WEBVTT

NOTE Science and the Free Market: How Government Distorts Scientific Research Through Public Funding

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Well, by way of introduction, as he said, my name is Norman Horne from the Department of Chemical Engineering at the University of Texas at Austin.

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I'll do a little shameless self-promotion. One of my projects is that I edit the website libertarianchristians.com, so if you'd like to check that out, feel free.

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Again, my topic is science and the free market. We're going to talk a little bit about government distortion of scientific research through public funding.

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Well, generally speaking, you write these presentations, you find out you're going to go way too long.

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So what I'm going to do is I'm going to front load and tell you, I think, the main message that I want to get across first.

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Basically, you know, everybody knows that science makes our lives better.

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Through research and industry, we improve our well-being.

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And so this, to me, tells me something very important.

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Science is basically the good guy's way to get back at the government.

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Science shows again and again that the government is basically unnecessary for either our survival or our productivity.

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And I think that's why the government endeavors so much to control science so badly.

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Good science is their enemy, and so they have to dupe citizens into thinking that they need to support science

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so that we can be productive and prosperous.

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Okay, so if you don't get anything else out of this,

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remember that.

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Okay, so first off, we're gonna talk a little bit about

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why does the government say

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that they need to be involved in science?

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Well, we kinda just said they have to dupe us

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into thinking that they're necessary

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in order to make us productive.

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In other words, they wanna tell us

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that there's insufficient incentives

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to do scientific research from the market

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because they want profits, not progress.

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And so the basic research,

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The most basic stuff in chemistry and physics and biology is just, oh, well the market's

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not going to provide for that, so that constitutes to them a market failure to provide for the

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public and thus the economy is going to be operating at a sub-optimal level, so they

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got to get in there, they got to do the funding and get it done.

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Well what's so wrong with this?

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Well, the nature of the state-sponsored science that we see all throughout the economy itself

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is problematic at best, and I think it's outright deceptive at worst, and we'll talk a little

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about how that happens and there's basically the problem of socialism and then there's

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other problems that kind of enter into the equation. After that what I'm going to do

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is I'm going to talk about a free market model for scientific research and kind of explain

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why their argument that there are no incentives and that the market's not going to do it

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is just flat wrong. And so we'll talk a little bit about how science actually advances and

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then give you a little bit of a model for how scientific research progresses. Now everybody

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Hayek here is pretty familiar with Mises and Rothbard and Hayek, and so you know what I'm

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going to say about socialism, that there are no rational means of economic calculation.

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That's the calculation problem.

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And Hayek had talked about how knowledge is distributed in a society.

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It's not centralized into the state apparatus.

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And so you could expect that they're not going to be able to make very good decisions about

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such things.

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Now, mind you, I'm not saying that what's going to happen is that all science that comes

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is flawed and wrong in terms of correctness. There will be correct science that will come,

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but there will be distortions. When we apply these critiques of socialism to science itself,

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we can come up with a few conclusions. First, there are no rational means that the government

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has to actually figure out what research needs to be done. They just don't have the capacity

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to make that decision. Now they can make guesses, but they're probably, they might be right

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a few times, but they're not going to be able to be efficient about it. And there's also

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no rational means to figure out how much resources they need to commit to any research program.

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So at best, we have to say that the central planners are going to be taking market signals,

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which begs the question, why are they necessary? Or at worst, they're just stabbing in the

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air. Okay, so the fundamental problem that leads from this is that the government is

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is effectively the controller of what is researched. So, this is a big abridgment of academic freedom,

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which if you're familiar with the concept of academic freedom, it just says that we

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in academia need to basically be free from outside influence in order to pursue knowledge

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to the best of our ability. Now, that's not entirely accurate. They're never going to

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be free from influence. We'll talk about that later. But basically, the power of the purse

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The course that the government holds over scientists has a great influence on how things are going to work.

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And it's naive to just assume that the government is going to be a neutral third party to the situation.

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I mean, it isn't like they're neutral in anything else, right?

