By Henry Kelly, Ph.D.
If you trying to set policy for a country increasingly entangled in global production networks, a country where a growing fraction of economic activity depends on the products of research and invention, what kind of economic statistics would you like to have? You might be curious about research investment and whether it needs to be considered on a par with the fixed capital investments that dominated the industrial revolution. You might be interested in the size of the investments foreign companies and foreign governments are making in the US.
Right? Guess again.
Faced with reduced budgets (measured in constant dollars) the Bureau of Economic Analysis has been forced to:
• Discontinue developing statistics in 2008 for the research and development (R&D) satellite account.
• Raise reporting thresholds and reduce the level of detail collected in BEA’s surveys of the operations of multinational corporations in the U.S.
• Eliminate the survey of new direct investment in U.S. companies by foreign companies (BEA will continue to collect data on total direct investment flows, but will no longer be able to distinguish investments in existing companies from “Greenfield” and other new investments).
Among other things this will scuttle a collaboration with NSF that tried to improve the way we understand the ways R&D investment affect the US economy. The insights of this research were leading to critical results. Among other things it revealed that “R&D accounts for 5 percent of real GDP growth between 1959 and 2004, and 7 percent between 1995 and 2004. This ramp-up in R&D’s contribution helps explain the pick-up in economic growth and productivity since 1995.”
An increasing fraction of the value added in the US economy is not in the form of stuff but in the form of knowledge and information. 86% of US workers are “service workers”. It’s obvious to everyone paying any attention to these dramatic developments that programs designed to ensure continued US economic growth, continued competitiveness in US markets, and increasing prosperity of American citizens needs to be based on the clearest possible understanding of how value flows in this new economy. We need to adapt and expand economic models to reflect these changes and the data to support them.
If, however, your preferred style of governance is to defend the proposition that cutting taxes on the affluent is the solution to all possible problems, the last thing you want is an unwelcome intrusion of evidence. Particularly if the evidence shows that federal investment in areas like research pay huge dividends. And you certainly don’t want data that might uncover problems requiring increased federal activity. This style of thinking is best supported by shooting the messenger –which is apparently just what the administration has chosen to do.
Henry Kelly, Ph.D., is the President of the Federation of American Scientists and Chairman of the Board of Directors for Scientists and Engineers for America.
By Matt Nisbet at Framing Science
