The West Has Lost the Will to Fund Basic Research
By William R. Brody Originally published in The Financial Times (U.K.), p. 11
August 19, 2005
Not available online When Wen Jiabao, the Chinese premier, visits India, as he did in April, and tells business associations there that a priority of his government is to strengthen co-operation between India and China in high-technology ventures, the US and Europe need to pay attention. Mr Wen said of this fledgling partnership: "For a grander sight, climb to a greater height." It was clear from his message that he was not talking about tourism. American and European economies face an unprecedented challenge to their technological leadership of the past two centuries. Yet researchers in industry, academia and government are playing it safe. In the US, the kind of freewheeling basic research that spawned new industries — from genetic engineering and the integrated circuit to wireless telephony and e-commerce — is already in serious decline. Industrial basic research has failed to demonstrate a return on investment that satisfies the ravenous appetite of financial markets for short-term earnings growth. As a result, companies have been directing capital to applied research and development, rather than basic invention and innovation. In the US, university basic research has withered in many important fields, especially in the physical and information sciences and engineering. And the runaway federal budget deficit is likely to retard and even reverse recent growth in medical research funding. In Europe, the European Union's proposed seventh framework programme expects to spend Euros 67.8bn (Dollars 83bn) on R&D from 2007 to 2013. But only one-sixth of this is targeted for basic research. In May, more than 5,000 French scientists took to the streets of Paris and other cities to protest at what they see as their government's abandonment of fundamental research priorities. We are losing our collective will to fund basic science. When these investments may not pay off for 20 years or more, we often forget why we need to make them in the first place. Mutual funds now hold stock for as short a time as eight months. Is it any wonder investors have no interest in backing basic research for the long term? At the same time, the US Department of Defense's basic research budget, once the major American source of funding for this kind of research, has been shrinking for more than two decades. The DoD's funding agency — the Defence Advanced Research Projects Agency (Darpa) — has created entire industries in which the US is dominant, including semiconductors, software, materials sciences and computer networking. Companies including Sun Microsystems and Cisco Systems would not exist were it not for DoD-supported research at Stanford University more than 25 years ago on the Darpa-net, the precursor to the internet. The priority must be to rekindle a spirit of innovation. This requires a cadre of talented scientists and engineers and an environment that supports the funding of high-risk ideas. Both of these essentials are in decline — particularly in the US — although innovation is more important than ever. When countries such as India and China can provide so much cheap labour, it is obvious that our only competitive advantage is ingenuity. How do we reinvigorate the creative energy that has served us so well for more than 200 years? Let us start by making three fundamental, yet simple, changes. First, shed the shackles of short-term profitability. Remember "patient capital"? We need to resurrect it and can start by offering enhanced tax incentives for companies to invest in higher-risk basic research with longer-term pay-offs. Second, strengthen our research universities to train more graduates in science and engineering. In the US, where much of the cost of higher education is borne by the students and their families, this might require government scholarships and grants for science and engineering students. In Europe, where publicly funded universities dominate, perhaps other incentives are needed. Finally, increase government spending for basic research. We were once expert at developing "the next new thing". Let us get back on track. We should start with a modern "man-on-the-moon" project: developing practical alternatives to fossil-based fuel sources. The knowledge we possess today will not punch our ticket to the world economy of the future. This is a flight with no discount fares. The alternative is to slip into economic irrelevance. We need to ask: "Where are we aiming for? What destination will we choose?" ____________________________
The writer is president of the Johns Hopkins University, the co-founder of three medical device companies and co-chairman of the US Council on Competitiveness's National Innovation Initiative. | 
