With rare exceptions, most of the articles about the Trump administration’s science-funding policies have discussed them in catastrophic terms. A professor at Johns Hopkins University School of Medicine has called cuts to research funding the “apocalypse of American science.” Critics believe this will sound the death knell of the American economy and our scientific leadership. Despite this widespread condemnation, the administration shows no signs of changing course. The most recent estimate suggests that basic research endowments will fall by US$15 billion in 2026.
In a recent Quillette essay, Lawrence Krauss writes that these cuts threaten “the economic health and security of the US” and “the future of scientific research and innovation at the country’s universities and scientific institutions.” He goes on to claim, “The economic and military interests of the nation are best served by supporting a vibrant research culture in STEM fields like physics and biology.” And: “The best and brightest scientists in the country need to be supported and encouraged to conduct curiosity-driven research—which produced almost half the current GDP of the nation within a single generation.”
Lawrence M. Krauss
These claims are worth examining in more detail. For a start, the best available evidence does not demonstrate that federal science funding predicts economic growth. This claim has been evaluated multiple times, sometimes decades apart. In 1989, the Bureau of Labor Statistics (BLS) audited R&D investments and determined that federally financed research was having no significant effect on the economy. The Congressional Budget Office reached the same conclusion during its assessment in 1998. Another BLS audit in 2007 found that: “Returns to many forms of publicly financed R&D are near zero.”
International audits have returned similar results. In the late 1990s, the Organization for Economic Cooperation and Development (OECD) looked at economic growth differences between countries, and reported their findings in 2003. The OECD could find “no clear-cut relationship between public R&D activities and growth.”
Even if the analysis is restricted to the “golden era” of NIH funding in the 1950s and 1960s, the effect on US growth is suspect. Given the massive public investment at that time, subsequent years should have demonstrated more rapid economic growth. But they did not. The annual growth rate of GDP after the 1950s was fairly stable. Terence Kealey has noted that total factor productivity (TFP) and other measurements that account for technological change fell in the post WWII era as federal science budgets expanded.
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Historical examples of nations following the public-funding model display similar trends. During the 1960s, Britain’s Labour Party also thought that government funding of science would be an engine of growth, but Britain’s poor economic performance during the following decade appears to refute this notion. This was a somewhat surprising policy for a British government to adopt since the United Kingdom had a laissez faire approach to science funding when it kicked off the industrial revolution, which led to one of the greatest eras of prosperity and growth the world has ever seen.
