A Scientist's Salary

A Scientist's Salary

The National Institutes of Health and the National Science Foundation both had their 2003 budgets approved by Congress last month in the United States of America. Capital markets are collapsing all around the world, and the United States isn't the only one attempting to make up for it.

Chancellor Gordon Brown launched a $1.6 billion "upgrading British science" and commercialization effort in 1999. This was on top of the $1 billion that was invested between 1998 and 2002 already mentioned. Both the Medical Research Council and the Biotechnology and Biological Sciences Research Council have had their funding tripled overnight.

An initial $100 million from the University Challenge Fund is intended to go toward employing managers, acquiring intellectual property, building models, or putting together business plans. Another $30 million was invested in high-tech, high-risk start-ups in the United Kingdom.

The UNDP estimates that the top 29 developed countries spend more than $600 billion annually on R & D. The vast majority of this funding comes from the business sector. According to the British Venture Capital Association, private capital in the United Kingdom dwarfs public funding. Since 1983, more than $80 billion has been invested in 23,000 businesses, with nearly half of them in high-tech. These companies employ three million people. In 2001, investments increased by 36% to $18 billion.

However, this British euphoria is a worldwide anomaly.

According to the MoneyTree Survey, even venture capital investments in the once-hot sector of life sciences fell by 11% last year. However, in spite of considerable matching funds and tax credits granted by numerous provinces and the federal government, the Canadian high-tech industry is stagnating, according to the Ernst & Young 2002 Alberta Technology Report issued on Wednesday.

Last year, venture financing in Israel fell to $600 million, a sixth of what it was in 2000. The Israeli government was aware of this dramatic shift in investor opinion and put up 24 hi-tech incubators. However, they are only able to partially meet the financial requirements of fewer than 20% of the proposed projects.

Attempts are being made by governments to rationalize and cut costs as a result of the dramatic reduction in private support.

Proposals to consolidate New Jersey's three public research institutions were recently made by the New Jersey Commission on Health Science Education and Training. The already tense relationship between academia and government is expected to be stressed further as federal and state budget deficits soar, particularly with respect to research objectives and the distribution of ever-shrinking resources.

Because of the ambiguity of the relationship between technology and science, there is bound to be a certain amount of friction. There are certain technical advancements that lead to new scientific areas, such as the emergence of metallurgy, computer science, and solid-state physics. Take semiconductors and biotechnology as instances of how scientific discoveries may lead to technical advancements, although in a roundabout way.

Because the technology sector only represents a small portion of research and development, it's reasonable to state that it's possible to generalize that this is the case. There are billions of dollars invested each year in both fundamental and applied research by the military, universities, institutions, and businesses across the globe. In the world of pure science, however, governments are by far the most significant funders.

Science is usually seen as a public good since its advantages are shared by all of its participants. Instead of making new discoveries that are widely duplicated, rational people would be better off sitting back and copying what others have already done. The government must step in and give them incentives to develop.

Many people and many economists see science as a product of government-funded colleges and the military. Some of the most well-known instances of how military science has benefited civilians are the jet airplane and the Internet. Science that is nonrivalrous (i.e., public domain) is critical to the pharmaceutical, biomedical, information technology, and space sectors, all of which are privately owned.

The majority of 501 firms questioned by the Department of Finance and Revenue Canada in 1995-6 said that government assistance enhanced their internal cash flow, which is a significant aspect in the decision to do research and development. Most recipients took advantage of the tax breaks for seven years, during which time they saw an increase in employment.

Without effective capital markets and adventurous capitalists, some emerging nations have carried this predisposition to the extremes. Nearly all R & D in the Philippines is funded by the government. FDI inflows have plummeted by roughly three-fifths since 2000, making governmental engagement even more critical.

The tendency, though, isn't a universal one. In South Korea, for example, private venture capital currently accounts for four fifths of all R & D investment, notwithstanding the Asian turbulence of 1997 and the worldwide slump of 2001.

As a result, advocating for government involvement in research on a widespread scale is a step too far. The vast majority of real-world R & D is still carried out by for-profit corporations. It is fairly uncommon for private foundations and endowments to fund "pure" research, which is not tainted by commercialism or avarice.

