The prospect of federal dollars going toward advanced research – including for hybrid and electric car development – has caught its fair share of criticism, but according to a recent twin panel discussion on Capitol Hill, American competitiveness also hangs in the balance.
Objections have included philosophical disagreement with the government “betting taxpayer money” and “picking winners and losers” but what happens when bets pay off?
According to a March 16 discussion sponsored by the American Association for the Advancement of Science (AAAS) and nine other professional societies, many federal bets have fundamentally improved life as we know it.
Fisker and its battery supplier A123 Systems have taken federal money to research and develop product with ultimate payoff yet uncertain. The fear is if they fail, taxpayers lose. The hope is if they succeed, America wins.
As companies like Fisker Automotive contend for a remaining balance of a low interest Energy Department loan – with critics saying it will be “the next Solyndra” – the briefings showed that sometimes the government can also pick winners.
For example, Google’s search engine algorithm was born from a $4.5 million National Science Foundation grant for a Stanford University digital library project. Similarly, federally funded research into lithium-ion batteries, liquid crystal displays, signal compression and magnetic storage devices was credited with the 2001 introduction of Apple’s iPod. And thus far $5.6 billion invested in the Human Genome Project over 13 years has netted an estimated $67 billion economic payoff.
The discussion, as reported by Lab Manager Magazine centered on whether federally backed research and development is worthwhile and concluded there is little question spending has paid off over the years.
Arguments leading to this included those by Fred Block, a research professor at the University of California, Davis, who cited a number of reasons, including a trend by large corporations to cut back on funding.
“The basic innovation system in the U.S. economy has changed very radically over the last 30 years,” Block said. The dominance by large companies has declined, and many scientists and engineers have “voted with their feet,” and have moved to companies with fewer than 500 employees.
The need for the government to get involved was further shown in that out of the 88 U.S. winners of the “R&D 100” awards by R&D Magazine, 77 had federal backing.
“The federal role has permeated the innovation economy,” Block said.
Block also said the public and private long-term value of R&D was revealed in a 2010 study that tracked the growth of output per unit of labor in the U.S. economy from 1948 to 2007. The study used U.S. Bureau of Labor Statistics to conclude that the output grew at an annual rate of 2.5 percent, and 58 percent of that growth was credited to the increase of knowledge that comes from investment in R&D.
Catherine T. (Katie) Hunt, R&D director for Innovation Sourcing & Sustainable Technologies at The Dow Chemical Company said federal R&D programs, which often cross disciplinary boundaries, help to promote new ideas by bringing various pieces of a research puzzle together.
Hunt also said it is important to not only avoid eating the “seed corn” for economic growth, but also to make sure the ground is well-prepared when that corn is planted.
Today it is also not uncommon to hear that the U.S. economic downturn should be countered by fiscal conservatism – a sentiment edging even in the area of tech R&D. This was countered by the moderator for the briefings, Vijay Vaitheeswaran, a senior correspondent for The Economist, who documented fruitful industrial investments that yielded long-reaching positive results began during one of America’s darkest times.
Vaitheeswaran said history suggests great countries, like great companies, invest during an economic downturn. His new book, “Need, Speed and Greed,” cites economic historian Alexander J. Field of Santa Clara University, and Vaitheeswaran contended it was not so much mobilization for World War II that planted seeds for postwar prosperity but rather technological progress achieved during the 1930s and the Great Depression.
“Lots of great companies founded then ultimately paid off,” Vaitheeswaran said.
Today we often hear about China investing heavily in electric vehicles, stacking the deck for its state-run companies, while some Americans decry the U.S. is declining as the “world’s largest auto market” continues on its inexorable rise.
Basing his optimism for the entire U.S. economy on his research, Vaitheeswaran said the U.S. does not have to wind up a loser if it plays its yet-considerable advantages wisely, and invests in technology now.
“It’s wrong to say that just because China goes up, the United States has to come down,” he said denying the fear that we are playing a zero-sum game. “That’s too simplistic. That’s not how innovation works in an open world.”
The knowledgeable speakers shared a conditional optimism, while noting ironies as well.
Hunt – who is also a former president of the American Chemical Society – got laughs when she quoted genius inventor, and former EV advocate, Thomas Edison, who also foresaw solar energy’s potential over 80 years ago.
“I’d put my money on the sun and solar energy,” Edison said in 1931, “What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.”
The speakers observed we’ve missed opportunities, while winning bets also, but said the bottom line is a quantifiable case for government investment has always existed.
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