
Does academic research cause economic growth? - malloc47
http://lemire.me/blog/archives/2013/02/26/does-academic-research-cause-economic-growth/
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beloch
For the studies mentioned, how do you decide what leads to economic growth and
what doesn't?

Take Lasers for example. The first Laser was made at Bell Labs, a commercial
research lab. It would not have been possible without the maser that came
before it in academia, or the work done by Einstein, also in academia. Lasers
have had an immense economic impact, but do we credit them to academic or
commercial research?

The answer is _both_.

Academic research is less frequently the final link in the long chain to
profits than commercial research is. This is only natural since commercial
research labs are motivated to invent products that will make money while
academics can afford to take a longer view.

Why else might nations that spend a lot on fundamental science benefit? A
skilled work-force. Scientists may publish how their experiments work in broad
strokes, but the nitty gritty details are often something that can only be
learned by working in a lab. If your country has a lot of labs, you have a
workforce that commercial enterprise can draw upon to bring products to market
based on research. A country can always lure immigrants, but having a home-
field advantage is more cost effective.

~~~
vacri
The author is misrepresenting his first quoted study: 'little or no _direct_
effect', my emphasis. He takes this to mean 'no effect', which is a lot of
screaming bullshit, as you say.

Another example of government research being very beneficial in an indirect
manner is in things like mental illness research. Little is done privately
outside of pharmaceutics, yet improved treatment of mental illness
significantly improves the economy - workers are more productive, more people
participate in the workforce (and subsequently fewer crimes), and of course
there are a ton of non-economic benefits.

 _Similarly, the US saw a massive economic growth from its early days all the
way to WWII_

The US is an _incredibly_ wealthy landscape, in terms of mineral wealth,
agricultural wealth, and temperate weather. Throw in a massive population
increase, successful wars of conquest, and a productive temperate climate, and
the author is pushing shit uphill with a pointed stick if he's trying to make
the argument against publicly-funded R&D this way.

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pseut
I like "number theory" as a favorite example of practical reasons to fund
seemingly impractical and useless academic research. A quote from Hardy (who I
think was a number theorist, but could be misremembering) that I like is:

"I have never done anything 'useful'. No discovery of mine has made, or is
likely to make, directly or indirectly, for good or ill, the least difference
to the amenity of the world... Judged by all practical standards, the value of
my mathematical life is nil; and outside mathematics it is trivial anyhow. I
have just one chance of escaping a verdict of complete triviality, that I may
be judged to have created something worth creating. And that I have created
something is undeniable: the question is about its value."

And I can't find a quote, but I think I remember reading that he viewed his
mathematical research as consistent with his pacifism, because nothing he
developed could be used for military purposes.

Of course, now that we have computers...

But, given the different channels that research can become commercially
viable, and given the long and uncertain time lags before new developments in
research show up in GDP, a statistical analysis based on aggregate data is
going to be absurdly difficult. And there are other reasons to expect that
private companies will underspend (from a societal-benefit point of view) on
research that has positive spillovers/externalities (really quickly: they're
only going to want to spend to the extent that they directly benefit. If there
are benefits that they can't profit from, as a society we'd want them to pay
for the research anyway, but they'd be crazy to). So funding as much research
as possible seems like a decent approach.

Incidentally, this is the first time I've seen someone claim that the US or
Canada governments have massive research expenditures. Does anyone have a link
for good numbers?

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jostmey
I do not believe that the U.S. government should fund translational research.
I firmly believe that private enterprise will be able to efficiently make
immediate use of any important scientific breakthroughs or discoveries.
Instead, I believe that the government should pore funding into basic science
research.

I completely disagree with the Author's implicit assertion that the U.S.
government should spend less money funding scientific research. Private
industry did not discover the importance of DNA, nor was it responsible for
determining the chemical structure of this nucleic acid. Many fundamental
discoveries would never have occurred in private industry simply because
private industry cannot afford to heavily fund basic science.

The value of basic science is not felt within a decade or two. It takes a
lifetime to appreciate.

