should government fund science today. On the curious task. I speak with Terence Kealey. Welcome to the curious task from the Institute for Liberal Studies where we explore economics, politics philosophy and other ideas from a classical liberal perspective. I'm Alexa Rigoni your host and today I'm speaking with Terence Kealey.
Terrence is a professor of clinical biochemistry at the University of Buckingham in the United Kingdom, where he served as Vice chancellor until 2014 as a clinical biochemist. Terrence study human experimental dermatology. He published around 45 original peer reviewed papers and around 35 peer reviewed scientific reviews. His work attracted funding from government charities and business.
In 1996 he published his first book, the Economic laws of scientific research where he made his case for whether governments need to fund science, that's the case we'll be exploring today. His second book sex science and profits. Looked at whether science is a public good Terrence welcome to the curious task. It's lovely to be here. It's lovely to have you on So Terrence we base each episode on a question and go wherever the answers take us.
Our question today is should government fund science and this is a question that has different layers of course uh you know, layers about the should and would of public policy and so on and so forth. But underneath there is some history and facts I think worth exploring. You do this in your writing and lectures you do with this topic. So I'd like to explore that a little bit. Now Let's start with a fun one.
So we've all been told that government needs to fund science for science itself to progress. Let's just start with this sort of point. I'm just going to throw that idea over to you even before we get to public policy and the economy and market corrections. Just this idea of science progressing and the idea that government needs to be involved. What do you say to that?
Well, you only have to look at the history of Britain during the Industrial Revolution, as you know perfectly well, Britain led the world through the Industrial revolution, France and Germany were way behind. And the thing about Britain in the Industrial Revolution is the government did not fund science is one of the big, extraordinary facts of history that's often forgotten.
And yet we had Charles Darwin, we had Lord Kelvin, we had all the great chemists, we had Michael Faraday, I mean we had biology, we had physics, we had math, and we had chemistry in Britain all funded by the private sector through the Industrial Revolution. And going right back to the Royal Society and the philosophical transactions.
There is a very good argument to be said that from 16 60 when the Royal society was founded right up until, say, the 19 sixties, when America finally overtook Britain 300 year period Britain completely under laissez faire was the most important scientific country in the world. And now pivoting over to the other side of the conversation, which is the idea that the government or public entities need to fund science for technology and the economy to grow. So it's a little bit of a separate thing.
Not science for the sake of science, but this idea of economic growth and technology. Again, if we trace some history there, it seems that we find that again this is not the case, right? Absolutely not the case.
Um And in the paper that you and I both know about which will eventually be published, I point out most interestingly that the five most damaging surveys that show that the government funding of science not only doesn't help technological growth, not only doesn't help economic growth but possibly even holds them back. Were all performed by government departments. And that's very important because the government has an inherent bias towards justifying what it does.
So if governments particularly the U. S. Government, which is the great funder of course the science at the moment, if the U. S. Government's own agencies find that the government funding of science is counterproductive and it publishes those findings, we've overcome the problem of confirmation. But I mean, if you or I were to go around saying government shouldn't fund size will be dismissed as mad libertarians.
But when the Congressional Budget office or the Oecd or the Defense Department published papers saying, or the Bureau of Labor Statistics published papers saying, you know, we're shocked by this. We don't want to say this, but truth compels us to tell you that every survey has shown that government funding of science holds economies and total factor productivity back then, then there's something very important that I actually think it's a great way to connect that into another question.
I want to get to specifically on the american side of the equation with some of the history around the public funding of Science. So you talked about this in one of the lectures, you did it for the I L. S two and I like the way you sort of framed it that this this idea when the USSR launched Sputnik was sort of this turning point in public mentality.
There was sort of, if you will, for the sake of our conversation that, let's say, the pre Sputnik era in the United States and North american Western countries and the post Sputnik era of the public and government mentality around funding Science, could you get a little bit into that? Very, very enjoyable the way you trace it. But the thing is, you're absolutely right. You can say pre and post Sputnik, although technically it would be more accurate.
But we're going to go emotional here, technically be more accurate to talk about pre and post 1915 National Science Foundation, but actually, Sputnik is only seven years later, no, Sputnik caused what they call a moral panic in the West. Um people like Lyndon johnson wrote wrote quite openly about the sheer horror of thinking that once put Nick was going around that America would be destroyed by nuclear missiles from the soviet union.
And the impact of Sputnik on the west was quite disproportionate. We know perfectly well. They knew at the time that Russia was actually quite a poor country. Russia was like one of those crabs that's not particularly distinguished, that has this enormous claw, but basically just holds nothing back and it's something to do with sexual reproduction anyway, nothing to do with natural selection. The soviet union was like that is pouring all its money in defense and therefore into space.
But the idea this was going to speak to economic growth is of course the nonsense, we can say that in retrospect, but actually there was sensible people pointed out at the time that the soviet union was going mad with this nonsense. Nonetheless, it hugely affected America. So, for example, our per or DARPA, it was originally harper and then becomes darker and then it goes back to opera again, that was founded in 1958. And that's not a coincidence. Nasa was founded in 1958.
The National Defense Act was 1958. This was an enormous splurge recovered money in which the american government said, you know, the soviet union understand economic growth. Amazingly, we americans do not, we must now copy the soviet union and much good that did America economically quick footnote on that before we jump further into that american story, you've been sending an electric did. And I thought this was very very good point to that.