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Well, another thing that's going to happen is that in government-sponsored science, you're just going to get poorly conducted research.

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This is just a natural consequence of the type of decision-making that they do.

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It takes money away from the people who can make right decisions and put it into the hands of people who make poor decisions.

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So, for a big example, this is NASA.

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We all know that, yes, there are some benefits that we've received from that, but they're a massive, colossal waste, and have been since the beginning.

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Well, and this also constitutes an artificial increase in demand for scientific research, and this is going to drive up the prices for it.

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And this is why there's a ton of money in what they're doing.

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I think also that you end up with some practical property rights issues here, and they get exacerbated a whole lot when you just start throwing government money or actually public money into it.

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You know, so who owns it? It's kind of strange. I mean, I don't really want to get into intellectual property issues per se, although, like I say here, the intellectual property laws exacerbate all these problems.

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But really, who profits from the research? Who gets to? The public? The federal government? Society? The world? Who knows?

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We just don't really know because there's no private property involved.

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Okay, and I think most of all, and this goes back to who controls the research, you also get a lot of agenda-based research.

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Science is used initially as a basis for fear and then for control.

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The example of this is environmental science. In the 80s we were all worried about global cooling.

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Now we're worried about global warming. And under the precincts of science, this has now been changed to climate change.

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And nobody really knows what's true and what's not. It's a big mess.

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This is not going to be solved until the government gets out of it.

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In fact, I just recently published a paper in a peer-reviewed journal on what I presented last year at this conference

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on the problem of transportation pollution and how that cannot be solved when the government is doing all its work,

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trying to fund all these projects and trying to get everything done like that. It's not going to work.

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And furthermore, you have this really interesting phenomena of the government sponsoring research

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just to find out how necessary they are to sponsor research. This happens continually,

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The reality of scientific advancement. How does science actually proceed along the free market?

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If you look through history, what you realize is that science moves forward when individuals are allowed to exercise their minds in freedom.

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Perfect examples of this are people like Copernicus and Galileo and Newton.

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Can you imagine what the change would have been like if Copernicus and Galileo had been

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sponsored by the state church and the state government at the time?

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Do you think they would have been able to stand against those people who were basically

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oppressing them for their ideas?

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I doubt it.

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If they were funded by the government, I mean, you know that that is another conflict of

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In the Industrial Revolution, how much state-sponsored science was there?

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As far as I can tell, and I haven't seen a lot of work on this, but there was very little.

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In fact, I would say it's pretty close to zero.

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And yet, we're supposed to believe that the only way we're going to have progress is through

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government funding.

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Okay, that seems a little dubious.

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In the 20th century, we have a whole lot of other instances of ways that science has progressed

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without any interference from government whatsoever.

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Albert Einstein published his four major papers

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that literally changed physics itself

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while he was working at a patent office.

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He did it on the side.

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You know, that's how science advances.

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It's by people who are interested in a particular subject,

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exercising their mind.

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And in my field, I work in polymer science

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in the Department of Chemical Engineering.

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The bulk of the early research and development

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in Polymer Science occurred via private industry.

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Without people like Wallace Carruthers at DuPont

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and Dow Chemical and whatnot, we would not have polymers

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and you wouldn't be wearing them,

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which everybody uses polymers every day,

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and even if they don't know it.

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And so we find even now that in polymer science,

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the bulk of innovation comes from private industry.

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If you just take a look at the funding statistics,

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This is not my graph. I got it from Boudos and McQuade in one of their articles from 2006.

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You see that really what the industry still funds basic research at an alarming rate.

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And in fact, it's only been in more recent years when the government has just kind of,

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that big black mark on there, shows the government funding.

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And you see, wow, it's really nearly doubled in the last few years alone.

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and it actually gives you kind of an indication that this might be a bubble.

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Oh wow, novel thought there.

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And a lot of that goes actually into medical science industry

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and you've seen how the government is continually taking control over the medical industry over time.

