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Comment by edwardbernays

4 days ago

What distorting effects of public funding? What about the distortionary effects of the market? I'll offer the suggestion that what you read is brainrotting private market propaganda designed to erode the public institutions that make America happier, healthier, and wealthier.

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edwardbernays

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tomrod  4 days ago

In economics discussions regarding public funding policy, the concern of "crowding out" commercial firms or nonprofits is a real concern. It's definitely an observed, measured, and reported phenomenon.

In the end, incentives matter.

https://en.wikipedia.org/wiki/Crowding_out_(economics)

  • edwardbernays  4 days ago

    There is no private market entity with an incentive to provide research to the public, so in this sense there is no crowding out. Providing research to the public enables the discovery of new products which would otherwise have not been created. Public research is a public good that makes our nation happier, healthier, and wealthier.

    • tomrod  3 days ago

      Let's ignore FOSS contributions for a moment, which very much contradict your claim that private companies don't contribute research to the public.

      Outside software technology: there is a series of papers from Grossman (going back to the 80s!) that analyzes basic versus applied research in a macroeconomic framework. Basic research _can_ be a public good, applied research can be crowded out. Combined with microeconomic research that monopolies can be dynamically efficient (investing in applied and basic R&D, like Bell Labs) and you get several examples and theories that contradict your statement that "there is no private market entity with an incentive to provide research to the public."

      Another real world example in hardware that contradicts this claim is the evolution of building control systems. Before the advent of IOT, so, circa 1980s - 2010s, you saw increasing sharing and harmonization of competing electronics standards because it turned out to be more efficient to be modular, not have to re-hire subcontractors at exorbitant rates to maintain or replace components that go haywire, etc.

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  • Ma8ee  3 days ago

    That whole discussion is based on the assumption that commercial firms or nonprofits are better in some way than publicly funded research. That is the stupid neoliberal dogma that private and market economy always are better than things that are run by our elected officials. That dogma has to die.

    • tomrod  3 days ago

      Price as a market signal precedes neoliberalism by several decades to several millennia, depending on which economic historian you speak with. Is your argument that basic research which has no immediately attributable applications is better handled by publicly funded research? I mostly agree to that. Applied research is definitely handled better by commercial firms and nonprofits when handling is defined by what people are willing to value (pay for).

      If we're talking about applied technology in the public goods space, then it can be a toss up. Sustainability research, for example, can be quite blurry as to whether the market is pricing it in or not as applied or basic research -- really depends on how a government handles externalities and regulatory capture!

      I'll 100% agree to government entities as well as some well-chartered public entities being absolutely awesome at setting up incentive structures for desired outcomes. There is actually a whole field of research dedicated to the topic of incentive structuring called mechanism design -- think of it as the converse to Game Theory and strategic behavioral analysis -- that policy design and analysis learn from.

      I'll also note that governments aren't structured to efficiently provide benefits or just-in-time delivery in most situations. Though the discussion has made me more curious about how operationally efficient the DOD is for civilian goods distribution, given it supports a massive population.

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