X-Message-Number: 5089
From:  (David Stodolsky)
Subject: Re: Technological Progress
Date: Wed, 1 Nov 95 21:35:01 +0100

Saul Kent <> writes:
> 	I now believe that the requisite basic research would  be adquately

> funded privately if there was no government-sponsored research.  I now believe

This is only true if the private funders do not require full return
on their investment. For theoretical reasons, full value of new inventions
cannot be fully recovered, even considering patent exploitation, etc.
The way to understand this is that just the idea that something can
be done is of value, and there is no way to recover this value. For
example, the Soviet Union was able to build an atom bomb very quickly
after its existence was revealed. The only real "secret" about the atom
bomb was that it could be built. After the word was out, any advanced
physics student could do it, given the resources. Failure to understand this
contributed to the execution of the Rosenbergs and the surrounding "Atom Spy
Hoax" (I think that's the title of a book).

Similarly, once someone demonstrates reversible suspension, there
will be no way to control the technology. The original inventors will
never recover their investment. However, avoiding death would be fine
consolation prize. On the other hand, raising capitol on this basis
could probably not be done through conventional investment instruments.
The money would have to given away. Something like a church might
be the best model.

Some years back there was a big push for private exploration/exploitation
of space resources. This led nowhere, apparently due to the payback
period being too long for investors. If reversible suspension requires
the same kind of investments, then the outlook for private investment
is not good, regardless of theoretical questions. On the other hand,
building political support to the level where a government can be brought
to support suspension research is not a near term prospect. However,
we should keep in mind that a great deal of research along this line
was funded by NASA, until their money ran out. This suggests that if
research funding can be expanded, then suspension research could benefit.
Unfortunately, the current climate in the US points in the direction
of a cut of 1/3 in research funding for the future. There seem no
justification for this except opposition to "big government" supported
by a general anti-scientific attitude in the country.


The theoretical point, while not new, is referenced in this draft:
-------------------------------------------------

Dr. Christian Groth
Economics Institute
Studiestraede 6
DK-1455  Copenhagen K
Tlf. +45 35 32 30 28


R&D, Human Capital, and Economic Growth

Abstract:

A growth model is constructed which emphasizes R&D and human capital 
accumulation as distinct phenomena, both necessary for sustained growth. The 
distinction is not only of theoretical interest, but has implications for 
empirical predictions and for policy. In contrast to other R&D-based growth 
models, our model implies growth in the size of the market relevant to each 
invention, and this helps explaining the empirical tendency for the
patent/R&D-expenditure ratio to fall; the pressure for migration that we 
observe in the world comes out naturally from the model without having to add 
a positive externality from average human capital; economic integration 
increases the proportion of its available time that society will want to 
spend on research and education, and a higher growth rate will result; 
although the market economy devotes too little effort to both education (or
imitation) and research, only the latter needs public support.
-------------------------------------------------


David S. Stodolsky      Euromath Center     University of Copenhagen
   Tel.: +45 38 33 03 30   Fax: +45 38 33 88 80 (C)

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