The Case against Government Science
The Economic Laws of Scientific
Research
Terence Kealey
St. Martin's, New York, 1997
382 pp,
paper ISBN 0-312-17306-7
Reviewed by Frank Forman
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:
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
departments even if they would rather let other businesses perform the
research 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 attempts 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).