However, what the state spends taxpayers money on, private individuals can’t use. For all the known positive results of public research (and the failures), what about the unknown uses that private research may have discovered? It is the unseen opportunity cost of public spending that is not seen and cannot be easily measured that matters.

Basic research at any cost (to the public)? If it only saves one life? Who, but who, will think about the little children? Sound familiar?

Perhaps if the US Army had taken the basic research it took as spoils of war from the German’s and auctioned it off to the highest bidder, not to mention the theorhetical breakthroughs in computers US public research funded, a McDonnell Douglas or Boeing might have used the rocket research to launch commercial satellites much earlier and cheaper and a IBM may have had personal computers on desks so much earlier than we actually had them.

Instead, we know what did happen, the research into space and defence technology continued, isolated from commercial applications because of state secrecy. So instead of PCs and communication satellites in 1961, we had nuclear stand off over Cuba and mutually assured destruction by the 1970s and a moon programme whose only achievement was to show what throwing massive amounts of money at a project can do, a round trip to the moon for a handful of privileged individuals and a public bureaucracy in NASA still looking for a purpose, but spending up billions of dollars a year killing astronauts and not even able to launch satellites of any significant payload into geosynchronous orbit without using booster rockets, even retiring launch vehicles developed in the 1960s and 70s that were superior in their ability to launch satellites (and without the need to risk human life). Great use of public research, methinks not.

But you haven’t proven that nationalised research necessitates basic research. There is no need to counter the examples.

“Sorry, but I can’t read that diagram you link too. Is there a higher resolution source?”

The amount of R&D spending by multinational enteprises is phenomenal. The idea that the private sector cannot afford research is beyond weird.

“All I am saying is that there are some projects that the private sector has no motivation (can’t see the ROI) to engage in, that are still worthwhile. This is no mystery.”

Huh? If it becomes apparent that basic research drives applied research, then why won’t there be investment in basic research? Allowing the research to be private allows the most efficient level of basic research to be chosen, as firms will maximise their ROI based on the optimal mix of basic and applied research.

All of those things can be built with private money. The scope is not too large for private enterprise. It is a shame you can’t read the table to see how wrong you are. But then you contend that private firms won’t be able to figure out which one of us is right (whether basic research drives applied resarch or vice versa) and in either case, won’t be able to choose the mix between the two which maxmimises firm value.

This is just wrong. Business academics have known for a long time about unspecified payback periods and the contribution of “mistakes” to business successes. That said, industry probably knew about this at least implictly for a very long time.

The market does indeed have limitations, but these are not overcome by nationalising research or the further nationalisation of private goods – under the flawed assumption they are public goods.

The human genome project could have been done privately. Celera Genomics did their own genome mapping along side the mainly public mapping. And I think it demonstrates how easy privatised basic research could be even in today’s world where governments attempt to control research.

Basic research is mainly done at universities. eg/ Human genome project. Libertarians would argue that universities could be privatised.

Why couldn’t you build a rail network, interstate road or large dam with private money? These have been done before. The money originates privately in the pockets of your average joe.
What is this point where something suddenly becomes too big to be done privately by one or multiple companies?
Private enterprise runs many public transport systems and is responsible for massive projects like sky scraper buildings, big bridges and football stadiums.

You couldn’t have done a worse job in defending nationalisation of scientific research.

Oh, given time and effort I probably could have

Sorry, but I can’t read that diagram you link too. Is there a higher resolution source?

You haven’t countered any of the examples I’ve given of huge investments in basic research that — I contend — could not/would not have been equaled by the private sector. We agree that some part of the public money applied to space exploration is mis-spent, but, still, satellites and the rocketry to put them into orbit was all due to public money which has produced markets in imagining, communications, and GPS that the private sector was quick to exploit (and I say “good for them!”). It couldn’t have been done any other way. Some things do require rocket science.

All I am saying is that there are some projects that the private sector has no motivation (can’t see the ROI) to engage in, that are still worthwhile. This is no mystery. You don’t build the Hoover Dam with private money. You don’t build a national Interstate highway system like that in the USA with private money. You don’t fund the basic research into biology that produces modern medicine and pharmacology with private money. Even Exxon and the rest of the oil conglomerates acknowledge their debt to public expenditures funding basic geology.

