Downsizing Science Dow-nsizing Science Will the United States Pay a Price? Kenneth M. Brown The AEI Press Publisher for the American Enterprise Institute WASHINGTON, D.C. 1998 Distributed to the Trade t~ational&x)kNetwork; 15200 -NBN Way, Blue Ridge Summit) PA 17214. To order call toll free t~-462-6420 or 1-717-794-3800. For all other UlqUirie.S please contact the AEI Press~ 11.50 call1-80()~62~-5801. Seventrm.th Street, N"W' j Washirlgton, D.C,. 20036 or AEI wishes to thank the David and Lucile Packard Foundation for its support for this project. Library of Congress Cataloging-in-Publication Data Brown, Kenneth M., 1939- Downsizing science: will the United States pay a price? / Kenneth M. Brown. p. em. Includes bibliographical references and index. ISBN 0-8447-4026-8. - ISBN 0-8447-4027-6 (pbk.) 1. Research-Government policy-United States. 2. Federal aid to re- search-United States. 1. Title. IN PROCESS 338.973'06-dc21 96-32749 CIP 3 5 7 9 10 8 6 4 2 © 1998 by the American Enterprise Institute for Public Policy Research, Wash­ ington, D.C. All rights reserved. No part of this publication may be used or reproduced in any manner whatsoever without permission in writing from the American Enterprise Institute except in cases of brief quotations embodied in news articles, critical articles, or reviews. The views expressed in the publica­ tions of the American Enterprise Institute are those of the authors and do not necessarily reflect the views of the staff, advisory panels, officers, or trustees of AE1. THE AEI PRESS Publisher for the American Enterprise Institute 1150 17th Street, N.W., Washington, D.C. 20036 Printed in the United States ofAmerica Contents FOREWORD, Claude E. Barfield ix ACKNOWLEDGMENTS xi 1 INTRODUCTION 1 THE END OF THE GOLDEN AGE 3 2 Budget Pressures 5 An Overview of the Research Enterprise 9 The Age of Science 11 The Golden Age Comes and Goes 13 Conclusion 18 MEASURING THE COSTS OF DOWNSIZING 20 3 R&D as a Source of Economic Growth 21 R&D as an Investment 25 Would Downsizing Be Costly? 28 Conclusion 33 A BROADER VIEW OF THE BENEFITS FROM SCIENCE 34 4 More than Economic Benefits 35 Other Unique Aspects 41 Questionable Benefits 42 Conclusion 42 v CONTENTS A VITAL BUT LIMITED ROLE FOR GOVERNMENT 44 5 Reasonable Limits 46 Criteria for Evaluating Programs 48 Contrary Views 52 Conclusion 53 JUST ANOTHER DOWNTURN? 55 6 Worrisome Signs 55 Attitudes toward Science 57 Ignorance of Science 58 Science and Higher Education 59 A Negative View of Scientists 60 Conclusion 61 THE FEDERAL LABORATORIES-FIRST, DECIDE ON A MISSION 63 7 Downsizing Federal Laboratories 64 "Mission Lurch" 70 Living with Lower Funding 75 Conclusion 78 THE ESSENTIAL FEDERAL ROLE IN ACADEMIC RESEARCH 80 8 The Washington Connection 82 Impacts of Downsizing 84 Conclusion 90 IMPROVING THE ENVIRONMENT FOR INDUSTRIAL RESEARCH 92 9 What Price Federal Downsizing? 92 How Healthy Is Industrial R&D? 95 Reactions of Industry 101 Other Federal Policies and Funding 104 Conclusion 105 INTERNATIONAL DIMENSIONS OF DOWNSIZING 108 10 U.S. Leadership, Past and Present 108 U.S. Leadership, Future 110 Looking Ahead a Few Years 114 Implications of Relative Decline 115 How Much Is World Leadership Worth? 117 That Old Shibboleth "Competitiveness" 120 Implications for Policy 121 Conclusion 124 vi CONTENTS THE PRICE OF DOWNSIZING SCIENCE 125 11 What Are the Alternatives? 128 Reflecting on the Future 132 NOTES 133 INDEX 145 ABOUT THE AUTHOR 153 LIST OF FIGURES 2-1 Funding and Performance of U.S. Research and Develop­ ment,1996 10 2-2 U.S. Funds for Reseach and Development, 1957-1996 14 2-3 Science and Engineering Doctorates Awarded by U.S. Universities,1957-1995 16 5-1 Private and Social Benefits from Research and Develop­ ment 45 7-1 R&D Performed by the Federal Government, 1957-1996 65 8-1 R&D Performed at Universities, with Sources of Funds, 1957-1996 81 9-1 Federal and Industry Funds for Industrial R&D, 1957­ 1996 93 10-1 U.S. Share of World R&D Expenditures, 1961, 1993, and 2003 115 vii Foreword KENNETH BROWN'S COMPREHENSIVE study of the potential impact of "downsizing science" is one of a number of studies the American Enterprise Institute has commissioned as a part of a major research project launched in 1996, entitled "The Science Enterprise in the United States." Other recent studies published in this series include an assessment of Vannevar Bush's Science-The Endless Fron­ tier from the perspective of the 1990s, a multiauthored volume on future challenges to biomedical research, and an evaluation of the Clinton administration's Advance Technology Program. In coming months, AEI will publish analyses of the difficult issues posed by intellectual property rights in the field of biotech­ nology and an evaluation of the economic results of public-private research and development partnerships. In this study, the author reexamines the rationales that have been advanced for public support of scientific research and evalu­ ates these rationales in light of current economic theory and political realities. He reviews and assesses the nature and scale of purported