You know, although this was a symbol of something too many people Sputnik launching into space. Like you said, it was an incredible waste of money. I think you said because at the end of the day, if they were dealing with their own economic problems being a command economy and you know, on the one hand, you have people that perhaps can't even get a job or figure out what to do in the economic sphere. And a lot of people don't even have food.
And on the other hand, you're sending satellites into space. Although some people in both the USSR and the U. S. Did look at this as some sort of symbol at the end of the day, it could also be looked at when you get out of those textbooks, if you will, a symbol of waste. Similar total waste. And there's a famous poem, I don't want to get into the whole black lives Matter stuff because that's way outside my confidence.
But there is that famous poem and Whitey's on the moon in which a black poet goes verse after verse after verse of terrible things happening to black people and poor people in America. But the last line of every verse but Whitey's on the moon, a complete waste of money. Right? And I think it's also good that if in the conversation because we also don't avoid the fact that, you know, the american on the american side, they were also trying to counteract the symbolism if you will.
There's actually a really good clip that I found while preparing this podcast actually the JFK archives where he's actually, it's a tape from the Oval Office I believe, and he's talking to one of his heads of Nasa at the time. And even the head of Nasa was like, here's the breadth of things we could do in space, we can explore these things, we get samples here.
And he's like we have to put someone on the moon, we have to put something that is the goal, you know, and it's just it's so interesting that even that's still a context of waste overall. But again, this idea of symbolism and directing all the resources to do this one political goal, ultimately It's amazing to think and registered how many billions of dollars report into that.
Oh I think something like 1/5 like 5% of American GDP was being spent on R&D in that era, mainly space, not exclusively but defense and space. I mean of course because the Russians of course got there first has put the Russians got there first of yuri gagarin the first human to be in space. So as far as the popular framework was concerned, the next big framework would be man on the moon. And that was that was JFK JFK was a populist politician, he wasn't a dispassionate economist. Right?
Fair enough. Yes. And speaking of supposed dispassionate economists just to connect up to that. So the political and the economic class, I guess if you could say in the United States started talking about what direction they should go with this kind of funding. As a matter of fact, there was a gentleman named Kenneth arrow and you talk about this a lot and I'd like to get into that now.
He compared the idea of treating science as a public good in the USSR versus letting it alone in the Western scene. And he compared both and ultimately came out with his own conclusion. But I mean, I'll leave that to you to explain this is a very interesting thing too. I think it's not only after the Sputnik turning point, you have perhaps the ken arrow turning point in a way, I think the Camaro turning point is the most important because it's still with us. And Canonero won a Nobel prize.
Um but Canaries paper in 1962 paper, this famous paper, it's not even a peer reviewed paper in a journal, it's a chapter, is a book chapter um in the series in a conference series and I o the next few minutes very much to analysis I got from my friend Professor martin Ricketts is Professor of Economics, University of vacuum in England, because I'm not an economist, I'm a scientist, and he took me very carefully through the argument, ken Arrow's paper is a disgrace.
He quite deliberately mixes up arguments from classical competitive markets and neoclassical or perfectly competitive markets. These are two completely different paradigms and to take an argument halfway through one of them and put them into another. I'm not going to say it's dishonest because that, that would be savage. But it is intellectually utterly unacceptable.
And for camera to actually say in this famous paper, not that particular paper, but a previous paper which I quoted one of my own publications and martin rickets that only the soviet union understands how to turn science into technology and economic growth is absolutely protest.
The thing is the rand corporation, the Research and Development Corporation rand was created just after the Second World War by the american Air Force by the way, and by one of the big defense contractors as a lobby group to lobby for more government funding of science, mainly for the Air Force and the defense contractors. And they absolutely grabbed Sputnik as an excuse for getting these big big name economists.
One was Richard nelson, but Richard nelson uh he saw the light later and Richard nelson said my papers rubbish. I I take it all back, I should never said it, It's nonsense, but ken Arrow never retracted and ken Harris paper, therefore cited many more often and more times than Richard nelson's and ken Arrow's paper, I'm afraid it's simply, it's simply incoherent. It's, I'm not going to say he's as honest, cause that would be wrong for a start. He's dead and can't defend himself.
But it is intellectually dishonest and he must surely have understood that when I talk to economists, they told me that In that era, people were so obsessed with the idea of perfectly competitive neoclassical markets, it was almost normal to extrapolate from those into real markets, even though everyone knew that that wasn't a taller legitimate thing to do.
So calories paper is still with us and to this day, 99.9% of people believe that government should fund science and when you probe them and when they seek to defend, it. it always comes down to this completely incoherent paper of Camaros, right? And can we just drill a little bit deeper into the argument in the paper? Of course, I don't mean, let's trace the whole thing and get into every footnote.
But but at the end of the day, my understanding from, from your writing and you're talking on the subject is that it ultimately is the idea that there is a justification. And he thinks he discusses it from an economic perspective, and he has the correct argument that the government needs to come in and correct the markets or for economic progress that Well, he says, he says, we're all good market people here, we all believe in capitalism.