Some of my colleagues at university helped to develop massively parallel computation systems to simulate the development of oil reservoirs thus helping oil companies in finding them. A good use of public funds, I think.

This is no slight on the capabilities of the free market — just an acknowledgement that the free market has limitations (oh my!).

http://globalhighered.files.wordpress.com/2007/10/unctad2005rd1.jpg

Note the soruces – UNCTAD etc. Now that is only the largest firms as well.

R&D isn’t too expensive for the private sector – paticularly when public funding is generated from taxation. Every $1.00 spent by Austalian public bodies costs society at least $1.19 in lost production.

I think we can move on from the idea that R&D is too expensive for the private sector.

You keep on pushing the idea that the private sector isn’t motivated to work on basic research. It doesn’t matter if basic research drives applied research or vice versa – if there was no public funding of basic research, private firms would have to do it anyway, either to generate new ideas or to give their applications some theoretical breakthrough.

Tell me why firms wouldn’t engage in basic research if they had no public subsidy on this?

Your argument is slightly flawed here since univeristies do applied research as well, generally with external financing. To say there is no spillover into basic research is a very limiting assumption of human behaviour.

Your argument that we need publicly funded science research rests upon the baseless assumption that the private sector can’t afford it and the shaky assumption that the private sector doesn’t have the incentive.

Your valuation tool is an indefinite payoff period, based on the fallacy of the broken window.

You couldn’t have done a worse job in defending nationalisation of scintific research.

I didn’t say, “Private firms can’t get enough capital to perform their own research.”

A lot of research goes on in the private sector; I’ve tried to be clear about that. While there are some kinds of basic research, e.g. CERN, that are too big for private enterprise, the private sector just isn’t motivated to work on basic science. It’s an ROI isssue. I don’t understand why you find that laughable; it’s am matter of mainstream economics.

So let the private firms decide how they conduct research.

By all means. And let’s use some public funds to enable scientists to continue to do fundamental research that has no immediate payoff. That doesn’t mean it’s haphazard. Sure some silly things get through the grant process, but astronomy, basic physics, biology, geology, etc. are on the whole rather nice additions to civilization (and of great use to the private sector economy). Look at the Human Genome Project and it’s successful mapping of our DNA. Could not have been done by the private sector alone, but it has stimulated a lot of economy activity.

The basic research argument is used to support nationalised science, but firms won’t do it?

Why won’t they? Basic research is no more a public good than applied research.

If this is the case (and I don’t agree that it is), then how could a government overcome this anyway?

But just because the water service is public, doesn’t mean it couldn’t be privatised!

This is the same as research.

As far as I can see, your argument is that public research exists, therefore it’s the best approach. Have you also considered the existence of tax breaks, regulations and public grant offerings that forced high level research to be dependant on public funds?

Public space research was as you agree, mis-directed. Well isn’t that a good example of government wasting our money. Private research wouldn’t waste money on politically driven space programs to increase patriotism or moon walks.

Private companies always work in connection with other companies. Outsourcing certain tasks etc. No company is an island. Look how many companies are involved in the manufacture of one car. There’s no reason to think that satellite building couldn’t have been developed privately just because one company alone couldn’t have afforded it. Unfortunately the government set up conditions where this was not as viable as described above.

You say: Bill Gates wouldn’t have gotten anywhere without the government research and then imply this means he wouldn’t have gotten anywhere without the government itself! This is B.S. Firstly Bill Gates would have always gotten somewhere. But more importantly, he lived in a world where many universities were publically funded. If he’d lived in a world where universities were privately funded, the result would be the same or better.

Apple is another good example of private research, developed from its founders that treated computer research as a fun hobby when they were young.

Public money always originates from private money. Without seizing private money you can’t have public money. If people are prepared to be forced into wealth distribution, logically they will be happy to voluntarily give money for research especially considering its in their best interest.

I can name many companies that do heaps of research and don’t get government grants.
I have also seen many privately funded research projects at the university I went to. (even in today’s system that effectively discourages this approach).

I am reminded of someone I met the other day who was proud to claim they were a “traditionalist”.