to benefit, even in situations where they're deprived of a choice. If there is some definition of these terms that makes it impossible, I suspect that the problem lies with the definition, not with reality.

Tim continues by raising a couple of issues that are more pragmatic objections than philosophical. He starts by pointing to cases where the government has completely wasted funding:

Of course, we might also mention, to counterbalance the Arpanet example, all the many wastes of time and money that government subsidies have provided. After all, while government was funding Arpanet research, it was also funding some pretty wasteful things, like research into psychic warfare. In short, merely pointing to something good that government did, without keeping in mind the costs of that project--including the unseen costs; things that might have come into existence but didn't--is one of the oldest economic fallacies there is.

The government of the United States, like every government we know of, is composed of people. With one alleged exception, people are fallible. This is a simple fact of life, that applies as much in the private sector as it does within the government. Mistakes will be made. Tim can cite plenty of examples of this where government funding is involved; I'm sure I'll have no problems doing the same with private sector initiatives. Perfection does not exist, and everything has unseen costs.

Moving on, Tim effectively makes my case for me, by going back to the internet example:

Second, it's not true that government created the Internet. Arpanet was a fine enough invention, sure. But it bears about the same relationship to the modern Internet as the birth of Christ does to modern Christmas. In both cases, it's private enterprise and freedom of economic decision-making that have given us all the wonderful luxuries and delights that make these things so wonderful to us. While in their distant history they may be attributable to government or God, it is in the hands of private, human entrepreneurs--not government planners--that these things have become such a marvelous experience for us all. What's more, no government could possibly have sat down and created either of these things. Only decentralized, private decision-making could have created the marvelous multiverse of today's Internet.

That is exactly why the internet is such a fantastic example of what's good about government funding for basic research. Government funding created the basic structure of the internet, and government-funded researchers using the internet created a great deal of the initial culture of the internet and the initial content that was available when private companies began to introduce non-academic users to this world. The private companies were not operating or innovating in a vacuum. They were building on - and benefiting from - the basic foundation that had been provided by government funding.

As far as I'm concerned, that's about as close to the way I think things should work as we're likely to find. I'm not a fan of public control or public planning, and I think that you'd have to be almost totally blind to avoid seeing just how good a job entrepreneurs can do when it comes to creating things. I don't think that the proper role for government is to try to control or dictate all, or even most, research. When things reach a point where private firms see potential, I think they should be allowed - encouraged - to develop things further.

That's exactly what happened with the internet. No one company expended - or had to expend - the tremendous research and development funding required to develop the basic foundation of the internet. The public development of the basic infrastructure made it possible for people to try new things with relatively low start-up costs. With a little bit of programming skill and a little bit of marketing skill, any geek could make it big.

Of course, there are unseen costs to allowing this sort of free-market innovation as well. For a while there, it felt like anyone with access to a high-speed connection and their mother's garage was getting insane amounts of venture capital, and a lot of people - including some innocent bystanders - got hammered when the resulting dot com bubble burst.

The Public Good Argument:

Mr. Sandefur is also not a fan of my "public good" argument:

There are a couple problems with this. The first is that most of the time, the alleged public good isn't a public good at all. ("Public goods" doesn't mean "good for the public," which science obviously is. It means something that is non-rivalrous in consumption and non-excludable: something you can't keep people from stealing and something that everyone can enjoy at the same time.) It is not true that scientific research is necessarily a public good. There are all sorts of ways to prevent people from stealing your proprietary research. One of these ways is in the form of a particular kind of government subsidy, and that is, patents and copyrights. What's noteworthy here is that when the Constitution's authors decided to provide federal authority for this particular kind of subsidy, they did so by explicitly granting Congress the power to grant patents and copyrights. They did not grant Congress the authority to devote taxpayer money to running a federal research apparatus. In other words, the founders thought about the public goods argument, and chose only one way of responding to it: patents and copyrights--not government funding.

Part of the problem with that is that Sandefur is conflating two subtly different concepts: scientific research in general, and government-funded scientific research in particular. Intellectual property law creates an incentive - or at least removes a disincentive - for private research funding. Investors know that if the research they are funding yields something with economic benefits, their right to profit from their investment will be protected. Government funded research, on the other hand, should be generally available to the public - and most of it is, in the form of peer-reviewed scientific literature.

Here, again, the government funded work is available to anyone and everyone to build upon. There's no way, in fact, to realistically prevent someone from further developing an idea that he or she got after reading an article produced by a government-funded scientist, and someone else could, in theory, come up (and run) with a different concept based on the same original work. Under the circumstances, I'm having a hard time seeing how the body of peer-reviewed scientific literature isn't a public good.