~~~
jlcx
Some private organizations have very deep pockets, and it's not just industry,
as non-profits can also fund research. But if industry is biased toward
applied/translational research, perhaps it's not just a focus on short-term
profitability or a lack of funds for large projects. One interesting idea is
that patent laws are partially responsible for this bias, because they grant a
temporary monopoly on inventions/applications, but not on basic science.

~~~
djcapelis
> as non-profits can also fund research

They can, but the reality is very few are really prepared to do a good job of
it and even fewer have the resources to really fund the portfolios relevant to
them in the same way other institutions (gov, some large corps, etc) do.

The non-profit sector has a bunch of hard working folks with great goals and
there's a bunch of good uses for them to put money toward, but frankly I'm not
sure R&D is the one that makes the best impact. I think if a non-profit is
going to fund R&D they need to be really really smart, innovative and/or
creative to make their money get the type of impact they could get on spending
it in critical areas outside of R&D.

This changes depending on the field though. In some areas of the arts and
humanities, non-profit funding is a huge and valuable source of funding.

But in tech/sci/eng? Not so much.

------
cdi
It seems author goes from presupposition that economic growth is something
inherently good or better than pursuit and dissemination of knowledge.
Knowledge itself is valuable for society. If you don't agree, I don't want to
know you.

Private companies don't fund fundamental/basic research, unless we have semi-
monopolistic situation like with AT&T Bell Labs before breakup, and Microsoft
Research today. If you're in highly competitive market, you simply can't fund
things which don't improve your bottom line in foreseeable future.

Academic institutions provide highly trained employees for industry, without
funding of academic research, quality of teaching will decrease significantly.
Even if there is a problem in finding correlation between funding of public
research and economic growth (which I find highly dubious, it goes against
intuition and lots of examples) it definitely helps humanity as a whole,
because knowledge is not locked up in borders. Although people who go with
commercialization of an invention they've come up with while in academia, most
commonly do it in their home country.

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wisty
From what I've heard, those regressions aren't totally valid. It can simply be
that poor countries grow faster (leapfrogging on the research of rich
countries), but don't fund a lot of public R&D.

Once the regression hits a dead end (as it doesn't distinguish the causal
factors), we jump straight to anecdotes - the Industrial Revolution, and the
USA. Both of these are probably outliers.

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simonster
It's possible that academic research causes economic growth, but that it
doesn't do so on a country by country basis. A significant proportion of
people trained in American research universities are not Americans. Many of
these people probably return to their home country where they use their
knowledge in industry. Furthermore, anyone who picks up your scientific paper
can go ahead and implement what's in it regardless of where they are.

It may be that the we should fund scientific research because it benefits
everyone rather than because it gives us an advantage over other nations.

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javert
It's very important to remember that government research money is taken from
the citizens, who otherwise would allocate it in accordance with their
preferences.

Taxes in the US are actually very high, plus the government takes a lot of
money via inflation of the money supply.

It seems likely to me that government-funded research is a "local maximum."

If we were to massively shift the backbone of the economy from consumption to
production (i.e., letting people and companies keep more of their money), we
would certainly see much more private research.

In fact, we could potentially have a "research economy," if the intellectual
property issues were sorted out. In this system, research institutes would
take over a lot of functionality from academic departments (including training
new researchers). Such an institute my employ tenured academicians who make
lower, fixed wages (as with current academicians) but are free to do basic
research, plus applied people try to market the results and are paid
competitively (as with current industry people).

There is also a high level of regulatory capture in most industries that
punishes any attempt to transition research results into a marketable product.

~~~
twmb
Taxes are not very high in the US. We have about 26.9% total tax revenue
(which I will abbreviate TTR. TTR is measured as a percentage of GDP)[0][1]. I
hate seeing this statement thrown out as if it is fact. We have very low taxes
comparatively, especially given our status as a highly developed and
competitive economy.

We are #7 on the Global Competitive Index, behind Switzerland (29.4% TTR),
Singapore (14.2% TTR), Finland (43.6% TTR), Sweden (47.9% TTR), Netherlands
(39.8% TTR), and Germany (40.6% TTR) [3].

Sweden, the Netherlands, Finland and other countries that are close below the
US have socialist governments. As much as hip, intellectual go-getters who
read Ayn Rand would love there to be no government, it's simply not feasible.
It may be great in theory, but it's not great in practice. However, I do not
know much about the Ayn Rand's entire philosophy, so I wont comment on it
further. I do know that most people who blindly latch on to some of her ideas
don't truly understand her philosophy.

Half of that 'regulatory capture' you refer to is because of private interests
lobbying for government restrictions. The will of the free market may drive
such anti-competitive practices by private interests out of business
eventually, but humans do not operate on the long term.

Regardless, the point of this post is that even if you thought you opened up
your eyes before to the realities of the world and exactly how it should work,
I invite you to take a step back every now and then and reevaluate your
philosophies.

[0][http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenu...](http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP)
[1][http://www.taxpolicycenter.org/briefing-
book/background/numb...](http://www.taxpolicycenter.org/briefing-
book/background/numbers/international.cfm)
[3][http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport...](http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf)

~~~
seanmcdirmid
Those who think taxes are high in the states have simply never lived outside
of the states.

~~~
javert
I'm so sick of online American-bashing, which is a fad. Please stop. Where
someone has lived has nothing to do with it whatsoever.

