Jay P. Greene's Blog

(Guest post by Greg Forster)

In his Sunday column, George Will advocated a government takeover of the economy. Well, not quite – but close.

Will points out, correctly, that the economy is really, ultimately driven by the discovery of new ways of serving human needs. From this, he concludes that the enormous government regime of subsidies (and consequent control) of “basic science” and other STEM (science, technology, engineering and math) research in universities must not only continue, but be dramatically expanded.

He makes the by-now standard argument for government control of STEM:

1. STEM contributes to the economy through “basic science.”
2. “Basic science” doesn’t yield useable results rapidly enough to show up on quarterly earnings reports.
3. Businesses are incapable of seeing past quarterly earnings reports when making decisions.
4. Therefore, only government (through its hired retainers in the universities) has a long enough time horizon to be entrusted with control of basic science, and hence STEM.

How is this wrong? Let me count the ways.

The error starts right at the beginning. “Basic science” is not what drives entrepreneurial innovation and economic flourishing. “Basic science” is part of the liberal arts and is not all that much different from the study of poetry. It’s about investigating the fundamental structure of the universe simply for the sake of understanding it – just like poetry, in a different way, investigates the fundamental structure of the universe simply for the sake of understanding it. Basic science not only doesn’t produce economic benefits on a quarterly basis, it doesn’t produce economic benefits at all (except insofar as it contributes generally to the maintenance of a humane culture). 

This matters because it is universities who fundamentally drive “basic science,” but not entrepreneurial innovation. There’s a reason Bill Gates had to leave Harvard to found Microsoft.

It’s entrepreneurially minded businesses that drive entrepreneurial innovation and economic flourishing. The assertion that businesses don’t support long-term innovation is false. Some do, some don’t. The ones that do are where the dynamism of the economy comes from. Google encourages employees to spend a set portion of their time working on side projects over which they have total control, and which are not expected to produce defined results; the Google News service was created as one such project. Yes, there are many businesses that can’t see past their quarterly earnings reports. But the solution to that is for a partnership of philanthropy and educational institutions to raise up a new generation of entrepreneurial leaders who can see past their quarterly earnings reports.

If business as a sector is congenitally and permanently incapable of long-term thinking, the United States is scrod, and we should all quit trying to save it.

The worst error is to think that government and universities are capable of better long-term strategic thinking than business. The opposite is the case. Just look at the outstanding examples of long-term strategic thinking we have before us in those sectors today – in government, $14 trillion debt with bailouts, nationalizations and endless Keynesianism (on the right and left) at home, and fecklessness and appeasement abroad; in the universities, a ridiculously unsustainable business model, the most dysfunctional labor policy (tenure) of any sector of society, and a total abandonment of the sector’s core function (education for human life) in favor of hyperspecialization of technical competencies.

The main difference between business and the government/university axis is that business occasionally does really take care for the long term.