How Excellent That China Is Increasing Its Research Spending – It’s Not A Competition With The US

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China is increasing its scientific research spending substantially and this is something that is causing concern among those who rule us. The truth here being that it’s just absolutely wonderful that China is increasing its spending and it’s going to be just absolutely wonderful for all of us too. The point being that the very argument in favour of government doing the research spending being exactly the argument which insists that it doesn’t matter which government is doing it.

The implication of that being that if it’s China doing the spending then it’s the Chinese taxpayers coughing up for it, not ourselves. And if we get the same benefits – as the base argument insists we do – then ain’t that just peachy for us?

Thus this is a silly concern:

There’s no question that the amount of money available for research in China is going up. The country has made it clear it plans to be a global leader in high-tech manufacturing. China created the Thousand Talents Plan to attract top researchers from around the world. Both Antilla and Olson get support under the plan. China’s ambitions have prompted great concern in the Trump Administration. The worry is that China might be eroding America’s technology advantage — not just by support for research, but also by theft of scientific ideas and corporate espionage.

It’s necessary to think back to the underlying rationale for government spending here at all. We all agree – or at least should – that if a private economic actor can see a way of making a profit out of something then they’ll spend and work on that thing in order to make that profit.

This rather falls down when there’s something we want to have done but which no one can profit from. The most likely path to this disaster being public goods. No, not goods for the public, not things good for the public, things which suffer a specific economic problem. The people who have to bear the costs of the creation aren’t the people who gain the profits from it having been created. If that’s so the people carrying the costs won’t pay them, the thing won’t be created and the other people won’t get the benefit they would have.

Herd immunity, the manner in which diseases just don’t exist in a community if sufficient vaccination has been carried out, is a good example. We parents who pay for the vaccinations carry the costs – we pay as pocket money doesn’t go far these days. We gain some part of the benefit in that our kids don’t get the diseases. But once 90% of the anklebiters are vaccinated then the other 10% are also protected – there’s nowhere for the disease to be any more so no one gets it. We can’t stop people from being protected if everyone else is vaccinated, we can’t reduce the amount of protection in any manner.

Thus the jargon definition, a public good is something non-excludable and non-rivalrous.

Excellent – and long term research is usually thought of as a public good. Sure, it would be great if fusion power works. But it’s going to take several more decades of work to get there. And once it is possible then other people will be able to copy the way it does. Even just knowing that it does is a reduction in research costs. Further, the way market interest rates work private economic actors are unlikely to fund something that will take decades.

This is the argument for such basic research being undertaken by government. As with the public goods problem more generally, as the private actor can’t capture some of the value being generated then the activity itself won’t take place. Thus fund it through taxation – we all chip in a bit to make the world a better place.

And that really is the argument for government funding of research. Because we all benefit and yet no one can profit that’s the way we need to do it.

Excellent. Now run that argument through it being the Chinese or American governments doing the spending. It doesn’t matter, does it? It’s a public good, it’s being delivered by the taxpayers coughing up, we’re done. Except, of course, if it’s them Chinese taxpayers over there having to do the paying instead of us Anglos over here, why isn’t that even better?

Actually, it is even better. So, we should be not just happy but entirely copacetic about China doing all the scientific research instead of us? For they’re paying to produce things, knowledge, that we can and will use. And what could possibly be wrong with that? They pay, we benefit, and?

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Provided that their research is published.