- The Washington Times - Tuesday, March 23, 2010

When it comes to our economy, where are we going, and why are we in this handbasket? That’s a question worth answering before Congress reauthorizes legislation to boost government investment in science and technology and, in turn, manufacturing.

Indeed, we want to make stuff in the United States and create jobs. But when we’re mired in recession, what really is the national government’s role in “manufacturing” a more robust manufacturing economy?

First, we must avoid fostering a “declaration of dependence” on federal dollars on the part of America’s most crucial frontier industries. Second, we must avoid having government steer while the market rows. Worthy knowledge and ideas are too widely dispersed for officials in Washington to know the right direction for American industries.

The need to deregulate this economy shouts at us: It’s on fire and Rollerblading naked through the Capitol, but Congress doesn’t seem to see it. Basically, you don’t need to tell the grass to grow; you just take the rock off of it.

One big rock on a growing American economy is politically driven research and development (R&D).

Federal science fosters too many conflicts: over public access to data; over the merits of basic versus applied research, government versus industry science; over assignment of intellectual property; and more. For another, politics has trouble balancing trade-offs: When to subsidize nanotechnology? Or biotech? Or fuel cells and the hydrogen economy? Or robotics? Or bioengineered gills so we can live in the oceans? Congress can’t fund them all.

Meanwhile, the science not created by the political reassignment of taxpayer resources remains unseen. It wasn’t the power of tax and dispense that made the United States leapfrog the world’s economies in 100 years.

So a warning: Subsidies can mean “subprime” technology policy for many reasons:

(1) Government “steering” can create artificial tech booms.

(2) Government funding comes with regulatory strings attached.

(3) Politicians can’t choose projects rationally.

(4) The latest conceit is the Federal Communications Commission’s new “National Broadband Plan,” a form of “cap and trade” for telecom.

(5) Taxpayer funding sometimes wrongly fosters a view of technology as a zero-sum global race; moreover, subsidies don’t alter the ratio of gross domestic product spent on R&D, anyway.

(6) Taxpayer funding of “science education” can create a glut of the wrong kind of technology graduates.

(7) Taxpayer funding creates pressures for poor intellectual property outcomes like compulsory licensing.

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