Monday, October 28, 2013

Government Funding and the Creation of Strife

I have written several times on the belief, sadly shared by many on the right as well as the left, that it is the proper role of government to fund research, as well as arts. Of course, the sides differ as to who and what should be funded, but, inevitably, when I mention eliminating all such funding, comments about Medicis and the space race and all the supposed benefits will be mentioned, with the clear implication that government funding is the sole reason for most human progress. (Ignoring for the moment that the Medicis, and many other Renaissance patrons were actually private patrons who happened to also hold government posts, though under some aristocratic systems the distinction is a bit hard to determine with precision.)

As I have already written about the many ills caused to artists by the patronage system1, I will look today at two other other problems, closely related to one another. First, I shall look at the very simple question of how funding should be allocated between the many competing priorities, and, second, I shall look at how that question -- assumed by so many to be quite easily solved -- results in tremendous civil strife, while producing little or no obvious benefit. Along the way, I suppose I will need to address a third issue as well, the problems caused by comparing obvious, realized benefits, with lost potential gains, as it will be hard to make my case without discussing it.

Actually, as it will do nothing but break up the flow later on, let us quickly cover that secondary topic now, so we can return to our primary point. It is a point that should be familiar to anyone who has read even a little writing by free market economists, most often introduced with a reference to, or quote from, the writings of Frederic Bastiat -- either attributed or not -- especially his writing about the dubious benefits of broken windows. The basic concept is this, while we can often see the benefits brought about by government spending, but what we do not see is how that money would have been spent otherwise. The most famous example being a window, broken by some malefactor. Looking at the window, one could think the damage a blessing. After all, it created work for the glazier, allowing him to spend more on food and clothes, helping the merchants selling those, and so on. However, what is not seen is how the money would have been spent had the window not been broken, all the benefit that would have brought, and at the same time leaving us ahead one window2. In short, while it may seem through very simple analysis that breaking windows makes work and brings prosperity, the truth is, that money would have been spent had the window not been broken, bringing just as much, or more, benefits, and we also would have one additional window.

A similar problem often arises when discussing government funding of the sciences (and to a lesser degree the arts), though it takes two slightly different, but closely related, forms.

First, there is the argument from historical evidence, that is, pointing out the discoveries supposedly attributable to government funding, such as velcro or the internet (well, DARPAnet). This argument is problematic for several reasons. Mostly, because we cannot look at counterfactual histories. That is, we cannot say "were there no government funding, researchers would still have followed those same lines." Or "velcro might not have been discovered, but this wonderful other discovery would have been made, which we now do not have." Thus, it is impossible to say whether or not a given discovery would have come about without the government being involved. We can say that government funding probably did push research into certain channels it would not have otherwise followed and thus likely hastened some discoveries. On the other hand, if funding were determined by private funding, most money would have been put into areas more urgently desired by consumers and thus the potential discoveries would probably have been more satisfactory to the public in general. However, that is also speculative, and in some cases it is possible private research would have produced little or nothing while the state funding produced much. The point here is not that government funding is worse than private, just that there is no way to tell (1) what to credit to government funding and (2) what other discoveries, if any, were not made because of that funding. Thus, it is foolish to point to government funded discoveries and treat them as cost-free triumphs, as they may have happened anyway, and they may also have cost more than we will ever know.

The second problem with discussion of government funding is that proponents often imagine that a world without government funding would look almost identical to the present, save for the elimination of government subsidies. For example, they will ague that, were government funds not provided for disease research, we would have very little progress, as current private funding is scant, and mostly focused on handful of disease where medication brings high profits. The problem with such arguments is that they forget that government funding has changed the world, and its elimination would cause other changes. To draw an example from another field, when I discuss changing from public welfare to private charity, many think private donation would remain at present levels. But this ignores two factors  -- or probably more. First, that present donation is reduced by the amount of income which is taxed away to support welfare. Were this available for private use, donations could easily rise. Second, individuals now can reassure themselves that, because of welfare, the impoverished will always have food and shelter. Were welfare gone, they would feel a greater urgency to give, and would have more money with which to dos so. In short, our present behavior is shaped by welfare's existence (or by government funding) and to eliminate either would change the world as well. And that is why I think it absurd to look at present research funding and imagine it is the model that would continue to exist were funding from the state eliminated. Not only would more money be available, but individuals who had a strong interest in any area of research would feel the need to help fund it, as the researched, unless commercially viable, would not have the state as a safety net, making private donation a more pressing need, and inspiring potential donors to give in larger amounts.

