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Grow the Economy by Investing in Research and Development

Hey, Governor Noem! Still looking for South Dakota’s “Next Big Thing“? Instead of paying kids to kill varmints, how about investing in research and development?

South Dakota alone can’t muster the $100 billion a year that MIT economists Jonathan Gruber and Simon Johnson say would jumpstart the American economy, but we could take their advice and redirect our public academic efforts toward science rather than industry:

Gruber and Johnson observe that almost all of the major technological advances that have created good jobs and wealth in the U.S. started as government-funded research projects.  The list is long of technologies that we use every day, and which companies make millions (if not billions) on, but that started as government projects.  That list would include:  Google (original research supported by federal university grants), GPS, speech recognition, the smartphone, the internet, radar, digital cameras, jet engines, and so on and so on.

All of these technologies were either created or nurtured by initial investments by either the military or by federal funds. Would you be surfing the internet on your iPhone if the government had not invested in the underlying technologies that make these technologies possible? Unlikely.

The problem, as Gruber and Johnson see it, as almost all those technologies listed above came from government-funded projects with roots in the 1950 and 1960s.  Since the 1970s, the government has devoted an ever smaller proportion of dollars (as measured as a percentage of GDP) to long-term research and development R&D.

In the place of government, the private sector has stepped in as the funder and large-scale technology research and of big science.  As detailed in Jump-Starting America, the problems with relying on companies to fund technological innovation are that companies either have short-time horizons or that they invest in technologies that are most likely to bring that company economic gains.

Where R&D and big science spending by government tend to spill over to other industries, creating spinoff technologies and lots of new jobs, corporate R&D remains in company labs [Joshua Kim, “Jump-Starting America as an Invitation to a Conversation with Economic Conservatives,” Inside Higher Education, 2019.04.21].

Research, like many of us, follows the Golden Rule: those with the gold rule. Private-sector research serves its corporate masters, meaning cool discoveries and innovations stay locked up in-house. When the public pays for research, the public can rightfully claim the results for everyone’s use.

I would expand that thought to how we focus post-secondary education. Sure, it’s nice to train lots of young people in welding, diesel mechanics, rad tech, and other jobs that we need done right now. But if we focus too much on training kids for today’s jobs, we miss out on the chance to train young people to do the research and dreaming (the two are related) that will create tomorrow’s jobs. To that end, even as industry clamors for our vo-techs and our universities to do their job-training for them, we need to maintain a focus on the liberal arts, the fields of human scholarship that foster critical thinking, creativity, and big thinking that fuel discovery, invention, and, per Gruber and Johnson, long-term economic growth.

Emphasize the Next in Next Big Thing: invest in the research, development, and liberal arts education that has always made America great.

26 Comments

  1. Robert McTaggart

    To play the global game you need an understanding and/or an appreciation of art, history, literature, diverse cultures, and foreign language. You need to write well and speak well. There will be more growth in the rest of the world as they seek our standard of living, so it will be beneficial if we can sell our goods and services to them.

    But to access the STEM jobs that supposedly will be in demand, we need to encourage students to take calculus. Get a minor in math, physics, computer science, or chemistry to go along with the prototypical liberal arts degree (or get a minor in a foreign language or history, etc. if you get a STEM degree).

    You need the dreamers and the do-ers.

  2. mike from iowa

    To play the global game it does not hurt to have a Potus whose IQ is on the sunny side of retarded.

  3. jerry

    Follow China to learn to play the global market. That Belt and Road is a big deal. Wish that we had some kind of idea like that and then, give it a name like Trans Pacific something or other. Now that would be where research and development could combine to lift us out of economic downturn.

  4. Robert McTaggart

    Jerry,

    It’s called I-90 around here :^).

