Related to regulatory effects of mass spending on national plans and the deadweight costs of spending, are the distortions, diversion of resources, and regulation caused by taxpayer funding and government steering of science and technology.
The impetus for raising this issue is the Senate’s deliberation over the bipartisan Endless Frontier Act (S. 1260), which, in an alleged effort to stand up to China, will boost government spending on science and technology, set up regional technology hubs, and spend $100 billion at the National Science Foundation on something called a Directorate of Technology and Innovation.
This problem of government steering is a concern found elsewhere, highly relevant to government-sponsored enterprises and public-private partnerships.
The assumption is all but universal that the government is the proper vehicle for investment not only in basic knowledge, but in a great deal of applied research and investment as well. The common refrain that markets underinvest in R&D is confused, since failure to have markets is a primary culprit.
Critiques of that notion abound, but a fundamental rejoinder is that of Terence Kealey, noting that government funding of R&D crowds out private, and thus spending as a percentage of GDP is not affected as spending proponents would prefer.
The critique is that taxpayer funding of projects to advance discovery and well-being means the attachment of regulatory strings and the diversion of technological trajectories and distortions.
Specifically, the emphasis on public over private funding creates tensions and artificial debates and confusions over such issues as:
- Intellectual property status of federally funded discoveries;
- Commons vs. proprietary views of information, data, and discoveries;
- The merit of basic vs. applied research (the bill itself assumes a dichotomy);
- The alleged objectivity of government vs. industry science (and the disparagement of industry science in the marketplace of ideas);
- Public access to scientific data upon which regulations are based; and
- The right to not fund science if one chooses not to.
The right to disagree and withhold funding will not likely be permitted, as a new bureaucracy in will be seized by environmental radicals on the climate issue.
Whether spending taxpayer dollars on Earth-bound projects like green energy and energy efficiency, or whether launching Federal Reserve notes into outer space, more federal funding and steering of scientific trajectories mean larger government rather than a larger private sector.
Different industries, sectors and fields fertilize one another; government steering mangles this organic technological sequence. That injures not just any given project at hand, but also the path of adjacent and downstream industries.
The Endless Frontier Act is also being debated against a backdrop of modern tech companies being deeply involved in defense contracting and surveillance. President Eisenhower’s farewell address warned not just of a military-industrial complex, but of a scientific one:
[P]ublic policy could itself become the captive of a scientific- technological elite. … Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. … The prospect of domination of the nation’s scholars by Federal employment, project allocations, and the power of money is ever present—and is gravely to be regarded.
Another problem in the modern administrative state is that the rise of government guidance document as distinct from legislation and regulation further underscores the risk of a private sector increasingly rendered unable to act without government guidance at every turn.
Bureaucrats’ ability at spending others’ money is suspect. It puts the cart before the horse by short-circuiting the organic evolution of new technologies. Governments, unlike private sector investors, are also is incapable of rapid course correction, including abandoning unproductive projects.
The Endless Frontier Act still has a way to go in terms of debate and amendment. Policy makers need to do a better job in addressing the downsides of government funding and oversight of frontier sectors. CEI’s founder Fred Smith has often noted the primacy of tying research and deployment to human needs, and how private investors are best situated to do that, able to test low-probability projects and letting the rare success offset multiple failures. Markets are good at killing bad projects.
We need laws to stop, not perpetuate, business/government alliances. Otherwise we are likely to end up with a bipartisan Endless Regulation Act.