That's how he starts off and he says, and what's the perfect capitalist market when an infinite number of suppliers and an infinite number of producers and an infinite number of consumers and perfect knowledge, then we have a perfect market. And you can show, of course, that under those circumstances, the price mechanism does give you what's called Pareto optimum or Pareto optimal Itty in the distribution of goods. There's no question.
That statement is true, but because knowledge is perfect and because you also have an infant number of consumers and producers, by definition, by definition, is actually built into the Presumptions before you start the model, you can't invest in research and development because if you invest in science by definition in a perfectly competitive market, you immediately go bust because there is no surplus. There's no profit. Companies make no profit in a perfectly competitive market.
So if you invest in already you lose your profits and you go bust. So what he said is the ideal capitalist market is perfectly competitive. No one would do research under those circumstances, therefore nobody does research. Therefore governments should do it for them.
And I mean, I only have to say, you can see the logical inconsistency because we don't live in we don't even perfect, nor should we, by the way, what we live in classically competitive markets by which companies compete with each other, not on price, but on new products. It's the company that produces the iphone while everyone else is still using development quill pens that makes the advances.
You don't beat your fellow vellum competitor by producing vellum from sheep because it's cheaper than vellum from cattle. You beat your vellum production person villain by the way, is the old form of paper by inventing the iphone. And that's what, and that's the world in which we actually live. We live in classically competitive market by which companies compete by getting ahead of the other through new technology.
And so Arrow was deliberately using something that might have been true in medieval europe. It was infinitely large, but certainly ain't true today. To add to that point, I'd like to read a quote. It's a quote of you. I've grabbed it from two different pieces of a lecture you did.
Um and I read this because I think it's interesting that of course, when we talk about, you know, government funding government waste, often the discussion sometimes gets limited to in many circles, at least specifically the political sphere and the politicians encouraging this waste or wanting to see it happen or encouraging this spending.
And you said something I really like you said, industrialists love ken arrow's paper because industrialists love corporate welfare, governments loved ken eros paper because governments love going around acting like patrons of science and of course scientists love Kenneth Arrow's paper because the last thing they want to do is be accountable for the work they do. They want to be given money with no strings. There are no vested interest to show science is not a public good.
There are many layers there. So we can start with the industrialist part, and you can go through it. But I find that very interesting. We did talk about the government's under the equation, of course, them going around saying, we're putting men on the moon, look at us, we're patrons of science. That's one thing. But there's also the science and the industrialists angle, isn't there? There's a vested interest in these two classes, if you will. Yes, and they're very important. I mean, injustice.
You know, there's a cliche amongst us libertarians, because of course, I'm in libertarian, Um, is that we believe in markets and not in business. And of course, people in business don't believe in markets. They believe in monopoly. You've only got to look at the history of the last 200 years. What does everyone want? Everyone wants monopoly. They want no one else have a monopoly, but they themselves want to monopoly. And it's perfectly reasonable for industrialists.
And it's perfectly understandable, I should say, preposterous to use every mechanism they can to try to get government subsidies. That's what industrialists do. And so one of the things they do is they go to government, and they say, um, you know, Microsoft, for example, there are, and the budget is only 21 billion. I mean, they'll go to the government and say, look, we've only got 21 billion to spend on research. You know, we're really short of money.
Can you please give us some more money because what can you do with 21 billion? I mean, you know, it's nothing to start and the whole thing is absolutely fraudulent. But government but companies are very, very good at going to government and explaining why they need help here. And then the other way. But the other one of course is a scientist and actually this is important.
Scientists want government funding of science because and the reason this really damages the economy is this relatively few scientists matter. We've known this for over 100 years actually have known this for 300 years. But it's been formally shown over 100 years ago now that the distribution of quality among scientists, it's a power law distribution. The top two or 3% of scientists do something like 80% of the science that matters. Most scientists don't really matter.
They're just in there filling in the gaps. Fine honorable, decent work. But it's only the two or three, the top two or three who actually matter who changed things, who make things happen. Now if you have the government funding of science, what happens is those people because they are the best we'll get the best jobs which are the ones in universities and they then also sit on the review committees of the national status.
Foundational Nationalist use of health or whatever it is and they distribute the money. And they very reasonably distribute the money to themselves and they're very good friends because that's the nature of science they will distribute. And so the result is that they'll take this government funded money and they'll give it to themselves and their friends and they'll do exactly what they want to do with it. But what they've done is they've taken the best scientists out of the market.
In the market, scientists actually have to produce stuff that's good for consumers and customers and shareholders and producers scientists are bent to the need of society when they work for industry. But when they work for the universities, the whole point is that they're not re countable to society. That's how it's all set up to be there accountable only to themselves, which is why by the way, in 1947 Truman, President Truman America vetoed the first National Science Foundation bill.
He said, this is ridiculous. Why are we getting all this public money to people who are just going to play with it on their own terms. I refused by vito. And the only reason we got the National Science Foundation 1950 was we had the Cold War and the american defense industry said we need more trained scientists and the only way you can get that with some industry or universities also said universities demanded that was done in a particular way.
It is actually defense that gave us the National Science Foundation that they never talk about that now. But the point is the trouble with the government funding of science, even if it's only 10 or 20% of the science the country does, if that takes the top 10 or 20% of scientists out of industry into the universities and it does, which is why university university scientists on average get 30% less salary than industrial scientists.