27% of the entire economy shifted entirely to government consumption? That's a
humongous amount of the economy. It's almost 1/3.

~~~
seanmcdirmid
I'm not bashing America, I'm even American. I just get so tired of those of us
who complain about paying so much taxes and so much for gas for our SUVs and
so much rent for our McMansions. And here I am living in a country where I
can't even buy a car, live in a small apartment, and pay 40% income tax, and a
pair of jeans sets me back 800RMB. And you know what...it's not the end of the
world, it works out.

And...our government consumes less than 1/3rd of the GDP when social spending
in other developed countries is at 1/2 or more! Libertarians would have us be
like Somalia.

~~~
javert
> Libertarians would have us be like Somalia.

It's important to realize that that's not actually true. I think we should
have a small government that protects citizens from force and violence. That
still includes all the core functions of government (e.g. police, courts,
military, I don't care if you throw in basics like roads).

That is a world apart from Somalia, or anarchism. It's actually just a return
to earlier ideas of American government that served us well at the time.

To be clear, I'm not a libertarian, for reasons that aren't relevant here.

~~~
seanmcdirmid
> I think we should have a small government that protects citizens from force
> and violence.

How about protecting us from peasant revolts when our social services suck so
much that people lose hope and take advantage of their second amendment
rights? Or how about just avoiding the revolts in the first place by having a
decent moral government that evens the playing field between rich and poor?

> It's actually just a return to earlier ideas of American government that
> served us well at the time.

This is BS rosy-tinted glasses revisionism that has no grounding in real
history. Like how everything was better in the 50s if you just ignored
segregation and the 90% tax rate we had on the rich. Did isolationalism serve
us well before WWI and II? Did our hands off approach prevent the dishonest
greed and speculation that led to the depression? The 1800s weren't that much
better, just look at all the crashes and war that went on then.

> To be clear, I'm not a libertarian, for reasons that aren't relevant here.

Good, because libertarians tend to be bad historians and have a poor
understanding of human nature.

~~~
javert
I think your viewpoints are completely inane.

For example, our current economic model is completely unsustainable. It's not
going to prevent the "peasant revolts" you talk about. It's going to guarantee
them. Yet you seem to be calling for more of the same.

I wasn't talking about the 1950s, but pre-WWI. And, yes, isolationism did
serve us well pre-WWI, though I am not an advocate of isolationism at all, as
a principle.

Now, to get to the interesting bit.

> having a decent moral government that evens the playing field between rich
> and poor

Pray, tell me where you have found a rational, reason-based morality that
makes you so certain that the rich need to be punished and sacrificed to the
poor? Where have you found a rational, reason-based economic philosophy that
can prove that doing so will be good for the economy, instead of furthering
its destruction?

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dreamdu5t
Economic growth encompasses _every single thing in the world_ and has no
single defining factor as the "cause."

Yes, academic research causes economic growth. So does eating and sleeping.
Everything on the planet affects trade.

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tehwalrus
I can't agree with this article. It is very thoughtful, and looks very
thoroughly to verify (or refute) a very specific thesis. However, it is
manifestly causal-ly false to assert that pure scientific advances do not
affect the real economy. Where would we be, economically, without silicon
chips and laser beams? In a _very different place_.

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jostmey
I looked up the Author's published manuscripts to see what his background is
in research. It appears that his expertise lies outside that of physics,
chemistry, or biology but is instead in algorithm design(??) and data
analysis(??).

I wonder if the programming community relies on academia as much as for
example the medical industry or the aeronautical industry.

~~~
jamesjporter
I think the programming industry is interesting because my impression (I have
no idea if this is backed up by data) is that there's much more mixing between
academia and the private sector (i.e. people move from academic to industry
jobs and vice-versa more frequently/easily) than in other fields (natural
science, social sciences). I wonder if this increases the productivity of
either.

~~~
jostmey
I am in the Natural sciences. I see that people are trained in esoteric
technologies or procedures that may only be useful to the immediate scientific
question at hand. This would seem to make it hard for these individuals to
transition to industry, unless their specific expertise is required.

The computer programming community has the advantage that its technologies and
best practices are ubiquitous throughout the industry and academia (??). This
may facilitate an easy transition from industry to academia and vice-versa.

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capkutay
Remember that Google began with academic research in mining data from the web.
Google created billions of dollars of value and thousands of jobs around the
globe. That certainly contributed to economic growth.

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lifeisstillgood
This is weirdly the exception to the HN rule - if a title is a question the
answer is no. In this case it's a full-on, dumb-as-shit hell yes. Describe the
world that did not have the useless work of that weird academic Isaac Newton -
I mean he never even taught students except three times. Talk about failing to
contribute.

I must stop winding up my sarcasm chip - just unbelievably stupid article.

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olalonde
Just a minor nitpick but I believe it should be "disclosure" instead of
"disclaimer" at the end of the article. Interesting read nonetheless.

