> Andrei Shleifer would not be there, but if he were he would point out
> that the Soviet Union poured a huge amount into research and
> development and got very little out of it, largely because of
> bureaucratic meddling. He would say that the only area in which
> Soviet science lived up to its potential was higher math and
> mathematical physics--and that only because none of the bureaucrats
> could understand anything other than that doing it was
> internationally prestigious.
.
Maybe it wasn't intended as such, but the old
"why-don't-you-go-back-to-Russia" argument sounds a lot like red-baiting. I
could just as speciously ask how many advanced drugs post-1991 capitalist
Russia has produced. Zero? For that matter, how many citizens of capitalist
Russia have died of tuberculosis in the last 10 years?
When a private company spends $2 billion on research, it can end up earning over its lifetime, say, $10 billion in profit on the drug, due to patent extensions. Those excess profits represent a huge redistribution of income from the sick and old to shareholders and managers. If the NIH spent $2 billion on research, it could produce a drug at cost - meaning the cost would be borne mostly by the rich and there would be no redistribution from the sick and old. The welfare gains would be huge, not to mention the efficiency gains from a far more rational allocation of research to serious ailments rather than hair loss.
Maybe it would all be cancelled out by the alleged incompetence of public agencies, but I smell some rank ideology therein.
Seth
> Charles Schultze would point out that the U.S. political system
> simply cannot handle directing large amounts of money at product
> development of any kind--that East Asian and western European
> bureaucracies can semi-successfully run industrial policies but that
> we cannot--and that such a tremendous boost in NIH spending would
> mean that the direction of research would be decided not by the
> (imperfect) consumer market demand for drugs but by the (even more
> imperfect) negotiating skills of political and policy entrepreneurs
> like Ira Magaziner.
>
> Robert Reich would argue that we need post-modern entrepreneurial
> forms of organization--that the NIH should be split into ten and set
> to work competing against itself for public funding--but that it was
> important that the incentive mechanisms set up to award funding to
> the post-modern post-big government entities avoid the flaws of
> bureaucratic groupthink and of market distortions.
>
> Larry Summers would say that he has heard me say many things that
> have not been thought through, but that this is perhaps the champ:
> that we have run this social experiment three times over the past
> half century--U.S. science vs. Soviet science, the U.S. computer
> industry vs. NASA, and the U.S. pharmaceutical industry vs. Pentagon
> weapons development--all three times the flaws in the more
> market-oriented forms of organization have been dwarfed by the flaws
> in the more centrally-planned forms of organization, and that this
> three-fold failure of centralization should tell us something.
>
> Central planning is good if you have one overarching clear goal--to
> build an A-bomb, to send Neil Armstrong to the moon, to electrify the
> Ukraine's cities, to build as many T-34c tanks as possible, even to
> harvest as much sugar as possible in a single year. Central planning
> is much less good if you have a number of goals, or if you are not
> clear on exactly what your goals are.
>
> Lenin had no view of what a proper socio-economic organization would
> be other than to try to copy Ludendorff's war economy. But Lenin's
> ignorance is no excuse for keeping today's discussion of forms of
> organization on his--low--level.
>
>
> Brad DeLong
>