Many people believe that science and research are public goods and thus need financial support from the government. Most economists believe that economic growth depends on innovation which in turn arises from science and research. The conventional wisdom concludes that economic growth depends on government largesse, perhaps as much as it does on markets.
Economic growth and innovation are closely linked, but we might doubt that science and research are public goods. Consider the history of public support for science. The United States was effectively laissez faire in science and research until 1940, yet the inauguration of vast federal funding for science and innovation since that date has not altered the nation’s underlying rates of economic growth. The Wright brothers, Thomas Edison, and Nikola Tesla transformed their industries without government grants. Indeed, in 2003 the Organization for Economic Co-operation and Development OECD found in surveying its members that only privately funded R&D led to economic growth—publicly funded R&D had no beneficial effects at all.
Everybody supports the public funding of scientific research: industry loves corporate welfare, the universities love the grants, the politicians love the reflected glory, and the general public believes the conventional wisdom previously noted. Terence Kealey argues that science and research are most certainly not public goods and that we could—if we wished—leave R&D solely to the market.