[ExI] Private and government R&D

[Dan]

--- On Mon, 6/29/09, Stefano Vaj <stefano.vaj at gmail.com> wrote:
> On Mon, Jun 29, 2009 at 5:12 PM,
> Dan<dan_ust at yahoo.com>
> wrote:
>> True on one level, but the market generally is better
>> at delivering the goods.  That's the record of history.
> 
> The jury may be still out on whether the goods here means
> "all goods".
> But this is not really my point here.

I'm not sure any system delivers all the goods.  There are constraints.  Even complete socialism in R&D would have constraints.  (I believe that it'd have even more constraints because it's overall productivity would be lower and it'd serve purely political ends.)  Recall Soviet science.  Some fine results, but lots of waste overall and even the few fine results were hard to apply or, worse, were never applied.*  (An extreme case was Lysenkoism, which probably would've quickly failed the "market" test -- as Western scientists not under the sway of Marxist ideology rejected Lysenkoism.)
 
> My point is that the market - as is the case, at some
> level, for the
> politics - deliver *the goods there is a demand for*.
> 
> And it is not the "market" that decide which goods are
> demanded. It is
> the preferences of the economic players (politically, of
> "the
> people"). And such preferences are determined by the
> cultural norms,
> which in turn are generated by the cultural power in
> place.

I agree preferences play a role here.  I'm not sure anyone disagreed with that.  But the point is whose preferences and who pays the bill.  In any system, coercive or voluntary, there will be demands and the system will have ways of meeting those demands.  It seems to me that a voluntary system works better because each person has an effective and efficient way of making her or his demands felt.  A coercive system, on the other hand, does not.  It's inefficient because some people can slough off the costs of their demands on others -- as when a politically influential person or group get the tax base to pay for a pet project regardless of its benefit to the rest of society.  (And how would one know beforehand what's of benefit?  In a voluntary system, one has to persuade people who pay the costs, so there's a check on what gets done.  In a coercive system, one merely has to persuade those who have more coercive power to give some of the loot for this or
 that project.)

It's ineffective because those who are outside or marginalized have no effective demand.  If, e.g., we have a pure democracy, whoever has a simple majority wins.  Those in the minority simply lose.  As Bruno Leoni put it many decades ago:

"To continue our favorite comparison between voting and operating on the market: This argument seems to be the same as saying that we must give a one dollar bill to everybody in order to give each one the same purchasing power. But when we consider the analogy at closer quarters, we realize that in assuming that 51 voters out of 100 are “politically” equal to 100 voters, and that the remaining 49 (contrary) voters are “politically” equal to zero (which is exactly what happens when a group decision is made according to majority rule) we give much more “weight” to each voter ranking on the side of the winning 51 than to each voter ranking on the side of the losing 49." **
 
> This is where transhumanism, or for that matter neoluddism,
> make a
> difference in what the governments or the private sector
> are going to do.

I think there are three differences.  One, what actually gets done may be very different.  (E.g., had government monopolized computer development in the 1970s, do you think they'd have come up with the PC?  Maybe not.  Maybe just everyone having a dumb terminal connected to the big mainframe and complaints about more funding and bigger staffs for the big mainframe.)

Two, how efficiently it gets done might be very different.  Around the time the Wright Brothers were working on powered flight, there was a government funded project to do the same.  The Wrights spent, IIRC, something like $200 to develop their airplane and, IIRC, invented the wind tunnel to keep costs low; they couldn't afford to build full-scale models for each test.  The government funded project, headed up by Langley, used around $70,000 to achieve the same and failed.  That's a ratio of 350 to 1 for the public vs. private effort.  Now, this is probably an extreme case, but I've read elsewhere that publicly funded projects tend to spend from two to ten times more to get the same done than private efforts.  If this is reliable, then it's not to hard to reason that each publicly spent dollar is 50% to 90% wasted effort.  And then even if private funding would spend less -- say, one half to one tenth as much, you'd still get the same sort of outcome
 with less effort...  And have more to spend on other things, including other research.

Third, there are long-term consequences of the kinds of institutions put in place.  Coercive institutions tend to not only grow simply because they lack checks on their size and scope, but tend to teach people in general the lesson that coercion is acceptable.  Thus, coercion begets more coercion; and as there's more coercion, the overall amount of making goes down and taking increases.  (I'm using "making" here to mean making wealth and "taking" to mean taking wealth.  Taking is generally easier -- it's easier to steal than to produce.  Overall, the more people focus on taking, the less making will be done.)

Regards,

Dan

*  Which seems like nothing more than the broken window writ large: lots of investment in R&D with little to show for in the end.  And some of the successes actually were more because of cost constraints...  You've probably heard the joke about how NASA (a publicly funded agecny, no?) spent millions to develop a pen that can write in space.  The Soviet space agency used a pencil.  :)

**  See http://oll.libertyfund.org/title/920/193210 for context.