Study finds that budget cuts to public R&D would significantly hurt the economy

I'm in this space. Where I work we've already lost 10% of our staff with senior management looking for an additional 15% in budget cuts (anything else we can cut).

So this sector may be "ignored" so to speak (though I'm not even sure what that means). I also have a number of friends at agencies and government contractors that all think they will "feel" these possibly large federal budget cuts. They are all on edge, especially with eyes towards the end of summer and early fall.

Most academics have the option of studying abroad for awhile if desired.

And yes, people should be worried. =3

https://www.youtube.com/watch?v=23X14HS4gLk

Yes: the US administration is infested with anti-intellectuals who falsely believe that they're self-made ubermensch. So anyone else is obviously beta or worse.

Espected that a university would find that federal funding cuts have a negative impact?

Trump won the popular vote because people were nostalgic for Obama's economy that Trump got credit for which is what always happens when a Republican follows a Dem into office.

They have better outcomes actually. Higher economic growth, higher population growth, lower state debt, lower unemployment. Of course, exceptions apply but the overall data is pretty clear.

https://www.richardhanania.com/p/forty-years-of-economic-fre...

The reality is that US AID money went to any NGO that had mechanisms to pipe some percentage back to Act Blue as cash and hidden through donors like my mom that donated once and had her record in there 20 times. Mostly facilitated by corrupt lawyers there.

I think everyone is this country agrees that there is some corruption everywhere, and isn't opposed to cleaning that up.

The complaint against Trump is that he's "solving" everything by just burning it down.

Private industries are not incentivized to pursue the same kind of research as the public sector. An excellent example of this is antibiotics (or antifungal drugs). Pharma companies do not put forth a large budget for research like this, because it isn't profitable. But, if we were to see a super bug crop up in the next 10 years (unfortunately this is not a crazy "if" due to trends in antibiotic resistance), then you would quickly see the public sector's research paying enormous dividends in terms of missed economic hardship. These economic benefits would not affect the private sector in the same way, because a pharma company would not see, let's say, $50b in profits from helping ease an equivalent $50b in economic hardship caused by hospital bills/suffering/lost productivity.

On top of this, let's just look at the current private sector and what they spend R&D dollars in: can you really say that $1b spent by Google, Meta, Amazon etc. actually ends up being better worthwhile than $1b spent by NASA? see this list of inventions NASA has inadvertently created: https://www.jpl.nasa.gov/infographics/20-inventions-we-would...

In general, public sector research is already so strapped for cash. Their budgets are not large. Their salaries are lower than the private sector. I agree that public R&D spending is likely not at a "theoretical optimal level", but would you argue that private sector R&D spending is?

We probably want even more R&D than we have now. Private companies frequently spend much less than the optimal level because it's a tossup on whether it will amount to anything, government can fund a wide range of R&D and society picks up the benefits of it even if half the projects don't turn out.

Something doesn’t need to be “optimal” for it to highly net positive.

But even if you don’t want to believe all the research and all the very obvious examples that suggest the tremendous benefits of public research even from a purely monetary perspective, maybe just consider that nearly every other country is trying to rebuild what the U.S. has in terms of public research.

China, Europe, etc.

And countries in the Middle East are using their oil money to essentially pay for these universities to build campuses in their nations.

> For example, what are the odds that current public R&D spending is really at an optimal theoretical level? Do these models account for potential substitution by private industry if government funding is reduced? etc.

On the other side of things, they're using an economic model based on keyword searches for woke language in grant descriptions, and yet you felt compelled to comment to urge skepticism and "just ask questions" only about this study?

turnabout is fair play?

I'm just curious: you really believe that all academic R&D is wasteful and non-productive?

People who get contracts for doing R&D say that the R&D calls for more funding.

The problem with private R&D is that it's quite difficult for any individual company to fully capture the benefits of research. There are lots of ways this happens. Company does innovative research then gets copied by other firms. Or, they don't recognize an idea's potential but another company does. Or, the research is useful twenty or fifty years in the future. Or, the research is very useful both for them and for many, many other fields and they're only able to capture a tiny sliver of the total value.

For a couple concrete examples: Xerox-PARC did incredibly innovative computing research that turned Apple into a trillion dollar company. For a more modern take: DeepSeek literally used ChatGPT to build their own cheaper competitor.

So, R&D is incredibly societally useful and it's in the collective interest of companies to have access to research results to keep them innovative and competitive. But, it doesn't make sense for any one company to actually do R&D. It really only works as a public good.

I'm not angry and I totally get your point of view. I don't think you're wrong.

My belief is that the underlying issue is that most companies and their drive for quarterly results means that they won't front a bunch of the "we're not sure if this will result in anything but it's an interesting thing to look into" style of research on their own. The Bell Labs of the olden days are gone and publicly-funded R&D has essentially replaced it.

It's not all bad though, having all of that research published instead of tucked away in a private research facility can be beneficial.

There’s a couple factors - one is the payoff time and risk levels make basic research difficult for even businesses with long time horizons to engage with, and American businesses are notoriously short term. The other is that there’s a large public benefit to making the fruits of that research widely available by way of risk mitigation - it’s commercial companies that take the research over the line, but making the research public allows multiple companies to take a shot at commercializing the results,

In general, considering the government and public money to not be part of “the economy” will make your internal models less performant - the public is an actor in the economy and so is the government, and both make decisions on the basis of their needs, values, and resourcing. Those entities seeing higher rates of return for their investment than other actors like private companies is absolutely consistent with, for example, different companies seeing different rates of return for the same investment dependent on their needs, resourcing, and constraints.

It's no more circular than spending money on education to get a high-paying job, or spending money on changing your A/C filters so that your air conditioner doesn't prematurely fail.

> but I'd think if it were economically productive it would be able to make a self-sustaining feedback loop.

A "self-sustaining" feedback loop still has humans in the loop, deciding to reinvest money in future improvements. If those humans decide to shut the loop down then obviously the benefits will stop being realized.

Yeah, that’s an oversimplification and short-sighted. Do you really think even a small fraction of the AI research that led to LLMs and trillions in corporate market capitalization was funded purely by private money? No, it was largely driven by public funding. Even more, not just from the US, but from governments and academic institutions around the world over several decades.