On a practical matter, there are some issues that interfere with this particular view. One glaring example would be the Bayh-Dole Act of 1980, which allows universities to seek patents on the products of government funded research. I would agree that allowing universities - or other entities - to direcly reap financial gain from research conducted with our money, without providing us with some sort of compensation, is unreasonable. I'd be thrilled to see that act overturned or repealed. But that's a reason to fix the problem, not toss out the system.

Mr. Sandefur also points out that private companies can provide public goods:

...is it true that government must provide public goods? No. Private industry provides public goods all the time. I've already mentioned the tremendous amount of money that private charitable foundations devote to scientific research, for example. There are plenty of other examples, both in science and outside of it. Celera gave away many of its genome sequences--sequences produced faster, better, and cheaper than the sequences produced by the government HGP.

This is true, as far as it goes. Private industry is entirely capable of providing public goods, and they frequently do so, when it is in their interests. And there, as the bard said, is the rub. Celera gave away many of the genome sequences they produced, after determining which ones they wanted to keep for themselves. That might be a public good, but it's a limited one - essentially, the public good in this case consists of whatever is left after Celera claimed their private goods.

In both the case of Celera and private foundations, funds are often available only for certain narrow purposes - either ones related to the foundations' charters, or spin-offs from the corporation's main focus. They may create a public good, but that does not mean that it's the same one that the government funding creates, or even that the two are equivalent.

The Environment and Corporate Effects:

Timothy goes on to dismiss the suggestion that corporations might not do a good job researching their own toxic output:

Dunford also argues that some kinds of research won't be provided by private industry because it is potentially inimical to their plans: "Few companies find researching the possible long-term effects their activities might have on their surroundings and neighbors to be commercially beneficial." I see no reason to believe this. In fact, in a free market--that is, a market where nuisance law is strongly enforced--it would actually be much more in their interest to research the possibility that their activities might lead to liability.

In effect, this is a request that I bet my life - and those of my family - on the free market. I'm a gambler, but not a fool, so that's a bet that I'm reluctant to make. Corporations, like the government, are ultimately human endeavors, and there's quite a bit of research (not to mention plain old experience) that suggests that people aren't always good at making the best long-term choices when faced with massive potential short term gains.

Sandefur's argument is even less sound when it comes to addressing an entire class of possibilities: instances where the potential harm is the cause of the cumulative effects of an entire industry of group of industries, but cannot be easily ascribed to the actions of any one company. In these cases, none of the companies has any incentive to do the research. If challenged, they can blame the competition for the harm, and if they do the research themselves, they may be helping their competition while hurting themselves.

Sandefur concludes this section of his argument with a statement that seems to fly in the face of quite a bit of experience - so much so, in fact, that I think the best response will consist of a single word.

The fact is, private industry today takes extreme steps to ensure the safety and cleanliness of their products--not because government makes them do it, but because they don't get rich by killing customers or pissing them off.

Tobacco.

The Best We've Tried So Far.

Moving right along, Tim takes on my final argument:

In his conclusion, Dunford claims that government funding is better than "everything else we've tried" with regard to science research funding. I can't imagine he really means this. Private institutions were by far the leading investors in scientific research in the United States until the 1950s--and the United States became the scientific and technological leader of the world long before then. Certainly there's no reason to believe that the science they did was qualitatively worse because it was funded by private industry.

We didn't do badly before the 1950's. But the rate of advance certainly seemed to rapidly accelerate right around the time that big government funding opened up, and it's remained high since then.

In fact, let's consider a country that devoted a tremendous amount of its resources to government-funded science research: the USSR. There's no question that, whatever else the Soviet Union did, it certainly funded its science institutions! And yet, twenty years later, we know that Soviet science was a "dismal failure" and did very little that was not actually stolen from Western science and technology. If government-funded research really is the best method we've found, then surely we would have expected the Soviets to be ahead of us in scientific research...in at least...something....

There is a valid point here, mostly because I wasn't clear enough at the outset. I do not believe that the government should be the only source of funding for science, or that the government should be heavily involved in all areas of science. I no more believe in unfettered government action than I do unfettered capitalism.

The current system of research funding that we have works well not because it's government money, but because of the balance that's been struck between government and private funding. The government provides the broad foundation, but tries to avoid dictating the details. Private industry is free to build on the foundation provided by the government research, and benefits from having the infrastructure available before they need to start spending money.

Concluding arguments:

Dunford has not even tried to respond to any of the theoretical points I raised--the rent-seeking problem, for example, or government's interference with scientists and their research.

Here, I think part of the problem is simply that Sandefur and I are coming at this from different directions. He wants me to show that government is better than industry at addressing these issues; I want him to show that it's necessarily worse. Yes, for example, the government can interfere with scientists, but so can industry (again, Tobacco). The government can engage in rent-seeking behavior, but so can industry. In both cases, the potential problems strike me as being more the product of humans being humans than government-specific issues.