  5. jerry

    I know, that is why we are so stuck. I-90 was built in the 60’s and we haven’t been able to grow our research and development since then. Our brain thrust has thrusted themselves beyond I-90 so now all we have are old farmers and ranchers that only remember how things were done when they were a sprout. Take a look at state government, briefly, I might add, and you will see that they cannot even come to a reasonable idea about a new crop called hemp. Actually, that is an old crop, so the old timers should be able to figure that one out and tell their elected officials to make it happen. Nope, still stuck on I-90 with an empty gas tank.

  6. Robert McTaggart

    How best to use I-90 and I-29 so that economic development and research touch the whole state (both along the highways and in the interior) is the primary question.

    Could be worse…there are areas of the nation with no highway at all. At least we are maintaining and fixing what we have, not building it from scratch.

    What you need to do is find applications that can use intermittent energy without having to burn carbon for back-up energy. Then instead of waiting for batteries to work or sending the wind energy somewhere else, it would have a local impact here. Energy and economic activity are tied together.

  7. jerry

    Apparently you have not heard about the PUC in South Dakota. Those rascals will stop anything that does not have a chance for an oil leak. There is no way to do things here without some rich guy tossing in a few million as seed, thanks Denny for the Dusel, now what the hell are we gonna do with that? Dump these grumpy trumpers and we may see something positive, until then, whipping the oxen down I-90 for the future is our goal. We have some thermonuclear Boeing bombers coming, boy if that don’t make you feel as safe as riding on on of their Apache helicopters. Danger danger that helicopter strap bolt holds the damn rotor on, can’t these jokers do anything safely?

  8. mike from iowa

    B-1s and B-52s are being refurbished so maybe there will be even moar nuke bombers loafing around the state and maybe Mt Rushmore will be leveled for bombing runs.

  9. Robert McTaggart

    Big Science often has an impact when and where you least expect it. The problem is that you don’t necessarily know what those impacts will be ahead of time.

    And I don’t mean the day-to-day economic activity associated with people at the lab living in the region, but that is a not-so-insignificant contribution.

    Something like DUSEL (now SURF) is challenging to do when instant success is requested or demanded, and there is a large upfront cost. But if you don’t pursue Big Science, those other long-term benefits do not happen.

    The biggest of those benefits may be the cohort of students who pursue careers in science or engineering and make contributions in other fields. They may never have gotten into science or engineering if not for their participation in Big Science activities.

    I stipulate that I used to be more involved in SURF, but less so over time. Still a good thing for the state though.

  10. Roger Cornelius

    Why we can’t have nice things.
    According to a Newsweek article last week Trump called former President Jimmy Carter to discuss China.
    Trump had concerns that China is outpacing the U.S. in trade and so many other areas and wanted to know China’s success.
    China does not have to continually upgrade their military, they haven’t fought a war since like ever.
    As a result China spends its money on research and technology and is widely success.
    Anyway, back to South Dakota and Kristi Noem who has to protect us from the dangers of hemp.

  11. Donald Pay

    There was some benefit in the decline of “Big Science.” First, there was a broadening of which science got funded. Biological sciences, environmental science, climate science, computer science and medical research benefited significantly from shifting “Big Science” into “little science.” Second, there was a greater emphasis on multi-disciplinary work. Third, research money was pushed out to more colleges and universities, and scientists became a fixture in government agencies.

    Ecological and climatological data collection, followed by modeling, took off in the 1970s. Air quality monitoring and modeling, ground water research, soil and water chemistry, paleontology, genomic studies and genetic studies, and seismic and geologic studies all benefited as Big Science in physics and space dwindled.

  12. Robert McTaggart

    Ummm…physics and space are needed for all those items. You can’t have remote sensing without a satellite, and the satellite has to get up there somehow.

    Those items even use nuclear science. Neutron activation analysis is one of the tools in the toolkit for environmental analyses and geologic studies. It is complementary to mass spectrometry. X-Ray Fluorescence is another nuclear-related method. Heck, people are interested in detecting geoneutrinos because radioactive decay plays a role in the heating of the Earth’s inner layers.