They take an enormous cut to work in the universities, but they do it because it's so much more fun working to your own agenda than someone else's. We understand all this. But the trouble is Babydoll act notwithstanding. Once you put all the best scientists and universities, you remove them from industry and rates of economic growth slowed down. And as you said, when the funding and the different interests start creeping into play there too.
The idea is you're doing science for the sake of science in university theoretically, but that doesn't necessarily happen to be the case. Later on. Noam Chomsky, who is a professor at MIT. I saw him say something an electron, I think he was there for like 80 years or something. But he said he was actually, he actually saw this cycle when the funding started creeping into MIT and he said, it's almost like it was a joke in the departments.
He said, people did this, they almost had like these templates that they sort of had and any research grant that they were applying for. You basically stuck these other 30 pages on me. Like here's the defense applications for this. Here's where the american government might benefit if we get this funding. So it becomes a bit of a pork barrel into itself at that point. Absolutely. At MIT at one point trump skis high point I was getting 80% of its money from the defense department.
I mean it absolutely was the research wing of the Defense department by the way, by the way, all credit to MIT. They allowed trump's key to sit there for nearly a century saying very rude things about the american defense department and no one touched him in Britain. I have to say if you criticized the government for british universities are definitely less tolerant of people like trump ski than american universities.
So all credit to american universities but in the sense they could afford to ignore him because they were getting so many billions of dollars in the taxpayer. Didn't have to worry about some little linguistic chap complaining in the corner that they just took the money and ran. Yeah he said he said one time in the same lecture I saw where he said this he said it was effectively just like they're saying okay you go protest the Vietnam war over there.
But from 9 to 5, can you please work on the missiles? It's pretty much exactly like that I'm afraid so. And you know, just moving on from that to that you said something that is very interesting. You said in this lecture, I saw that, you know, it took you a long time to get to the revelation and understand that this debate, this whole thing we're talking about is not set by scientists. It's set by economists. And why was that such an important revelation to you?
And why did that change your mentality moving forward on this whole conversation? Because that's the perspective you're coming from today in this conversation with me. But before you sort of thought about it differently. So why was this such a turning point? And you're thinking and understanding and why should other people think on that too? Well, that's a very good question. And it's not a very easy question to answer, but I will give you the answer.
The trouble is no one's interested, what scientists have to say. People are interested only what economists say, economists rule the world may not cain said that. And it turns out he was right. People listen to economists Now, the reason this is so unfortunate is that economists have come up with these ideas of public goods and which everyone buys into economists, by the way. No, nothing about science.
I'm tempted sometimes, but I won't actually say it, but I'm tempted sometimes to say that no economist has made a statement about science that is valuable useful since Schumpeter Uh, in 1942, every economist since then has been trying to justify what Ken Arrow said. And it's really very unhelpful and that's him. That's not entirely true.
Um there's William Beaumont, for example, who is very good, but in the main economics has been exceptionally unhelpful in studying science or even economic growth. The problem is this, the problem is that economists have bought into absolutely the idea that they are spokesman for the universities and universities want government funding of science for reasons that are very, very obvious. They have converted themselves the universities from institutions of teaching into institutions of research.
And no economists who seriously threatened that paradigm would be welcome in an american university or indeed in those large government departments that are so closely linked to american universities like the Federal Reserve, these organizations or the american treasury, absolutely part of the same culture. These organizations have all bought into the idea that the american government has to give money to american universities because otherwise we don't get economic growth.
I think there are some less noble motives as well. But that's the official story. And so economists, and as we've bought it, as we've all seen from the replication crisis as everybody now knows, thanks to the work of john Ioannidis and stanford, half of all published papers are wrong. I mean, it's an unbelievable fact and it's not just in his case, he was looking at psychology and nutrition and some of the soft biological scientists.
But it's true of economics, Economics goes through these extraordinary waves of literally everything being wrong and one of them is that ever since 1962 when Ken Arrow said that knowledge was a public good because it's non rivalrous and excludable. Which statement is untrue. Knowledge is very excludable, by the way.
But ever since ken, era said that the entire economics profession has gone into that and the whole business of the non replication crisis is about scientists, in this case, economists defending a vested interest and they want government to give money to economics research establishments because that's what they've bought into for selfish reasons and and to connect that thought to something else.
You were talking, we talked about it before, and you did touch on at the very beginning that there are these vested interest, lots of theory and ideas at play. But ultimately, the evidence doesn't play a lot of these out. And 11 thing that stuck out to me is the O E C D. And you brought this up before in your talks that published a book about sources of economic growth.
And ultimately, you said the conclusion at the end of the day is that the more the government funded R and D in a country that the less that that economy grew, this is probably because resources are ultimately being directed to grants and things like that in people's projects rather than in industry or in technology or an actual R and D if you will, let me give you two examples we've just lived, we're just living through the covid crisis. I can never pronounce her name.
But there's that lady who went to work for biontech there, the Pfizer vaccine. People who had did all that work at the University of pennsylvania on RNA vaccines and RNA expression. And she, in 1995 was demoted from her associate professor position to adjunct position because she wasn't wearing enough grants. Basically, the NSF and NIH didn't really understand all her work on RNA and went there to find her.
