Government Sponsored Research

As an extension of my thoughts on February 12th....

I was reading through the economic stimulus package today in response to a friend's email blasting several points of the bill. In particular, there was a point arguing against funding research.

If the government is going to crowd out long-cycle businesses as I mentioned a few days ago - the least it should do is make sure that we fund what private businesses would have funded without the crowding out. Society has made a decision that we'd rather limit long-cycle businesses (and research) that have long recessions. If this is going to be our decision, then somewhat must make up for the lost research.

This is not to say that the government does a better job of selecting/performing research than private industry. It simply means that through stimulus, the government has made it impractical for private industry to pursue certain very long research projects. So one cost of shorter recessions is that government sponsors research instead of industry - this seems to at least be an improvement over no sponsorship at all.

One pitfall is - what research is the government selecting? Is it the research that was crowded out? If so - great. If not - than the government's stimulus to research will be an additional crowding out and arguably net negative.