As you can see, this case is not identical to Bastiat's broken window. In that case, there was a clear net loss, in terms of the broken window at the very least, while in this case I cannot conclusively show that public funding is inferior. But then again, I do not have to. I can make some persuasive arguments based on the likelihood of private research following lines of research more likely to fill the public's most urgently felt needs, the tendency of bureaucratized government to waste more resources, the ability of private firms to avoid political orthodoxies likely to lead to false starts and dead ends, and so on. However, such persuasive arguments are not proof. But we do not need proof here. What I intend to show is, while the supposed benefits of public funding are impossible to prove, and possibly imaginary, there are some very real downsides, and, at the same time, there is no foundation to many of the claims made in favor of government involvement -- such as the ability to more efficiently direct research -- and thus, as it brings little or not clear benefit, yet clearly does considerable harm, there is little justification for pursuing this course of action. (Of course, I can't resist closing with a few asides along the lines of those "persuasive" arguments I mentioned, which hopefully will serve to make my case that much more convincing.)

So, having set forth my argument, and having shown the impossibility of proving the benefit of government subsidy, let us move along to the next point, and the main focus of my essay, or should I say two points, as we will need to look at a pair of related points. First, the troubles caused by attempts to choose how to allocate our resources, and then, second, and even more important, the impossibility of finding any means to rationally choose that allocations.

I suppose it would make more sense, at least from some perspectives, to start by asking how one should allocate the funds available to the various choices. But in this case, I think the method itself, though it shall be of interest later, is of less immediate interest than the consequences of making such a decision. That is, from the political perspective, it is less interesting to ask how funds will be allocated than to examine how much strife comes about from deciding such questions.

This topic came to mind today when I was considering how politicized the questions of funding research into certain diseases has become. Or not just funding, but anything to do with certain ailments. The two most obvious being breast cancer and AIDS, diseases which have ceased being simple illnesses and have become causes. But it is not just funding for diseases attached to political agendas. At various times, public or government attention can make other topics become "hot button" issues. Thimerosal, autism, depression, Alar, global warming and so on. All of these have gone from being academic questions to becoming political debates, and have turned the question of government funding into a means by which we announce our political identities, or measure the worthiness of others.

What is interesting is that there are many equally contentious issues in our private lives, and yet we rarely see such acrimony over these topics. We accept that others choose religious beliefs, select schools for their children (if they can afford private schooling), select their own books, films and so on, yet we do not get into shouting matches over such things. For example, what films are shown in schools can often create hard feelings, sometimes to the point that we need to forcibly separate parents. On the other hand, what films you show your own children rarely rankles other parents3. Perhaps they will raise an eyebrow, or say you're a dolt, but that's it. Private choices are generally treated as just that, private choices, and rarely bring about any hard feelings or public disorder.

So, why does this change when we talk about government money? When the money is being spent on public schools? Or, more to our topic, when it is being used to fund public research?

Let us look at a hypothetical example. Were some researcher to find private funds to sponsor a study into the effects of beer and garlic on the appetite of leeches, most of us would have no objection. We might still chuckle about it, or about a study on the walking behavior of snakes4, but we would not begrudge the sponsor the right to spend his money, nor the researcher's right to ask for it. However, once it becomes a government funded project, suddenly we are quite upset by the stupidity of the topic, and for a number of reasons. First, because it is, at least in part, OUR money they are wasting, and without asking us. Second, because we recognize that government money is limited, that government funding is a zero sum game, and every dollar taken from research to give to stupid projects is money that will not go to valid research. And, since taxes and overhead takes away a lot of available research funding, government funds are a considerable part of any project. That is, government funds give you a big leg up over those looking for private funds5, and to give such an advantage to something we find absurd or offensive upsets us.

Or, to turn to a more prosaic example, we often hear complaints about how little money is going to study breast cancer or AIDS (inevitably meaning, of course, government money), or the opposite, complaints that funding for politicized ailments such as AIDS and breast cancer detract from diseases such as heart disease that kill far more. In both cases, the resentment is not precisely that money is being spent, we would not begrudge someone spending every last dime to cure her own case of breast caner or fight his AIDS, what we resent is the choice made with government funds, with funds that we are told are collective, shared, are, in essence, OUR money. Since the funds come from the public, the public feels a right to decide where those funds go, and, since "the public" is made up of millions of souls with millions of different perspectives, any solution is going to lead to nothing but conflict. Every individual will have his own priorities and reasons he finds perfectly reasonable to support those priorities, and, as a result, no matter what the choice made, many souls will find it not just objectionable, but irrational, and feel very angry that such a foolish plan was embraced.