So because the University of pennsylvania degraded her, she eventually left to go and work for biontech gave us the RNA vaccine and not just she gave us the RNA vaccine, but Moderna Moderna is very clever name because the word RNA is in the middle of that. Moderna was stimulated to keep to catch up with biontech because of what she was doing. So thanks to this one brilliant lady, she's one of the 1% of scientists that's so important. I think there's one brilliant lady.
We have all these RNA vaccines, but we have it only because the University of pennsylvania sector because she wasn't winning enough money. Imagine what a nightmare would have been if there was more government money for science. She had got those grants should still be at the University of pennsylvania and hundreds of thousands of people would now be dead because we would have no RNA vaccines. Another classic example of this crowding out is the whole business of high tech.
Why is it America and not say Germany or Sweden because they had lots of good stuff going on at some point knock here and stuff like that. Why is America the home of amazon and all the other companies that we now are told we must hate.
But 10 years ago we all had to worship why America the best answer we have is the extraordinary story which is completely forgotten now of what Senator Mike Mansfield did when he realized that the defense department like the OECD had shown that the government funding of pure science in America had done absolutely nothing for the development of defense equipment and so the whole rand story, the whole ken era story was untrue.
And so Mike Mansfield took away because he was the senator majority leader took away from our Pir particularly are pretty soon became DARPA all its funding for pure science at the time everyone said he's destroying american science. It's almost impossible to conceive of this now because science is so worshiped. But in 1969, these two years, Mike Mansfield took away up as pure so I just took it away, imagine that closing the NSS or where do all these scientists go?
They all went to Xerox parc because that in what we now call Silicon Valley was looking for scientists to help invent the modern world. Both steve jobs. And Bill Gates quite openly admitted that all their best ideas came from Xerox parc. But xerox parc that was staffed almost exclusively by people who've been sacked from our Pir imagine what a nightmare if they hadn't been sacked from our per you still have all those wonderful upper bits of science going on.
But it big Nokia today or IBM in England, that would now be the great tech companies and America would be saying, why is it that europe has beaten us yet again? And so people forget these historical stories of what we can call crowding out. Those very rare examples when people like the lady who gave us the RNA vaccine or the Xerox when these people get sacked and actually transform our world.
What we don't see is all the other great scientists who are still in the university's winning nobel prizes and all the things we're not seeing as a consequence in the real world and I think that's actually an excellent place to take a quick break. So we're gonna do So right now everyone you're listening to curious task. I'm speaking with Terence Kealey today, the curious task is a podcast from the Institute for Liberal Studies.
Feel free to send questions, feedback guest recommendations or anything else that's on your mind. Too curious task at liberal studies dot C A As always a big thanks to our supporters on patreon including rosa. Pastorello Sabine, El Chidiac and scott. She'll remember to like us on facebook. Follow us on twitter at the curious task and rate us on apple podcasts or wherever else you're listening to. The curious task. Welcome back everyone to listen to curious task.
I'm speaking with terrance kelly today. So so Terrence before the break we chatted about many things.
Um, and we were just chatting at the break actually that the woman, the british brilliant scientists who were talking about her name was actually and I'm not sure if I'm going to pronounce it correctly either Catelyn Khoury Co so someone could either correct me an email me and but also google if they're not sure I'm talking about and we could see this this lady's achievements which are brilliant as Terence said um for for a second swing of our conversation here,
I want to enter like me perhaps objections is probably a little bit too harsh of a word to say because it's not like I'm just gonna throw those at you but just other ideas and things people might think of as they're hearing you talk about this and I'm actually gonna take one question someone did ask you at a lecture because I think it's very interesting.
So someone might say to you, what about today's Kenneth arrow's the people that say specifically we still need to in the modern context, invest in science. Even if everything you're saying is right Terrence because look at we are live in a world of globalism and geopolitical threats. Like for instance, china regardless of it's working or not, they are using research and development and lots of money is being poured into, you know, their technology in the military and so on and so forth.
Are we going to accept a world where, you know, the quote west is going to quote fall behind in this area sci tech, military defense. When someone just throws that idea that you and the ultimately the call to action from that assumed as well, America better keep investing in science then. What do you say to this general idea when this whole thing is tied to geopolitics and the quote rivals and threats?
Well, geopolitics has just raised its ugly head again because there's this extraordinary phenomenon that Britain and America both going to double the government funding science with the british government and the american government are both going to double their funding for science over an incredibly short period of time. And what is interesting about that is that the Canadian government is not doing that.
The french the Germans, the european governments aren't doing that Japanese governments are doing that. It's just Britain, America and the last time we saw and it's bipartisan in both countries on both sides of the aisle, Both parties believe that America and Britain doubled their funding aside the last time we saw that extraordinary pattern of just these two countries doing this bipartisan think that no one else wants to do was the invasion of Iraq in 2003, which was a catastrophic mistake.
We all can now see some of us saw it at the time, but forgetting that everyone now sees that was a catastrophic mistake. So let me just say this just because Britain and America do a bipartisan thing together and no one else doesn't does doesn't necessarily mean that they're right, but they're both doing it because of china. Now, let me make it quite clear what I mean when they say government shouldn't fund science because you've raised a terrific question.
If you are investing in public money in science to increase economic growth, it will not work. No one has ever shown it works.
