| In the United States, Congress approved, last | | | | and foundations.Moreover, the conduits of |
| month, increases in the 2003 budgets of both | | | | government involvement in research, the |
| the National Institutes of Health and | | | | universities, are only weakly correlated with |
| National Science Foundation. America is not | | | | growing prosperity. As Alison Wolf, professor |
| alone in - vainly - trying to compensate for | | | | of education at the University of London |
| imploding capital markets and risk-averse | | | | elucidates in her seminal tome "Does |
| financiers.In 1999, chancellor Gordon Brown | | | | Education Matter? Myths about Education and |
| inaugurated a $1.6 billion program of | | | | Economic Growth", published last year, extra |
| "upgrading British science" and | | | | years of schooling and wider access to |
| commercializing its products. This was on top | | | | university do not necessarily translate to |
| of $1 billion invested between 1998-2002. The | | | | enhanced growth (though technological |
| budgets of the Medical Research Council and | | | | innovation clearly does).Terence Kealey, a |
| the Biotechnology and Biological Sciences | | | | clinical biochemist, vice-chancellor of the |
| Research Council were quadrupled | | | | University of Buckingham in England and |
| overnight.The University Challenge Fund was | | | | author of "The Economic Laws of Scientific |
| set to provide $100 million in seed money to | | | | Research", is one of a growing band of |
| cover costs related to the hiring of | | | | scholars who dispute the intuitive linkage |
| managerial skills, securing intellectual | | | | between state-propped science and economic |
| property, constructing a prototype or | | | | progress. In an interview published last week |
| preparing a business plan. Another $30 | | | | by Scientific American, he recounted how he |
| million went to start-up funding of | | | | discovered that:"Of all the lead industrial |
| high-tech, high-risk companies in the | | | | countries, Japan - the country investing |
| UK.According to the United Nations | | | | least in science - was growing fastest. |
| Development Programme (UNDP), the top 29 | | | | Japanese science grew spectacularly under |
| industrialized nations invest in R&D more | | | | laissez-faire. Its science was actually purer |
| than $600 billion a year. The bulk of this | | | | than that of the U.K. or the U.S. The |
| capital is provided by the private sector. In | | | | countries with the next least investment were |
| the United Kingdom, for instance, government | | | | France and Germany, and were growing next |
| funds are dwarfed by private financing, | | | | fastest. And the countries with the maximum |
| according to the British Venture Capital | | | | investment were the U.S., Canada and U.K., |
| Association. More than $80 billion have been | | | | all of which were doing very badly at the |
| ploughed into 23,000 companies since 1983, | | | | time."The Economist concurs: "it is hard for |
| about half of them in the hi-tech sector. | | | | governments to pick winners in technology." |
| Three million people are employed in these | | | | Innovation and science sprout in - or migrate |
| firms. Investments surged by 36 percent in | | | | to - locations with tough laws regarding |
| 2001 to $18 billion.But this British | | | | intellectual property rights, a functioning |
| exuberance is a global exception.Even the - | | | | financial system, a culture of "thinking |
| white hot - life sciences field suffered an | | | | outside the box" and a tradition of |
| 11 percent drop in venture capital | | | | excellence.Government can only remove |
| investments last year, reports the MoneyTree | | | | obstacles - especially red tape and trade |
| Survey. According to the Ernst & Young 2002 | | | | tariffs - and nudge things in the right |
| Alberta Technology Report released on | | | | direction by investing in infrastructure and |
| Wednesday, the Canadian hi-tech sector is | | | | institutions. Tax incentives are essential |
| languishing with less than $3 billion | | | | initially. But if the authorities meddle, |
| invested in 2002 in seed capital - this | | | | they are bound to ruin science and be rued by |
| despite generous matching funds and tax | | | | scientists.Still, all forms of science |
| credits proffered by many of the provinces as | | | | funding - both public and private - are |
| well as the federal government.In Israel, | | | | lacking.State largesse is ideologically |
| venture capital plunged to $600 million last | | | | constrained, oft-misallocated, inefficient |
| year - one fifth its level in 2000. Aware of | | | | and erratic. In the United States, mega |
| this cataclysmic reversal in investor | | | | projects, such as the Superconducting Super |
| sentiment, the Israeli government set up 24 | | | | Collider, with billions already sunk in, have |
| hi-tech incubators. But these are able merely | | | | been abruptly discontinued as were numerous |
| to partly cater to the pecuniary needs of | | | | other defense-related schemes. Additionally, |
| less than 20 percent of the projects | | | | some knowledge gleaned in government-funded |
| submitted.As governments pick up the | | | | research is barred from the public domain.But |
| monumental slack created by the withdrawal of | | | | industrial money can be worse. It comes with |
| private funding, they attempt to rationalize | | | | strings attached. The commercially |
| and economize.The New Jersey Commission of | | | | detrimental results of drug studies have been |
| Health Science Education and Training | | | | suppressed by corporate donors on more than |
| recently proposed to merge the state's three | | | | one occasion, for instance. Commercial |
| public research universities. Soaring federal | | | | entities are unlikely to support basic |
| and state budget deficits are likely to exert | | | | research as a public good, ultimately made |
| added pressure on the already strained | | | | available to their competitors as a |
| relationship between academe and state - | | | | "spillover benefit". This understandable |
| especially with regards to research | | | | reluctance stifles innovation.There is no |
| priorities and the allocation of ever-scarcer | | | | lack of suggestions on how to square this |
