Archive for January, 2009

Investing Abroad, Investing at Home

Posted by Chris Moody

On the campaign trail, then-candidate Obama spoke against policies that give companies tax breaks after shipping jobs overseas.

“I will stop giving tax breaks to corporations that ship jobs overseas, and I will start giving them to companies that create good jobs right here in America,” Obama said.

Now as president, there’s little doubt he will put those promises into action.

In today’s Cato Daily Podcast, Dan Griswold, director of Cato’s Center for Trade Policy Studies, explains why singling out those companies now for tax hikes can have a particularly painful negative side effect.

“When they talk about shipping jobs overseas what do they mean exactly? Well, if they mean U.S. companies investing in operations abroad then you’re indicting pretty much all of corporate America,” Griswold says.

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National Science Foundation “Stimulated” Enough

Posted by Tad DeHaven

The House version of the “stimulus” plan being developed in Congress would give the government’s National Science Foundation (NSF) an extra $3 billion, in part, to “put scientists to work looking for the next great discovery.”  Three billion dollars is a considerable chunk of change given that the NSF spent more than $6 billion in fiscal year 2008.

A story in today’s Politico says that Senator Chuck Grassley (R-IA) wants more details on a NSF Inspector General finding that “NSF employees have been spending significant amounts of company time on smut sites and in other explicit pursuits.”  The report states that one senior NSF official “had been repeatedly and excessively visiting pornographic websites and spending up to 20 percent of his official work time viewing sexually explicit images and engaging in sexually explicit on-line ‘chats’ with various women.”

I didn’t take the time to read the entire 68-page report, but what I did see was replete with examples of wasted taxpayer money by NSF employees and grant recipients.  For instance, the section prior to the porn finding discusses one NSF Don Juan who “based NSF-funded travel decisions, at least in part, on his desire to further personal relationships with women, some of whom were affiliated with NSF.” Right prior to that we learn that a Colorado grant recipient spent taxpayer money on booze for “workshop” attendees.

These examples of tawdry behavior at the NSF invite a bigger question: should taxpayers be forced to fund scientific research to begin with?  The majority of scientists would probably reply that the government doesn’t spend enough.  Then again, it’s hard to find any group that has developed a dependency on taxpayer largesse who will say otherwise.

One scientist who thinks the government shouldn’t fund scientific research is Dr. Terence Kealey, a clinical bio-chemist at the University of Buckingham in the UK.  Dr. Kealey made some interesting observations in a piece he wrote for Cato a while back called “End Government Science Funding.”

Without government funding of science, the United States overtook Britain around 1890 as the richest country in the world. So strenuously did Congress disapprove of federal involvement in research that it refused James Smithson’s bequest in 1829 and only grudgingly accepted it in 1846. (His gift helped establish the Smithsonian Institution.)

Further, government funding of university science is largely unproductive. When Edwin Mansfield surveyed 76 major American technology firms, he found that only around 3 percent of sales could not have been achieved “without substantial delay, in the absence of recent academic research.” Thus some 97 percent of commercially useful industrial technological development is, in practice, generated by in-house R&D. Academic science is of relatively small economic importance, and by funding it in public universities, governments are largely subsidizing predatory foreign companies.

In a 2003 interview with Scientific American, Dr. Kealey had this to say:

Research and development, which is a wider category, is largely funded by the private sector [for industrial purposes]. There’s no doubt in my mind that if government didn’t fund science, there would be significantly more private funding even for academic science. By “academic science” I mean pure or basic science as opposed to university science; the latter would dwindle, but the former would grow within industry. My belief–and it’s based on historical evidence of how good American science was before 1940–is that you have significant foundations [that would fund pure science]. Indeed, in my book I pointed out that quite a lot of the big foundations of science preceded 1940, and then after the huge influx of American government funding, people said, “Well, the government’s doing that,” and they started turning their attention to other things. More recently we’ve had people like [Bill] Hewlett and [Dave] Packard and others leaving billions to endow research, as the government started to withdraw slightly from that activity.