You can show for case studies, you can show that if the government goes to a particular company or a particular project and gives them money that will do well, but it never works in aggregate because you've taken good scientists and other projects, put them into those projects and what you're not seeing is the cost of those failed projects because No one and it's a really important point here, we are. In 2021, government's funding science for a very long time.
They've been telling us for a very long time how important this we're talking about billions and billions and billions of dollars. No one has ever shown that it stimulates economic growth and every study that's been carefully performed to show that it doesn't. So let me make it absolutely clear if America is worried about GDP per capita vis a vis china, then the government should just back out of science.
And by the way, china's GDP per capita is only a quarter of America's depending how you measure it or six, depending on whether you're using nominal or purchasing power. But china is really poor compared to America. So the idea that America needs to transform its science because it has great economic threat, these people only as quarter as rich as America. So I can't remember how far back you have to go to be a quarter but probably uh standards of living in China's like 1914 in North America.
I mean heaven saying let's not be frightened of them. However, if you're talking about the geopolitical threat, that's a completely different story. That's the government funding of science for reasons of defense or reasons of geopolitics. That becomes a matter of judgment. So for example, Should the Americans have developed the Manhattan project in 1944-45 and develop the atom bomb of course it should have has nothing to do with economics.
That's geopolitics there should therefore be a very clear distinction because there's a cost to be paid, the more the american government takes good scientists under the economy for these geopolitical projects, the greater damage it does to the economy. So if you're concerned, for example with artificial intelligence because you think the chinese are going to develop artificial intelligence and defeat the american economy. Forget it. Let the american economy see to it.
If you're worried about chinese artificial intelligence, the defense reasons. Well that's a different argument. And of course you would hope under those circumstances there will be a nice spillover that the artificial intelligence research you do for defense reasons spills over into the economy. You know, it's amazing how rarely that happens contrary to myth Nasa and the moon smith did not give us the nonstick nonstick saucepan.
And in fact the defense spillovers into the general economy are incredibly rare. It's a very very bad investment. But that's what's happening at the moment. People are saying let's do artificial intelligence or whatever you want to do cyber security. And let's hope that by facing the chinese geopolitical threat will also stimulate our economy. I can tell you now it won't work. That's what they're thinking of doing. And indeed it may do the exact opposite because of the business of crowding out.
But yes, if you want to do defense research for defense reasons fine. But don't pretend it's going to help the economy because it won't, I think I saw joe biden had a post on social media a couple of days ago is something he said science is back. So this stuff makes you nervous. Well it makes me more than that. It would be sad. I'm going to wave this book at you. So, this is a this is a cato book, visions of liberty. It came out last year and I have a chapter in there.
And this is an amazing book. Because what this book did. They went to every Cato scholar in every field and said, what would the perfect world look like? Um if we if the world is libertarian. And so, you know, the health people at Kato said, well, and then, you know, everybody when I did the science chapter and I said, the amazing thing is and the wonderful thing is we're back to perfection this. I wrote this last year.
This is before biden made those comments before Boris johnson in England made those comments. What people haven't realized it's gone completely under the radar is the american government support for research last year Was lower as a share of GDP than any year since 1941. We had absolutely gone back to the days of Laissez faire. Because if you look in this is last year, the American government of research, they were funding only defense research.
Well, of course, energy research, I global warming um uh health research. Because people really believe in health research. So you can't get away from that democratic mandate. But the american government was funding nothing in terms of supporting the economy. They're completely given up on that. And space research is the big things. The only exception was the 5.5 billion.
That's more now that they gave to the National Science Foundation, but that was only 5% of the American government's research budget. And that also was actually for a mission. And that mission was keeping the university's off their back because if universities get short of money, my God, on both sides, they descend on you and make your life hell 5.5 million is quite a small sum of money to keep the university's off your back.
But no one in the american government was funding science because they thought the market was ignoring site, they've stopped doing it. And now, God forbid, biden and johnson have invented this terrible idea that we absolutely saw failed in the sixties and seventies. And it's very depressing to see it coming back again.
And some will say that, okay, if they, if they accept what you're saying, maybe the government should fund science start projects, start departments, et cetera, but some still say, but the government should at least indirectly fund things like science education. So for example, um, you know, sometimes this is couched in the idea of a greater good, in reality, it's a form of industrial planning and what jobs people should take.
But nevertheless, there is an idea out there that says, should we figure out ways to incentivize students to go into stem fields, not, not necessarily fund their research, but maybe, you know, oftentimes politicians will connect this to cutting tuition or figuring out special incentives to enter stem program.
The idea, although it all ends up trickling back to, like I said, a form of scientific funding, the ideas, why don't we at least fund scientific education, create more of an educated workforce in the science area? When I throw that idea at you, what do you say to that objection? Well, does the government have to fund the education of doctors or investment bankers where the market is going to send a pretty strong signal? People will respond to that.
You don't have to subsidize the training of lawyers or investment bankers because the market is sending out signals. If the market is saying we don't need any more stem people, there may be a reason for that. And the reason for that is very straightforward actually. I mean, economic growth is limited amongst lead countries and America has been the lead country after 200 years Is limited about 2% a year. It's actually quite hard economic growth. Not sure the country is really quite difficult.
