Because we economists, too, feed at the trough of government-funded scientific research, it is important for us to make a special effort to seriously consider arguments that government funding of basic science is not socially optimal. Matt Ridley gives such an argument in his Wall Street Journal op-ed “The Myth of Basic Science,” based on his new book, The Evolution of Everything: How New Ideas Emerge. Let me quote four key passages from the his essay, then give my reaction. I can’t encompass all the ways in which Matt backs up his argument within a set of quotations of reasonable length here, so if you want to argue against Matt, you should read his whole article.

Matt Ridley:

1. Simultaneous discovery and invention mean that both patents and Nobel Prizes are fundamentally unfair things. And indeed, it is rare for a Nobel Prize not to leave in its wake a train of bitterly disappointed individuals with very good cause to be bitterly disappointed.

Patents and copyright laws grant too much credit and reward to individuals and imply that technology evolves by jerks. Recall that the original rationale for granting patents was not to reward inventors with monopoly profits but to encourage them to share their inventions. A certain amount of intellectual property law is plainly necessary to achieve this. But it has gone too far. Most patents are now as much about defending monopoly and deterring rivals as about sharing ideas. And that discourages innovation.

2. When you examine the history of innovation, you find, again and again, that scientific breakthroughs are the effect, not the cause, of technological change. It is no accident that astronomy blossomed in the wake of the age of exploration. The steam engine owed almost nothing to the science of thermodynamics, but the science of thermodynamics owed almost everything to the steam engine. The discovery of the structure of DNA depended heavily on X-ray crystallography of biological molecules, a technique developed in the wool industry to try to improve textiles.

Technological advances are driven by practical men who tinkered until they had better machines; abstract scientific rumination is the last thing they do.

3. In 2003, the Organization for Economic Cooperation and Development published a paper on the “sources of economic growth in OECD countries” between 1971 and 1998 and found, to its surprise, that whereas privately funded research and development stimulated economic growth, publicly funded research had no economic impact whatsoever. None. This earthshaking result has never been challenged or debunked. It is so inconvenient to the argument that science needs public funding that it is ignored.

4. … if the government spends money on the wrong kind of science, it tends to stop researchers from working on the right kind of science. …

… we can never know what discoveries were not made because government funding crowded out philanthropic and commercial funding, which might have had different priorities. In such an alternative world, it is highly unlikely that the great questions about life, the universe and the mind would have been neglected in favor of, say, how to clone rich people’s pets.

Miles: On patent reform, I am in agreement with Matt: current patent law and copyright law errs too far in the direction of giving monopolies that are longer-term than necessary to give adequate incentives for innovation and get in the way of progress in other ways. I address this on the copyright side in several posts:

• Odious Wealth: The Outrage is Not So Much Over Inequality but All the Dubious Ways the Rich Got Richer
• The Wonderful, Now Suppressed, Republican Study Committee Brief on Copyright Law
• Copyright

On government support for basic scientific research, I think there is value to understanding the universe even aside from aiding technological progress, and our understanding of the universe is a public good. If indeed it is true that privately funded research is more productive than publicly funded research, the government can still help by requiring high levels of charitable contributions from people–as I proposed in 

• No Tax Increase Without Recompense and 
• Yes, There is an Alternative to Austerity Versus Spending: Reinvigorate America’s Nonprofits

and discussed further in 

• Why You Should Care About Other People’s Kids as Much as Your Own

Finally, with a clear warning that self-interest could be distorting my views here, I think a good argument can be made that social science research directed at policy-relevant questions will often be underprovided by the private market because it isn’t valuable for making money by those who discover it (that is, it is relatively hard to monetize) but only useful from improving the quality of public policy and literally or figuratively enriching many people a little bit. Of course, there is a real danger of having only the government fund policy-relevant research, because then research on what the government is doing badly wrong is likely to be underprovided. So it is important for private individuals and foundations of a wide variety of ideological stripes to fund social science research.    

Update: Many letters came in to the Wall Street Journal from very smart people disputing Matt Ridley’s contention, collected under the heading “Fundamental Science and Useful Applications.” Among other things, these arguments point out why many empirical approaches would fail to detect all the contributions of basic science. Of course, the issue is whether the subsidization of basic science is important. Other arguments are relevant to that. Here are some of the key points:

• Len Fisher and Ibo van de Poel: Without the very abstract general theory of relativity, your GPS navigation system wouldn’t work. Without the abstract ideas of quantum mechanics, we wouldn’t have lasers and CD players. And without a basic understanding of the structure of the DNA molecule, we would have no chance of tackling many genetically based diseases.
• Leon Cooper: It would have been difficult to predict that the investigations of Maxwell, Lorentz and Einstein in electromagnetic theory would lead to improvements in communications. Few would have expected that Schrödinger and Heisenberg’s quantum mechanics would lead to the transistor and computers, that Townes’s work on millimeter radiation would give us laser surgery. Premature targeted programs to obtain these technologies would have failed.
• Standish M. Fleming: I have worked in venture capital for the past 29 years, primarily in the life sciences. Venture capital, biopharmaceutical and other high-tech industries cluster about major research centers because basic science drives innovation. Venture capitalists literally “walk the halls” of major research institutes in search of breakthroughs, embodied in patents and published papers, around which to build companies. Government financing supports those centers.
• Bob Ward: Matt Ridley neglects to mention that in many advanced economies it is government funding for postgraduate students that ensures successive generations of highly skilled scientists for both the public and private sectors.
• Val Dusek: One major exception to the lack of corporate funding of truly pure scientific research whose payoff, if any, lay many decades in the future is Bell Labs. [I think Val Dusek’s point is that Bell Labs was government-like support of basic research.]