| resources.This friction is inevitable because | | | | circle.Quoted in the Philadelphia Business |
| the interaction between technology and | | | | Journal, Donald Drakeman, CEO of the |
| science is complex and ill-understood. Some | | | | Princeton biotech company Medarex, proposed |
| technological advances spawn new scientific | | | | last month to encourage pharmaceutical |
| fields - the steel industry gave birth to | | | | companies to shed technologies they have |
| metallurgy, computers to computer science and | | | | chosen to shelve: "Just like you see little |
| the transistor to solid state physics. The | | | | companies coming out of the research being |
| discoveries of science also lead, though | | | | conducted at Harvard and MIT in Massachusetts |
| usually circuitously, to technological | | | | and Stanford and Berkley in California, we |
| breakthroughs - consider the examples of | | | | could do it out of Johnson & Johnson and |
| semiconductors and biotechnology.Thus, it is | | | | Merck."This would be the corporate equivalent |
| safe to generalize and say that the | | | | of the Bayh-Dole Act of 1980. The statute |
| technology sector is only the more visible | | | | made both academic institutions and |
| and alluring tip of the drabber iceberg of | | | | researchers the owners of inventions or |
| research and development. The military, | | | | discoveries financed by government agencies. |
| universities, institutes and industry all | | | | This unleashed a wave of unprecedented |
| over the world plough hundreds of billions | | | | self-financing entrepreneurship.In the two |
| annually into both basic and applied studies. | | | | decades that followed, the number of patents |
| But governments are the most important | | | | registered to universities increased tenfold |
| sponsors of pure scientific pursuits by a | | | | and they spun off more than 2200 firms to |
| long shot.Science is widely perceived as a | | | | commercialize the fruits of research. In the |
| public good - its benefits are shared. | | | | process, they generated $40 billion in gross |
| Rational individuals would do well to sit | | | | national product and created 260,000 |
| back and copy the outcomes of research - | | | | jobs.None of this was government financed - |
| rather than produce widely replicated | | | | though, according to The Economist's |
| discoveries themselves. The government has to | | | | Technology Quarterly, $1 in research usually |
| step in to provide them with incentives to | | | | requires up to $10,000 in capital to get to |
| innovate.Thus, in the minds of most laymen | | | | market. This suggests a clear and mutually |
| and many economists, science is associated | | | | profitable division of labor - governments |
| exclusively with publicly-funded universities | | | | should picks up the tab for basic research, |
| and the defense establishment. Inventions | | | | private capital should do the rest, |
| such as the jet aircraft and the Internet are | | | | stimulated by the transfer of intellectual |
| often touted as examples of the civilian | | | | property from state to entrepreneurs.But this |
| benefits of publicly funded military | | | | raises a host of contentious issues.Such a |
| research. The pharmaceutical, biomedical, | | | | scheme may condition industry to depend on |
| information technology and space industries, | | | | the state for advances in pure science, as a |
| for instance - though largely private - rely | | | | kind of hidden subsidy. Research priorities |
| heavily on the fruits of nonrivalrous (i.e. | | | | are bound to be politicized and lead to |
| public domain) science sponsored by the | | | | massive misallocation of scarce economic |
| state.The majority of 501 corporations | | | | resources through pork barrel politics and |
| surveyed by the Department of Finance and | | | | the imposition of "national goals". NASA, |
| Revenue Canada in 1995-6 reported that | | | | with its "let's put a man on the moon (before |
| government funding improved their internal | | | | the Soviets do)" and the inane International |
| cash flow - an important consideration in the | | | | Space Station is a sad manifestation of such |
| decision to undertake research and | | | | dangers.Science is the only public good that |
| development. Most beneficiaries claimed the | | | | is produced by individuals rather than |
| tax incentives for seven years and recorded | | | | collectives. This inner conflict is difficult |
| employment growth.In the absence of efficient | | | | to resolve. On the one hand, why should the |
| capital markets and adventuresome | | | | public purse enrich entrepreneurs? On the |
| capitalists, some developing countries have | | | | other hand, profit-driven investors seek |
| taken this propensity to extremes. In the | | | | temporary monopolies in the form of |
| Philippines, close to 100 percent of all R&D | | | | intellectual property rights. Why would they |
| is government-financed. The meltdown of | | | | share this cornucopia with others, as pure |
| foreign direct investment flows - they | | | | scientists are compelled to do?The |
| declined by nearly three fifths since 2000 - | | | | partnership between basic research and |
| only rendered state involvement more | | | | applied science has always been an uneasy |
| indispensable.But this is not a universal | | | | one. It has grown more so as monetary returns |
| trend. South Korea, for instance, effected a | | | | on scientific insight have soared and as |
| successful transition to private venture | | | | capital available for commercialization |
| capital which now - even after the Asian | | | | multiplied. The future of science itself is |
| turmoil of 1997 and the global downturn of | | | | at stake.Were governments to exit the field, |
| 2001 - amounts to four fifths of all spending | | | | basic research would likely crumble. Were |
| on R&D.Thus, supporting ubiquitous government | | | | they to micromanage it - applied science and |
| entanglement in science is overdoing it. Most | | | | entrepreneurship would suffer. It is a fine |
| applied R&D is still conducted by privately | | | | balancing act and, judging by the state of |
| owned industrial outfits. Even "pure" science | | | | both universities and startups, a precarious |
| - unadulterated by greed and commerce - is | | | | one as well. |
| sometimes bankrolled by private endowments | | | | |