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Okay, so let's talk a little bit about how science proceeds on the free market

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and there's two ways this is going to happen.

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It's going to happen through industry and it's going to happen in academia

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and I'm kind of ignoring just people doing it in the comfort of their own home

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Okay, but how does research proceed in industry? Well, scientific research creates more roundabout

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production. And so what we could say is that the inevitable outcome of more roundabout

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production being demanded is going to be a demand for more basic research. Any production

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process that is science-based is based on sound scientific theory. And thus, if we expect

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to maintain roundabout production, we have to invest in research, so the free market

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will eventually demand research, it's gonna happen.

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Now there's also more benefit to this than just meets the eye, there's a so-called first

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mover benefit, those who are the first to achieve a certain scientific process will

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benefit first from this and then they actually have the capacity then to market this, they

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They have the first reinvestable profits. They can then take their research and, provided

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that they can show people that it's useful, they can even use their science to make even

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more money. So there's research, there are incentives to doing research and marketing

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it that the government seems to just ignore in their analysis of why they need to be funding

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it. Now, research can be kept internal, we could call that a trade secret, but there

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There are advantages to being more open, and as I already mentioned a little bit, let's

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talk a little bit about that.

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Advantages to openness.

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Scientific contributions are an enhancement to a firm's public image.

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Three minutes?

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Okay, great.

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All right, we'll have to jump in a little faster.

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So they're just like charitable donations, and it is going to attract the goodwill of

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consumers and scientists, and it will attract top talent for their company.

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Because if a firm is open and people see that, if students see that, they're going to come

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and work for them.

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Okay, there also will be new business opportunities because implementation of research is a different

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thing than the research itself.

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And they may have the ability to implement research that goes beyond that which the research

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alone has.

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So there are things like that.

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There's also a very interesting phenomenon that we've seen in research consortium development,

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and a good example of this is the Semitech Corporation in Texas, where we have 14 corporations,

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The biggest semiconductor companies in the world are joining together voluntarily and doing research together for their mutual benefit.

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Okay, jumping quickly to academia, and we'll summarize after this.

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There are a lot of different funding sources that can go into research.

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I'm going to talk specifically about the final two that you see on this slide, business donations and contracted projects.

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What are the business incentives to donating to science?

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Well, first of all, there's, again, charity and public image.

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That is almost like direct advertising to them.

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There could also be tax breaks for university donations,

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and so that could actually be a good thing

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that government could do, get rid of taxes

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on university donations.

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And then also it's gonna attract talented students to them

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because that's, and they do this all the time already.

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And also I think a bigger idea was the idea

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of just contracted projects.

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Researchers are then free to negotiate terms

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on contracted projects.

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So for instance, Richard could come to me and say, hey, I got this problem and I need you to solve it, and so you can pay me to solve that research project, and then you get the benefits of the research, I get the benefits of profits retained.

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And so that's an enhancement of the division of labor. And what's really cool about this is that you could say that this rewards success and not publications.

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A lot of you may hear the term publisher perish. That's sort of the mantra in academia a lot. And this rewards success, not publications.

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I guess I'm going to skip this. Well, I'll just briefly touch on this slide.

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Ultimately, what I'm trying to get across here is that when we go with this free market model,

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where I'm only receiving donations that are private or that I'm doing research for other companies

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in order to produce something of value for them,

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and then I retain the profits to do my own personally interested research,

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Research, I'm in control of the research program and not the government. Everything

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done is voluntary. So that's a big thing for me. And so I would like to just really emphasize

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that, that I control the research program, not the government. And so we get out of this

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idea that the government is the ultimate in control.

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So here's the conclusions. Publicly funded research is socialistic in nature, should

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be eliminated, rah rah. The free market is fully capable of supporting research. And

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And then I've just proposed to you a model for scientific research in industry and academia.

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And so finally I just want you to remember again why government wants to control science.

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If they control it, they have a means of controlling everyone, because science is very integral

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to our society.

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And with that I will leave it up to questions, so thank you.