Should Government Fund R&D?

Article excerpt

In spite of the advances and declines on Wall Street, technology continues to drive this "new economy." As with economies of the past, we must stoke the fires to keep this one running at an efficient pace. That means we should not overdo it, nor should we underdo it.

Opinions vary as to the efficacy of the federal government spending tax dollars on research and development.

After all, the government that governs least governs best and the level of our personal freedom, some say, is in direct proportion to our government's ability to tax.

Regardless of political philosophy, none of us want our government to spend in a wasteful manner.

That said, the questions go begging, "should not the private sector pay for R&D and at what level, if any, should government support R&D?"

The private sector should pay for R&D. Having said that, now consider the private inducement to spend. If you or I, as owner of a private company, need research done, by definition we will be very focused, and targeted with our research dollars. This occurs because (1) we have relatively few of them and (2) if we pay for R&D, it will be a specific regime of R&D expected to produce findings to enhance our financial position.

On the other hand, government has a funding mechanism for R&D, can be less targeted thereby opening up other possibilities for research findings and has a history of empowerment for such research.

Government can do this because (1) government has more dollars due to its ability to tax and (2) government profit is measured in service to its citizens and not in financial gain.

Let's look at examples.

How can we quantify the level of R&D that went into the development of laser-guided weaponry used to defeat Iraq in the Gulf War?

Much, if not most, of the research that produced such weapons capability came from a blending of private-sector research funded with government money.

In this example, the private sector alone would have had to rely on profit from sales of weapons if the federal government had not sponsored the research. The only market for such weapons is our military. U.S. citizens are prohibited from selling such weapons to foreign buyers without government oversight and approval. This is a case of limitations placed on an activity in the interest of national security.

Much of the research being performed at health research centers is paid for with federal dollars. Why? Because healthy citizens are more productive, less expensive to care for and they are a vital part of our society, the service of which is why we have government in the first place. They vote and they want their loved ones to be healthy -- and vote.

How about developing a new elixir that eliminates wrinkles in your skin, grows hair on your head, and makes you appear to be 20 years younger than you really are?

Not much need for government investment here. There are no issues of national security or public health. This type of R&D is purely private sector with all the profits going to the developer of the new technology. Government does have a role to play but that is through the Food and Drug Administration charged with ensuring the safety of such products. …

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