And the rate limiting step isn't coming from the science of the technology, It's coming from all the other thing, if you have a good idea and you show it works, you've only just started, you've got to build the factories, you've got to build the salesforce is you've got to change the branding and the marketing, You've got to persuade people to buy on your product. The real work comes after the invention. So the idea that we need to invent more is simply not true.
There's absolutely no evidence, I mean, absolutely no evidence that was short of invention. What and indeed there's no evidence for short of anything. Two% Americans 200 years. When I say America, I mean Canada as well, of course. Um, um, and Britain and France and Germany. Um, 2% is all that you can hope for. You can't hope for more than that because you have to keep on sacking people from making buggy whips to making motorcars. And that's an incredibly slow process.
The rate limiting step to repeat myself doesn't come from science and technology. The rate limiting step comes to the rest of the economy. So by stimulating people to go into stem as as is so often the case with government interventions and government programs, you're wasting time and money. We covered sort of the the idea that, you know, the politicians might talk about companies won't invest in science.
So the government needs to that sort of that vested interests that we established at the front. We talked about the idea while science for the sake of science, the scientists have a vested interest. Now let's tie back to the third when we talked about at the front with another objection. Well, companies. And this isn't necessarily the government funding, quote science or technology, but let's call it protecting it.
One of the objections you heard from the industrial sector as well, patents and certain protections are needed because we won't innovate without them. So please protect us from the market. What do you say to that objection? Because this is this is a key one. This is every established corporation Microsoft, Apple et cetera. Established pressure. Every established corporation. Uh And patterns are a scam there. That's a disgrace.
And they should be abolished with the exception of pharmaceutical industry for reasons that we can talk about or we cannot. But the point is patterns of scam. Yeah. Great. Your president biden and company comes up to you and says we will not invest in research unless you give us this money. This grants protection. President biden's response to be fine. Don't invest in research.
See how long it takes you to go bust because you will go bust and you invest in research, not because you're a good person, but you rest in research because that's the only way to make profit. And by the way, if you look at the costs of research, they are absolutely tiny. I mean, the pharmaceutical industry's advertising budget is bigger than its R. And D. Budget. And our is a very small part of d by the way, Research is really a very modest.
It's one or 2% of the economy, that's all that research is, I mean it's a tiny cost. The idea that companies wouldn't do it if it was in their interest is just a fantasy. And I repeat the company that says I will not do research. That path protection and subsidies should be told fine don't do research. And it seems to be a way to protect longer term profits rather than immediate research and development.
Like like Apple computer for instance, which I'm a fan of their very good right now on things like privacy issues and so on and so forth. But one thing that they continually have wind about ever since their inception was this whole, we don't want to develop things and have other people copy them. So they have ridiculous patent wars about the way you can hold ipads and things like that and it just gets crazy.
And ultimately, like you were saying, when you actually parse through the argument, it doesn't really seem that what they're really saying is that there's no R. And D. And innovation that's going to happen here without the patent. It's more, can we sell the same thing and keep other people out of the market for another 10, 15 years? That's a different conversation. And we don't want Apple to succeed. That is not particularly Apple, we want the market to succeed.
And what were the greater the competition, the more companies like Apple are under competitive pressure. The only response they have in the absence of copyright and all the other tricks that they can employ legally. The only response they actually have is to invest even more in research to come up with the next generation. Even sooner. They don't want to do that because no industrialist does whatever industrialist wants is a monopoly and perpetuity. Thank you very much.
Um, uh, and they will invent arguments for that. We are not interested, we are not interested in the health of individual companies. Were interested the help of the market and we therefore want companies, we would like to see bigger turnover of companies would like to see more companies going bust because the competitive pressures, we want to be so intense that new companies are constantly for and pushing forward to the next generation of technology quicker than they currently are.
I've seen you say that in a democratic society, it's, you know, talking about funding science for the sake of science. Talking about funding science for correcting market failures, all the great things we've been talking about today, That's one thing. But you also said there is sort of a nuance or a footnote to this, if you will, sometimes a needle that needs to be threaded usaid funding Science for, as we said, for the sake of science and so on.
And so it was one thing, but there might be a benefit in a democratic society for science being funded to oppose industry and the other in vested interests. That is to say you started talking about how there may be worth in some areas for, for instance, that the democratic institutions and the politicians to to have some sort of scientific bedrock that they can either turn to as far as research is concerned or things they can reference.
That doesn't come from industry, doesn't come from philanthropy, doesn't come from the universities that want funding. I'm not going to ask you how, from a policy perspective we thread that needle, but I at least want to explore that idea of why you think that's at least valuable. I think it's potentially valuable historically. There's this terrible example though, a friend of mine, I'm sitting here talking to you.
So my my memory's gone that a friend of mine san Francisco doctor pointed out to me there was a fault in my argument, but I tell you what the argument is. Um the the awful thing is that we know that cigarettes about few because of Adolf Hitler. It's a depressing story.
Um but Adolf Hitler in 1933, um and Adolf Hitler, I mean, you know, just an unspeakable, but let's just talk about the story of the cigarettes, he was a teetotaler, he was a vegetarian, he believed in nature, I mean, he really he was absolutely part of the progressive package 1933, and he just believed that cigarettes had to be bad for you. And so he got his epidemiology, just look for it. And of course they, the evidence just fell out.