Some may ask at this point how private funding would be any better. And, in one sense, it won't. No system will ever match the ideal system envisioned by each of us. But, as I have pointed out, we tend to only become so angry when we discuss public funds, not private contributions. In addition, when funding is private, there is no single target, no one source of irritation as there is with government. You could be upset with each contributor, I suppose, but each will argue he has the right to give as he sees fit, and will have his reasons for his donation, and, in the end, we tend to accept those arguments from individuals, just not form the state. And thus, in the long run, private funding will just not create the situations which create such strife when public funding is used.

And private funds have one other advantage. As private funding tends to be allocated either by private donors or profit seeking enterprises, it tends to follow closely the pattern which produces the greatest satisfaction for the most individuals. After all, those with money to donate tend to be those who are best at meeting public wants. Thus, they tend to be good bellwethers of the public mood, and their giving will inevitably follow much the same pattern. This is especially true of the for profit companies, which will donate primarily to those ventures likely to be profitable, which means, those likely to satisfy a strongly felt public want in a reasonable amount of time. This tends to make the funding follow closely upon the needs most urgently felt, and thus has the least probability of producing those heated emotions politicized government funding does.

Of course, there is the one objection we hear most often, or rather two related objections. First, that there simply will not be sufficient public funding if the state did not fund research. Second, that there may be funding, but it would be haphazard and not go to where it is "really needed". But both suffer from the same problem, that is, confusing the prejudice of the speaker with objective reality.

Who is to say what is "enough" research? If an individual would give $10 if allowed the choice, but is forced by the state to contribute $20, which is "right"? Why is the government official better able to determine what is the "proper" amount of research? What makes a politician expert in all fields and more capable of spending money than those who produce and earn it?

And that is the true problem with most arguments for public funding. They rest upon the idea that there is some optimal, objective best amount of research, and in truth, there is none, there are simply a host of individual opinions, some of which are granted government power to confiscate wealth. In the end, the "right" amount, at least if we are looking to produce the solution which provides the greatest overall satisfaction, is the one which each individual would set with his own money. It may not please others, but in the long run, just like the free market in all other aspects of commerce, allowing a free market in contributions toward research will produce the most satisfactory result for the greatest number. It may not be perfect, it may sometimes make false starts, but that is true of all systems.

And, unlike public funding, it will not produce the angry, contentious circumstances we so often see around us concerning public financing of science, medicine and the arts.


1. As is the case with most of my writing, the majority of these older posts are not currently available, as has taken down its blog pages and has not provided me with an export I can move to a new site. I do have manually saved copies, but it is tedious to remove the formatting and then reformat them, add tags and fix links addresses, so they will work on a new site. Especially as I have about 4000 posts to process. However, I do have a few essays on this topic that are posted on this blog, but to flesh out the subject, I also ported over a handful of old articles to this blog, so I wouldn't be left with a lack of citations. So I can now direct interested readers to "Patronage", "The Inherent Disappointment of Authoritarianism", "Missionary Zeal and Human Discord", "Harming Society", "In Loco Parentis", "The Danger Inherent in Banning "Bad Ideas"", "A Question for Artists of the Left" , "My Censorship is Your Discretion" and "Moral For Me, But Not For Thee".

2. The most common version of this silliness is the idea that war stimulates and economy, or that was brings us out of depressions. In truth, war destroys massive amounts of wealth and leaves us much poorer. We may be more busy, as we need to replace all that was destroyed, but we are busy because we are impoverished, it does not make us rich. As I wrote in an article currently unavailable, if anyone believes this theory, let him burn down his house. He will be quite busy working and saving to buy a new one and replace the contents, but is he wealthier because of it? If not, then how do we think a similar situation benefits a nation?

3. In a few cases social conservatives will decide a given film is destroying society, or their mirror image among the PC liberals will decide it is offensive to some minority group, and these professionally aggrieved individuals will take to the streets demanding no one be allowed to be offended by this film. However, they are a relatively small minority, and, for the most part, on the political fringe. Most Americans seem to believe their fellows are capable of making individual decisions about private matters, even those involving their children.

4. Both of these studies actually existed. The leech one was used for quite some time as an example of absurd research by those objecting to government waste. The other, the "walking behavior of snakes" was a research project conducted by a professor I knew through my ex.

5. Because government funds are reliable and generally generous (at least as generous is defined in the world of research funds -- well, especially after the dot-com, telecomm and biotech booms ended), the advantage gained by those who are good at getting government grants cannot be overstated. It is one of many reasons why it seems so unfair for funds to be given for ludicrous projects, as it not only wastes those funds, but also helps establish the author of such absurdities for success in future projects.


  1. Can't argue with that one, Andrew. Good post!

    1. I'm glad you enjoyed this one. I have not been writing quite as much, but have been trying to make up by reposting some old posts from TH.