benefits to society from science. ·Using a "public goods" analytic framework, he then develops criteria for assessing federal programs and funding priorities. In succeeding chapters, he applies those criteria to programs directed to the research universities, to the national laboratories, and to recommendations for public policy, including greater reliance on market solutions and the private sector. In a closing statement, he argues: ix FOREWORD Maintaining U.S. excellence in science is not an impossible dream, like ridding the world of crime or narcotics. It is not a problem of exploding costs, as with social security or Medicaid. It does not even require building vast new infrastructure and creating new institutional arrangements; most of what we already have is sufficient. The gap be­ tween excellence and mediocrity is measurable in the low billions of dollars per year. Clearly, continued excellence in science is within the nation's reach. CLAUDE E. BARFIELD Director, Science and Technology Policy Studies American Enterprise Institute x Acknowledgments I thank Neal Lane, Bennett Bertenthal, Cora Marrett, and Jeff Fenstermacher for granting me leave from the National Science Foun­ dation to write this book. Equal thanks to Christopher DeMuth, Claude Barfield, and David Gerson for their generous hospitality at the American Enterprise Institute. Thanks to these people who helped by reviewing drafts, pro­ viding information, and editing: Dennis Avery, Cynthia Beltz, Wil­ liam Blanpied, Jennifer Bond, Allyson Brown, Lisa Bustin, Eileen Collins, Ed Dale, Donald Dalton, Charles Dickens, James L. Edwards, Richard Florida, Murray Foss, Howard Gobstein, Mary Golladay, Mark Griffin, Margaret Grucza, Alan Hale, Eric Hanushek, Robert Helms, JohnJankowski, Jean Johnson, Marvin Kosters, Kei Koizumi, Dana Lane, Charles Larson, Jennifer Lesiak, Clarisa Long, Ronald Meeks, Leonard Nakamura, Shanna Narath, Richard Nelson, Steve Nelson, Dan Newlon, Peter Sharfman, and Mark Symonds. Finally, thanks to my wife, Agnes, for her patience and support during the months this book was underway. xi 1 Introduction THESE TRADITIONAL JUSTIFICATIONS for federal science funding are ingrained in discussions of science policy: • Science produces tremendous benefits for the nation. • The federal government must help support fundamen­ tal research because industry and private sector donors will not do enough. • The United States must be a world leader, or close to it, in every field of science. These principles, however, are inconsistent with current re­ alities. Federal funding of science has been reduced and will be reduced more, regardless, apparently, of whatever benefits may be lost. Some have proposed more direct federal assistance for industry, even though industrial research is growing. Scientific advances in other countries, especially inAsia, may erode the U.S. position of world leadership. Yet current plans for downsizing science endanger fundamental research in particular, where the rationale for federal support is strongest and which is vital to con­ tinued world leadership. What is going on here? Are the principles wrong, or the poli­ cies, or both? One thing is clear: federal funding for all 1/discre­ tionary" programs, including science, is under extreme pressure that will surely increase during the next several years and into the next century. Significant reductions in federal funding for sci­ entific research seem inevitable. 1 DOWNSIZING SCIENCE This book reexamines the rationales for the governmental role in science in an effort to shape an efficient policy response to tighter federal budgets. First, it looks at the nature and magni­ tude of the benefits from science. Next, it draws on the "public goods" argument for federal support to develop criteria by which to evaluate federal science funding: which programs should have the highest priority for continued support and which could be dispensed with most easily? How to define and allocate intellec­ tual property rights clearly looms large in this new context: with greater dependence on nonfederal funds, the nation's legal frame­ work for intellectual property rights will become increasingl)' important. Finally, the book addresses how the United States will fare with a downsized science establishment: the fact of downsizing is at odds with the often-stated goal of world leadership in sci­ ence, particularly when certain other nations are expanding their support for science. The nation's research effort is in several parts-federallyper­ formed research, federally financed research outside the govern­ ment, and industrial research. All will be affected by the coming changes. This book recommends specific actions, including in some cases greater reliance on markets and the private sector, to obtain the best results from the diminished federal support of science. 2 2 The End of the Golden Age DESPITE EXTENSIVE EVIDENCE that scientific research brings vast social and economic benefits, the federal budget for research and development (R&D) is being reduced, possibly very consid­ erably.