Industrial policy for me but not for thee

okay, I’ll bite. While I don’t think the loss of our technological leadership is really on a par with terrorism, from where I’m sitting like it looks like a bad thing.

I’m not an economist, so you’ll have to be patient with my naive understanding of the situation.

The US is losing manufacturing jobs to overseas workers who are willing to do the jobs cheaper (and, perhaps, with fewer benefits and rights).
The US is losing its low skilled service jobs to immigrants, illegal or otherwise, willing to work for the wages.
(And these pressures are driving down the pay for the jobs that do remain in the US.)
With all due respect to the lawyers, lawsuits don’t really strike me as a good way to generate wealth.
On the other hand, technological innovation does seem to me to be a pretty good way to generate wealth and (good) jobs. Furthermore, if we are at the leading edge, it seems a pretty good way to generate exports – and work on that trade deficit thing.

Public funding for university research strikes me as a sensible investment. Grad students work on the cheap. The results get passed to industry, which invests further, creates jobs and wealth, sells products, pays taxes, and hires the students.

Maybe I’m just prejudiced because this pretty well describes my work. University research, spun off to industry, selling products around the world, creating good jobs in the US … and hiring on the H1B because we have to (bringing smart, hard-wroking, enthusiastic, innovative people from other parts of the world to create wealth here). (FWIW, I pay in taxes every year more than the government spent to fund my education in a year – so it certainly looks like a win-win situation.)

Why is it wrong to worry that the brain drain from asia and europe might reverse (leading the best and brightest to leave the US instead of come to it)? Why is it wrong to see funding for research as investment in the economy?

Anecdote isn’t evidence, however, and I’m way out of my depth arguing economics – so correct my misunderstandings.

“The reason people like Friedman offer for the desirability of subsidizing basic research is wrong?competitiveness is irrelevant. But, economically speaking, subsidizing basic research is desirable, as is.”

Okay, I still don’t understand. Why is it desirable, economically speaking, but irrelevant to competitiveness?

Wouldn’t having more scientists and engineers make us more competitive, especially if we are attracting the best scientists and engineers from other countries?

And doesn’t the subsidization of research contribute to this?

If you have, say, better scientists, you may be more competitive in the long run–that’s quite iffy, btw. But the more significant economic point is that, if you help train better scientists anywhere, say in India, their work in basic research–which, for the lack of immediate profit, would not have taken place–can make the whole world better off in the long run.

Indeed, since basic research does not confer immediate benefits, subsidizing basic research probably would not yield much competitive advantage in the short run, and even in the long run, there’s no guarantee that you’ll benefit from it. For example, advances in theoretical physics (a field of basic research) may lead to star trek-type starships centuries later, but who knows who exactly will benefit from this (perhaps an extreme example)? For competitiveness’ sake, better to invest in what you know…and those things don’t need public subsidy.

I should have written “no reason you will benefit from it competitively, since the knowledge probably will not be limited to you only.” Sorry!

When you pay for basic research, you get more than just the knowledge. You get trained scientists and engineers, who can sometimes be persuaded to put their training to use on commercial enterprises or programs serving the national interests.

Where do you think all those scientists who worked on the Manhattan Project came from? How were they trained?

Stanford University’s existence, and to a lesser extent, Berkeley, has a great deal to do with the creation and success of Silicon Valley. As does MIT and the tech beltway of Boston.

There seems to me to be a major multiplier effect, economically, to basic research spending.

I feel a definite thread of animosity in this site to me and my sibling Silicon Valley engineers. Why is that? I’m used to the math-hate and anti-intellectualism of American culture, but I didn’t expect to find it here.

Many of the people including the theorists who worked on the Manhattan Project were refugees from fascist countries where people were persecuted for religious or political reasons.

Few native Americans worked on this because few were very well trained. When our rocket program started, it was heavily involved with hiring Nazis for the same reason.

hmm… is my link on the blink? My reading of that article is quite different:

(1) Restricting visas undermines US science because science flourishes when fed by a stream of new people with new ideas, including people from outside the US;

(2) Basic science education is not being funded properly, but should be because that would provide a domestic stream of people with new ideas… etc, see point (1);

(3) Being good at science will provide a firm foundation for future US competitiveness;

(4) Where the US government is currently spending money on science, it’s misguided and so could be better spent (ie, he’s talking redirection, not expansion);

(5) US investment in science is threatened by the budget deficit.

He doesn’t explain the last point; I suppose he’s worried that the budget deficit is crowding out private investment in science, and that efforts to control the deficit are leading to cutbacks in funding on basic science (whereas taxing the rich more is the answer).

As for “Susie Smith”: I think you’ve missed the point. First, that’s precisely the kind of folksy writing Friedman’s reputation is based on. He could have written “Congress is obsessed by delocalisation and outsourcing”, but it doesn’t have the same zing, does it? Second, his point isn’t to sneer at “Susie Smith”; if anything, it’s to sneer at Congress for protecting industries the US can’t hope to compete in, in the process failing to consider what industries the US SHOULD focus on to compete in the future.

Yes, basic research is good, that’s the political equivalent of saying “I support mothers.” The problem with Friedman’s article is that it’s a misdirection based on total bullshit. Where is the evidence that these Asian countries are becoming more innovative than the U.S? I teach Chinese engineering students. Believe me, they will be lucky if they can reverse engineer a wide mouth beer can. Besides “The war for innovation” makes no sense; How is the U.S. hurt if somebody in India designs a better cell phone? Despite what Friedman’s friends say, most evidence still shows that U.S. companies start factories overseas because of the cheap labor. We are supposed to take his assertions at face value just because they come from “Silicon Valley Executive”?

“Susie Smith” is the real problem with America’s economy. You can educate her all you want but if she can’t find a good job, she’s still screwed. Outsourcing wouldn’t be a problem if the U.S. economy wasn’t based on a ponzi scheme.

Sorry if I’ve said things that have already been said, only stupider, but the thought of my Chinese engineering students competing for the same jobs as M.I.T. students was to ridiculous to pass up. China has at least half a century before it’s education system catches up to mediocre American universities.

“Wouldn’t having more scientists and engineers make us more competitive, especially if we are attracting the best scientists and engineers from other countries?”

May I suggest state-subsidized provision of Hot Babes (or Hot Hunks, according to preference) as partners for well-qualified engineers and scientists moving to the US?