    Modeling took off because computers got better….due to physicists! The big science we need in that regard is quantum computing. Better performance, less heat loss, less consumption of fossil fuels to run the computers.

  13. jerry

    Doc, I’m not saying that phyics is not important for finding new ways. My oldest has a PHD in that subject. What I’m saying is that South Dakota cannot even grow hemp, little alone any research and development. There has to be a reason for young minds to stay here and feel like they may be on the cutting edge of something important.

    How can you achieve dreams when you stifle them with dictatorship type governing. The people vote for something and government takes their vote away. How can you achieve dreams when your state is a nightmare?

  14. jerry

    Phyics was spelled incorrectly, and I know it.

  15. Roger Elgersma

    Large company research dwindled when the interest rate was twenty percent because research is a long term investment and high interest rates killed it. Not sure if the industries increased research with one percent interest or if quarterly bottom lines kept it out. Now days if it is not high tech computer games etc. the youth coming out of University are looking for the glamor jobs of creating facebook rather than inventing machines or productive technologies.

  16. Donald Pay

    Dr. McT: Yes, physics has its place in “little science,” but I think we should be all done with moonshots and Mars exploration fru-fru. These are political vanity projects, not science. If we do “Big Science,” it ought to be in the climate area. If we do anything in space, it ought to be to get the recycling trucks up there to clean up the place.

  17. Robert McTaggart

    We will need a moon shot to solve energy storage and/or carbon capture at the levels required for ameliorating climate change. Not surprisingly, I am more optimistic about generating carbon-free back-up with nuclear in the near term.

    I agree with you Donald that there is nothing wrong with hitting singles and stealing a base or two instead of trying to hit triples all the time. But we need the all-of-the-above approach. Pursue big science, have the public-private partnerships, and do the research that lives off of incremental improvements.

    And you have to be prepared to fail. Solyndra and Tesla likely fall into that category. Worth trying things out, but at some point it has to make money and be sustainable. The next versions will be better.

    Ultimately research is an investment, and investments have risk associated with them. The bottom line is that risk doesn’t mean you stop investing if you don’t get an instant return on everything.

    SpaceX is one of those companies that is benefiting from Big Science today. NASA took on the big problems, and then farmed out the technologies to private companies to make them better.

  18. Robert McTaggart

    I should add that in order to get to Mars and operate something other than a rover with solar, you will need bulk energy storage to work during the trip and while on the planet (say if there is a sandstorm).

    So NASA is interested in that too. That kind of system has to be more robust in a space environment due to the harsh conditions, and you can’t just call the repair guy to make a house call while in-between planets.

    I guess you could toss the battery into space, but all the materials you take with you are a resource. Here we have the flexibility to dump it and buy a new one.

  19. I want to echo McTaggert’s 13:22 comment.

    Spending the past 16 years watching my wife design costumes and sets wielding both a sewing needle and multi-tool far better than I can, I’d add that a few classes in technical theater might be helpful.

    I want to quibble a bit with Cory’s point about “how we focus post-secondary education analysis . . . . to do the research and dreaming. . .” analysis. He’s right, but my last few years in the secondary classroom made me wonder if the K-12 system isn’t being restructured to destroy creativity before the young’uns know they have it.

  20. leslie

    “UNIVERSAL RIGHTS”- See 1948 UN Declaration

    GREEN NEW DEAL @aoc

    THERE’S A BIGGER PRIZE THAN IMPEACHMENT—Keeping Trump in office will destroy the Republican Party. (NYT, Joe Lockhart, White House press secretary from 1998 to 2000.)

    Trump approval poll 39%

  21. jerry

    With 6,000 retail stores closing since the 1st of January 2019, we better think of something to grow the economy. In Rapid City, 7 major closings in as many months.

    “More store closings have been announced already this year than in all of 2018, according to new research.
    A report from Coresight Research found the retail apocalypse to be continuing, with 5,994 store closings announced in the US this year compared with 5,864 in all of 2018.
    Some retailers including Fred’s and Family Dollar are closing select stores in a bid to stay profitable, while chains like Payless have announced they are shuttering all of their stores.” https://www.thisisinsider.com/retail-apocalypse-start-of-2019-more-store-closures-all-of-2018-2019-4

    When will we have Infrastructure Week with that trillion or two bucks promised by the head Russian to make fix that I-90 and beyond?

  22. Robert McTaggart

    If you think economic development via solar and wind only has the largest base of support, think again.

    https://www.vox.com/energy-and-environment/2019/4/23/18507297/nuclear-energy-renewables-voters-poll

    It is clear that Democrats who were polled expressed a clear preference for solar and wind only (92%). Apparently the strongest demographic against nuclear power consists of those who watch MSNBC and have solar power at home.

    So I know what jerry will be watching this evening. However, I don’t know how he will watch Rachel Maddow at night using solar power :^).

    Republicans and Independents did not respond as strongly to renewables only. Overall the renewable-only approach still received 55% majority support.

    When they include solar, wind, nuclear, and carbon capture in support of “clean energy”, it received 65% support. In other words, clean energy standards had a broader majority. Yes, a little less Democratic support, but more Republican and Independent support.

  23. leslie

    TNBT: MONEYLAND, Oliver Bullough the author interviewed on SD public radio and who spoke at Augustana university, Econ Dept. 4.23.19

    SD Republican entry into the business of international money laundering.

  24. jerry

    By investing in education at all levels, we could help close the gaps we will soon be facing regarding doctors and trained medical professionals. “The U.S. could face a shortage of nearly 122,000 physicians by 2032, according to data from the Association of American Medical Colleges.

    “The nation’s population is growing and aging, and as we continue to address population health goals like reducing obesity and tobacco use, more Americans will live longer lives. These factors and others mean we will need more doctors,” said AAMC President and CEO Darrell G. Kirch, MD, in a news release. “Even with new ways of delivering care, America’s doctor shortage continues to remain real and significant.”

    We will need more doctors, more health professionals, and more facilities along with the infrastructure to operate all. Educations should be key to research and development.

  25. jerry

    Also, follow the lead of China to develop infrastructure projects that would cross this state and join it with others to create an economic corridor of goods, services and passengers. I’ve been to Laos, accidentally, but I have been there. It is a rugged poor place that is rich in heritage (sounds like South Dakota to me). Research and development could begin with the one thing promised by trump, trillions in infrastructure, should be right up Mike Rounds alley for re-election.

    “The numbers by the Lao Ministry of Public Works and Transport are impressive – the Kunming-Vientiane high-speed railway, started in 2016 and to be completed in 2021, features 72 tunnels, 170 bridges and will have trains speeding along at 160 km an hour.

    The China-Indochina Peninsula Economic Corridor is one of the six main BRI corridors identified back in March 2015. These are BRI’s land arteries – the backbone of an intricate, integrated continental landmass featuring multiple layers of transportation, telecom, energy infrastructure, financial, trade, political and economic projects and agreements.”

    These projects take time and effort. We started one of these in California but gave up on it because it was just too difficult. Funny how other countries advance while we stay on I-90 looking for a gas station. We think that 520 miles is insurmountable https://www.theguardian.com/us-news/2019/feb/12/california-high-speed-rail-la-san-francisco-cancelled

  26. Robert McTaggart

    Physics majors score among the highest on both the MCAT (for medical school) and the LSAT (for law school). Which goes to show you the value of a broad-based education that involves technical problem solving.

    However, despite that data over several decades, we have never received an onslaught of biology and history majors who minor in Physics due to math avoidance. College should be about pursuing what you love to do, but it can also help to strengthen what was previously a weakness.

    It is more typical for the Physics major to branch out into other things.

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