Review of Terence Kealey's "The Economic Laws of Scientific Research" by Peter McCluskey

May 19, 1999

This book is an entertaining and forcefull polemic against the quasi-religious dogmas that government and academic researchers advocate about the need for taxpayer financing of science, plus some related areas such as tenure (noting with approval that Adam Smith was paid directly by his students rather than getting a university salary).

He has convinced me that the arguments in favor of taxpayer financing are motivated largely by self-interest and rarely by evidence that would come close to meeting normal peer-review standards.

He produces statistical evidence that suggests the hypothesis "wealth causes government-financed research" yields much better predictions than the hypothesis "government-financed research causes wealth", and that there is reason to suspect that government-financed research may even hinder economic progress.

But he appears to overstate his case when he concludes that government-financed research should be abandoned entirely. (I'm not saying this conclusion is wrong, but it's much harder to prove than he implies). He assumes that basic research should, if it causes economic growth, cause the nation which finances it to become wealthier than nations which don't. He doesn't do an adequate job of explaining why the research couldn't have a worldwide wealth effect that doesn't show up in national comparisons.

He simply assumes away the hypothesis that free-rider problems will cause suboptimal spending on research. While he provides good reason to suspect that no practical methods exist to get us closer to the ideal than the capitalist approach, that imply that there are no problems. The standard economic analysis that implies free-riders cause suboptimal spending seems fairly solid.

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