Furthermore, the colleges that serve as conduits for government engagement in research are only marginally linked to economic growth. It is clear from Alison Wolf's pioneering book on education at the University of London, "What's the point of education? Economic Growth and Education Myths Research released last year found that more learning and more access to universities does not inevitably lead to greater growth (though technological innovation clearly does).

Professor Terence Kealey is a clinical biochemist, vice-chancellor of Buckingham University, and author of "The Economic Laws of Scientific Research." He is one of an increasing number of experts who question the intuitive relationship between state-supported science and economic advancement. In an interview with Scientific American that was published last week, he explained how he determined that: "Japan, the country that invested the least in research, grew the quickest among the leading industrial nations. Japan's science grew as a result of a laissez-faire approach. Its science was much superior to that of the United Kingdom or the United States. France and Germany, the nations with the second-lowest investment, grew the quickest. All three were in dire financial straits at the time, but they invested the most heavily in their economies. "

The Economist agrees that governments have a hard time picking winners in technology. Innovation and research thrive in places with strong intellectual property laws, a well-functioning financial system, a "thinking outside the box" mentality, and a long history of excellence.

Red tape and trade barriers can only be eliminated by the government, while infrastructure and institutions can help move things in the right direction. In the beginning, tax incentives were critical. However, if authorities get involved, research would be ruined, and scientists would be furious.

Even so, there is a severe dearth of governmental and private support for research.

Government expenditures are ideologically limited and often misdirected. They are also ineffective and irregular. The Superconducting Super Collider and a slew of other billion-dollar military projects have been unexpectedly shelved in the United States. In addition, some of the information gathered through government-funded studies is off-limits to the general public.

It's possible that industrial money is worse. You have to accept that there are strings attached to it. Corporate contributors, for example, have withheld drug study data that may be harmful to their bottom lines. There are few businesses that are willing to invest in fundamental research as a "spillover advantage" that would eventually help their rivals. Innovation is stifled because of this natural hesitation.

There's no shortage of ideas on how to make this circular square.

Former Princeton biotech chief executive officer Donald Drakeman was quoted in the Philadelphia Business Journal proposing last month that pharmaceutical corporations be pushed into repurposing technology that they have decided to shelve. Johnson & Johnson and Merck could produce their own start-ups in the same way that Harvard, MIT, Stanford, and Berkeley produce their own start-ups out of their research.

The Bayh-Dole Act's corporate counterpart would be this. According to the law, academic institutions and researchers were given ownership rights to government-funded innovations and discoveries. This sparked a surge of self-financing enterprise that had never been seen before.

Since then, the number of university patents has grown tenfold, and more than 2200 spinoff companies have been formed to monetize the results of research. They produced $40 billion in GDP and created 260,000 jobs as a result.

The Economist's Technology Quarterly estimates that for every $1 invested in research, up to $10,000 is required to get it to market. There should be a clear and mutually beneficial division of labor between government and private capital, with the government picking up the bill for fundamental research and the private sector taking on the remainder.

This, of course, presents a slew of controversial questions.

As a kind of covert subsidy, such a plan may make businesses dependent on the government for improvements in pure science. Pig-barrel politics and the imposition of "national objectives" will lead to a vast misallocation of precious resources in research. NASA is a tragic example of these hazards, with its "let's put a man on the moon (before the Soviets do)" mission and the pointless International Space Station.

Only science is a product of a person rather than a group effort, making it a valuable public asset. It's tough to overcome this internal struggle. As a general rule, why should the government's money be used to help entrepreneurs? An alternative strategy used by capitalists motivated by short-term gains is the creation of intellectual property rights (IPRs). Why would they, as obligated as they are to do so by their profession, provide this bountiful bounty to others?

Basic research and applied science have long had a tense relationship. Scientific discovery has grown in importance as monetary rewards for scientific discovery have increased and commercialization resources have risen. A great deal is at risk here, even the very future of science itself.

If governments were to stop funding fundamental research, it is probable that it would cease to exist. Applied science and entrepreneurialism would suffer if they micromanaged it. In light of the current status of both institutions and start-ups, it's a delicate balancing act.