I mean, it was so clear that cigarettes give you lung cancer, it's amazing, really wasn't discovered before. But the point was, Adolf Hitler discovered it and it was then published in the Nazi literature. Uh and Richard Doll in England was one of the few people to read the Nazi literature. And he kept very quiet about where he got the idea from. So he redid the work post war and became famous and united and all the rest of it.
But actually, I've been brought up on, I've been corrected on that because although that statement is true, the fact of the matter is that the american actuary profession advising the american life insurance professional trade had shown many years before that high blood pressure was bad for you and was about to show, it turns out that cigarettes give you lung cancer.
So even that example of governments being good for the health of the people as opposed to the health of the economy um, is countered by the fact that actually, the actuarial profession has always been a very good public health service. Having said all that, I do actually believe there must be a benefit to a democratic government, having an independent science based, independent of all the people you just mentioned of policy of corporations, even philanthropist that we don't know.
So, I mean, a classic example, might be, might be a global warming. I mean, what is what is dismaying about global warming and climate change is it's very hard to know who really to trust. I mean, we all know what the conventional story is, but when you read the critics of the conventional story, they can be surprisingly persuasive. Um so it turns out the correlation between atmospheric CO two uh and temperatures isn't such a good thing.
For example, I mean, in my young, in my youth, between the second World War in 1975 Co two levels are rising and yet global temperatures are falling. Why is that? It might be there have fallen even more, but I'm not going to get into that. But what I'm trying to say is I can see there would be an argument for completely dispassionate research, free of all vested interests.
And if the government could justify that, I would be perfectly happy and perfect and it would be a small sum of money anyway. But I do I wouldn't rule out a philosophical grounds. The idea that democratic government should not have an independent science based the cases have to be made.
But there may well be a good case and as our time is winding down here, I just wanted to ask you for some of your thoughts on um you know, you did pass me a paper review in preparation for this interview and I did I did have a chance to look at it, but without getting into everything there, we sort of touched on it before this idea of biden's new I. Guess agenda item for for for for Science. And let's get America back on track.
We all know the rhetoric at this point, especially all those listening and you and I here, but but is there any specific highlights you'd like to pull out the paper and your thoughts on the topic overall right now as we move into the future? Because we talked a lot about the past and current but the future trajectory of all these conversations. Well, it's very depressing because all this money will be wasted. Um Because what life and is doing is he's backing the wrong model.
He's basically saying let's pour money into the universities and it'll trickle down, knowledge will trickle down and our economy was stimulated and it's simply untrue. So what I would actually say is it would be nice if a congressman or a senator, congress person or a senator where to ask the federal government write a paper showing why this is going to work economically.
It may work geopolitically that's a different argument, write a paper saying why this is going to work so that we can then critique your thinking. And that's the one thing I would say, let biden justify what is having to do and let people like me access to that paper and critique it in public.
And we would use as our sources, the congressional budget office uh and other government agencies like the Bureau of Labor Statistics in Washington, D. C, who have shown that the government funding of Science fails economically. Those people must be crying bitter tears as we speak. Yes, exactly. As you said, as we learned from the Camaro story, let's make sure this paper gets peer reviewed. Yes. Yeah. 10 hours paper was in peer reviewed is a disgrace. So our time is pretty well wound down here.
I liked us to move to the formal sort of wrap up section of our episode here. So, terrence in each episode, I want to make sure that the guest ultimately has the last word and brings everything full circle and puts a finer point on her on her exploration of the question. So let me ask, what do you ultimately hope are the main takeaways for someone listening to hear on whether governments should fund science.
In other words, if you wanted someone to take one or two or three takeaways only from this conversation and everything that we've talked about, what would those ultimately be? Sadly, it wouldn't be about the government funding of science because that is a wasted one. Sadly, my real fundamental takeaway and I regret having to say this.
If you can't trust the economists economics is a very, very complicated discipline, understanding the difference between neoclassical, perfectly competitive markets and classical competitive markets. It's not easy understanding the games that economists play is not easy. And somehow we have to make the profession of economics more honest in its approach to the public. Canberra's paper Is a very old Emmy that 70, 70 years old now and it still rules the roost and it was rubbish from day one.
So sadly, I have to say to you that my real takeaway messages, Winston Churchill's last words. The last words Winston Churchill ever uttered in the Houses of Parliament. He actually did it outside the chamber. His last words where don't trust the bankers and I'm afraid I know which in Churchill, but I'm afraid my last words would have to be don't trust the economists if you ask me who to trust.
Instead it becomes very, very difficult because only economists can interpret what economists have to say. But sadly you can't trust the economists and that really. And I regret having to say this is really what my lesson is. I think we'll leave it there then. Terence Kealey, thank you very much for joining me on the curious task today. Pleasure! Beautiful. Mhm. This episode of the curious task was produced by Alex Tarragona and Sabine El Chidiac.
Our executive producer is matt buffed in the music you heard on today's episode was created by lindy bop insured. You should check out his other stuff online. The curious task exists today because of donations of time and money from those creating it And listeners like yourself, check us out on Patreon and find out how you can support us and get access to exclusive offers. I'm Alex Tarragona. Thank you very much for joining us on the curious task, wow.