Subsidizing Research and Technology

Chris EdwardsCongress is considering “The United States Innovation and Competition Act,” which includeslarge new subsidies for research and technology industries. The bill includes $81 billion for the National Science Foundation, $52 billion for semiconductors, and billions for various other programs. President Biden ’s Jobs Plan similarly proposednew subsidies for research and technology.America faces competitive challenges, but a lack of research spending does not seem to be a weakness. Scott Lincicomeshows that U.S. R&D spending has been trending upward in recent decades as a share of the economy.Government subsidies often generate damaging side effects. More subsidies for research may displace private research, steer markets in low ‐​value directions, and tie up researchers in bureaucratic knots. Terence Kealey discusses pitfalls of science subsidieshere.Semiconductor entrepreneur T.J. Rodgers recentlyargued against subsidies to his industry. He noted that “in 1987 the Sematech consortium began spending $500 million in government funds that did zero for the industry,” and that “‘free government money’ induces horribly inefficient spending and undeserved payouts to executives and shareholders.”Technology expert Jeffrey Funk has a great article on innovation inAmerican Affairs. He critiques venture capital markets and current U.S. research funding. I am not on board with some of Funk ’s ideas, but he nicely summarizes the...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs